ASSET PURCHASE AGREEMENT
by and between
CONDOR D.C. POWER SUPPLIES, INC.,
as the Purchaser,
and
XXXX PRODUCTS CORP., and XXXX POWER CORPORATION
as the Sellers
Dated: as of July 13, 1999
THIS ASSET PURCHASE AGREEMENT dated as of the 13th day of July, 1999
(this "AGREEMENT") is by and between Condor D.C. Power Supplies, Inc., a
California corporation (the "PURCHASER"), and Xxxx Products Corp., a New York
corporation, and Xxxx Power Corporation, a New York corporation (the "SELLERS").
RECITALS
--------
WHEREAS, the Sellers are engaged in the business of designing,
manufacturing and distributing power supplies and related equipment (the
"BUSINESS"); and
WHEREAS, the Sellers desire to sell to the Purchaser the Business and
substantially all of the assets and properties related thereto, and the
Purchaser desires to acquire the Business and such related assets and
properties, upon the terms, in the manner and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations and warranties contained in this Agreement, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE ASSETS
SECTION 1.1. THE CLOSING. The sale and transfer of the Assets (as
defined herein) and the consummation of all of the other transactions
contemplated by this Agreement (the "CLOSING") shall occur at the offices of
Xxxxxxxx & Xxxxxxxx, Four Stamford Plaza, Stamford, Connecticut, at 10:00 a.m.,
Eastern Standard Time, on July 31, 1999, unless the Purchaser and the Sellers
mutually agree upon another method, time and place (the "CLOSING DATE"). At the
Closing, the Sellers and the Purchaser shall exchange
certificates, instruments and other documents required to be delivered under
Article VI hereof.
SECTION 1.2. PURCHASE AND SALE OF THE ASSETS. At the Closing, the
Sellers shall sell, assign and transfer to the Purchaser, free and clear of all
liens, pledges, security interests, mortgages, claims, debts, charges,
agreements or other encumbrances or restrictions on transfer of any kind
whatsoever (collectively, the "ENCUMBRANCES") except as expressly assumed by
Purchaser as provided herein, all of their property, rights, privileges and
interests, whether tangible or intangible, real, personal or mixed, that are
held or leased or used in connection with the Business, other than the Excluded
Assets as defined in Section 1.3 below (the "ASSETS"). The Assets shall include,
without limitation, all of Sellers' rights and interests in their:
(a) tangible personal property, including, without limitation, work
in process, inventory, furniture and equipment;
(b) real property, if any, including, without limitation, fixtures;
(c) leasehold interests, some or all of which may require
landlords' consents, which consents will be delivered at Closing;
(d) contracts (subject to the limitations on liabilities as
hereafter provided) which are to be assumed by Purchaser;
(e) licenses and permits, some or all of which may require consent
to assignment;
(f) patents, trademarks and intellectual property, some or all of
which may require consent to assignment;
(g) prepaid expenses;
(h) accounts receivable;
(i) customer lists and account information;
(j) goodwill; and
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(k) copies of files, books and records.
SECTION 1.3. EXCLUDED ASSETS. The following assets of the Sellers are
expressly excluded from the Assets and shall not be sold, assigned, transferred
or delivered to the Purchaser hereunder (collectively, the "EXCLUDED ASSETS"):
a) the corporate minute books and stock record books of the
Sellers;
b) any rights the Sellers may have to enforce the obligations of
the Purchaser pursuant to this Agreement and any and all agreements,
certificates, instruments and other documents related to this Agreement (the
"RELATED DOCUMENTS");
c) the books of account and any other corporate records of the
Sellers;
d) the accounts receivable from Xxx. Xxxxxxxx Xxxx representing
life insurance premiums paid by the Sellers prior to the Closing (provided that
after the Closing the Purchaser shall have no further obligation to fund such
life insurance);
e) any tax refunds due the Sellers; and
f) the stock of Xxxx Power Corporation and of Oryx de Mexico de C.V
("Oryx").
SECTION 1.4. ASSUMED LIABILITIES. At the Closing, the Purchaser shall
assume the following obligations and liabilities of the Sellers which were
related to the Business (the "ASSUMED LIABILITIES"):
(a) $7,330,000 of
(i) payables incurred by the Sellers prior to the Closing Date
in connection with (y) the Material Contracts listed on SCHEDULE 3.12(A) of the
Disclosure Schedule and/or (z) the Ordinary Course Contracts (as defined in
Section 3.12(a)); and/or
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(ii) Debt Contracts listed on SCHEDULE 3.12(B) of the
Disclosure Schedule; provided that Purchaser shall be required to assume all
obligations of each Seller for borrowed money pursuant to this Section
1.4(a)(ii) prior to assuming any obligation of any Seller for any payable
pursuant to Section 1.4(a)(i).
(iii) the obligations to be assumed above shall be satisfied in
the ordinary course of business, provided that the liabilities in Section
1.4(a)(i) shall be satisfied at Closing and the liabilities in Section
1.4(a)(ii) due and payable at the time of Closing shall be paid within five (5)
business days.
All other obligations incurred prior to the Closing Date in connection
with Material Contracts or Ordinary Course Contracts or Debt Contracts shall be
and remain an Excluded Liability and shall be discharged and satisfied in full
by the Sellers.
(b) all liabilities of the Sellers which become performable or
payable subsequent to the Closing Date in connection with the Material Contracts
listed on SCHEDULE 3.12(A) of the Disclosure Schedule which are expressly noted
on such schedule as being assumed by Purchaser (in all cases excluding any
Existing Litigation).
(c) all liabilities of the Sellers which become performable or
payable subsequent to the Closing Date in connection with Ordinary Course
Contracts (as defined in Section 3.12(a) (in all cases excluding any Existing
Litigation).
(d) $90,000 of catalogue liability accrued by the Sellers prior to
the Closing in the ordinary course of business.
(e) $75,000 of sales commissions accrued by the Sellers prior to
the Closing in the ordinary course of business.
(f) one-half of the accounting firms xxxx in connection with the
current audit of all of the Sellers' businesses, provided that (i) Purchaser is
entitled to select the accounting firm and (ii) such cost to Purchaser will not
exceed $60,000.
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(g) all obligations of Sellers arising out of or incurred in
connection with warranty claims for products manufactured or sold by Sellers at
any time prior to the Closing Date. Notwithstanding the Purchaser's assumption
of the Assumed Liabilities, the Purchaser may seek indemnification from the
Sellers for any and all Losses (as defined below) resulting from a breach of any
of their representations and warranties hereunder.
