1
EXHIBIT 2.6
================================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
EAGLE RESEARCH CORPORATION
AMERICAN METER COMPANY
AND
METRETEK, INCORPORATED
XXXXXX NATURAL GAS SERVICES, INC.
DATED: March 23, 1998
================================================================================
2
TABLE OF CONTENTS
Section 1. Sale and Purchase of the Assets . . . . . . . . . . . . . . . . . 1
Section 1.1 Sale and Purchase . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Liabilities . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2. Purchase Price and Payment . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Post-Closing Adjustment For Purchase Price For
Inventory. . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Convertible Note . . . . . . . . . . . . . . . . . . . . 6
Section 2.4 Convertible Note Adjustment . . . . . . . . . . . . . . . 7
Section 2.5 Issued Shares . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6 Allocation of Purchase Price . . . . . . . . . . . . . . 7
Section 3. Representations and Warranties of Seller and American Meter . . . 8
Section 3.1 Organization . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3 Power and Authority . . . . . . . . . . . . . . . . . . . 8
Section 3.4 Enforceability . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 No Conflicts . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.6 Defaults . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.7 Consents . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.9 Ability to Dispose of the Assets . . . . . . . . . . . . 9
Section 3.10 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . 9
Section 3.11 Financial Statements . . . . . . . . . . . . . . . . . . 9
Section 3.12 Absence of Undisclosed Liabilities . . . . . . . . . . . 10
Section 3.13 No Material Adverse Change . . . . . . . . . . . . . . . 10
Section 3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.15 Title to and Condition of Assets . . . . . . . . . . . . 12
Section 3.16 Personal Property Leases . . . . . . . . . . . . . . . . 12
Section 3.17 Inventory . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.18 Intellectual Property . . . . . . . . . . . . . . . . . 13
Section 3.19 Relationships with Suppliers and Customers . . . . . . . 14
Section 3.20 Labor and Employment Matters . . . . . . . . . . . . . . 14
Section 3.21 Employee Benefit Plans . . . . . . . . . . . . . . . . . 15
Section 3.22 Insurance . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.23 Contracts . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.24 Licenses . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.25 Product Liability Claims. . . . . . . . . . . . . . . . 16
Section 3.26 Product Warranties . . . . . . . . . . . . . . . . . . . 16
Section 3.27 Compliance with Laws . . . . . . . . . . . . . . . . . . 16
3
Section 3.28 No Loss of Rights or Legal Obstacles . . . . . . . . . . 17
Section 3.29 Transactions with Affiliates . . . . . . . . . . . . . . 17
Section 3.30 Absence of Certain Commercial Practices . . . . . . . . 17
Section 3.31 Securities Representations As To The Shares . . . . . . 17
Section 3.32 Full Disclosure . . . . . . . . . . . . . . . . . . . . 19
Section 4. Representations and Warranties of Purchaser and Xxxxxx . . . . . . 19
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.2 Power and Authority . . . . . . . . . . . . . . . . . . . 19
Section 4.3 Enforceability . . . . . . . . . . . . . . . . . . . . . 19
Section 4.4 No Conflicts . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.7 Shares . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.8 Capitalization of Xxxxxx . . . . . . . . . . . . . . . . 20
Section 4.9 Securities Law Reports . . . . . . . . . . . . . . . . . 20
Section 4.10 Financial Statements . . . . . . . . . . . . . . . . . . 20
Section 4.11 Absence of Adverse Change . . . . . . . . . . . . . . . 20
Section 4.12 No Brokers . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5. Pre-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1 Conduct of Business of Seller . . . . . . . . . . . . . . 21
Section 5.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.4 Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.5 Consummation of Transactions . . . . . . . . . . . . . . 22
Section 5.6 Public Announcements . . . . . . . . . . . . . . . . . . 22
Section 5.7 Notification of Certain Matters . . . . . . . . . . . . . 22
Section 5.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.9 No Shopping . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.10 Employee Matters . . . . . . . . . . . . . . . . . . . . 23
Section 5.11 Assumed Warranty Obligations . . . . . . . . . . . . . . 24
Section 5.12 Repayment of Indebtedness and Release of Liens . . . . . 24
Section 5.13 Financial Statements . . . . . . . . . . . . . . . . . . 24
Section 5.14 Board Seat . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.15 Pantheon Software License Agreement . . . . . . . . . . 25
Section 5.16 Non-Competition Agreement . . . . . . . . . . . . . . . 25
Section 5.17 Amendment of Xxxxxx Rights Agreement . . . . . . . . . . 25
Section 6. Conditions Precedent to Purchaser's and Xxxxxx'x Closing
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.1 Accuracy of Representations and Warranties . . . . . . . 25
Section 6.2 Performance of Covenants . . . . . . . . . . . . . . . . 25
Section 6.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.4 Deliveries at Closing . . . . . . . . . . . . . . . . . . 26
Section 6.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . 26
4
Section 6.6 Condition of Assets . . . . . . . . . . . . . . . . . . . 26
Section 6.7 Non-Competition Agreement . . . . . . . . . . . . . . . . 26
Section 6.8 License Agreement . . . . . . . . . . . . . . . . . . . . 26
Section 7. Conditions Precedent to Seller's and American Meter's
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.1 Accuracy of Representations and Warranties . . . . . . . 26
Section 7.2 Performance of Covenants . . . . . . . . . . . . . . . . 26
Section 7.3 No Litigation . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.4 Deliveries at Closing . . . . . . . . . . . . . . . . . . 26
Section 7.5 License Agreement . . . . . . . . . . . . . . . . . . . . 27
Section 8. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.1 Date and Place . . . . . . . . . . . . . . . . . . . . . 27
Section 8.2 Deliveries by Seller and American Meter . . . . . . . . . 27
Section 8.3 Deliveries by Purchaser . . . . . . . . . . . . . . . . . 28
Section 8.4 Effectiveness of Closing . . . . . . . . . . . . . . . . 29
Section 9. Survival and Indemnification . . . . . . . . . . . . . . . . . . . 29
Section 9.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.2 Indemnification by the Seller and American Meter . . . . 29
Section 9.3 Indemnification by Purchaser and Xxxxxx . . . . . . . . . 29
Section 9.4 Claims for Indemnification . . . . . . . . . . . . . . . 30
Section 9.5 Limitation on Liability . . . . . . . . . . . . . . . . . 30
Section 9.6 Non-Exclusive Indemnification . . . . . . . . . . . . . . 31
Section 9.7 Effect of Knowledge . . . . . . . . . . . . . . . . . . . 31
Section 9.8 Contribution . . . . . . . . . . . . . . . . . . . . . . 31
Section 10. Post-Closing and Other Covenants . . . . . . . . . . . . . . . . 31
Section 10.1 Further Assurances . . . . . . . . . . . . . . . . . . . 31
Section 10.2 Seller's Financial Statements . . . . . . . . . . . . . 32
Section 10.3 Preservation of Files and Records . . . . . . . . . . . 32
Section 10.4 Mutual Cooperation . . . . . . . . . . . . . . . . . . . 32
Section 10.5 Solicitation and Hiring . . . . . . . . . . . . . . . . 33
Section 10.6 Registration Rights . . . . . . . . . . . . . . . . . . 33
Section 10.7 Seller's Right of First Refusal to Acquire Purchaser . . 36
Section 10.8 Transition of Assets and Business . . . . . . . . . . . 36
Section 10.9 American Meter Licenses . . . . . . . . . . . . . . . . 37
Section 11. Termination and Confidentiality. . . . . . . . . . . . . . . . . 37
Section 11.1 Events of Termination . . . . . . . . . . . . . . . . . 37
Section 11.2 Effect of Termination . . . . . . . . . . . . . . . . . 37
Section 11.3 Confidentiality . . . . . . . . . . . . . . . . . . . . 37
5
Section 12. General Provisions . . . . . . . . . . . . . . . . . . . . . . . 38
Section 12.1 Governing Law . . . . . . . . . . . . . . . . . . . . . 38
Section 12.2 Expenses . . . . . . . . . . . . . . . .. . . . . . . . 38
Section 12.3 Assignment . . . . . . . . . . . . . . .. . . . . . . . 38
Section 12.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . 38
Section 12.5 Notices . . . . . . . . . . . . . . . . . .. . . . . . . 38
Section 12.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 12.7 Severability . . . . . . . . . . . . . . . . . . . . . . 40
Section 12.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 12.9 Successors and Assigns . . . . . . . . . . . . . . . . . 40
Section 12.10 Pronouns, etc . . . . . . . . . . . . . . . . . . . . . 40
Section 12.11 No Third Party Beneficiaries . . . . . . . . . . . . . 40
Section 12.12 Schedules and Exhibits . . . . . . . . . . . . . . . . 40
Section 12.13 Specific Performance; Cumulative Remedies . . . . . . . 40
Section 12.14 Counterparts . . . . . . . . . . . . . . . . . . . . . 40
Section 12.15 Entire Agreement . . . . . . . . . . . . . . . . . . . 40
SCHEDULES
1.1(a) Equipment
1.1(b) Inventory
1.1(c) Intellectual Property
1.1(g) Assigned Contracts
1.2 Excluded Assets
2.5 Allocation of Purchase Price
3.1 Foreign Qualification
3.13 Affiliated Transactions
3.15 Liens on Assets
3.16 Personal Property Leases
3.18 Intellectual Property
3.19 Customers and Suppliers
3.20 Employment Agreements
3.23 Contracts
3.26 Product Warranties
EXHIBITS
A. Convertible Note
B. Software Licensing Agreement
C. Non-Competition Agreement
D. Xxxx of Sale
E. Seller's Legal Opinion
F. Purchaser's Legal Opinion
6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 23rd day of March, 1998, by and among EAGLE RESEARCH
CORPORATION, a West Virginia corporation ("Seller"), AMERICAN METER COMPANY, a
Delaware corporation ("American Meter"), METRETEK, INCORPORATED, a Florida
corporation ("Purchaser"), and XXXXXX NATURAL GAS SERVICES, INC., a Delaware
corporation ("Xxxxxx").
W I T N E S S E T H:
WHEREAS, Seller is, among other things, engaged in the business of
developing, manufacturing and selling electronic meter correcting and reading
equipment, excluding those business activities conducted by Seller (i) that the
parties agree are associated with the design, construction and sale of remote
terminal units (the "RTU Business") (it being agreed that the Business shall
include, and the RTU Business shall not include, high-low pressure monitors
developed, manufactured and sold by Seller), and (ii) in the system
installation business (collectively, such activities of Seller, taking into
account the aforementioned excluded business activities, are hereinafter
referred to as the "Business"); and
WHEREAS, Seller desires to sell and Purchaser desires to purchase
certain assets of Seller used in the Business, upon the terms and subject to
the conditions set forth herein; and
WHEREAS, the parties hereto desire to enter into certain other covenants
among themselves as an inducement to and in connection with the execution,
delivery and performance of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
SECTION 1. SALE AND PURCHASE OF THE ASSETS
SECTION 1.1 SALE AND PURCHASE. At the Closing (as defined below),
upon the terms and subject to the conditions set forth in this Agreement,
Seller shall sell, assign, transfer, convey and deliver to Purchaser, and
Purchaser shall purchase and acquire from Seller, all of Seller's right, title
and interest in and to all the assets of Seller of every kind, character and
description, whether now owned or hereafter acquired by Seller prior to the
Closing Date, whether tangible or intangible, and wherever located, which are
owned, used or held for use in connection with, generated by, derived from or
attributable to, or otherwise related to, the Business (excluding the Excluded
Assets, as defined in Section 1.2 hereof) (all of which are collectively
referred to herein as the "Assets"), including, but not limited to, the
following:
(a) all equipment, machinery, vehicles, office furniture,
fixtures, tools, dies, spare parts, appliances, computer hardware, equipment
and supplies, and other similar tangible personal property, including, without
limitation, the personal property and equipment set forth on Schedule 1.1(a)
hereto;
(b) all inventories, including, without limitation, raw
materials, work in process, finished goods, inventories held by customers on a
consignment basis, stocks, supplies, materials and
1
7
manufactured and purchased parts, including, without limitation, the items of
inventory set forth on Schedule 1.1(b) hereto;
(c) all patents, trademarks, trade names, trade dress, logos,
service marks and copyrights, all applications, registrations, extensions,
reissues and continuations thereof, all licenses and sublicenses with respect
thereto, all rights thereunder, and all remedies against infringement thereof,
including, without limitation, those items set forth on Schedule 3.18 hereto
(including trademarks, trade names, trade dress and logos directly related to
the Assets and used by Seller in the Business that are owned by American
Meter), other than the name "Eagle" and all trademarks, trade names, trade
dress and logos associated with such name;
(d) all technologies, materials, formulations, data bases,
trade secrets, secret processes, know how, inventions and other intellectual
property and intangible property of every kind and nature;
(e) all computer software (including documentation and related
object and source codes), other than that pertaining to "Pantheon," as such
term is defined in the License Agreement (which is defined in Section 5.15
hereof);
(f) all rights and interests under orders, bids, quotations
and similar arrangements relating to the purchase or sale of Seller's goods and
services, and all deposits by customers, to the extent not fulfilled prior to
the Closing Date;
(g) all rights and interests under licenses, contracts,
agreements, leases and commitments, including without limitation, contracts
providing for the lease of equipment, machinery, office equipment, furniture
and vehicles, sales representative agreements, distributor agreements,
consignment agreements and other similar agreements, whether as principal or
agent or distribution, to the extent (i) transferable to Purchaser, (ii)
assumed in the sole discretion by Purchaser, and (iii) set forth on Schedule
1.1(g) hereof ("Assigned Contracts");
(h) all franchises, approvals, permits, licenses,
qualifications, authorizations, orders, registrations, certificates, variances,
and similar rights obtained from or issued by any Governmental Authority (as
defined in Section 3.5 below), and all pending applications therefor, that are
transferable to Purchaser;
(i) all rights and interests of Seller under all warranties,
guarantees and covenants not to compete for the benefit of the Business or the
Assets;
(j) all data, documents, forms, correspondence, lists, plats,
architectural plans, drawings, specifications, creative materials, advertising
and promotional literature and materials, studies, reports, and other printed,
written, machine readable, electronic or computer-generated materials, and such
financial information as reasonably necessary for Purchaser to operate the
Business, to the extent they relate to the Assets or the Business; and
(k) the Business as a going concern and all goodwill
associated therewith.
SECTION 1.2 EXCLUDED ASSETS. Notwithstanding any provision in Section
1.1 or elsewhere herein to the contrary, the Assets shall not include any of
the following:
2
8
(a) those Assets disposed of in the ordinary course of
business as permitted by this Agreement;
(b) the corporate franchise of Seller and the records of all
matters pertaining to its corporate existence including minute books, stock
transfer books, tax returns, tax identifications, books of account and other
records pertaining to Seller's corporate organization;
(c) the Purchase Price (as defined below) and all other rights
accruing to Seller under this Agreement;
(d) the rights to all of Seller's claims for any federal,
state, local or foreign tax refunds or adjustments;
(e) Seller's Employee Plans (as defined in Section 3.21
hereof);
(f) any leases of real or, except as set forth on Schedule
1.1(g), personal property by Seller as lessee;
(g) any rights and interests of Seller under contracts,
agreements and commitments that are not set forth on Schedule 1.1(g);
(h) the accounts receivable of Seller;
(i) cash and cash equivalent items;
(j) insurance policies, surety bonds, prepaid insurance
premiums, insurance claims and refunds and adjustments on insurance policies
and claims;
(k) net operating losses generated by Seller and all rights
pertaining thereto;
(l) assets, properties and rights set forth on Schedule 1.2;
and
(m) assets, properties and rights not used by Seller
principally in connection with the Business and not necessary for Purchaser to
conduct the Business, including, but not limited to, the Pantheon business and
assets, properties and rights related thereto, which are set forth on Schedule
1.2.