SECTION 1.5. EXCLUDED LIABILITIES. Except for the Assumed Liabilities
specifically set forth in Section 1.4 above, the Purchaser shall not assume or
be deemed to have assumed any debts, liabilities or obligations of any kind,
character or nature, whether known or unknown, fixed, contingent, absolute or
otherwise, arising or made prior to, on or after the Closing Date, of the
Sellers and their affiliates, or relating to or arising from the Assets or the
conduct of the Business on or prior to the Closing Date (each an "EXCLUDED
LIABILITY" and collectively, the "EXCLUDED LIABILITIES") as a result of or in
connection with the Purchaser's purchase of the Assets or its consummation of
the transaction contemplated by this Agreement.
From and after the Closing, the Sellers shall discharge and satisfy all
Excluded Liabilities.
ARTICLE II.
CONSIDERATION FOR TRANSFER
SECTION 2.1. PURCHASE PRICE. Subject to any increase required by
Section 2.3 of this Agreement, the aggregate purchase price to be paid by the
Purchaser in consideration of the sale, assignment, transfer and delivery by the
Sellers of the Assets and the other transactions contemplated by this Agreement
(the "PURCHASE PRICE") shall be Three Million Seven Hundred Thousand Dollars
($3,700,000).
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SECTION 2.2. PAYMENT OF THE PURCHASE PRICE.
(i) At the Closing, the Purchaser shall pay and deliver the
Purchase Price by delivery to the Sellers of Three Million Seven Hundred
Thousand Dollars ($3,700,000) by wire transfer in immediately available funds
(the "CASH PAYMENT") less any sums due pursuant to a certain promissory note of
even date herewith in the original principal amount of Two Hundred Ninety Two
Thousand ($292,000) between Sellers and Purchaser and less the payments to be
made as set forth in Section 2.2(ii).
(ii) At the Closing, Sellers shall satisfy the following
liabilities to the reasonable satisfaction of Purchaser:
(a) all amounts for rent then due and payable (excluding any
obligations for Sellers' facility in Mt. Prospect, Illinois);
(b) all amount then due and payable for medical claims;
(c) all amounts then due and payable for Sellers' 401(k) program;
(d) all accruals for real estate taxes due and payable;
(e) all amounts then due and payable for payroll taxes;
(f) all amounts then due and payable for vacation benefits for
Sellers' employees;
(g) all amounts then due and payable for child support
garnishments;
(h) all amounts then due and payable with respect to Oryx de
Mexico, S.A. de C.V.; and
(i) all of the sales commissions then due and payable not expressly
assumed by Purchaser.
SECTION 2.3. Earn-out Payment. The Purchaser shall pay to the Sellers
an earn-out payment (the "EARN-OUT PAYMENT") based upon the Net Sales (as herein
defined) of the business acquired hereunder (the "ACQUIRED BUSINESS") as
follows:
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Net Sales Earn-out Payment
--------- ----------------
At least $30,000,000, but less $1,000,000.00
than $35,000,000 -
At least $35,000,000, but less $3,000,000.00
than $40,000,000 -
$40,000,000 or more - $5,000,000.00
"NET SALES" shall mean gross sales, less all discounts, returns,
rebates and other adjustments in accordance with GAAP, received by the Acquired
Business (i.e., all sales from the Sellers' product line and products currently
under development and set forth on SCHEDULE 2.3 of the Disclosure Schedule
(and/or variations based directly on the same) whether to current customers of
any Seller or a new customer) for the period from and including April 1, 2000
through and including March 31, 2001 (the "EARN-OUT PERIOD"). All sales shall be
recognized by the Purchaser on the date of shipment or the date that the goods
leave the Purchaser's dock. The applicable Earn-out Payment shall be calculated
by the Purchaser within one hundred twenty (120) days of the Earn-out Period,
and shall be paid by wire transfer within 10 business days thereafter.
Following the Closing, the Purchaser agrees to operate the Business in
accordance with its standard policies and procedures, including accounting for
the Business in accordance with GAAP. The Purchaser shall provide Sellers'
agents access, upon reasonable prior notice and subject to reasonable
confidentiality obligations, to all documentation used in the calculation of the
Earn-out Payment in order to allow Sellers, at their sole expense, to audit such
calculation.
SECTION 2.4. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Sellers and the Assets as set forth in SCHEDULE 2.4 of the
Disclosure Schedule prepared by the Purchaser. The Purchaser and the Sellers
each agrees (a) that any
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such allocation shall be consistent with the requirements of Section 1060 of the
Code and the regulations promulgated thereunder; (b) to complete jointly and to
file separately Form 8594 with its federal income tax return consistent with
such allocation for the tax year in which the Closing occurs; and (c) that
neither party shall take a position on any income, transfer or gains tax return,
before any Governmental or Regulatory Authority charged with the collection of
any such tax or in any Action or Proceeding, that is in any manner inconsistent
with the terms of any such allocation without the prior written consent of the
other party, which consent shall not be unreasonably withheld or delayed.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES AS TO THE SELLERS
The Sellers hereby, jointly and severally, represent and warrant to the
Purchaser, as of the date hereof (except as to any representation or warranty
which specifically relates to an earlier date) and as of the moment immediately
prior to Closing, as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; INVESTMENTS.
(a) Each Seller is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdictions set forth in SCHEDULE
3.1(A) of the Disclosure Schedule, with all requisite power and authority to own
the Assets, lease its properties, and to conduct the Business as it is presently
conducted. Each Seller is qualified to do business and is in good standing in
each jurisdiction in which it owns assets, leases property or conducts the
Business, which jurisdictions are set forth on SCHEDULE 3.1(A) of the Disclosure
Schedule.
(b) Other than as set forth in SCHEDULE 3.1(B) of the Disclosure
Schedule, each Seller does not have any affiliates or hold any direct or
indirect equity investments in other businesses, joint ventures, partnerships or
other persons. None of the
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entities set forth in SCHEDULE 3.1(B) of the Disclosure Schedule has any
business, interests, revenues, or expenses that relate in any manner to the
Business.
(c) Each Seller has delivered to the Purchaser complete copies of
its currently operative certificate of incorporation and by-laws.