SECTION 1.3 LIABILITIES.
(a) Notwithstanding any other provision herein to the
contrary, Purchaser is not assuming and shall have no obligation to pay,
perform or discharge any liabilities, debts, accounts payable or other
obligations of Seller of any kind or nature whatsoever, whether known or
unknown, fixed or contingent, whenever arising or accruing, other than the
Assumed Liabilities (as defined in Section 1.3(b) below).
(b) From and after the Closing Date, Purchaser shall assume
and perform the Assumed Liabilities. As used herein, the term "Assumed
Liabilities" means only the following:
(i) One-half of the "Post-Closing Transitional Employee
Costs" (as defined in Section 5.10(g) hereof);
3
9
(ii) the Assumed Warranty Obligations (as defined in
Section 5.11 hereof); and
(iii) the Assumed Contracts set forth on Schedule 1.1(g)
hereto.
(c) Notwithstanding the foregoing, except for the Assumed
Liabilities expressly and specifically set forth above, for purposes of
amplification and not of limitation, Purchaser shall not assume and shall have
no obligation to pay or perform any of the following debts, liabilities or
obligations of Seller:
(i) any tax, fee or charge pertaining to the Assets
accruing on or prior to the Closing Date, including but not limited to income,
sales, use, transfer or other tax, whether imposed on Seller or Purchaser,
accruing due to the transactions contemplated hereby;
(ii) any trade or accounts payable of Seller;
(iii) any liabilities or obligations of Seller for (A)
wages, salaries, bonuses, commissions, vacation pay, sick pay, holiday pay,
severance or termination pay, (B) employee benefits, including without
limitation pension plans, bonus plans, profit-sharing plans, life, health or
disability insurance programs, 401(K) plans and other Employee Plans (as
defined in Section 3.21 hereof), (C) FICA, payroll or other payroll taxes, or
(D) any other liability or obligation pertaining to employees, consultants,
independent contractors and other persons or entities who provide services to
Seller;
(iv) Pre-Closing Transitional Employee Costs (as defined
in Section 5.10(g) hereof), other than as specified in Section 5.10(g);
(v) any real property lease of Seller;
(vi) any contract, agreement, lease or commitment not
specifically set forth on Schedule 1.1(g) hereto;
(vii) any environmental liability of Seller;
(viii) any debts, liabilities or obligations of Seller
arising under any guarantee, bond, debt, loan or credit agreement, promissory
note, mortgage, security agreement, pledge or other similar agreement or
instrument;
(ix) any obligation or liability of Seller to indemnify
any person or entity (including but not limited to any officer, director or
stockholder) for any expense, loss, damage, judgment, fine, cost, amount paid
in settlement, legal fees or otherwise, whether such indemnity is pursuant to
any statute, charter document, bylaws, agreement or otherwise);
(x) any liability or obligation relating to any
financial indebtedness of Seller;
(xi) any debt, liability or obligation incurred by
Seller under this Agreement, or
4
10
any cost or expense incurred in connection herewith or the transactions
contemplated hereby; or
(xii) any other debt, liability or obligation of Seller
or related to the Assets or the Business, whether fixed, contingent or
otherwise, whether or not arising in the ordinary course of business, that
accrues on or prior to the Closing Date.
SECTION 2. PURCHASE PRICE AND PAYMENT
SECTION 2.1 PURCHASE PRICE. As full payment and consideration for the
sale and transfer of the Assets by Seller to Purchaser, upon the terms and
subject to the conditions set forth herein, Purchaser shall assume and
thereafter perform the Assumed Liabilities of Seller set forth in Section
1.3(b) hereof and shall pay to Seller a total purchase price of $4,500,000,
plus or minus the "Inventory Adjustment Payment" (as defined in Section 2.2
hereof) and the "Convertible Note Adjustment" (as defined in Section 2.4
hereof) (the "Purchase Price") as follows:
(a) At the Closing, Purchaser shall pay to Seller the amount
of $1,300,000 (the "Cash Portion") by certified or bank cashier's check or by
wire transfer of immediately available funds to an account designated by
Seller;
(b) At the Closing, in payment of $2,000,000 of the Purchase
Price, Xxxxxx shall issue and deliver to Seller a certificate representing
1,758,242 shares (the "Issued Shares") of Common Stock, par value $.01 per
share, of Xxxxxx (the "Common Stock");
(c) At the Closing, in payment of $1,200,000 of the Purchase
Price, Purchaser and Xxxxxx shall execute and deliver to Seller at the Closing
an unsecured, subordinated, convertible promissory note, substantially in the
form attached hereto as Exhibit A (the "Convertible Note");
(d) On the date specified in Section 2.2 hereof, the Inventory
Adjusting Payment shall be paid as specified in Section 2.2 hereof; and
(e) As specified in Section 2.4 hereof, the Convertible Note
Adjustment, if any, shall be made.
SECTION 2.2 POST-CLOSING ADJUSTMENT FOR PURCHASE PRICE FOR INVENTORY.
(a) Within 60 days after the Closing Date, Seller, with the
assistance of any relevant former employees of Seller who have been hired by
Purchaser, shall prepare and deliver to Purchaser a statement (the "Closing
Inventory Statement") setting forth the amount and value of the "Inventory" (as
defined below) of the Business as of the Closing Date (the "Closing Inventory
Amount"), computed in accordance with provisions of this Agreement. For
purposes of this Agreement, the term "Inventory" shall mean the value at the
close of business on the date of determination thereof of all inventory,
including raw materials, work in process and finished goods, used in the
Business, net of reserves for obsolescence. For purposes of this Agreement,
the parties agree that the Inventory as of December 31, 1997 was $1,683,772,
less reserves of $173,483 (the "1997 Inventory Amount"). The computation of
the Closing Inventory Amount shall be made on a basis consistent with the
method of computation for the 1997 Inventory Amount. Solely for purposes of
computing the amount, if any, of the Inventory Adjusting Payment (as defined
below in this Section 2.2), Purchaser hereby agrees that the amount and method
of determining the reserves for obsolescence used by Seller in calculating the
1997 Inventory
5
11
Amount, and all parties hereto agree that the same reserve amount will be used
to calculate the Closing Inventory Amount.
(b) If Purchaser does not deliver to Seller written notice of
any objections to the Closing Inventory Amount as proposed by Seller within 30
days after Purchaser's receipt of the Closing Inventory Statement, then the
Closing Inventory Amount set forth in the Closing Inventory Statement shall be
deemed conclusive and binding on the parties hereto. If Purchaser does so
deliver written notice of any objections in reasonable detail to the Closing
Inventory Amount, then Purchaser and Seller shall use their best efforts to
resolve the matters in dispute among themselves and agree upon the Closing
Inventory Amount. If Purchaser and Seller do not agree in writing on the
Closing Inventory Amount within 30 days after Seller's receipt of Purchaser's
notice of objections to Seller's determination of the Closing Inventory Amount,
then Purchaser and Seller and shall submit the issues and the amount in dispute
(the "Disputed Amount") to an accounting firm mutually acceptable to Purchaser
and Seller (the "Accountants") for final resolution and determination of the
Closing Inventory Amount. Each party shall furnish to the Accountants such
work papers and other documents relating to the disputed issues as the
Accountants may reasonably request and as are available to the parties, and
shall be afforded the opportunity to present to the Accountants any material
relating to the determination and to discuss the determination with
Accountants. The determination made by the Accountants as set forth in a
writing delivered to each party within 60 days after being engaged shall be
made in accordance with the provisions of this Agreement and shall be
conclusive and binding upon the parties hereto. Seller shall bear that portion
of the fees and expenses of the Accountants that is equal to the portion of the
Disputed Amount determined to have been correctly disputed by Purchaser, and
Purchaser shall bear the remainder of such fees and expenses.
(c) Seller shall make the work papers and back-up materials
used in preparing the Closing Inventory Statement available to Purchaser and
its accountants and representatives at reasonable times and upon reasonable
notice at any time during the review by the Purchaser of the Closing Inventory
Amount and the resolution by the parties of any objections thereof.
(d) Within 30 days after final determination of the Closing
Inventory Amount pursuant to Section 2.2, an adjusting payment (the "Inventory
Adjusting Payment") shall be made by Seller to Purchaser or by Purchaser to
Seller as follows: (i) if the 1997 Inventory Amount exceeds the Closing
Inventory Amount, then Seller shall make an Inventory Adjusting Payment to
Purchaser in the amount of the difference; and (ii) if the Closing Inventory
Amount exceeds the 1997 Inventory Amount, then Purchaser shall make an
Inventory Adjusting Payment to Seller in the amount of the difference. The
Inventory Adjusting Payment shall be paid in immediately available funds by
wire transfer to an account designated by the payee.
SECTION 2.3 CONVERTIBLE NOTE. The Convertible Note (a) shall bear
interest on the unpaid principal balance at a fixed rate per annum equal to
7.5% payable quarterly in arrears, (b) shall be due and payable four years from
the Closing Date in a single payment of unpaid principal together with accrued
and unpaid interest, (c) may be prepaid in whole at any time or in part from
time to time without penalty or premium, (d) shall be subject to certain debt
covenants of Xxxxxx set forth in the Convertible Note, and (e) shall be
convertible into unregistered shares of Common Stock at the rate of $1.421875
of principal per share (the "Convertible Shares"); provided, however, that in
no event shall the aggregate number of Issued Shares and Convertible Shares
(collectively, the "Shares") to be issued by Xxxxxx to Purchaser hereunder
exceed 19.99% of the aggregate number of Shares of Xxxxxx outstanding on the
date preceding the Closing Date (the "Share Cap"). The amount of any principal
balance on the
6
12
Convertible Note, together with any accrued and unpaid interest thereon, as a
result of the Share Cap, if applicable, shall be paid in cash upon the maturity
date of the Convertible Note or if sooner upon either prepayment or conversion,
as the case may be, of the Convertible Note.
SECTION 2.4 CONVERTIBLE NOTE ADJUSTMENT.
(a) The amount of the Convertible Note is based upon the
assumption that average annualized gross sales ("Average Sales") for the period
from July 1, 1998 through December 31, 1999 (the "Sales Adjustment Period") of
products formerly manufactured and sold by Seller (the "Products") will be at
least $4,500,000. For purposes of this Section 2.4, "Average Sales" shall mean
the aggregate gross sales (net of returns and allowances) of the Products by
Purchaser and its affiliates during the during the Sales Adjustment Period,
multiplied by a fraction, the numerator of which is 12 and the denominator of
which is 18. For purposes of this Section 2.4, the term "Products" shall
include products sold by Purchaser and its affiliates, the design of which is
directly derived from the Products.
(b) Purchaser shall provide Seller with a quarterly report of
gross sales of Products during the Adjustment Period within 45 days after the
end of each quarter. The last such report shall be accompanied by a
certificate from Purchaser's Chief Financial Officer certifying the accuracy of
the final aggregate amount. Seller shall have the right to audit any report in
the amount of Average Sales at any time with reasonable notice to Purchaser.
(c) If Average Sales are less than $4,500,000, then the
principal amount of the Convertible Note shall be reduced dollar-for-dollar by
the amount of any such deficiency; provided, however, that the amount of any
such reduction in the principal amount of the Convertible Note shall not exceed
$600,000 (the amount of such reduction referred to herein as the "Convertible
Note Adjustment").
(d) In the event that Seller has converted into Convertible
Shares a portion of the Convertible Note in excess of the difference between
$1,300,000 and the Convertible Note Adjustment (the "Excess Conversion
Amount"), then within 30 days after the determination of the Excess Conversion
Amount, Seller shall pay the Excess Conversion Amount to Purchaser in
immediately available funds by wire transfers to an account designated by
Purchaser. The obligation of Seller to pay the Excess Conversion Amount to
Purchaser is joint and several with American Meter and shall survive the
Closing until satisfied in full notwithstanding any provision of Section 9.1
hereof to the contrary.
SECTION 2.5 ISSUED SHARES. The Shares shall be issued by Xxxxxx in
transactions exempt from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), and applicable state securities laws
and shall constitute "restricted securities" as such term is defined in Rule
144 promulgated under the Securities Act. Seller shall have certain
registration rights with respect to the Shares as set forth in Section 10.7
hereof.
SECTION 2.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price set
forth in Section 2.1 hereof shall be allocated among the Assets for all
purposes (including financial reporting and tax purposes) as set forth on
Schedule 2.6 hereto. Seller and Purchaser each hereby covenants and agrees
that it will not take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is in any way inconsistent with the terms of this
Section 2.6.
7
13
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND AMERICAN METER.
Each of Seller and American Meter hereby jointly and severally
represents and warrants to and for the benefit of Purchaser and Xxxxxx as
follows:
SECTION 3.1 ORGANIZATION. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of West
Virginia. American Meter is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Seller is duly
qualified or licensed to do business and is in good standing as a foreign
corporation in each state and other jurisdiction in which the ownership, lease
or operation of the Assets or the conduct of the Business requires such
qualification or licensing. Schedule 3.1 hereto sets forth an accurate and
complete list of each state in which Seller is licensed or qualified to do
business as a foreign corporation.
SECTION 3.2 SUBSIDIARIES. Seller has no direct or indirect
subsidiaries and does not own, hold or control, directly or indirectly, any
shares of capital stock or any equity, ownership, management or voting interest
in any corporation, general or limited partnership, limited liability company,
joint venture, business trust or other business entity or association
(collectively, "Entities").
SECTION 3.3 POWER AND AUTHORITY. Seller has all requisite right,
power and authority, corporate or otherwise, to conduct its business and
affairs (including the Business) as presently conducted and as proposed to be
conducted, to own, lease and operate its assets and properties (including the
Assets), and to execute, deliver, and perform its obligations under, this
Agreement and the other agreements and instruments to be executed and delivered
by it hereunder (the "Related Seller Agreements"). The execution and delivery
by it of this Agreement and the Related Seller Agreements and the performance
by it of its obligations hereunder and thereunder have been duly and validly
authorized by all requisite action, corporate or otherwise, of it.
SECTION 3.4 ENFORCEABILITY. This Agreement has been duly and validly
executed and delivered on behalf of it and does, and the Related Seller
Agreements when duly and validly executed by it shall, constitute legal, valid
and binding obligations of it, enforceable against it in accordance with their
respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, receivership, reorganization, moratorium and other
similar laws now or hereafter in effect relating to or affecting creditors'
rights and remedies generally, and by general principles of equity, whether
applied by a court of law or in equity.
SECTION 3.5 NO CONFLICTS. The execution and delivery by it of this
Agreement and the Related Seller Agreements and the performance by it of the
transactions and obligations contemplated hereby and thereby do not and will
not, directly or indirectly, (a) violate, conflict with, or constitute a breach
of or a default (or an event that, after the giving of notice or the lapse or
time or both, would constitute a default) under, any provision of (i) its
certificate or articles of incorporation, bylaws or other charter or
organizational documents, (ii) any agreement among its shareholders or between
it and its shareholders, (iii) any contract, obligation, note, security
agreement, mortgage, bond, indenture, lease, loan agreement, debt instrument or
other instrument, commitment or agreement to which any of the Assets are or may
be bound, or (iv) any license, franchise, approval, certificate, permit or
authorization held by it or applicable to the Assets; (b) violate any
applicable federal, state, local or foreign law, statute, rule, regulation or
ordinance, or any order, injunction, writ, judgment, decree or ruling of any
court, arbitrator or governmental, quasi-governmental, administrative or
regulatory body, agency or authority ("Governmental Authority"); (c) result in
the creation or imposition of any mortgage, lien, pledge,
8
14
security interest, conditional sales rights under any applicable bulk sales or
bulk transfer law or other title retention agreement, or any other restriction,
encumbrance or claim of any kind or description on or against any of the
Assets; or (d) constitute an event which would permit any individual, Entity or
Governmental Authority (collectively, "Person") to terminate or modify any
Assigned Contract.