SECTION 3.2. AUTHORIZATION. Each Seller has full corporate power and
authority to perform the transactions contemplated by this Agreement. Each
Seller's execution and delivery of this Agreement and the Related Documents and
its performance of the transactions contemplated herein have been duly
authorized by all requisite action, including, without limitation, by such
Seller's board of directors and, where applicable, its stockholders. This
Agreement and the Related Documents have been duly and validly executed and
delivered by each Seller and constitute legal, valid and binding obligations of
such Seller, enforceable in accordance with their terms, except to the extent
that such enforcement may be subject to applicable bankruptcy, insolvency or
similar laws relating to creditors' rights and remedies generally.
SECTION 3.3. NO VIOLATION. Neither the execution and delivery of this
Agreement or the Related Documents by each Seller and the performance of its
obligations hereunder and thereunder, nor the purchase and sale of the Assets,
will:
(a) violate or result in any breach of any provision of any
Seller's certificate of incorporation or by-laws;
(b) except as set forth on SCHEDULE 3.3(B) of the Disclosure
Schedule violate, conflict with or result in a violation or breach of, or
constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or require the consent of any other party
to, or result in the acceleration of, or entitle any party to accelerate
(whether as a result of a change in control of any Seller or otherwise) any
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obligation under, or result in the loss of any benefit under, any agreement to
which any Seller is a party, or give rise to the creation of any Encumbrance
upon any of the Assets; or
(c) violate any order, writ, judgment, injunction, decree, statute,
law, rule, regulation or ordinance of any court or governmental,
quasi-governmental or regulatory department or authority ("GOVERNMENTAL
AUTHORITY") applicable to any Seller, the Business or any of the Assets.
SECTION 3.4. OWNERSHIP. All shares of capital stock or securities of
the Sellers, other than Xxxx Products Corp., are held entirely, directly or
indirectly by Xxxx Products Corp..
SECTION 3.5. CONSENTS AND APPROVALS. Except as listed on SCHEDULE 3.5
of the Disclosure Schedule, no filing or registration with, no notice to, and no
permit, authorization, consent or approval of any Governmental Authority or any
other person is necessary for the Sellers to execute and deliver this Agreement
and the Related Documents or to enable the Purchaser after the Closing to
continue to conduct the Business as presently conducted.
SECTION 3.6. FINANCIAL STATEMENTS. The Sellers have delivered to the
Purchaser the unaudited financial statements of the Sellers as of May 31, 1999
(the "FINANCIAL STATEMENTS"), which Financial Statements include the Sellers'
unaudited balance sheet as of May 31, 1999. The Financial Statements are
accurate in all material respects and have been prepared from the books and
records of the Sellers and in accordance with GAAP consistently applied and
fairly present the financial condition of the Sellers as of the date thereof and
the results of the operations of the Business for the period indicated. A copy
of the Financial Statements is attached hereto as SCHEDULE 3.6 of the Disclosure
Schedule.
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SECTION 3.7. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
SCHEDULE 3.7 of the Disclosure Schedule, on May 31, 1999, the Sellers had no
material liability (whether accrued, absolute, contingent or otherwise, and
whether then due or to become due) nor loss contingency, except as reflected on
the Financial Statements, which would be required to be included therein in
accordance with GAAP consistently applied, and the Sellers have no knowledge of
any valid basis for the assertion of any such material liability or loss
contingency.
SECTION 3.8. ABSENCE OF CERTAIN CHANGES. Except as disclosed in
SCHEDULE 3.8 of the Disclosure Schedule, since May 31, 1999, each Seller has
conducted the Business in the usual ordinary course, and, without limiting the
generality of the foregoing, since May 31, 1999 there has not been:
(a) any change or condition of any character in the Assets
including, without limitation, the financial condition, results of operations or
prospects of the Business which, individually or in the aggregate, had or could
reasonably be expected to have a material adverse effect on the revenues,
financial condition, results of operations, properties, assets or prospects of
the Sellers (a "MATERIAL ADVERSE EFFECT");
(b) any capital expenditure or commitment thereof in excess of
$10,000 individually or $50,000 in the aggregate;
(c) any sale, lease, license, Encumbrance or other transfer or
disposition of any material assets or properties of any Seller except in the
ordinary course of business;
(d) any forgiveness or cancellation of any debts or claims, or,
except in the ordinary course, any discharge or satisfaction of any Encumbrance
or payment of any liability or obligation, of any Seller, except as expressly
set forth herein;
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(e) any material change in any Seller's credit practices or any
creation or assumption of indebtedness for money borrowed, or any making of
loans, advances or capital contributions except in the ordinary course of
business;
(f) (i) any material increase in the rate or terms of compensation
(including termination and severance pay) payable or to become payable by any
Seller to its directors, officers, employees or agents (except for normal
increases which are consistent with past practices), or any increase in the rate
or terms of any bonus, insurance, pension or other Benefit Plan (as hereinafter
defined), or any program or arrangement made to, for or with any such directors,
officers, employees or agents, or (ii) any entry by any Seller into any
employment, profit sharing, compensation, severance or termination agreement
with any such person;
(g) except in the ordinary course of business, any entry into or
commitment to enter into any material contract by any Seller or any material
change or amendment to any material contract, or any entry into any or
commitment to enter into any contract with an affiliate of any Seller;
(h) any material damage, destruction or loss to the properties or
assets owned, leased or used by any Seller, whether or not covered by insurance,
which adversely affected the operations of the Business;
(i) any material change by any Seller in its financial or tax
accounting principles or methods;
(j) any acquisition (by merger, consolidation or acquisition of
stock or assets) by any Seller of any business entity or division or significant
assets thereof;
(k) any failure to maintain the books, accounts and records of any
Seller in the usual, regular and ordinary manner on a basis consistent with
prior practice and in accordance with GAAP;
(l) any change made or authorized in any Seller's certificate of
incorporation or by-laws;
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(m) any failure by any Seller to use its customary efforts to
preserve its goodwill subject to the Sellers' liquidity problems, with
suppliers, customers and others with which it has business relationships and to
maintain its business, employees, licenses and operations consistent with past
practices;
(n) any loss of any customer or project of any Seller;
(o) any resignation or termination of employment of any key
employee of any Seller. The Sellers have no knowledge of any impending
resignation that could become applicable to this Section 3.8 (o);or
(p) any purchase order from any customer in excess of $100,000.