SECTION 3.6 DEFAULTS. It is not presently in breach or violation of
or default under or conflict with any item set forth in Section 3.5(a) or (b);
and no event or condition has occurred which, after the giving of notice or the
lapse of time or both, could be reasonably expected to result in any such
breach, violation, default or conflict.
SECTION 3.7 CONSENTS. No consent, authorization, permit or approval
of, notice or report to, or filing or registration with, or waiver
(collectively, "Consents") by, any Person is necessary for it to execute and
deliver this Agreement and the Related Seller Agreements and to perform its
obligations hereunder and thereunder, except for Consents the lack of which,
either individually or in the aggregate, shall have no material adverse effect
on the Assets or the Business or on its ability to consummate the transactions
contemplated by this Agreement or the Related Seller Agreements.
SECTION 3.8 LITIGATION. There are no actions, suits, claims,
investigations, arbitrations, hearings or other proceedings (whether civil,
criminal, administrative, investigative or informal) (collectively,
"Proceedings") pending or, to the best knowledge of it, threatened by, before
or involving any court, arbitrator or Governmental Authority (i) against it or
affecting the Business or the Assets, (ii) in which any Person has sought or is
reasonably likely to seek to restrain or prohibit, or to obtain damages or
other relief in connection with, this Agreement or the Related Seller
Agreements or the transactions contemplated hereby or thereby, or (iii) which,
if determined adversely to it, would be reasonably likely to have a material
adverse effect on the Business or the Assets or its ability to perform its
obligations hereunder or to consummate the transactions contemplated hereby.
Neither the Business nor any of the Assets are subject to any outstanding
judgment, order, writ, injunction, decree or ruling of any court, arbitrator or
Governmental Authority. Seller is not presently engaged in any legal action to
recover moneys due from damages caused by, or to enforce its rights against,
any third party relating to the Assets of the Business.
SECTION 3.9 ABILITY TO DISPOSE OF THE ASSETS. Seller is the sole
legal owner of the Assets and has the sole dispositive power with respect to
the Assets.
SECTION 3.10 BROKERS' FEES. No broker, finder, investment broker or
similar agent is or shall be entitled to receive any fee, commission or other
remuneration or compensation relating to the transactions contemplated by this
Agreement or the Related Seller Agreements based on any action taken by or on
behalf of it.
SECTION 3.11 FINANCIAL STATEMENTS. Seller has furnished (or, with
respect to the 1997 financial statements, will furnish prior to the Closing) to
Purchaser true and complete copies of Seller's audited balance sheets as of
December 31, 1996 and 1997, and the related statements of operations and cash
flows for the fiscal years then ended (together with the report thereon of
Xxxxxx Xxxxxxxx, independent certified public accountants, as to the 1997
financial statements, and Xxxxxx & Xxxxxx, P.L.L.C., independent certified
public accountants, as to the 1996 financial statements, and in each case
together with the notes thereto). All such Financial Statements (together
with all related schedules and notes) (i) present fairly the financial
condition, results of operations and cash flows of Seller as of the respective
dates thereof and for the respective periods covered thereby; (ii) have been
prepared in
9
15
accordance with generally accepted accounting principles consistently applied
throughout the periods indicated and with prior periods (except for changes
specifically noted therein); (iii) have been prepared in accordance and
consistent with the books and records of Seller; and (iv) reflect appropriate
reserves for all taxes and other liabilities or obligations of any nature,
whether accrued, absolute, fixed, contingent or otherwise and whether due or to
become due, and all reasonably anticipated losses related to the Business.
SECTION 3.12 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date
hereof, except as set forth in the audited balance sheet of Seller as of
December 31, 1997 and the related notes thereto ("1997 Balance Sheet"), Seller
does not have any material debt, liability, guarantee or other obligation
related to the Assets or the Business, except for those that (i) are not
required by generally accepted accounting principles to be included in the 1997
Balance Sheet, and (ii) have been incurred after the date of the 1997 Balance
Sheet in the ordinary course of business and are usual and normal in amount,
both individually and in the aggregate. To the best knowledge of Seller and
American Meter, no circumstance or event has occurred prior to the Closing that
could be reasonably expected to give rise to any additional material debts,
liabilities or obligations pertaining to the Business after the Closing.
SECTION 3.13 NO MATERIAL ADVERSE CHANGE.
(a) Since December 31, 1997, (i) the Business has been
conducted only in its historic, ordinary course; (ii) there has been no
material adverse change in (x) the Assets or (y) the liabilities, operations,
affairs, condition (financial or otherwise) or prospects of the Business; and
(iii) there has been no damage, destruction, loss, occurrence or event (whether
or not insured against) which, either individually or in the aggregate, has
had, or might reasonably be expected to have, a material adverse effect on the
(x) Assets or (y) liabilities, operations, affairs, condition (financial or
otherwise) or prospects of the Business.
(b) Without limiting the generality of the foregoing, since
December 31, 1997, there has not been any:
(i) Sale, assignment, transfer, lease or other
disposition of any Assets, except of inventory and equipment to customers in
the ordinary course of business for fair consideration;
(ii) Mortgage, pledge, security interest, lien, claim or
other encumbrance or restriction granted by Seller, or otherwise created or
imposed, on or against any Asset or the Business;
(iii) Capital expenditure (or series of related capital
expenditures) by Seller relating to the Business exceeding $25,000;
(iv) Material destruction, damage to or loss (whether or
not insured against) of any Assets;
(v) Entering into any agreement, contract, lease or
license (or series of related instruments) relating to the Assets or the
Business, which either involves more than $25,000 or is outside the ordinary
course of business;
(vi) Modification, amendment, cancellation or
termination of any contract, agreement, lease or license relating to the Assets
or the Business to which Seller is a party, except in the ordinary course of
business;
10
16
(vii) Commencement or notice or threat of commencement of
any Proceeding against or affecting the Business or the Assets;
(viii) Amendment to Seller's articles of incorporation or
bylaws;
(ix) Capital investment in, loan to or acquisition of
the securities or assets of, any other Person (other than in the ordinary
course of business);
(x) Grant of any license or sublicense of any Assets or
any rights under or with respect to any Intellectual Property;
(xi) Any transaction between Seller and any of its
officers, directors, employees or affiliates, other than in the ordinary course
of business and usual in amount and as disclosed on Schedule 3.13 hereto;
(xii) Waiver, cancellation, compromise or release of any
material right or claim of Seller relating to the Assets or the Business, or
forgiveness or cancellation of any material debt or claim relating to the
Assets or the Business;
(xiii) Failure to maintain levels of inventory in the
Business consistent with past ordinary practices, or alteration of the
inventory practices maintained by Seller during the previous twelve months
relating to the Business;
(xiv) Other events or conditions of any character that,
individually or in the aggregate, (A) have or might reasonably have a material
adverse effect on (i) the Assets, or (ii) the operations, liabilities,
condition (financial or otherwise) or prospects of the Business, or (B) cause
or might reasonably be expected to cause Seller to be in breach of any of its
representations, warranties or covenants hereunder; or
(xv) Any agreement, commitment, arrangement or
understanding by Seller to do any of the actions described in the preceding
clauses (i) through (xiv).
SECTION 3.14 TAXES.
(a) Within the times (or if later all penalties and interest
related thereto having been paid in full) and in the manner prescribed, Seller
has accurately prepared in good faith and properly filed all federal, state,
local and foreign tax returns, reports and forms required by law, rule,
regulation or otherwise to be filed relating to the Business and has paid all
taxes, assessments and penalties due and payable, and Seller has furnished to
Purchaser true and complete copies of all such tax returns, reports and forms
so filed since December 31, 1994. All tax returns, reports and forms filed by
Seller accurately set forth all items (to the extent required to be included or
reflected in such returns) relevant to its future tax liabilities, including
the tax bases of the Assets. Seller has fully paid or has made adequate
provision in the 1997 Balance Sheet for all federal, state, local and foreign
taxes relating to the Business for the period ending on the date of the 1997
Balance Sheet and for all subsequent periods. Seller has timely collected,
withheld and paid or, if not yet due, will pay when due, all taxes
11
17
required to be withheld by any federal, state, local or foreign taxing
authority relating to the Business and complied with all information reporting
requirements related thereto.
(b) There are no disputes pending or overtly threatened by any
taxing authority as to taxes of any nature payable by Seller. No examinations
or audits of the federal, state, local or foreign tax returns of Seller
relating to the Business are currently in progress or, to the best knowledge of
Seller and American Meter, threatened or proposed. No deficiency or adjustment
for any tax has been claimed, proposed or assessed against Seller relating to
the Business by any taxing authority that remains unpaid.
(c) As used in this Section 3.14, the term "tax" includes all
federal, state, local or foreign income, franchise, profits, gross receipts,
value added, net worth, real property, personal property, sales, transfer, use,
service, ad valorem, stamp, environmental, windfall profits, employment, social
security, Medicare, disability, workers' compensation, unemployment
compensation, occupation severance, purchaser premiums, excise, withholding,
payroll and other taxes, charges, fees, levies, tariffs, duties and other
assessments of any kind or nature, imposed by the laws and regulations of any
governmental jurisdiction (federal, state, local or foreign) or by any taxing
authority (federal, state, local or foreign) and all interest, fines and
penalties related thereto.
SECTION 3.15 TITLE TO AND CONDITION OF ASSETS. The Assets constitute
all of the assets, rights and interests of every kind and description that are
used by Seller in the Business (other than assets of Seller or American Meter
that are not principally used in the Business and not necessary to conduct the
Business as set forth on Schedule 1.2 hereof) and will permit Purchaser to
operate the Business in compliance with all legal requirements substantially as
conducted by Seller. All tangible Assets are physically located at 000 Xxxxxxx
Xxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxx. Seller has and will transfer to Purchaser at
Closing good, valid, marketable and exclusive title to and rightful and
peaceful possession of all of the Assets, free and clear of any and all
mortgages, liens, security interests, pledges, charges, encumbrances, equities,
rights of first refusal, options to purchase, equitable interest, deeds of
trust, claims, easements, rights-of-way, covenants, conditions or restrictions
of any kind or nature whatsoever ("Liens"), except for (i) those disclosed in
the 1997 Balance Sheet; (ii) liens for current taxes not yet due and payable;
and (iii) Liens disclosed on Schedule 3.15 hereto which will be removed and
released at or prior to the Closing. Seller is in rightful possession of all
personal property leased to it from others and utilized in the Business. All
tangible personal property of Seller included in the Assets is generally in
good operating condition and repair (ordinary wear and tear excepted), has been
utilized or serviced only in a manner that would not void or limit the coverage
of any warranty thereon, has been properly maintained and are adequate and
suitable for its intended purposes.
SECTION 3.16 PERSONAL PROPERTY LEASES. Schedule 3.16 hereto sets
forth each lease of personal property under which Seller is either a lessee or
lessor of certain of the Assets. Each such lease is in full force and effect
and is a valid and binding obligation of Seller and of each of the parties
thereto. Seller is not, and Seller does not have any knowledge that any other
party is, in default with respect to any material term or condition of any such
lease, and no event has occurred which through the passage of time or the
giving of notice, or both, would constitute a default thereunder or would cause
the acceleration of any obligation of any party thereto or the creation of a
lien or encumbrance upon any Asset.
SECTION 3.17 INVENTORY. All of Seller's inventory of raw materials,
work in process and finished goods, parts and supplies (including inventory on
consignment) relating to the Business consists of items of a quantity and
quality usable and saleable in the ordinary course of business by Seller (net
of
12
18
any reserve reflected in the 1997 Balance Sheet), except for obsolete,
defective, damaged and slow-moving items and items below standard quality, all
of which have been written down on the books of Seller to net realizable market
value or have been provided for by adequate reserves in the 1997 Balance Sheet.
All inventories of finished goods consist of items that have been manufactured
in accordance with, and which meet, applicable industry standards. All
inventories are correctly marked. The inventories shown on the 1997 Balance
Sheet are based on quantities determined by physical count or measurement and
are valued at the lesser of cost (determined on a first-in, first-out basis) or
market value and on a basis consistent with that of prior years and are
adjusted for excess and obsolescence.
SECTION 3.18 INTELLECTUAL PROPERTY.
(a) Schedule 3.18 sets forth a complete and accurate list and
brief description of all patents, trademarks, trade dress, logos, service marks,
trade names, corporate names, fictitious names and copyrights, and each
application therefor, which are either owned by Seller or which are used by
Seller in the Business and, in each case where Seller is not the owner thereof,
the name of the owner thereof. Except as set forth in Section 3.18, Seller is
the exclusive owner of and possesses adequate and valid licenses and other
rights to use all of the items set forth in Schedule 3.18 hereto and all trade
secrets, licenses, inventions, processes, discoveries, developments, designs,
formulas, know-how, drawings, customer and supplier lists, software,
confidential information and other proprietary information and all other
proprietary rights, intangible assets and intellectual property, and all copies
and tangible embodiments thereof in whatever form or medium necessary for the
operation of the Business as presently conducted (collectively, "Intellectual
Property").
(b) All rights of Seller in and to its Intellectual Property
related to the Business will be transferred to Purchaser at the Closing.
(c) Seller has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that it owns or uses in
connection with the Business. Seller has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
rights of any third parties, and Seller has never received any charge,
complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or conflict (including any claim that Seller
must license or refrain from using any Intellectual Property rights of any
third party). To the best knowledge of Seller and American Meter, no third
party has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of Seller. No claim,
demand, assertion, action, suit, arbitration, hearing, investigation or
proceeding is pending or, to the best knowledge of Seller, threatened, which
pertains to or challenges the validity, ownership or enforceability of any
right of Seller in respect to of Intellectual Property. To the best knowledge
of Seller and American Meter, the continued operation of the Business as
currently conducted will not interfere with, infringe upon, misappropriate or
otherwise come into conflict with any Intellectual Property rights of any third
parties.
(d) Seller is not a party to any agreement, document,
arrangement or understanding pursuant to which Seller has licensed or granted
any right or interest in, to or under any of its Intellectual Property in
connection with the Business. Seller is not obligated or under any liability
whatsoever to make any payment, by way of fees, royalties or otherwise, to any
owner or licensor of, or other claimant to, any of the Intellectual Property of
the Business. Seller has not disclosed any of its trade secrets or other
proprietary or confidential information of the Business to any Person, except
pursuant to a loan or other agreement obligating the recipient to maintain the
confidentiality thereof. To the best knowledge of
13
19
Seller and American Meter, no employee of Seller is subject to any agreement,
arrangement or commitment with any former employer or other person, or is
subject to any judgments, order, decree or ruling of any court, arbitrator or
Governmental Authority regarding confidential information, or rights or
restrictions on competition, that would otherwise affect such employee's
ability to perform his duties to Seller. Seller has never agreed to indemnify
any person for or against any interference, infringement, misappropriation or
other conflict with respect to any item of its Intellectual Property.