SECTION 3.9. LITIGATION. Except as set forth in SCHEDULE 3.9 of the
Disclosure Schedule, there is no action, dispute, suit, litigation, hearing,
inquiry, proceeding, arbitration or investigation pending or threatened against
any Seller or any of its properties, assets or rights, before any court,
arbitrator or Governmental Authority, nor is there any judgment, decree,
injunction, rule or order of any court, arbitrator or Governmental Authority
outstanding against, and unsatisfied by, any Seller (any of the foregoing being
herein referred to as "EXISTING LITIGATION"), nor does any Seller know of any
fact or condition which could reasonably be expected to serve as a basis for the
assertion of any such action, suit, inquiry, judicial or administrative
proceeding, arbitration or investigation which could reasonably be expected to
have a Material Adverse Effect. There is no action, suit, proceeding or
investigation by any Seller pending or that any Seller intends to initiate or is
considering initiating.
SECTION 3.10. TITLE TO ASSETS. Except as set forth in SCHEDULE 3.10 of
the Disclosure Schedule, each Seller has good and marketable title to all of the
properties and assets used in the conduct of the Business or reflected in the
Financial Statements as owned by it, free and clear of any and all liens or
Encumbrances (except for those
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properties or assets disposed of in the ordinary course of business). SCHEDULE
3.10 of the Disclosure Schedule lists all of the properties and assets used in
the Business that are individually or in the aggregate material to any Seller
which are not owned by such Seller. Except as set forth in SCHEDULE 3.10 of the
Disclosure Schedule, all of the Assets are located at the Sellers' facilities at
00 Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx.
SECTION 3.11. The properties and assets used in the Business or
otherwise comprising the Assets are, in all material respects, sufficient for
the conduct of normal operations of the Business as presently conducted by the
Sellers.
SECTION 3.12. CONTRACTS.
(a) SCHEDULE 3.12(A) of the Disclosure Schedule sets forth a
complete and accurate list of all of the material contracts, agreements and
arrangements, whether written or oral, formal or informal, which relate to the
Assets, except for Ordinary Course Contracts and Debt Contracts, which involve
(i) obligations (contingent or otherwise) of, or payments to, the Sellers in
excess of $25,000 or (ii) the license of any patent, copyright, trade secret or
other proprietary right to or from any Seller (iii) provisions materially
restricting or materially affecting the development, distribution or provision
of the products or services of the Seller, (iv) indemnification by any Seller or
(v) obligations of any Seller which are not terminable by such Seller upon no
more than ninety (90) days' notice (sometimes hereinafter collectively referred
to as the "MATERIAL CONTRACTS"). The Material Contracts also include contracts,
agreements and arrangements to purchase capital equipment, non-competition
agreements, profit sharing, employment, consulting and agency agreements.
"ORDINARY COURSE CONTRACTS" shall mean those contracts entered into in the
ordinary course of business by any Seller from the date of this Agreement until
Closing including trade payables, open purchase orders, and supplier
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agreements. The Material Contracts and Ordinary Course Contracts were negotiated
at arms' length and in good faith on the part of the Sellers.
(b) SCHEDULE 3.12(B) of the Disclosure Schedule sets forth a
complete and accurate list of all guarantees, loans or other financing
agreements pursuant to which any Seller is or may be liable as guarantor,
obligor or payor or otherwise for the payment of money or guarantee of such
payment (the "DEBT CONTRACTS").
(c) Other than as set forth in SCHEDULE 3.12(C) of Disclosure
Schedule, each Seller is not in default with respect to any material obligation
to be performed under any Material Contract, Ordinary Course Contract or Debt
Contract, and to the knowledge of the Sellers, each other party to a Material
Contract, Ordinary Course Contract or Debt Contract is not in default with
respect to any material obligation to be performed.
(d) Except as set forth in SCHEDULE 3.12(D) of the Disclosure
Schedule, no consent by, notice to or approval from any third party is required
under any of the Material Contracts, Ordinary Course Contracts or Debt Contracts
as a result of or in connection with the execution, delivery or performance of
this Agreement and/or the Related Agreements or the consummation of the
transactions contemplated herein.
SECTION 3.13. EMPLOYEE BENEFIT PLANS; LABOR RELATIONS.
(a) SCHEDULE 3.13(A) of the Disclosure Schedule contains a complete
and accurate list of each employee benefit plan, program, agreement or
arrangement, whether written or oral, covering employees, former employees or
directors of any Seller, or providing benefits to such persons in respect of
services provided to any Seller (collectively, the "BENEFIT PLANS"). SCHEDULE
3.13(A) of the Disclosure Schedule indicates which of the Benefit Plans is an
"employee benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and which of the
Benefit Plans is subject to Section 302 or Title IV of ERISA.
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(b) With respect to each Benefit Plan, the Sellers heretofore
delivered to the Purchaser accurate and complete copies of such Benefit Plan and
any amendments thereto (or if the Benefit Plan is not a written plan, a
description thereof), and, if applicable, (i) any related trust or other funding
vehicle, and (ii) any reports or summaries required under ERISA and the most
recent determination letter received from the Internal Revenue Service with
respect to each Benefit Plan intended to qualify under section 401 of the
Internal Revenue Code of 1986, as amended ("CODE").
(c) As of the date hereof, except as set forth in SCHEDULE 3.13(C)
of the Disclosure Schedule, each Seller is not a party to any collective
bargaining agreement or other labor agreement with any union or labor
organization, and to the knowledge of the Sellers, there is no activity or
proceeding of any labor organization or employee group to organize any such
employees.
(d) SCHEDULE 3.13(D) of the Disclosure Schedule contains a complete
and accurate list of the following information for each employee of the Sellers,
including each employee on leave of absence: name, job title; current
compensation paid or payable and any change in compensation since June 30, 1998;
vacation accrued; and service credited for purposes of vesting and eligibility
to participate under any Benefit Plan. To the Sellers' knowledge, no current
officer or director or employee of any Seller is a party to, or is otherwise
bound by, any agreement or arrangement, including any confidentiality,
non-competition, or proprietary rights agreement, between such employee or
officer or director or any other person that in any way materially adversely
affects the performance of his or her duties as an employee or officer or
director of any Seller or the ability of any Seller to conduct the Business.
SECTION 3.14. TAXES.
(a) Except as set forth in SCHEDULE 3.14(A) of the Disclosure
Schedule, each Seller has:
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(i) timely filed or caused to be filed with appropriate
governmental agencies or departments all Federal, state, local and foreign
returns (the "TAX RETURNS") for Taxes (as hereinafter defined) required to be
filed by it;
(ii) paid or caused to be paid all Taxes (including any
additions or penalties if any) required to be paid in respect of the periods for
which its Tax Returns are due, and will establish an adequate accrual or reserve
for the payment of all Taxes payable in respect of the period, including
portions thereof, subsequent to the last of said periods up to and including the
Closing Date.
(b) Each Seller is not a party to any action, suit or proceeding by
any Governmental Authority for the assessment or collection of Taxes, nor has
any claim or assessment for collection of Taxes been asserted against any of
them, and there is no audit examination, deficiency or refund litigation or
matter in controversy with respect to any Taxes that might result in a
determination the effect of which could have a Material Adverse Effect.
(c) The Tax Returns are complete and accurate in all material
respects, and the calculations and deductions set forth therein have been made,
in all respects, in compliance with all applicable Tax statutes, laws, rules and
regulations. Each Seller's Tax Returns were last audited by the Internal Revenue
Service or by comparable state or local agencies on the dates set forth in
SCHEDULE 3.14(C) of the Disclosure Schedule.
(d) The term "TAX" shall include all taxes, charges, withholdings,
fees, levies, penalties, additions, interest or other assessments imposed by any
United States Federal, state or local and foreign or other taxing department or
authority on any Seller (including, without limitation, as a result of being a
member of an affiliated, combined or unitary group or as a result of any
obligation arising out of an agreement to indemnify any other person), and
including, but not limited to, those related to income,
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gross receipts, gross income, sales, use, excise, occupation, services, leasing,
valuation, transfer, license, customs duties or franchise.
SECTION 3.15. ENVIRONMENTAL MATTERS.
(a) Except as disclosed in SCHEDULE 3.15(A) of the Disclosure
Schedule, there are no Hazardous Substances on, in, or under any property or
buildings currently or formerly owned, leased or operated by any Seller (the
"SELLER FACILITIES") the presence of which could reasonably be expected to
result in a Material Adverse Effect.
(b) Except as disclosed in SCHEDULE 3.15(B) of the Disclosure
Schedule, (i) each Seller is in full compliance with all Environmental Laws,
(ii) each Seller has obtained all material permits required under any
Environmental Law, and (iii) each Seller does not have knowledge of any notice
of any suit, litigation, arbitration, hearing, investigation, dispute or other
action (whether civil, criminal, administrative or investigative) brought by or
before any court, Governmental Authority or arbitrator relating to (A) any
alleged noncompliance with any requirement of any Environmental Law or (B) the
presence or alleged presence of Hazardous Substances in, under, or upon any
Seller Facilities or upon the properties of any sites to which any of the
Sellers' waste has been transported, whether for disposal or for any other
purpose, and whether against any Seller or any of the assets or properties of
any Seller, and any Seller has no knowledge of any basis for any such notice or
actions.
(c) For purposes of this Agreement (i) "HAZARDOUS SUBSTANCES" means
any wastes, substances, or materials (whether solids, liquids or gases) that are
defined or regulated as hazardous or toxic under any Environmental Law,
including without limitation, substances defined as "hazardous wastes,"
"hazardous substances," "toxic substances," "radioactive materials," or other
similar designations in any Environmental Laws. "Hazardous Substances" includes,
without limitation, polychlorinated biphenyls (PCBs), asbestos, lead-based
paints and petroleum and
18
petroleum products, and (ii) "ENVIRONMENTAL LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss. 9601 ET
Seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 ET SEQ.; the
Resources Conservation and Recovery Act, 42 U.S.C. ss. 9601 ET Seq.; the Clean
Water Act, 33 U.S.C. ss. 1251 ET Seq.; the Safe Drinking Water Act, 42 U.S.C.
ss. 300F ET seq.; the Clean Air Act, 42 U.S.C. ss. 7401 ET Seq., each as
amended; or any other applicable federal, state, or local laws, regulations,
ordinances, decrees, rules, judgments, orders or directives now or hereinafter
in effect relating to the protection of human health, safety or the environment,
or otherwise relating to Hazardous Substances generation, production, use,
storage, treatment, transportation or disposal.
SECTION 3.16. COMPLIANCE WITH APPLICABLE LAWS; PERMITS AND LICENSES.
(a) SCHEDULE 3.16(A) of the Disclosure Schedule sets forth all of
the licenses, franchises, permits, consents and authorizations necessary for the
lawful conduct of the Business. Except as set forth in SCHEDULE 3.16(A) of the
Disclosure Schedule, each Seller properly holds, and at all relevant times has
held, all material licenses, franchises, permits, consents and authorizations
necessary for the lawful conduct of the Business, and the Business is not being
and, during the relevant statute of limitations period, has not been conducted
in material violation of any provision of any material federal, state, local or
foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit, consent or license or other governmental
authorization or approval ("LAW") applicable to it.
(b) Except as set forth in SCHEDULE 3.16(B) of the Disclosure
Schedule, no Seller has received any notification of any material failure by any
Seller to comply with any Law applicable to it.
19
SECTION 3.17. ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Sellers nor
any directors, officers, employees or agents thereof, acting on behalf of the
Business, nor any other person acting on their behalf on behalf of the Business:
(i) has made any political contributions in violation of Law;
(ii) has received any payments, services or gratuities which
were not legal to receive or which any Seller or such persons should have known
were not legal for the payor or the provider to make or provide; or
(iii) has made any unlawful payments or given or agreed to give
any gift or similar benefit of more than nominal value to governmental officials
in their individual capacities for the purpose of assisting any Seller in
securing or retaining any business opportunity, contract, permit or license or
in conducting its usual and customary operations or in clearing the shipment of
goods through customs in any country.
SECTION 3.18. BROKERS' FEES AND COMMISSIONS. Neither the Sellers nor
any of their directors, officers, employees or agents has employed any
investment banker, broker, finder or intermediary, and no fee or other
commission is owed to any third party, in connection with the transactions
contemplated herein.
SECTION 3.19. PROPRIETARY RIGHTS.
(a) Set forth in SCHEDULE 3.19(A) of the Disclosure Schedule is a
complete and accurate list of all patents, registered copyrights, trademarks and
trade names in which each Seller has proprietary rights (hereinafter referred to
as the "PROPRIETARY RIGHTS"). Such Proprietary Rights are those necessary for
the ordinary and usual conduct of the Business prior to and at the Closing.
(b) To the best of the Sellers' knowledge the use of the
Proprietary Rights does not infringe upon the rights of any other person or
entity, whether
20
or not registered, patented or copyrighted. No Seller has received any notice of
a claim of such infringement nor were any such claims the subject of any action,
suit or proceeding involving any Seller.
(c) No Seller has knowledge of any infringement or improper use by
any third party of the Proprietary Rights, nor has any Seller instituted any
action, suit or proceeding in which an act constituting an infringement of any
of the Proprietary Rights was alleged to have been committed by a third party.