SECTION 3.19 RELATIONSHIPS WITH SUPPLIERS AND CUSTOMERS. Schedule 3.19
contains a complete and accurate list of (i) the names, addresses and dollar
amounts of business of each of the 20 largest customers of the Business, in
terms of sales during 1997, and (ii) the name, address and dollar amounts of
business of each of the Seller's 10 largest suppliers during the 1997 fiscal
year for the Business. Since December 31, 1997, no supplier or customer of the
Business has canceled any contract or order or has indicated any intention to
terminate or materially alter its existing business relationship with Seller,
whether as a result of the transactions contemplated hereby or otherwise which
cancellation or termination would have a material advance effect on the
Business. Seller is not involved, and Seller has no knowledge of any facts or
circumstances which could result, in any material claim, dispute or controversy
with any of the material suppliers or customers of the Business.
SECTION 3.20 LABOR AND EMPLOYMENT MATTERS.
(a) Seller is not a party to any contract, collective
bargaining agreement or other agreement with any labor union including any
collective bargaining agreement.
(b) Seller is in compliance in all material respects with all
applicable laws, rules and regulations respecting the employment of, including
but not limited to, fair employment practices, terms and conditions of
employment, and wages and hours. Seller has not engaged in any unfair or
illegal labor practice, and there are no charges or claims of employment
discrimination or unfair labor practices pending, or, to the best knowledge of
Seller and American Meter, threatened against, Seller.
(c) Except as set forth in Schedule 3.20 hereto, Seller is not
a party to, nor is it or any of the Assets bound by, any written or oral,
express or implied, (i) retainer, consulting, severance, termination,
employment or similar contracts or agreements not terminable at will by Seller;
or (ii) pension, profit sharing, deferred compensation, bonus, stock option,
stock purchase or incentive plans or agreements providing for remuneration or
benefits to Seller's employees.
(d) Seller has not entered into any severance, termination or
similar arrangement in respect of any present or former officer, director,
employee or consultant that will result in any obligation, absolute or
contingent, of Purchaser or Seller to make any payment to any present or former
officer, director, employee or consultant following his or her termination of
employment by Seller, other than as agreed to by Purchaser and as otherwise
disclosed by Seller on Schedule 3.20 hereto.
(e) Seller had made payment in full to all of its employees of
all wages, salaries, commissions, bonuses, benefits and other compensation due
to such employees or otherwise arising under any policy, practice, agreements,
plan, program, statute or law.
(f) Seller, American Meter and their affiliates are in
compliance with their obligations, if any, pursuant to the Workers Adjustment
and Retraining Notification Act of 1988, as amended ("WARN"), and all other
notification obligations arising under any federal, state or local, or foreign
statute, rule or regulation.
14
20
SECTION 3.21 EMPLOYEE BENEFIT PLANS.
(a) No Purchaser Obligation. Purchaser shall have no
obligation or liability with respect to any "employee benefit plan," as such
term is defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or any other welfare, bonus, deferred
compensation, retirement, incentive, pension, profit sharing, stock purchase,
stock option, stock appreciation right, severance, or other similar employee
benefit plan, program, policy, arrangement or practice, whether formal or
informal, written or oral (collectively, "Employee Plans"), covering any
current or former employee, officer or director of Seller. Each employee of
Seller shall receive from Seller all benefits to which he is entitled under
each Employee Plan in accordance with the provisions of such plans. In
addition, to the extent that any employee of Seller who was employed prior to
Closing participated in any Employee Plan within the meaning of Section 3(3) of
ERISA which is maintained by an ERISA Affiliate, Purchaser shall have no
obligation or liability with respect to such Employee Plans and any affected
employees shall receive from Seller all benefits to which they are entitled
under such plans, in accordance with the provisions of such plans.
(b) Continuation Rights. Purchaser shall have no obligation
or liability to providing continuation of coverage under any group health plan
maintained by Seller or any other ERISA Affiliate ("Continuation Rights") to
any employees of Seller who were employed prior to Closing.
SECTION 3.22 INSURANCE. All insurance policies under which the
Business and the Assets are insured or which provide for bonding and surety
arrangements in connection with the Business are in full force and effect and
have been issued under valid policies for the benefit of Seller by properly
licensed insurance companies. The premiums on such policies have been paid as
they became due and payable, and Seller is not in default with respect to
payment of premiums on any such policy. Seller shall maintain in full force
and effect insurance policies providing protection against losses and risks to
the Assets and Business that are customarily insured against by comparable
businesses until the Closing.
SECTION 3.23 CONTRACTS.
(a) Each Assigned Contract (i) is in full force and effect and
is a valid and binding obligation of Seller and of the other parties thereto,
enforceable by Seller in accordance with its terms, and (ii) may be transferred
by Seller to Purchaser without penalty and to the best knowledge of Seller and
American Meter will be enforceable by Purchaser. Neither Seller nor, to the
best knowledge of Seller and American Meter, any other party to an Assigned
Contract is in any material respect in breach of or in default under any
Assigned Contract, nor has any event or circumstance occurred which, with
notice or lapse of time or both, would constitute a material breach or default
of the Assigned Contract. Seller has not received notice and has no reason to
believe that any party to any Assigned Contract intends to cancel or terminate
any Assigned Contract or to exercise or not exercise any option thereunder.
(b) Schedule 3.23 hereto sets forth a complete and accurate
list of each of the following Contracts to which Seller is a party which apply
to any portion of the Business or the Assets: (i) any distributor's or
manufacturer's representative or agency agreement; (ii) any output or
requirements agreements; (iii) any agreement not entered into in the ordinary
course of business; (iv) any indenture, mortgage, deed of trust, lease or any
agreement that is unusual in nature, duration, or amount (including, without
limitation, any agreement requiring the performance by Company of any
obligation for a period
15
21
of time extending beyond one year from the Closing Date involving total
consideration of more than $10,000); (v) any contract with any Government
Authority; (vi) any Contract for the lease of personal property to or from any
person providing for lease payments in excess of $10,000 per annum; (vii) any
Contract for the purchase or sale of raw materials, commodities, supplies,
products or other personal property, or for the furnishing or receipt of
services, the performance of which would extend over a period of more than one
(1) year or that involves consideration in excess of $10,000; (viii) any
contract concerning a partnership or joint venture; (ix) any Contract under
which it has created, incurred, assumed, guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, or under which it has
imposed a Lien on any of the Assets; (x) any Contract concerning
confidentiality or non-competition; (xi) any Contract involving any director,
officer, stockholder or other affiliate of Seller; (xii) any Contract for the
employment of any individual on a full-time, part-time, consulting, independent
contractor or other basis or providing severance benefits in excess of
customary severance benefits as set forth on Schedule 3.20; (xiii) any profit
sharing, deferred compensation, severance, termination or other plan or
arrangement for the benefit of current or former directors, officers, or
employees; (xiv) any Contract under which it has advanced or loaned any amount
to any of its directors, officers or employees; or (xv) any other Contract
material to the Assets or the Business.
SECTION 3.24 LICENSES. All licenses, rights, privileges, franchises,
permits, approvals, consents and other authorizations related to the Assets
reasonably necessary for the lawful conduct of the Business as it is presently
conducted and necessary to own, operate, maintain and use the Assets in the
manner in which they are now being operated, maintained and used, including all
applicable zoning, environmental, health, safety and other permits, have been
timely obtained and are currently in effect, except for any failure to have
such license or permit that has not had a material adverse effect on Seller's
ability to conduct the Business, and Seller has not violated, and is not in
violation of, any such licenses, rights, privileges, permits, franchises,
consents or other authorizations.
SECTION 3.25 PRODUCT LIABILITY CLAIMS. No Proceeding is pending or, to
the best knowledge of Seller and American Meter, threatened against or
affecting the Business, arising out of any injury to individuals or to property
as a result of the ownership, possession or use of any product manufactured,
sold, leased or delivered by Seller relating to the Business, and Seller knows
of no facts, circumstances, actions or omissions that could reasonably create
the basis for any such Proceeding.
SECTION 3.26 PRODUCT WARRANTIES. Schedule 3.26 sets forth a complete and
accurate description of all warranties and pending warranty and service
obligations of Seller to its customers in the Business with respect to the
products manufactured or sold by Seller within the two year period prior to the
date of this Agreement, including the beginning and ending dates of such
warranty obligations, and a summary of the warranty charges incurred by Seller
during 1996, 1997 and to date in 1998. Schedule 3.26 also contains a complete
and accurate copy of all such written warranties and terms and conditions, and a
list and amount of all products manufactured or sold by Seller during the past
two years. Each product manufactured, sold, leased or delivered by Seller to
any of its customers has been in material conformity with all applicable
contractual commitments and all express and implied warranties. Neither Seller
nor American Meter knows of any reasonable basis for any present or future
Proceeding against it giving rise to any liability, for replacement or repair
thereof or other damages in connection therewith, subject only to the reserve
for product warranty claims set forth on the 1997 Balance Sheet. There is no
pending or, to the best knowledge of Seller and American Meter, threatened
Proceeding under such warranties, other than the claim by Kukdong City Gas
Company (the "Korean Claim").
16
22
SECTION 3.27 COMPLIANCE WITH LAWS. The Business and the Assets are and
have been in material compliance with all applicable federal, state, local and
foreign laws, statutes, ordinances, rules, regulations, codes, licenses,
permits, orders, judgments, decrees and other legal requirements (including,
without limitation, those applicable to building, health, employment, labor,
product liability, zoning, environmental protection, occupational safety,
storage, disposal, discharge into the environment of hazardous wastes,
environmental protection, conservation, unfair competition, labor practices or
corrupt practices) which affect or are applicable to the Assets and the
Business.
SECTION 3.28 NO LOSS OF RIGHTS OR LEGAL OBSTACLES. The execution and
delivery of this Agreement and the Related Seller Agreements by Seller and
American Meter and their performance of the transactions and obligations
contemplated hereby and thereby do not and will not (a) result in any loss of
any material legal right being transferred to Purchaser hereunder or
thereunder; (b) result in any termination, modification or cancellation of any
Assigned Contract; (c) result in the termination, modification, or cancellation
of, give rise to any right of termination, modification, or cancellation with
respect to, give rise to the acceleration of any performance required under,
result in any increase in any payment due or other liability under, change the
performance required under, or otherwise adversely affect any Assigned
Contract, or modify any Assigned Contract, or result in, or require, the
creation or imposition of any material lien, charge, or encumbrance upon the
Assets, or result in the termination or impairment of any material permit,
license, franchise, or authorization pertaining to the Assets; or (d) to the
best knowledge of Seller or American Meter, adversely affect the Assets or the
Business in any material respect.
SECTION 3.29 TRANSACTIONS WITH AFFILIATES. Seller is not a party to
any lease, license or other agreement, understanding or arrangement with any
affiliates of Seller that is necessary for Purchaser to continue to conduct the
Business after the Closing, as it is conducted on the date of the Agreement.
SECTION 3.30 ABSENCE OF CERTAIN COMMERCIAL PRACTICES. To the best of
Seller's knowledge, neither Seller nor any officer, director, employee or agent
of Seller (or any Person acting on behalf of any of the foregoing), has
directly or indirectly, in connection with the Business (i) given or agreed to
give any gift or similar benefit or more than nominal value on behalf of Seller
to any customer, supplier, employee or official of any Governmental Authority
(domestic or foreign), to induce the recipient or his employer to do business,
grant favorable treatment or compromise or forego any claim, (ii) made any
significant payment which might be improper under prevailing law (regardless of
the jurisdiction in which such payment was made) to promote or retain sales or
to help, procure or maintain good relations with suppliers, (iii) engaged in
any activity which constitutes a violation of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations promulgated thereunder, (iv)
engaged in any practice violating any law prohibiting compliance with an
unsanctioned foreign boycott, (v) established or maintained any unrecorded or
illegal corporate fund or account or assets, (vi) made false or fictitious
entries on the books or records of Seller, or (vii) failed to perform its
obligations in any material respect under any Contract with, or violated in any
material respect any federal law known to Seller in its dealings with, the
Federal government or any agency or department thereof, including, but not
limited to, any law with respect to conspiracy to defraud, false claims,
conspiracy to defraud the United States, embezzlement or theft of public money,
fraud and false statements, false demands against the United States, mail
fraud, wire fraud, RICO, and truth in negotiations.
SECTION 3.31 SECURITIES REPRESENTATIONS AS TO THE SHARES.
(a) Investment Intent. Seller is acquiring the Shares solely
for its own account, and
17
23
not as nominee or agent for any other person or entity, for investment purposes
only, and not with a view to any subsequent offering, resale or distribution of
the Shares.
(b) Sophistication and Suitability. Seller has such knowledge
and experience in business and financial matters to be capable of independently
evaluating the merits and risks of an investment in the Shares. Seller has
independently evaluated the risks and merits of acquiring the Shares and has
independently determined that the Shares are a suitable investment for Seller.
Seller has sufficient financial resources to bear the economic risk of a loss
of its entire investment in the Shares.
(c) Access to Information. Seller and its representatives
have made an independent investigation of Xxxxxx and its assets, properties,
business, liabilities, financial condition, results of operations and
prospects, and have had access to all of the information it considers necessary
or appropriate in order to evaluate the risks and merits of acquiring the
Shares, and have received all information requested to its satisfaction.
(d) No Reliance. In making its investment decision, Seller
has not relied upon any representations made by Xxxxxx with respect to Xxxxxx
or the Shares (except as set forth in the Agreement) of any projections or
other estimates or forecasts of future performance provided by Xxxxxx.
(e) Accredited Investor. Seller is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
(f) No Registration. Seller understands and acknowledges that
the Shares to be acquired by it hereunder have not been registered for offer or
sale to the Seller under the Securities Act or under the securities laws of any
state, but are being offered and sold by Xxxxxx to Seller pursuant to and in
reliance upon exemptions from the registration requirements of such securities
laws, and that Xxxxxx is relying upon the truth and accuracy of the
representations, warranties, covenants and agreements of the Seller set forth
herein in order to determine the availability of such exemptions and the
suitability of the Seller to acquire the Shares.
(g) Restrictions on Resale. Seller understands and
acknowledges that, as a consequence of the restrictions on subsequent transfer
imposed by the exemptions from registration referred to in this Section 3.31
above, the Shares may not subsequently be offered, sold, assigned, conveyed,
pledged, hypothecated or otherwise transferred by Seller except pursuant to an
effective registration statement registering the sale or transfer of the Shares
under the Securities Act and under applicable state securities laws or pursuant
to an exemption from such registration requirements, and the certificates
representing the Shares shall bear a legend setting forth such restrictions
substantially as follows:
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state, and may not be sold, assigned,
transferred, or otherwise disposed of unless the same is
registered under such Act and any applicable state securities
laws, or unless an exemption from such registration is available
and Seller receives evidence of such exemption reasonably
satisfactory to it (such as an opinion of counsel).
18
24
SECTION 3.32 FULL DISCLOSURE. No representation, warranty or other
statement by Seller in this Agreement, or in any schedule, exhibit,
certificate, financial statement or other instrument or document furnished or
to be furnished to Purchaser, contains or will contain any untrue statement of
a material fact or omits or will omit any material fact necessary in order to
make any of the statements contained herein or therein, when taken as a whole,
not false or misleading in any material respect in light of the circumstances
in which they were made. There is no fact or circumstance known to Seller that
materially adversely affects, or in the future may be reasonably expected to
(insofar as Seller can now reasonably foresee) materially adversely affect, (i)
the Assets or (ii) the properties, liabilities, business, affairs, operations,
condition (financial or otherwise) or prospects of the Business that has not
been set forth herein or otherwise described to Purchaser.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND XXXXXX.