(d) Except as set forth in SCHEDULE 3.19(D) of the Disclosure
Schedule, there are no licenses, sublicenses or agreements relating to (i) the
use by third parties of the Proprietary Rights or (ii) the use by any Seller of
the Proprietary Rights, and, to the best of the Sellers' knowledge, there is no
party with an adverse interest or claim affecting any of the Proprietary Rights.
(e) SCHEDULE 3.19(E) of the Disclosure Schedule identifies (i) all
of the software and computer databases (collectively, the "COMPUTER SYSTEMS")
that are material to the conduct of the Business, (ii) whether such Computer
Systems are owned or licensed by any Seller and, (iii) if licensed, the name of
such licensor. Except as set forth on Schedule 3.19(e) of the Disclosure
Schedule, each Seller has all legal right to use the Computer Systems as they
are currently being used, and the Purchaser will continue to have the legal
right to use the Computer Systems in this manner following the consummation of
the transactions contemplated herein. The use of the Computer Systems does not
infringe upon the rights of any other person or entity, nor has any Seller
received any notice of a claim of such infringement. Except as listed on
SCHEDULE 3.19(E) of the Disclosure Schedule, there are no licenses, sublicenses
or other agreements relating to the use of the Computer Systems by any Seller or
third parties. Except as set forth on Schedule 3.19(e) of the Disclosure
Schedule, the Computer Systems will function with dates of January 1, 2000 and
beyond ("MILLENNIUM DATES") in the same manner as such Computer Systems operate
with pre-Millennium Dates, including, without limitation, as
21
relates to the input, storage, calculation, transmission, display, retrieval,
processing and printing of Millennium Dates, and that the Computer Systems will
accurately and simultaneously process both pre-Millennium Dates and Millennium
Dates.
SECTION 3.20. ACCOUNTS RECEIVABLE; PAYABLES.
(a) Except as set forth in SCHEDULE 3.20 of the Disclosure
Schedule, all outstanding accounts and notes receivable reflected on the
Financial Statements and that are incurred in the ordinary course of business by
the Sellers from May 31, 1999 through the Closing Date (collectively, the
"CLOSING ACCOUNTS RECEIVABLE"), are due and valid claims against account debtors
for goods or services delivered or rendered, and subject to no defenses, offsets
or counterclaims, except as specifically reserved against in such balance
sheets. The accruals or reserves reflected in the Financial Statements reflect
the Sellers' historical bad debt experience. The Closing Accounts Receivable
will be fully collectible within ninety (90) days of the date of invoice or
incurrence, except to the extent reserved or accrued on the Financial Statements
or as set forth on SCHEDULE 3.20 of the Disclosure Schedule. Except as set forth
in SCHEDULE 3.20 of the Disclosure Schedule, all Closing Accounts Receivable
arose in the ordinary course of business. Except as set forth in SCHEDULE 3.20
of the Disclosure Schedule, no Closing Accounts Receivable are subject to prior
assignment or other Encumbrance. Except as reflected in such Financial
Statements, no Seller has incurred any liabilities to customers for discounts,
returns, promotional allowances or otherwise through the date of the Financial
Statements.
(b) All obligations of the Sellers for money owed, whether in
respect of the payment for goods and services, pursuant to financing
arrangements or otherwise, have been fully reflected in the Financial Statements
or are incurred in the ordinary course of business from May 31, 1999 through the
Closing Date.
22
SECTION 3.21. INSURANCE. SCHEDULE 3.21 of the Disclosure Schedule sets
forth a complete and accurate list (including the name of the insurer, name,
address and telephone number of the insurance broker or agent, type of coverage,
premium, policy number, limits of liability for personal injury and property
damage and expiration date) of all binders, policies of insurance, self
insurance programs or fidelity bonds, other than bonds for excise taxes and
custom duties provided in the ordinary course of business (collectively the
"INSURANCE POLICIES") maintained by any Seller or for which any Seller is a
named insured. All of the Insurance Policies have been issued under valid
policies or binders for the benefit of such Seller, and are in amounts and for
risks, casualties and contingencies customarily insured against by enterprises
with operations similar to those of the Sellers. All of the Insurance Policies
are currently valid, issued, outstanding and enforceable, and each of the
Insurance Policies shall remain in full force and effect at least through the
respective expiration dates set forth in SCHEDULE 3.21 of the Disclosure
Schedule. There are no pending or asserted claims against any Insurance Policy
as to which any insurer has denied liability, and there are no claims under any
Insurance Policy that have been disallowed or improperly filed.
SECTION 3.22. REAL ESTATE.
(a) The Sellers do not own any real property.
(b) SCHEDULE 3.22(B) of the Disclosure Schedule sets forth a
complete and accurate list of all real property leased or subleased by or on
behalf of each Seller (the "REAL ESTATE LEASES"). Each Seller has been in
peaceable possession of the premises covered by the Real Estate Leases since the
commencement date of the original term of such Real Estate Lease. Other than as
set forth on SCHEDULE 3.22(B) of the Disclosure Schedule, the Sellers have
delivered to the Purchaser accurate, correct, and complete copies of the Real
Estate Leases, as amended, which leases, as amended, are in full force and
effect and constitute valid and binding obligations of the respective parties
23
thereto. There have not been and there currently are not any material defaults
under said leases by any party and no event has occurred which (whether with or
without notice, lapse of time, or the happening or occurrence of any other
event) would constitute a default thereunder entitling the landlord to terminate
the lease. Subject to obtaining the consents as set forth in the Disclosure
Schedules, the continuation, validity, and effectiveness of all such leases
under the current rentals and other current material terms thereof will in no
way be affected by the transactions contemplated by this Agreement.
SECTION 3.23. TRANSACTIONS WITH INSIDERS. Except as set forth in the
Financial Statements, and in SCHEDULE 3.23 of the Disclosure Schedule, and
except with respect to equity interests constituting less than 5% of the
outstanding capital stock of any publicly traded corporation, no Insider (as
hereinafter defined): (i) owns, directly or indirectly, any debt, equity or
other interest or investment in any corporation, association or other entity
which is a competitor, lessor, lessee, customer, supplier or advertiser of any
Seller, or otherwise has a business relationship with any Seller; (ii) has
pending or, to the knowledge of any Seller, threatened any action, suit,
proceeding or other claim against or owes any amount to, or is owed any amount
by, any Seller, other than for amounts accrued in the ordinary course of
employment; (iii) has any interest in or owns any property or right used in the
conduct of the operations of the Business; (iv) has lent or advanced any money
to, or borrowed any money from, or guaranteed or otherwise become liable for any
indebtedness or other obligations of any Seller, which loans, debts or
guarantees are now outstanding or will be outstanding on the Closing Date; or
(v) is a party to any material contract, lease, agreement, arrangement or
commitment, whether oral or written, express or implied, concerning the
operations of the Business (other than employment agreements listed in any
schedule to the Disclosure Schedule). The term "INSIDER" shall mean any of the
Sellers or any director, officer, employee or agent of any Seller or any member
of the immediate family of any such person or any corporation, partnership,
trust or other entity
24
in which any Seller, or any director, officer, employee or agent of any Seller
or any family member of any such person has a five percent (5%) or greater
interest or is a director, officer, employee, agent, joint venturer or partner
or trustee. The term "Insider" also shall include any entity which controls, or
is controlled by, or is under common control with any of the individuals or
entities described in the preceding sentence.
SECTION 3.24. REGULATORY REPORTS. Each Seller has filed all material
reports, registrations and statements the failure of which would have had a
Material Adverse Effect, together with any amendments required to be made with
respect thereto, that it was required to file in the last five (5) year period
with any Governmental Authority, and has paid all fees or assessments due and
payable in connection therewith.
SECTION 3.25. CUSTOMERS OF THE SELLERS. Except as set forth on SCHEDULE
3.25 of the Disclosure Schedule, the Sellers do not know of any fact, condition
or event (including, without limitation, the consummation of the transactions
contemplated herein) subject to Sellers' liquidity problems, which would
adversely affect the relationship of such Seller with its customers generally.
SECTION 3.26. POWERS OF ATTORNEY; GUARANTIES. Except as set forth on
SCHEDULE 3.26 of the Disclosure Schedule, each Seller has not granted any power
of attorney, revocable or irrevocable, that currently remains outstanding, nor
does there exist any obligation or liability on the part of such Seller, either
actual, accrued, accruing or contingent, as guarantor, surety, co-signer,
endorser, co-maker or indemnitor in respect of the obligation of any person,
firm, organization or other entity.
SECTION 3.27. ACCURACY OF REPRESENTATIONS. No representation or
warranty contained in this Article III contains any untrue statement of a
material fact or
25
omits to state a material fact required to be stated herein or necessary in
order to make the statements herein, in light of the circumstances under which
they are made, not misleading.
SECTION 3.28. SELLERS' KNOWLEDGE. The "Sellers' knowledge" or "the best
of the Sellers' knowledge" shall mean the knowledge of any director, officer or
managerial employee, and shall include information which such individuals
actually knew or should have known through the performance of the duties of such
individuals in a manner that is customary in the industry.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers, as of the
date hereof (except as to any representation or warranty which specifically
relates to an earlier date) and immediately prior to Closing, as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of California, with all requisite power and authority and legal right to own
assets, to lease properties, and to conduct its business as presently conducted.
SECTION 4.2. AUTHORIZATION. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and the Related Agreements and
to consummate the transactions contemplated herein. The execution and delivery
of this Agreement and the Related Documents by the Purchaser and the performance
by the Purchaser of its obligations hereunder have been duly authorized by all
requisite corporate action. This Agreement and the Related Documents have been
duly and validly executed and delivered by the Purchaser and constitute the
legal, valid and binding obligation of the
26
Purchaser, enforceable against the Purchaser in accordance with their terms,
except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, or similar laws relating to creditors' rights and
remedies generally.
SECTION 4.3. NO VIOLATION. Neither the execution and delivery of this
Agreement and the Related Documents by the Purchaser, nor the performance by the
Purchaser of its obligations hereunder, will:
(a) violate or result in any breach of any provision of the
Purchaser's certificate of incorporation or by-laws; or
(b) violate any order, writ, judgment, injunction, decree, statute,
rule or regulation of any court or Governmental Authority applicable to the
Purchaser.
SECTION 4.4. CONSENTS AND APPROVALS. No filing or registration with, no
notice to and no permit, authorization, consent or approval of any third party
or any Governmental Authority not heretofore delivered to the Sellers is
necessary for the Purchaser's consummation of the transactions contemplated
herein.
SECTION 4.5. BROKERS' FEES AND COMMISSIONS. Except for fees due and
owing to one broker (Adquest) which Purchaser shall be solely responsible for,
neither the Purchaser nor any of its shareholders, directors, officers,
employees or agents has employed any investment banker, broker, finder or
intermediary, and such no fee or other commission is owed to any third party, in
connection with the transactions contemplated herein.
SECTION 4.6. ACCURACY OF REPRESENTATIONS. No representation or warranty
contained in this Article IV contains any untrue statement of a material fact or
27
omits to state a material fact required to be stated herein or necessary in
order to make the statements herein, in light of the circumstances under which
they are made, not misleading.
ARTICLE V.
COVENANTS
SECTION 5.1. CONDUCT OF THE SELLERS' BUSINESS PRIOR TO THE CLOSING.
During the period from the date of this Agreement and continuing until the
Closing Date, the Sellers agree that, except as expressly contemplated or
permitted by this Agreement or to the extent that Purchaser shall otherwise
consent in writing, the Sellers shall carry on the Business in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted in all material respects except for liquidity problems affecting
Sellers. The Sellers agrees to promptly notify the Purchaser within two (2)
business days of any event or series of events which has resulted in any of the
representations and warranties as to any Seller being misleading in any material
respect. Without limiting the generality of the foregoing, prior to the Closing,
and except as expressly contemplated or permitted by this Agreement, the Sellers
will not, without the prior written consent of the Purchaser, take any action
that would constitute a change which violates the terms of Section 3.8 hereof.