Each of Purchaser and Xxxxxx hereby jointly and severally represents and
warrants to and for the benefit of Seller and American Meter as follows:
SECTION 4.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
Xxxxxx is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
SECTION 4.2 POWER AND AUTHORITY. It has all requisite right, power
and authority, corporate or otherwise, to execute, deliver and perform its
obligations under this Agreement and the other agreements and instruments to be
executed and delivered by it hereunder (the "Related Purchaser Agreements").
The execution and delivery by it of this Agreement and the Related Purchaser
Agreements and performance of its obligations hereunder and thereunder have
been duly and validly authorized by all requisite action, corporate or
otherwise, of it.
SECTION 4.3 ENFORCEABILITY. This Agreement has been duly and validly
executed and delivered on behalf of it and does, and the Related Purchaser
Agreements, when duly executed and delivered on behalf of it will, constitute
legal, valid and binding obligations of it, enforceable against it in
accordance with its respective terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, receivership, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
and remedies generally, and by general principles of equity.
SECTION 4.4 NO CONFLICTS. The execution and delivery by it of this
Agreement and the Related Purchaser Agreements and the performance by it of the
transactions and obligations contemplated hereby and thereby do not and will
not (a) violate, conflict with, contravene or constitute a breach or a default
(or an event that, after the giving of notice or the lapse or time or both,
would constitute a default) under any provision of (i) its certificate or
articles of incorporation, bylaws or other charter or organizational documents;
(ii) any contract, agreement, obligation, understanding, commitment, note,
security agreement, lease, loan agreement, debt instrument or other instrument
or agreement to which it is a party or by which it or any of its assets is or
may become bound; (iii) any license, approval, certificate, permit or
authorization held by it; or (b) violate any applicable federal, state or local
law, statute, rule, regulation or ordinance, or any order, injunction, writ,
judgment, decree or ruling of any court, arbitrator or Governmental Authority.
19
25
SECTION 4.5 CONSENTS. No Consent by any Person is necessary for it
to execute and deliver this Agreement and the Related Purchaser Agreements and
to perform its obligations hereunder and thereunder.
SECTION 4.6 LITIGATION. There are no Proceedings pending or, to the
best of its knowledge, threatened by or before any court, arbitrator or
Governmental Authority against it (i) in which any Person is seeking or is
reasonably likely to seek to restrain or prohibit, or to obtain damages or
other relief in connection with, this Agreement or the Related Purchaser
Agreements or the transactions contemplated hereby or thereby, (ii) which if
determined adversely to it would be reasonably likely to have a material
adverse effect on its ability to perform its obligations hereunder or to
consummate the transactions contemplated hereby, or (iii) which, if determined
adversely to it, would be reasonably likely to have a material adverse effect
on the assets, business, affairs, financial condition or operations of Xxxxxx.
SECTION 4.7 SHARES. The Shares have been validly authorized and,
when issued as contemplated by this Agreement and the Convertible Note, will be
validly issued, fully paid and non-assessable.
SECTION 4.8 CAPITALIZATION OF XXXXXX. The authorized capital stock
of Xxxxxx consists of 25,000,000 shares of Common Stock, par value $.01 per
share, and 2,500,000 shares of Preferred Stock, par value $.01 per share, of
which, as of January 31, 1998, 12,329,552 shares of Common Stock, options to
purchase 1,585,675 shares of Common Stock, and no shares of Preferred Stock
were issued and outstanding.
SECTION 4.9 SECURITIES LAW REPORTS. Xxxxxx has delivered to Seller
a complete and accurate copy of each Annual Report on Form 10-KSB, Quarterly
Report on Form 10-QSB, Current Report on Form 8-K and Proxy Statement (the "SEC
Reports") filed with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since January 1, 1996. All SEC Reports were prepared in accordance with
and complied in all material respect with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder, and as of the dates they were filed, none of the SEC
Reports (including, without limitation, any financial statements or schedules
included or incorporated by reference therein) contained any untrue statement
of a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein, or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading in any material respect, except to the extent any such statement or
omission was superseded by a later-dated SEC Report.
SECTION 4.10 FINANCIAL STATEMENTS. In all material respects, the
consolidated financial statements of Xxxxxx (including any notes thereto)
included in the SEC Reports were prepared in accordance with generally accepted
accounting principles applied on a consistent basis through the periods covered
thereby (except as disclosed in such financial statements), and fairly present
in all material respects the consolidated financial condition of Xxxxxx as of
the dates thereof and the consolidated results of Xxxxxx'x operations and
consolidated cash flow for the periods then ended, subject, in the case of any
unaudited interim financial statements, to the omission of certain notes not
ordinarily accompanying such unaudited financial statements, and to normal
year-end adjustments.
SECTION 4.11 ABSENCE OF ADVERSE CHANGE. Since December 31, 1997,
there has not been any material adverse change in the assets, business,
affairs, operations, financial condition or operations of Xxxxxx.
20
26
SECTION 4.12 NO BROKERS. No broker, finder, investment broker or
similar agent is or shall be entitled to receive any fee, commission or other
remuneration or compensation relating to the transactions contemplated by this
Agreement or the Related Purchaser Agreements based on any action taken by or
on behalf of it.
SECTION 5. PRE-CLOSING COVENANTS.
SECTION 5.1 CONDUCT OF BUSINESS OF SELLER.
(a) From the date of this Agreement through the Closing Date,
Seller shall conduct the Business only in its ordinary course consistent with
past practices, including but not limited to using its best efforts to (i)
preserve intact the Business and its good will, including Seller's
relationships with its suppliers, customers, lenders and others having business
relationships with it, (ii) perform all its obligations in accordance with
their terms, (iii) maintain the Assets in good operating condition, (iv) keep
available the services of its present lessors, lessees, licensors, licensees,
suppliers, customers, employees and agents, and (v) comply with all applicable
laws, rules, regulations and orders.
(b) Without limiting the generality of the foregoing, from the
date of this Agreement until the Closing, Seller shall not, without the prior
written consent of Purchaser:
(i) Take any action referred to in Section 3.13(b)
hereof;
(ii) Take any action or omit to take any action which
would breach any covenant or agreement of Seller herein; or
(iii) Take any action which would cause any
representation or warranty of Seller herein to be inaccurate in any material
respect.
(c) From this date of this Agreement through the Closing Date,
Seller shall deliver to Purchaser on a no less than monthly basis, accurate,
complete and current copies of financial statements of Seller and any reports
with respect to the operations of the Business prepared by or for Seller. All
such financial statements shall be prepared in accordance with generally
accepted accounting principles considerably applied on a basis consistent with
Seller's 1997 financial statements.
SECTION 5.2 ACCESS. From the date of this Agreement through the
Closing Date, Seller shall provide Purchaser and its officers, directors,
employees and agents and representatives full access during normal business
hours to the Assets and to the employees, agents, properties, books, contracts,
accounts, commitments, records, tax returns and documents of Seller and shall
furnish to Purchaser and its agents and representatives books, records,
contracts, data and information concerning the Assets and the business and
affairs of Seller as Purchaser and its agents and representatives may
reasonably request. In the event that the transactions contemplated by this
Agreement fail to be consummated, then Purchaser shall promptly return to
Seller all data and information furnished to it and shall keep all such data
and information confidential. No investigation pursuant to this Section 5.2
shall affect any representation or warranty of Seller or any condition to the
Closing obligations of Purchaser.
SECTION 5.3 RISK OF LOSS. From the date of this Agreement through
the Closing Date, Seller assumes all risk of loss, whether by reason of theft,
fire, act of God, or other casualty, and Purchaser shall
21
27
not be obligated to consummate the transactions contemplated hereby if there is
any material loss of the Assets caused by any casualty, whether through the
fault or negligence of Seller or otherwise.
SECTION 5.4 BULK SALES. Seller shall reimburse Purchaser for,
indemnify Purchaser from, and hold Purchaser harmless against, any liabilities,
claims, damages, costs and expenses (including, without limitation, reasonable
attorneys' fees) resulting from or arising out of (i) Seller's failure to
comply with any bulk sales or bulk transfer laws in respect of the transactions
contemplated by this Agreement, or (ii) any action brought or levy made as a
result thereof, other than the Assumed Liabilities.
SECTION 5.5 CONSUMMATION OF TRANSACTIONS. Upon the terms and subject
to the conditions of this Agreement, each of the parties hereto shall use its
reasonable best efforts, and will cooperate with each other, to take, or cause
to be taken, as promptly as practicable, all such actions and to do, or cause
to be done, all other things necessary to carry out its obligations under this
Agreement and under all other agreements contemplated by this Agreement and to
consummate and make effective the transactions contemplated hereby and thereby,
including obtaining all Consents which are necessary in connection with the
transactions contemplated hereby and thereby, provided that Purchaser shall not
be obligated to assume any additional liability of Seller or pertaining to the
Assets other than the Assumed Liabilities.
SECTION 5.6 PUBLIC ANNOUNCEMENTS. From the date of this Agreement
through the Closing Date or the earlier termination of this Agreement for any
reason, Purchaser and Seller shall consult with each other before issuing any
press releases or otherwise making any public statements or disclosures with
respect to this Agreement or the transactions contemplated hereby (directly or
through affiliates) and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which consent
shall not be unreasonably withheld, except that a party hereto may make a
public statement without such consent to the extent the same shall be required
by applicable law or the rules and regulations of the Nasdaq Stock Market or
any other national securities exchange, market or association on which the
capital stock of that party is listed, traded or quoted, if such party has used
its reasonable best efforts to consult with the other party to obtain the other
party's consent but has not been able to do so in a timely manner.
SECTION 5.7 NOTIFICATION OF CERTAIN MATTERS. From the date of this
Agreement through the Closing Date, Purchaser and Seller each shall give prompt
notice to the other of (a) the occurrence, or failure to occur, of any event,
fact or circumstance the occurrence or failure of which would be reasonable
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect, or that breaches or is
reasonably likely to breach any covenant or agreement set forth in this
Agreement, and (b) any material failure on its part to comply with or satisfy
any material covenant, condition or agreement to be complied with or satisfied
by it hereunder.
SECTION 5.8 TAXES.
(a) Pre-Closing. Seller shall be responsible for the timely
preparation of, for all federal, state, local or foreign income, excise,
withholding, property, sales, use, franchise and other tax returns, reports and
forms of Seller pertaining to the Assets for all taxable periods ending on or
before the Closing Date, and the payment of all amounts due thereunder.
(b) Due to Transactions. Seller shall pay all federal, state
and local sales, use, income, franchise, worker's compensation, unemployment
documentary and other transfer taxes and fees arising out of the transfer of
the Assets in accordance herewith, whether imposed by law on Seller or
Purchaser,
22
28
and shall pay its portion, prorated as of the Closing Date, of all federal,
state, local and foreign personal property taxes relating to the Assets.
Purchaser shall not be responsible for any business, occupation, withholding,
or similar tax, or any taxes of any kind related to the Assets or the business
being purchased for any period before the Closing Date. Seller shall
indemnify, reimburse and hold Purchaser harmless in respect of any liability
for payment of or failure to pay any such taxes or any filing of or failure to
file any reports required in connection therewith.
SECTION 5.9 NO SHOPPING. From the date of this Agreement through the
Closing Date, neither Seller, American Meter nor any affiliates thereof shall,
directly or indirectly, through any officer, director, employee, agent or
otherwise, solicit, initiate, or encourage the initiation or submission of
inquiries, proposals or offers from, provide any information to, enter into
any agreement with, or participate in any discussions or negotiations
concerning any direct or indirect acquisition of any interest in Seller or any
of the Assets (other than the sale of inventory and equipment in the ordinary
course of business) by, any Person other than Purchaser. Seller shall
immediately notify Purchaser of, and communicate to Purchaser the terms of, any
such inquiry, proposal or offer that it may receive.
SECTION 5.10 EMPLOYEE MATTERS.
(a) Seller shall pay, perform and discharge, and remain liable
after the Closing, for all obligations to its employees, for compensation and
benefits, including wages, salaries, commissions, bonuses, deferred
compensation, severance, termination, insurance, pensions, profit-sharing,
vacation, sick pay and other compensation or benefits ("Seller Employees
Compensation") to which they are entitled for periods prior to the Closing
Date. Until the Closing Date, Seller shall not, without the prior written
consent of Purchaser, change the compensation or benefits of any of its
employees.
(b) Purchaser is not assuming and shall have no obligation to
pay any Seller Employees Compensation, whether accruing before, as a result of,
or after the Closing, except (i) one-half of the Post-Closing Transitional
Employee Costs (as defined below), and (ii) the compensation and benefits
employees of Seller who are not Transitional Employees who are employed by
Purchaser for services performed for Purchaser after the Closing. Seller shall
perform, and Purchaser is not assuming and shall have no obligation to perform,
any severance or termination obligations, liabilities and commitments accruing
or arising by agreement, plan or policy of Seller as a result of the
transactions contemplated hereby.
(c) Purchaser may, but shall have no obligation to, offer
employment to any of the current employees of Seller in the Business as
Purchaser may desire. In addition, Purchaser shall have the right, but not the
obligation, to offer employment to and to employ a sufficient number of current
employees of Seller, with American Meter's consent (which shall not be
unreasonably withheld), to enable Purchaser to make Pantheon feasible, to sell
Pantheon and to meet its other obligations under the License Agreements. Any
employee of Seller considered for employment by Purchaser shall be subject to
Purchaser's normal application and screening procedures and to Purchaser's
compensation and benefits policies. No provisions of this Agreement, express
or implied, shall confer on any employee or former employee of Seller any right
to employment or any continued right to employment for any extended period.
(d) Seller shall be responsible for the maintenance and
distribution of benefits accrued under any Employee Plans maintained by Seller
pursuant to the provisions of such plans. Purchaser shall assume neither any
liability for any such accrued benefits nor any fiduciary or administrative
23
29
responsibility to account for or dispose of any such accrued benefits under any
Employee Plans maintained by Seller.
(e) All claims and obligations under, pursuant to or in
connection with any Employee Plans of Seller or arising under any legal
requirement affecting employees of Seller incurred on or before the Closing
Date resulting in or arising from events or occurrences occurring or commencing
on or prior to the Closing Date shall remain the responsibility of Seller,
whether or not such employees are hired by Purchaser after the Closing.
Purchaser will have and assume no obligation or liability under or in
connection with any such plan.
(f) Seller shall provide any and all notifications required by
all applicable federal, state and local laws in connection with the termination
of its employees, including notifications required under WARN, or any similar
state or local law, and any rules and regulations promulgated under any of the
foregoing.
(g) Purchaser and Seller shall establish a mutually acceptable
employee retention plan for certain transitional employees ("Transitional
Employees") of Seller to provide short-term transitional services in connection
with the transactions contemplated hereby. Such Transitional Employees shall
be entitled to severance and termination benefits of Seller as if they were
terminated by Seller on or prior to the Closing Date. All such severance or
termination benefits due to such Transitional Employees, and all other
employment costs and expenses of such Transitional Employees accruing prior to
the Closing Date (collectively, the "Pre-Closing Transitional Employee Costs"),
shall be borne solely by Seller. All employment costs and expenses for such
Transitional Employees accruing after the Closing Date, to the extent that such
expenses exceed any severance or termination benefits payable by Seller under
its severance policy, plus all costs and expenses incurred by Seller under WARN
for Transitional Employees terminated on or after the Closing Date ("Post-
Closing Transitional Employee Costs"), shall be borne equally by Seller and
Purchaser; provided, however, that Purchaser's obligations for all Post-Closing
Transitional Employee Costs in the aggregate shall not exceed $50,000. All
other costs incurred by Seller after the Closing in connection with WARN,
except as set forth in the immediately preceding sentence, shall be borne
solely by Seller.
SECTION 5.11 ASSUMED WARRANTY OBLIGATIONS. At the Closing, provided
that Seller's representations and warranties in Section 3.26 hereto are
accurate and complete, Purchaser shall assume the warranty obligations of
Seller (the "Assumed Warranty Obligations") for all equipment and products sold
by Seller within two years prior to the Closing Date with respect to the
Business, other than the Korean Claim. A complete and accurate list of all
such sales (by customer, amount, sale and type of equipment or services) is set
forth on Schedule 3.26 hereto.
SECTION 5.12 REPAYMENT OF INDEBTEDNESS AND RELEASE OF LIENS.
Contemporaneously with or prior to the Closing, Seller shall take all action
necessary to cause any Liens on or against the Assets to be released and
terminated as of the Closing Date.
SECTION 5.13 FINANCIAL STATEMENTS. Seller shall cause its Financial
Statements as of December 31, 1997, and for the one year period then ended, to
be audited by Xxxxxx Xxxxxxxx, independent certified public accountants (the
"Auditor"), and shall deliver the Auditor's report to Purchaser prior to the
Closing. Seller shall bear the costs of such audit, provided that Purchaser
shall bear any cost and expense of the audit, or of similar special procedures
incurred by Seller in order to permit Xxxxxx to meet its financial reporting
requirements under the Exchange Act in connection with the transactions
24
30
contemplated hereby which are in excess of Seller's normal and routine audit
expense. Seller shall cause the Auditor to reasonably cooperate with Purchaser
and Xxxxxx to complete such audit and special procedures, to sign and deliver
any required consents to Xxxxxx in connection with the Current Report on Form
8-K to be filed by Xxxxxx with the SEC pursuant to the requirements of the
Exchange Act, and to cooperate in the preparation of pro forma financial
statements required by Form 8-K.
SECTION 5.14 BOARD SEAT. Xxxxxx agrees to appoint Xxxxx X. Xxxxxxx,
President and Chief Executive Officer of American Meter, to be appointed or
elected to the Xxxxxx Board of Directors at the first Xxxxxx Board of Directors
meeting held after the Closing, to serve as a director for a term expiring at
the 2000 annual meeting of stockholders.
SECTION 5.15 PANTHEON SOFTWARE LICENSE AGREEMENT. At the Closing,
Seller and Purchaser shall execute and deliver to each other a License
Agreement, substantively in the form of Exhibit B hereto (the "License
Agreement"), pertaining to the license by Seller to Purchaser after the Closing
of the Pantheon software, and as to the development, manufacture and sale by
Purchaser to Seller of certain electronic components and related equipment
pertaining to electronic temperature and pressure correction to be embedded
within certain new rotary and turbine meters of American Meter.
SECTION 5.16 NON-COMPETITION AGREEMENT. At the Closing, Seller and
American Meter shall execute and deliver to Purchaser and Xxxxxx a five year
Non-Competition Agreement, in substantially the form of Exhibit C hereto (the
"Non-Competition Agreement").
SECTION 5.17 AMENDMENT OF XXXXXX RIGHTS AGREEMENT. Xxxxxx will amend
that certain Rights Agreement, dated as of December 2, 1991, by and between
Xxxxxx and American Securities Transfer & Trust, Inc., as rights agent, which
currently provides for the distribution of certain rights after a Person has
acquired or obtained the right to obtain beneficial ownership of 15% or more of
the outstanding Shares of Common Stock of Xxxxxx, to provide an exception for
American Meter, Eagle and their affiliates, so long as their aggregate
beneficial ownership (as defined in the Rights Agreement) does not exceed 25%
of more of the outstanding shares of Common Stock of Xxxxxx.
SECTION 6. CONDITIONS PRECEDENT TO PURCHASER'S AND XXXXXX'X CLOSING
OBLIGATIONS.
The obligations of Purchaser to purchase the Assets, to pay the Purchase
Price and to assume the Assumed Liabilities and of Purchaser and Xxxxxx to take
the other actions contemplated hereby to be taken by Purchaser and Xxxxxx,
respectively, at or prior to the Closing are subject to the satisfaction
(unless waived in writing by Purchaser), at or prior to the Closing, of each of
the following conditions:
SECTION 6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each and
every representation and warranty made by Seller and American Meter in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing Date with the same effect as if made or given on the Closing Date.
SECTION 6.2 PERFORMANCE OF COVENANTS. Seller and American Meter shall
have performed, satisfied and complied with all covenants, agreements,
obligations and conditions under this Agreement which are to be performed,
satisfied or complied with by Seller and American Meter, respectively, at or
prior to the Closing.
SECTION 6.3 NO LITIGATION. No Proceeding shall be pending or overtly
threatened by or before any court, arbitrator or Governmental Authority (a)
which seeks the restraint, prohibition or the obtaining
25
31
of damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, (b) which questions the
legitimacy, validity or enforceability of this Agreement or the transactions
contemplated hereby or (c) which, if successful, would have a material adverse
effect on the Assets or the Business or would materially and adversely affect
the ability of Seller or American Meter to consummate the transactions
contemplated hereby or of Purchaser after the Closing to operate the Business
substantially as currently operated.
SECTION 6.4 DELIVERIES AT CLOSING. Seller and American Meter shall
have delivered to Purchaser at the Closing the Assets and each of the
certificates, instruments, documents and agreements required to be delivered to
Purchaser and Xxxxxx hereunder.
SECTION 6.5 CONSENTS. All Consents of any Person necessary to permit
the consummation of the transactions hereby shall have been duly obtained, made
or taken prior to the Closing.
SECTION 6.6 CONDITION OF ASSETS. Neither the Assets nor the Business
shall have been adversely effected in any material respect by, or sustained any
material loss, whether or not insured, which has not been remedied to
Purchaser's reasonable satisfaction as a result of, fire, accident, storm, or
other casualty, or labor or civil disputes, or act of God or public enemy.
SECTION 6.7 NON-COMPETITION AGREEMENT. Seller and American Meter
shall have executed and delivered to Purchaser and Xxxxxx the Non-Competition
Agreement.
SECTION 6.8 LICENSE AGREEMENT. Seller and American Meter shall have
executed and delivered to Purchaser and Xxxxxx the License Agreement.
SECTION 7. CONDITIONS PRECEDENT TO SELLER'S AND AMERICAN METER'S
OBLIGATIONS.
The obligations of Seller to sell and deliver the Assets to Purchaser
and of Seller and American Meter to perform their other obligations
contemplated hereby to be taken at or prior to the Closing are subject to the
satisfaction (unless waived in writing by Seller), at or prior to the Closing,
of each of the following conditions:
SECTION 7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Purchaser and Xxxxxx in this Agreement
shall be true and correct as of the date of this Agreement and as of the
Closing Date with the same effect as if made or given on the Closing Date.
SECTION 7.2 PERFORMANCE OF COVENANTS. Purchaser and Xxxxxx shall have
performed, satisfied and complied with all of the covenants, agreements,
obligations and conditions under this Agreement which are to be performed,
satisfied or complied with by Purchaser and Xxxxxx respectively, at or prior to
the Closing.
SECTION 7.3 NO LITIGATION. No Proceeding shall be pending or overtly
threatened by or before any court, arbitrator or Governmental Agency (a) which
seeks the restraint, prohibition or the obtaining of damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby, (b) which questions the legitimacy, validity or
enforceability of this Agreement or the transactions contemplated hereby, or
(c) which, if successful, would materially and adversely affect the ability of
Purchaser and American Meter to consummate the transactions contemplated
hereby.
26
32
SECTION 7.4 DELIVERIES AT CLOSING. Purchaser and Xxxxxx shall have
delivered to Seller and American Meter at the Closing the Purchase Price and
each of the other certificates, instruments, documents and agreement required
to be delivered to Seller hereunder.
SECTION 7.5 LICENSE AGREEMENT. Purchaser shall have executed and
delivered to Seller and American Meter the License Agreement.
SECTION 8. THE CLOSING.
SECTION 8.1 DATE AND PLACE. Provided all conditions to the Closing
have been satisfied, the consummation of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Metretek, Incorporated, 000
Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxx, at 10:00 a.m. local time, on a date no more
than 30 days after the date hereof, as determined by Purchaser, or at such
other time, date or place as the parties shall mutually agree (the "Closing
Date").
SECTION 8.2 DELIVERIES BY SELLER AND AMERICAN METER. At the Closing,
Seller and American Meter shall deliver or cause to be delivered to Purchaser
and Xxxxxx, in form reasonably acceptable to Purchaser's counsel:
(a) Full, actual and unimpeded possession and enjoyment of the
Assets and the Business;
(b) Assignments and assumptions of all Assigned Contracts
being assumed by and assigned to Purchaser, duly executed by Seller, along with
all Consents required to permit such assignment and assumption;
(c) One or more duly executed bills of sale warranting good
and marketable title in and to the Assets, in the form of Exhibit D hereto, and
such other instruments of sale, conveyance, assignment and transfer as may be
reasonably requested by Purchaser, in order to vest in Purchaser all of
Seller's right, title and interest in and to all of the other Assets, free and
clear of any and all Liens;
(d) Any assignments required to transfer all right, title and
interest in the Intellectual Property to Purchaser;
(e) All Consents necessary to permit the consummation of the
transactions contemplated by this Agreement;
(f) All releases of all Liens encumbering any of the Assets;
(g) True and complete copies of corporate resolutions,
certified as of the Closing Date by the Secretary of Seller and of American
Meter as having been duly adopted by the Board of Directors and, if necessary,
shareholders of Seller and American Meter, respectively, authorizing Seller's
and American Meter's execution and delivery of this Agreement and the Related
Seller Agreements and their consummation of the transactions contemplated
hereby and thereby;
(h) Certificates duly executed by the President or Chief
Executive Officer of Seller and of American Meter, dated as of the Closing
Date, certifying that, to the best of their knowledge and belief after due
inquiry, (i) each of Seller and American Meter, respectively, has fully
performed, satisfied and complied with all agreements, obligations, covenants
and conditions required by this Agreement to
27
33
be performed, satisfied or complied with by it at or prior to the Closing, and
(ii) all of the representations and warranties of Seller and American Meter,
respectively, set forth in Section 3 of this Agreement are true and correct as
of the Closing Date;
(i) An opinion of counsel for Seller and American Meter, dated
as of the Closing Date, substantially in the form attached hereto as Exhibit E;
(j) The License Agreement, duly executed by Seller and
American Meter;
(k) The Non-Competition Agreement, duly executed by Seller and
American Meter; and
(l) All other items required to be delivered by Seller or
American Meter pursuant to any provision of this Agreement.
SECTION 8.3 DELIVERIES BY PURCHASER. At the Closing, Purchaser and
Xxxxxx shall deliver to Seller and American Meter, in form reasonably
acceptable to Seller's counsel:
(a) The Cash Portion of the Purchase Price as set forth in
Section 2.1 hereof, by cashier's or certified bank check or wire transfer of
immediately available funds to an account designated by Seller and American
Meter;
(b) One or more certificates representing the Initial Shares,
duly registered on the books of Xxxxxx in the name of Purchaser;
(c) The Convertible Note, duly executed by Purchaser;
(d) True and complete copies of corporate resolutions,
certified as of the Closing Date by the Secretary of Purchaser and of Xxxxxx as
having been duly adopted by the Board of Directors of Purchaser and of Xxxxxx,
respectively, authorizing Purchaser's and Xxxxxx'x execution and delivery of
this Agreement and the Related Purchaser Agreements and their consummation of
the transactions contemplated hereby and thereby;
(e) Certificates duly executed by the President or Chief
Executive Officer of Purchaser and of Xxxxxx, dated as of the Closing Date,
certifying that, to the best of their knowledge and belief after due inquiry,
(i) each of Purchaser and Xxxxxx has fully performed, satisfied and complied
with all agreements, obligations, covenants and conditions required by this
Agreement to be performed, satisfied or complied with by Purchaser and Xxxxxx,
respectively, at or prior to the Closing, and (ii) all of the representations
and warranties of Purchaser and Xxxxxx, respectively, set forth in Section 4 of
this Agreement are true and correct as of the Closing Date;
(f) An opinion of counsel for the Purchaser and Xxxxxx, dated
as of the Closing Date, substantially in the form attached hereto as Exhibit F;
and
(g) All other items required to be delivered by Purchaser or
Xxxxxx pursuant to any provision of this Agreement.
28
34
SECTION 8.4 EFFECTIVENESS OF CLOSING. No action to be taken or
delivery to be made at the Closing shall be effective until all of the actions
to be taken and deliveries to be made at the Closing are complete.
SECTION 9. SURVIVAL AND INDEMNIFICATION
SECTION 9.1 SURVIVAL. The indemnification obligations and the
representations, warranties, covenants and agreements set forth in this
Agreement shall survive the Closing and shall continue in full force and effect
until they expire on the second anniversary of the Closing Date (or such later
date as expressly provided herein), regardless of any investigation made by any
party hereto, except as to any Claims (as defined in Section 9.4) relating to
fraud or matters on which claims shall expire only upon expiration of the
applicable statute of limitations. No Claim pursuant to this Section 9 shall
be asserted by any party hereto after the expiration of the applicable survival
period or statute of limitations, as the case may be, except for Claims made in
writing prior to such expiration or actions (whether instituted before or after
such expiration) based on any Claim made in writing prior to such expiration.
The covenants and agreements of the parties hereto set forth in this Agreement
shall survive the Closing and shall continue in full force and effect
thereafter, subject to any termination thereof expressly set forth herein.
SECTION 9.2 INDEMNIFICATION BY THE SELLER AND AMERICAN METER. During
the period specified in Section 9.1, Seller and American Meter shall jointly
and severally indemnify, defend and hold harmless Purchaser and Xxxxxx, their
affiliates, successors and assigns, and the officers, directors, shareholders,
partners, employees, agents and representatives of any of them, from and
against any and all claims, actions, suits, proceedings demands, losses
(including diminutions in value), expenses, obligations, taxes, liabilities,
damages, recoveries and deficiencies (including, without limitation, interest,
fines, penalties, costs of investigation, reasonable attorneys', accountants'
and other professionals' fees and expenses and amounts paid in settlement)
(collectively, "Damages") arising out of, based upon or resulting from (i) any
breach or violation of, inaccuracy or misrepresentation in, or failure by the
Seller or American Meter to perform, any representations, warranties,
covenants, agreements or other obligations of Seller or American Meter made in
this Agreement or in any schedule, certificate, exhibit or other document or
instrument furnished or to be furnished by Seller or American Meter to
Purchaser or Xxxxxx pursuant to this Agreement, (ii) any act or omission of
Seller or American Meter with respect to, or any event or circumstance related
to, the ownership, lease or operation of the Assets or the conduct of the
Business, which act, omission, event or circumstance occurred, existed or
accrued existed prior to or at the time of the Closing, without regard to
whether a claim with respect to such matter is asserted before or after the
Closing, (iii) any debt, liability or obligation of Seller, American Meter or
the Business not included in the Assumed Liabilities, (iv) any failure by
Seller or American Meter to completely and timely comply with all applicable
provisions of (A) any applicable bulk sale or bulk transfer law of any
jurisdiction, (B) WARN or similar state or local laws, (C) the fraudulent
transfer or fraudulent conveyance laws of any jurisdiction, (v) any product
liability claims relating to products made or sold or services performed by
Seller or American Meter prior to the Closing Date (except to the extent
included in the Assumed Liabilities), or (vi) any violation of any
environmental law, rule, regulation or order by Seller or American Meter prior
to the Closing Date.
SECTION 9.3 INDEMNIFICATION BY PURCHASER AND XXXXXX. During the
period specified in Section 9.1, Purchaser and Xxxxxx shall jointly and
severally indemnify, defend and hold harmless Seller and American Meter, their
affiliates, successors and assigns, and the officers, directors, shareholders,
partners, employees, agents and representatives of any of them, from and
against any and all
29
35
Damages arising out of, based upon or resulting from any breach or violation
of, inaccuracy or misrepresentation in, or failure by Purchaser or Xxxxxx to
perform, any of the representations, warranties, covenants, agreements or other
obligations of the Purchaser or Xxxxxx made in this Agreement or in any
schedule, certificate, exhibit or other document or instrument furnished or to
be furnished by Purchaser or Xxxxxx to Seller or American Meter pursuant to
this Agreement.
SECTION 9.4 CLAIMS FOR INDEMNIFICATION.
(a) Whenever any party hereunder believes it has suffered or
incurred or is likely to suffer or incur any Damages, or any action or
proceeding is commenced or threatened or claim is made that could result in
Damages, which is reasonably likely to give rise to a claim ("Claim") for
indemnification under this Agreement, the party seeking indemnification
("Indemnified Party") shall, upon obtaining knowledge thereof, promptly notify
in writing the party against whom indemnification is sought ("Indemnifying
Party") of the Claim and, when known, the facts constituting the basis for such
Claim and the amount and nature of the Damages or an estimate thereof. The
Indemnified Party's failure to timely notify Indemnifying Party of any Claim or
potential Claim shall not relieve the Indemnifying Party of any liability
hereunder unless and only to the extent that such failure causes Indemnifying
Party to lose the right to assert any substantive rights or defenses or to the
extent that the Indemnifying Party is actually prejudiced in its rights or
obligations.
(b) The Indemnified Party shall give the Indemnifying Party a
reasonable opportunity to participate in and to assume the defense of any such
Claim at the Indemnifying Party's own expense and with counsel of the
Indemnifying Party's own selection reasonably satisfactory to the Indemnified
Party provided, however, that Indemnified Party shall at all times also have
the right but not the obligation, to fully participate in the defense of the
Claim and to employ its own counsel at its own expense. Notwithstanding the
foregoing, if the Indemnified Party reasonably determines that: (i) legal
defenses may be available to the Indemnified Party that are different from or
in addition to those available to the Indemnifying Party, (ii) a conflict or
potential conflict of interest exists between the Indemnified Party and the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such Claim on behalf of the Indemnified Party),
or (iii) the Indemnifying Party has not in fact employed legal counsel to
assume the defense of such Claim within a reasonable time after receiving
notice of the Claim, then the reasonable fees, disbursements and other charges
of counsel from one separate firm selected by the Indemnified Party (and
reasonably acceptable to the Indemnified Party) shall be reimbursed by the
Indemnified Party promptly as they are incurred.
(c) No party hereto shall compromise, settle or consent to the
entry of any judgment with respect to any Claim without the prior written
consent of the other interested party or parties (which consent shall not be
unreasonably withheld or delayed) unless such compromise, settlement or consent
includes an unconditional release of all other interested parties hereto from
any and all liabilities on any Claims that are the subject matter thereof.
(d) Each party hereto shall cooperate in every reasonable way
with the party assuming responsibility for the defense and disposition of any
such Claim, including making available to the defending party all books,
records, and other material reasonably required by the defending party for its
use in defending the Claim.
30
36
SECTION 9.5 LIMITATION ON LIABILITY.
(a) Notwithstanding the foregoing, the Indemnifying Party
shall not be required to indemnify the Indemnified Party hereunder unless and
until the aggregate amount of all Damages exceeds $25,000.00, and then only to
the extent of such excess.
(b) Neither party shall seek or be entitled to consequential
damages or damages for lost profits in any Claim for indemnification under this
Section 9 nor shall it accept payment of any award or judgment against the
other party to the extent that such award or judgment includes consequential
damages or damages for lost profits.
SECTION 9.6 NON-EXCLUSIVE INDEMNIFICATION. The foregoing
indemnification provisions are in addition to, and not in derogation of, or
statutory, equitable or common law remedies any party hereto may have for any
breach of representation, warranty, covenant or agreement.
SECTION 9.7 EFFECT OF KNOWLEDGE. No disclosure to and no
investigation by or on behalf of any party hereto shall be deemed to affect its
reliance on the representations, warranties, covenants and agreements contained
herein or to waive its rights to indemnification as provided herein for the
breach or violation of or inaccuracy or failure to perform or comply with any
representation, warranty, covenant or agreement of any other party hereto.
SECTION 9.8 CONTRIBUTION. If the indemnification provided for in this
Section 9 is for any reason unavailable or insufficient to indemnify the
Indemnified Party in respect of any Damages, then the Indemnifying Party shall
in lieu of indemnifying the Indemnified Party contribute to the total damages
to which the Indemnified Party may be subject in such proportion that shall be
appropriate to reflect the relative fault of the Indemnifying Party, on the one
hand, and the Indemnified Party, on the other hand, in connection with any
actions or omissions which resulted in such Damages as well as any other
relevant equitable considerations.
SECTION 10. POST-CLOSING AND OTHER COVENANTS.
SECTION 10.1 FURTHER ASSURANCES. At the Closing, Seller, through its
officers, directors, employees and agents, shall put Purchaser into full,
actual and unimpaired ownership, possession, enjoyment and control of the
Assets. At any time and from time to time after the Closing, Seller shall, at
the sole expense of Purchaser, execute, acknowledge and deliver any further
deeds, assignments, conveyances, consents, permits and other assurances,
documents and instruments of transfer reasonably requested by Purchaser, and
take any and all further actions consistent with the terms of this Agreement,
that may be reasonably requested by Purchaser for the purpose of more
effectively and fully assigning, transferring, granting and conveying to and
vesting in Purchaser all of Seller's right, title and interest in and to, or
reducing to possession, any or all of the Assets. If requested by Purchaser,
Seller shall, solely at Purchaser's expense (unless required due to a breach of
any representation, guaranty or covenant hereof by Seller), prosecute or
otherwise enforce in its own name for the benefit of Purchaser any claims,
rights or benefits that are transferred to Purchaser by this Agreement and
require prosecution and enforcement in Seller's name. In addition, Seller
shall provide all assistance reasonably requested by Purchaser to install the
environmental testing xxxxxxxx of Seller in Purchaser's offices in Melbourne,
Florida, including, but not limited to, assisting Purchaser in the disassembly
of such xxxxxxxx at Seller's offices, assisting Seller in the transportation of
such xxxxxxxx to Purchaser's offices, and assisting Purchaser in the assembly
and testing of operability at
31
37
Purchaser's offices to obtain operability comparable to the operability of the
xxxxxxxx at Seller's premises.
SECTION 10.2 SELLER'S FINANCIAL STATEMENTS. Seller and American Meter
shall cause the Auditor to comply with the provisions of Section 5.13 hereof
after the Closing and shall cooperate and take all reasonable efforts, and use
its best efforts to cause the Auditor to cooperate and use its reasonable
efforts, to assist Xxxxxx in complying with the financial reporting
requirements of Form 8-K and the SEC with respect to the transactions
contemplated hereby (including the preparation of historical financial
statements and pro forma financial statements related to the Business) and in
any future filings by Xxxxxx under the Securities Act and the Exchange Act that
include or incorporate Seller's historical financial statements, and to provide
any consents required in such Form 8-K and in any such future filings by Xxxxxx
that require the Auditor to furnish its consent in order for Xxxxxx to fulfill
its financial reporting requirements.
SECTION 10.3 PRESERVATION OF FILES AND RECORDS.
(a) By Purchaser. For a period of five (5) years after the
Closing Date, Purchaser shall preserve all files and records relating to the
Business and the Assets that are in existence as of the Closing Date and that
are less than 5 years old as of the Closing Date, and shall allow Seller access
to such files and records and the right to make copies and extracts therefrom
at any time during normal business hours, and shall not dispose of any thereof,
provided that at any time after the Closing, Purchaser may give Seller written
notice of its intention to dispose of any part thereof, specifying the items to
be disposed of in reasonable detail. Seller may, within a period of 60 days
after receipt of any such notice, notify Purchaser of Seller's desire to retain
one or more of such items to be disposed of. Purchaser shall, upon receipt of
such notice from Seller, deliver to Seller at Seller's expense, the items
specified in Purchaser's notice to Seller which Seller has elected to retain.
(b) By Seller. For a period of five (5) years after the
Closing Date, Seller shall preserve all files and records relating to the
Business and the Assets that are in existence as of the Closing Date and that
are less than five (5) years old as of the Closing Date, and shall allow
Purchaser access to such files and records and the right to make copies and
extracts therefrom at any time during normal business hours, and shall not
dispose of any thereof, provided that at any time after the Closing, Purchaser
may give Seller written notice of its intention to dispose of any part thereof,
specifying the items to be disposed of in reasonable detail. Purchaser may,
within a period of 60 days after receipt of any such notice, notify Seller of
Purchaser's desire to retain one or more of such items to be disposed of.
Purchaser shall, upon receipt of such notice from Seller, deliver to Purchaser
at Purchaser's expense, the items specified in Purchaser's notice to Seller
which Purchaser has elected to retain.
SECTION 10.4 MUTUAL COOPERATION.
(a) Preparation of Reports, Etc. Each of Purchaser and
Seller shall cooperate and cause its respective employees and agents to
cooperate with each other in the preparation of financial and other reports and
statements relating to the Business and the Assets for periods ending on or
prior to the Closing.
(b) Taxes and Other Matters. In connection with the
preparation of any tax returns, any audit or other examination by any taxing or
other Governmental Authority, or any Proceeding or other matters including but
not limited to, environmental and other matters relating to the transactions
32
38
contemplated by this Agreement, each party will provide the other with the
opportunity to make copies of any records or information which may be relevant
to such return, audit or examination, Proceeding or determination. Each party
shall make its employees available on a mutually convenient and reasonable
basis to provide additional information and explanation of any material
provided hereunder.
(c) Cooperation in Litigation. In the event that, after the
Closing Date, Seller or Purchaser shall reasonably require the participation of
officers and employees by each other to aid in the defense or prosecution of
litigation or claims, and so long as there exists no unwaived conflict of
interest between the parties, each of Seller and Purchaser shall make such
officers and employees reasonably available to participate in such defense or
prosecution provided that, except as required pursuant to the provisions
herein, the party requiring the participation of such officers and employees
shall pay all reasonable out-of-pocket costs, charges and expenses arising from
such participation.
SECTION 10.5 SOLICITATION AND HIRING.
(a) Covenant by Seller and American Meter. For a period of
five (5) years after the Closing Date, Seller and American Meter and their
affiliates shall not, directly or indirectly, as a stockholder, investor,
partner, director, officer, employee or otherwise (i) solicit or attempt to
induce any Restricted Xxxxxx Employee to terminate his employment with Xxxxxx
or Purchaser, or (ii) hire or attempt to hire any Restricted Xxxxxx Employee.
For purposes of this Agreement, a "Restricted Xxxxxx Employee" shall mean any
person who (i) was an employee of Purchaser or Xxxxxx on the Closing Date or
(ii) was an employee of Seller or American Meter on the Closing Date who
received an employment offer from Purchaser within 60 business days following
the Closing Date and accepted such offer.
(b) Covenant by Purchaser and Xxxxxx. For a period of five
(5) years after the Closing Date, Purchaser and Xxxxxx and their affiliates
shall not, directly or indirectly, as a stockholder, investor, partner,
director, officer, employee or otherwise (i) solicit or attempt to induce any
Restricted Seller Employee to terminate his employment with Seller or American
Meter, or (ii) hire or attempt to hire any Restricted Seller Employee. For
purposes of this Agreement, a "Restricted Seller Employee" shall mean any
person who was an employee of Seller or American Meter on the Closing Date who
did not receive an employment offer from Purchaser within 60 business days
following the Closing Date and accept such offer.
SECTION 10.6 REGISTRATION RIGHTS.
(a) Piggy-Back Registration.
(i) Right to Piggy-Back. If at any time after the Closing
Date, Xxxxxx proposes to register any of its shares of Common Stock under the
Securities Act for its own account or for the account of any of its
stockholders (except with respect to registration statements filed on Form S-4
(for acquisitions) or Form S-8 (for employee plans) or any successor or similar
forms or other unsuitable forms), Xxxxxx shall promptly give written notice of
such proposed filing to Seller and offer Seller the opportunity to register
such number of Shares as it may request in writing. Upon the written request
of Seller received by Xxxxxx within fifteen (15) days after the giving of the
notice by Xxxxxx, Xxxxxx shall use its best efforts to cause the Shares that
the Purchaser requests to be so registered to be included in such registration.
33
39
(ii) Underwriting Procedures. If any registration
pursuant to this Section 10.6(a) shall be, in whole or in part, in connection
with an underwritten public offering of Common Stock of the Company, then
Xxxxxx shall not be required to include any Shares in the registration unless
Purchaser accepts the terms and conditions of the underwriting as agreed upon
between Xxxxxx and the underwriters. If the managing underwriter determines
and advises Xxxxxx in writing (which shall promptly notify Seller) that the
inclusion in the underwriting of all or any of the Shares proposed to be
included by Seller would be reasonably likely to jeopardize the successful
marketing of the securities proposed to be registered for the underwriting by
Xxxxxx or materially adversely affect the price, time or distribution of the
public offering, then Xxxxxx shall only be required to include the number of
the Shares that the managing underwriter determines in its sole discretion,
will not materially adversely affect the public offering, and, if any such
reduction is so determined by the managing underwriter to be appropriate in
accordance with the standards set forth above, then the number of Shares
requested to be included in the underwriting shall be reduced, pro rata with
other stockholders, if any, participating in the public offering, to the number
determined to be appropriate by the managing underwriter (which may include a
reduction to zero).
(iii) No Xxxxxx Obligation. Neither the giving of a
notice by Xxxxxx nor any request by Purchaser under this Section 10.6(a) shall,
in any way, obligate Xxxxxx to file any registration statement at any time or
within any specific time period after receipt of Seller's written request and,
notwithstanding the filing of any registration statement, Xxxxxx may, at any
time before the effective date thereof, elect to delay or terminate the entire
registration process for any reason or no reason and without the consent of
Purchaser, without any further obligation to Seller in respect of such
registration statement.
(b) Demand Right. If at any time during the period commencing
two (2) years after the Closing Date and ending the earlier of (i) eight years
after the Closing Date, or (ii) 90 days after Seller's beneficial ownership of
the Shares issued pursuant to this Agreement (including upon conversion of the
Convertible Note) constitutes less than 10% of the then outstanding shares of
Common Stock of Xxxxxx, Xxxxxx shall receive a written request ("Demand
Request") from Seller for the registration of all or any portion of the Shares
it receives in connection with this Agreement (the "Registration Shares"),
provided, that at the time of the Demand Request, at least a majority of the
total Shares issued pursuant to this Agreement (including upon conversion of
the Convertible Note) are still held of record by Seller, then Xxxxxx, upon the
terms and subject to the conditions set forth in this Section 10.6, shall use
it best efforts to cause all Registration Shares to be registered in an
appropriate registration statement of the SEC as shall be selected by Xxxxxx,
provided that if Xxxxxx is eligible to use Form S-3 (or any successor form
thereto) for such registration, then such registration statement shall be used
unless such form is inappropriate or Xxxxxx desires to use a different form.
If Seller intends for the public offering covered by its Demand Request to
occur by means of an underwriting, it shall so advise Xxxxxx as a part of its
Demand Request, and the managing underwriter of such underwritten public
offering shall be selected by Seller and shall be reasonably acceptable to
Xxxxxx. Xxxxxx shall be obligated to register Shares under this Section
10.6(b) after receipt of a Demand Request on one occasion only. Xxxxxx shall
be entitled to include in any registration statement filed pursuant to this
Section 10.6(b) additional shares of Common Stock for its own account and for
the account of its other security holders. If the managing underwriter advises
Xxxxxx in writing that the inclusion of any or all such additional shares of
Common Stock would materially adversely affect the marketing of the public
offering of the Shares, then Xxxxxx shall not be entitled to include such
additional shares of Common Stock in any such registration statement to the
extent the managing
34
40
underwriter advises. Notwithstanding the provisions of this Section 10.6(b),
Xxxxxx shall have the right to delay or suspend the filing of a registration
statement for up to 90 days from the time the filing thereof would otherwise be
required under the Section 10.6(b) if, in the good faith determination of
Xxxxxx'x board of directors, such registration would be seriously detrimental
to Xxxxxx and its stockholders or would materially adversely affect the
business, affairs, properties, financial condition, results of operations or
prospects of Xxxxxx or any pending or proposed acquisition, merger,
reorganization, recapitalization or other transaction or public offering of
Xxxxxx'x securities, or would require premature disclosure thereof not in the
best interests of Xxxxxx; provided, however, that Xxxxxx shall not be entitled
to exercise this right more than once.
(c) Information. It shall be condition precedent to the
obligation of Xxxxxx hereunder to register the Shares under this Section 10.6
that Seller furnish to Xxxxxx and the managing underwriters such information
regarding itself, the intended method of disposition of such securities and
such other information as Xxxxxx or the managing underwriter shall from time to
time reasonably request and that shall be reasonably required to effect the
registration of the Shares.
(d) Expenses. Seller shall pay all underwriting and brokerage
fees, discounts and commissions related to the sale of the Shares in a public
offering registered pursuant to the provisions of this Section 10.6, together
with the fees and expenses of any separate counsel, accountants and other
advisors retained by Seller in connection with the offering. All other fees,
costs and expenses incurred in connection with any registration of public
offering including, but not limited to, all federal and state registration,
qualification, filing fees, printed and document distribution costs and
expenses, fees and disbursements of its counsel, accountants and other experts,
Nasdaq additional listing fees, transfer fees, exchange fees, fees of transfer
agents and registrants shall be borne as follows: (i) if pursuant to a demand
registration under Section 10.6(b), Xxxxxx shall bear the first $10,000 of such
costs, fees and expenses, and Seller shall bear the difference, and Xxxxxx also
shall bear its proportionate share of any such costs, fees and expenses to the
extent it includes additional shares of Common Stock in such registration, and
(ii) if pursuant to a piggy-back registration under Section 10.6(a), by Xxxxxx,
but Seller shall bear its proportionate share of any such costs, fees and
expenses to the extent Shares of Seller are included in the registration.
(e) Indemnification. If any of the Shares are included in a
registration, to the extent permitted by law, Seller and American Meter shall
indemnify and hold harmless Xxxxxx, each of its directors, each of its officers
who have signed the registration statement, each person, if any, who control
Xxxxxx within the meaning of Section 15 of Securities Act or Section 20 of the
Exchange Act, any underwriter, and any controlling person of any such
underwriter, from and against any and all losses, claims, liabilities, damages
and expenses (including any investigative, legal, accounting and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim (the "Damages") asserted to which
any of the foregoing persons may become subject under the Securities Act, the
Exchange Act, or other federal or state law, common law or otherwise, insofar
as such Damages arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
any preliminary prospectus or final prospectus, or any amendments or
supplements thereto, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation or alleged violation by Xxxxxx of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law (collectively, a "Violation"), to the extent that such Violation
occurs in reliance upon and in conformity with written information furnished to
Xxxxxx by American Meter or Seller expressly for use
35
41
in connection with such registration; and Seller or American Meter shall pay,
as incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this Section 10.6 in connection with the
investigation or defense of any such Damages.
SECTION 10.7 SELLER'S RIGHT OF FIRST REFUSAL TO ACQUIRE PURCHASER.
(a) Proposed Transaction. From and after the Closing Date, if
Xxxxxx intends or proposes to sell all or substantially all of the assets or
capital stock of Purchaser to a Person other than Xxxxxx or an affiliate of
Xxxxxx ("Proposed Purchaser"), or to consummate the merger, consolidation or
combination into a Proposed Purchaser in which transaction Purchaser is not the
survivor (a "Proposed Transaction"), Xxxxxx (or its permitted transferee, if an
affiliate) shall first deliver to Seller a notice of such Proposed Transaction
("Notice of Proposed Xxxxxx Sale") which shall include a copy or summary of the
Proposed Transaction and the terms and conditions thereof in reasonable detail,
including, without limitation, the proposed purchase price (or the basis of
determining the purchase price) ("Purchase Price) and the terms and conditions
of payment.
(b) Exercise. Seller shall have the prior right and option
("Right of First Refusal") to consummate the Proposed Transaction in the place
of the Proposed Purchaser upon the terms set forth in the Notice of Proposed
Sale, or on such other terms and conditions, no less favorable to Purchaser and
Xxxxxx, from Purchaser and Xxxxxx'x perspective as determined in their sole
discretion, as the terms in the Notice of Proposed Sale. Seller shall exercise
its Right of First Refusal by giving written notice of such exercise ("Notice
of Exercise") to Purchaser on or before the thirtieth (30th) day after
Purchaser shall have received the Notice of Proposed Sale.
(c) Closing Upon Exercise of Right of First Refusal. The
Closing of the Proposed Transaction with Purchaser upon Seller's exercise of
its Right of First Refusal shall take place at the principal place of business
of Purchaser on a date 60 business days after the date Purchaser receives the
Notice of Exercise, unless the Seller and Purchaser unanimously agree on a
different place or time.
(d) Non-Exercise of Rights of First Refusal. If Seller does
not exercise its Right of First Refusal, then Purchaser shall have the right,
for a period ending on the 150th day after the delivery of Notice of Offer, to
consummate the Proposed Transaction with the Proposed Purchaser, at
substantially the same Purchase Price and otherwise upon substantially the same
terms and conditions described in the Notice of Offer.
(e) Termination of Covenant. The Right of First Refusal shall
expire five years from the Closing Date.
SECTION 10.8 TRANSITION OF ASSETS AND BUSINESS. For a period of 60
days after the Closing Date, (a) Seller shall, at its expense, maintain the
Assets at its existing facility, and Purchaser shall have the right to remove
the Assets any time during such 60-day period; and (b) Purchaser shall have the
right to operate the Business at Seller's facility, provided that Purchaser
shall promptly reimburse Seller for all out-of-pocket costs of such operation
upon notice from Seller. Seller shall be entitled to be reimbursed only for
the additional incremental costs it bears from such operation, it being agreed
that Seller shall not be entitled to be reimbursed for its rent or any costs
associated with administration, management information systems, accounting and
human resources.
36
42
SECTION 10.9 AMERICAN METER LICENSES . For good and valuable
consideration paid to American Meter in connection with the transactions
contemplated hereby, from and after the Closing Date, American Meter (and any
affiliates owning the same) shall license to Purchaser and its affiliates
forever on a royalty-free basis, the right to use the technology specified in
U.S. Patent No. 5,656,784 and in the U.S. patent applications entitled "Printed
Circuit Board Coating & Method" and "Pulse Conditioning Circuit", and to
further develop and incorporate such technology into Purchaser's products and
services.
SECTION 11. TERMINATION AND CONFIDENTIALITY.
SECTION 11.1 EVENTS OF TERMINATION. This Agreement may be terminated
at any time prior to the Closing as follows:
(a) By mutual written agreement of Seller and Purchaser;
(b) By Seller or Purchaser by giving written notice to the
other, if the non-terminating party materially breaches any of its
representations, warranties, covenants or agreements hereunder;
(c) By any party hereto by giving written notice to the other
parties hereto if the Closing Date has not occurred on or before April 30,
1998, unless such party's intentional failure to fulfill any obligation
hereunder has been the cause of, or has resulted in, the failure of the Closing
to occur on or before such date; or
(d) By Purchaser or Seller if any court or Governmental
Authority of competent jurisdiction shall have issued an order, judgment,
decree, ruling or taken other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby.
SECTION 11.2 EFFECT OF TERMINATION. If any party terminates this
Agreement in accordance with Section 11.1, then all rights and obligations of
the parties shall cease, except for the obligations set forth in Sections 11.3
and 12.2 which shall survive such termination; provided, however, that any
termination of this Agreement shall not affect the rights of either Seller or
Purchaser against the other for breach of any representation, warranty,
covenant or agreement set forth in this Agreement.
SECTION 11.3 CONFIDENTIALITY. Notwithstanding the provisions of this
Section 11, if for any reason the transactions contemplated by this Agreement
are not consummated, each of the parties hereto shall keep confidential any
information obtained from any other party (except information publicly
available or in such party's domain prior to the date hereof, and except as
required by court order) and shall promptly return to the other parties all
schedules, documents, instruments, work papers or other written information,
without retaining copies thereof, previously furnished by it as a result of
this Agreement or in connection herewith.
SECTION 12. GENERAL PROVISIONS.
SECTION 12.1 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed and enforced in accordance with the internal
substantive laws of the State of Florida, without giving effect to any
principle or rule of conflict or choice of laws. Any action suit, or other
proceeding seeking to enforce any right, remedy, obligation, duty, covenant or
provision of, or arising out of, this Agreement shall be brought and entered
against any party hereto exclusively in any federal or state court of the State
of Florida or of the United States located in the State of Florida. Each party
hereto
37
43
irrevocably submits to the personal jurisdiction of any such court and
irrevocably waives, to the fullest extent of the law, any objection that it may
now or hereafter have to the laying of venue in any such court and any claim
that such action, suit or proceeding has been brought in an inconvenient form.
SECTION 12.2 EXPENSES. Except as expressly provided in Section 5.10 or
Section 10.7 hereof, each of the parties to this Agreement agrees to pay its
own costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including the fees and expenses of its
counsel, accounting and other advisers and agents.
SECTION 12.3 ASSIGNMENT. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any party hereto without the prior
written consent of all other parties hereto, provided that Purchaser may, upon
prior notice to Seller but without the consent of Seller, assign or delegate
its rights and/or obligations, under this Agreement to any of its affiliates,
in which case such assignee shall be substituted for Purchaser hereunder as
though the assignee were the original party to this Agreement, and Purchaser
shall be released from all obligations under this Agreement.
SECTION 12.4 AMENDMENTS. This Agreement may not be supplemental,
amended or modified in any manner in whole or in part except by a writing
signed by all parties to this Agreement that specifically states that it amends
this Agreement.
SECTION 12.5 NOTICES. Any and all notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given hereunder if delivered personally,
of if sent by facsimile transmission (upon receipt of confirmation of
delivery), on the next business day if sent or by overnight courier service, or
three business days after being sent by first class (registered/certified)
mail, postage prepaid, return receipt requested, to the parties at the
following addresses:
If to Purchaser or Xxxxxx:
Metretek, Incorporated
000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. XxXxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Xxxxxx Natural Gas Services, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: W. Xxxxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
38
44
With a copy to:
Kegler, Brown, Hill & Xxxxxx Co., L.P.A.
00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Seller or American Meter:
Eagle Research Corp.
000 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxx Xxxxxxxx 00000
Attn: Xxxxx I, Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
American Meter Company
000 Xxxxx Xxxx, Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx & Berlin, Chtd.
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change its designated address by giving written notice
thereof to all other parties hereto in the manner provided in this Section
12.5. Any party hereto may send any notice, request, demand, or other
communication to the intended recipient at the address above by using any other
means (such as telecopy, telex, expedited courier, messenger, ordinary mail or
electronic mail), but no such notice, demand, request or other communication
shall be deemed had been given until it is actually received by the recipient.
SECTION 12.6 WAIVER. The obligations of any party hereto may be waived
only with the written consent of the party giving the waiver. Any waiver by
any party of a breach of any provision of this Agreement shall not operate or
be construed to be a waiver of any other breach of that provision or of any
breach of any other provision of this Agreement. The failure of a party to
insist upon strict adherence to any provision of this Agreement on one or more
occasions shall not be considered a continuing waiver or deprive that party of
the right thereafter to insist upon strict adherence to that provision or any
other provision of this Agreement.
39
45
SECTION 12.7 SEVERABILITY. If any provision of this Agreement is
invalid, illegal or unenforceable in any situation, the balance of this
Agreement shall remain in effect, and such illegality, invalidity or
unenforceability shall not affect the legality, validity or enforceability of
that provision in any other situation or legality, validity or enforceability
of any other provision of this Agreement.
SECTION 12.8 HEADINGS. The headings used in this Agreement are solely
for convenience of reference and shall be given no effect in the construction
or interpretation of this Agreement.
SECTION 12.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
SECTION 12.10 PRONOUNS, ETC. The number and gender of each pronoun used
in this Agreement and the term "person" or "persons" or the like shall be
construed to mean both the number and gender of the individual, corporation,
limited liability company, partnership, firm, trust, agency and other entity as
the context, circumstance or its antecedent may require. The terms "herein,"
"hereof," "hereby," "hereto" and the like refer to this Agreement as a whole.
SECTION 12.11 NO THIRD PARTY BENEFICIARIES. Except as expressly
provided in this Agreement, this Agreement does not confer or create, is not
intended by the parties hereto to confer or create, and shall not be construed
to as conferring or creating, upon any person or entity other than the parties
hereto and their successors and permitted assigns any rights, remedies or
causes of action under or by reason of this Agreement.
SECTION 12.12 SCHEDULES AND EXHIBITS. The schedules and exhibits
attached to this Agreement are incorporated into and made a part of this
Agreement as if they were fully set forth herein.
SECTION 12.13 SPECIFIC PERFORMANCE; CUMULATIVE REMEDIES. The parties
hereto acknowledge and agree that the transactions contemplated by this
Agreement are unique in that remedies at law for any breach or threatened
breach of this Agreement would be an inadequate remedy for any loss, and that
any defense in any action for specific performance that a remedy at law would
be adequate is hereby specifically waived. Accordingly, in the event of any
actual or threatened breach to any of the terms of this Agreement, the
non-breaching party shall have the right of specific performance and injunctive
relief giving effect to its rights under this Agreement, in addition to any and
all other rights and remedies, at law or in equity, and all such rights and
remedies are cumulative.
SECTION 12.14 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, including counterparts executed by less than all parties
hereto, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
SECTION 12.15 ENTIRE AGREEMENT. This Agreement and the Related Seller
Agreement constitute the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior
arrangements, agreements and understandings, whether oral or written, among the
parties hereto in connection with the subject matter of this Agreement and the
Related Seller Agreements.
(The next page is the Signature Page)
40
46
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
EAGLE RESEARCH CORPORATION
By: /s/ XXXXX X. XXXXXXX
-------------------------
Its: Vice President
------------------------
AMERICAN METER COMPANY
By: /s/ XXXXX X. XXXXXXX
-------------------------
Its: President and Chief
------------------------
Executive Officer
METRETEK INCORPORATED
By: /s/ W. XXXXXXX XXXXXX
-------------------------
Its: Chairman and Chief
------------------------
Executive Officer
XXXXXX NATURAL GAS SERVICES,
INC.
By: /s/ W. XXXXXXX XXXXXX
-------------------------
Its: President and Chief
------------------------
Executive Officer