SECTION 5.2. ACCESS TO INFORMATION. During the period from the date of
this Agreement and continuing until the Closing, at reasonable times without
causing unreasonable disruption to the Business, the Sellers shall give the
Purchaser and its authorized representatives full access to all personnel,
offices and other facilities, and to all books and records of the Sellers
(including, without limitation, Tax Returns and accounting work papers) and will
permit the Purchaser to make, and will fully cooperate with regard to, such
inspections in order to conduct, among other things, interviews of individuals
and
28
visual inspections of facilities as the Purchaser may reasonably require and
will fully cooperate in such interviews and inspections and will cause the
Sellers' officers to furnish to the Purchaser such financial and operating data
and other information with respect to the Business and the Assets as the
Purchaser may from time to time reasonably request. The Purchaser agrees that it
will keep confidential all trade secrets and proprietary information of the
Seller ("Confidential Information") learned as a consequence of the transactions
contemplated hereby, and will similarly cause its respective representatives and
agents to maintain such confidentiality. This confidentiality provision shall
survive the Closing and any termination of this Agreement, but shall become
inoperative as to any Confidential Information (i) after the Closing, to the
extent that such Confidential Information is purchased by the Purchaser
hereunder, (ii) which is or becomes generally available to the public other than
as a result of a disclosure by a party to this letter of intent, or such party's
representative, in violation of this confidentiality provision, (iii) which
becomes available on a nonconfidential basis from a source other than the party
to this letter of intent furnishing the Confidential Information or any of its
representatives, which source has believably represented that it is entitled to
disclose such information, or (iv) which was already known on a nonconfidential
basis prior to its disclosure by the Sellers or theirs representatives. In the
event of a breach or threatened breach of the confidentiality provisions of this
Section 5.2 by the Purchaser, the Sellers shall be entitled to institute legal
proceedings to enforce the specific performance of this Section 5.2 and to
enjoin the Purchaser from any violation or further violation of this Section
5.2. The Purchaser acknowledges that the remedies at law for any breach of this
Section 5.2 may be inadequate and that the Sellers shall be entitled to
injunctive relief in the event of any such breach.
SECTION 5.3. MAINTENANCE OF EMPLOYEE AND CUSTOMER RELATIONS. During the
period from the date of this Agreement and continuing until the Closing, the
29
Sellers shall use its reasonable commercial efforts in view of Sellers'
financial condition to retain the services and goodwill of its employees and to
maintain the goodwill of its customers, and shall not take, nor permit any
director, officer, employee, agent or independent contractor of any Seller to
take, any action (i) with respect to any employee, which action is intended to
solicit, entice, persuade or induce such employee to terminate its employment
with any Seller which action is in contravention of the foregoing requirements,
and (ii) with respect to its customers, which action is intended to cause its
customers, to terminate or substantially diminish their business dealings with
any Seller which action is in contravention of the foregoing requirements.
SECTION 5.4. ALL REASONABLE EFFORTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done as promptly as practicable, all things necessary, proper and
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement including, without limitation, fulfillment of the
Conditions of Closing set forth in Article VI hereof. If at any time after the
Closing any further action is necessary or desirable to carry out the purposes
of this Agreement including, without limitation, the execution of additional
instruments, the proper officers and directors of the Purchaser and of the
Sellers shall take all such necessary action.
SECTION 5.5. CONSENTS AND APPROVALS. The parties hereto each will
cooperate with one another and use all reasonable efforts to prepare all
necessary documentation to effect promptly all necessary filings and to obtain
all necessary permits, consents, approvals, orders and authorizations of or any
exemptions by, all third parties and Governmental Authorities necessary to
consummate the transactions contemplated
30
herein, including, without limitation, if applicable, all filings and approvals
in connection with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX Xxx").
SECTION 5.6. PUBLIC ANNOUNCEMENTS. The Purchaser and the Sellers will
consult with each other and will mutually agree upon the content and timing of
any press releases or other public statements with respect to the transactions
contemplated by this Agreement and shall not issue any such press release or
make any such public statement prior to such consultation and agreement, except
as may be required by applicable law or based upon the advice of counsel that
such disclosure would be prudent under applicable securities laws, provided that
such party shall devote its best efforts to inform the other party in advance as
to the timing and contents of the proposed disclosure.
SECTION 5.7. CONFIDENTIALITY. The Sellers shall not use, publish, or
disclose to any other person any confidential or proprietary information
comprising part of the Assets or relating to the Business or the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that the foregoing
restrictions shall not apply to information: (a) that is necessary to enforce
the rights of the Sellers under, or defend against a claim asserted under, this
or any other agreement with the Purchaser, (b) that is necessary or appropriate
to disclose to any Governmental or Regulatory Authority having jurisdiction over
the Sellers, or as otherwise required by law, (c) that becomes generally known
other than through a breach of this Agreement by any Seller, or (d) that is
necessary or appropriate in the ordinary course of the Sellers' Business. The
Sellers, acknowledge that there is not an adequate remedy at law for the breach
of this Section 5.7 and that, in addition to any other remedies available,
injunctive relief may be granted for any such breach.
SECTION 5.8. DISCLOSURE SUPPLEMENTS. Prior to the Closing, each party
to this Agreement will promptly supplement or amend the Disclosure Schedule with
31
respect to any matter heretofore existing or hereafter arising which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedule or which is
necessary to correct any information in such Disclosure Schedule which has been
rendered inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of the Sellers contained in Article III hereof
and for purposes of determining satisfaction of the conditions set forth in
Section 6.2 hereof, the Disclosure Schedules delivered by the Sellers shall be
deemed to include only that information contained therein on the date of this
Agreement and shall be deemed to exclude any information contained in any
subsequent supplement or amendment thereto unless agreed to by the parties.
SECTION 5.9. RESTRICTIONS ON TRANSFER OF THE ASSETS. The Sellers agree
that prior to a termination under this Agreement pursuant to Section 8.7 and
Section 8.8 hereof it will not directly or indirectly sell, assign, transfer,
give, pledge, encumber or otherwise dispose of any portion of the Assets except
(i) in the ordinary course of business and (ii) except for the assets listed on
SCHEDULE 5.9 hereof which Sellers represent are unneeded for the Business and
which Sellers may sell and utilize the proceeds of such sale to pay off
outstanding liabilities of the Business.
SECTION 5.10. EMPLOYEES CONTINUED ASSOCIATION WITH THE BUSINESS. Prior
to Closing, the Purchaser and the Sellers shall meet to discuss which, if any,
of the Sellers' employees the Purchaser shall make an offer of employment to and
the Sellers shall facilitate and not interfere with the Purchaser's employment
of any such employees. The Purchaser shall have no obligation to such employees
for any compensation, benefits, severance, or similar items for or relating to
the period on or prior to Closing, and the Sellers shall not be considered a
third party beneficiary of any employment or benefits provided such employees.
32
ARTICLE VI.
CLOSING CONDITIONS
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS
AGREEMENT. Each party's obligations under Article I and Article II of this
Agreement shall be subject to each of the Parties having obtained any and all
approvals, consents, licenses, permits and authorizations from Governmental
Authorities (including, without limitation, if applicable, the HSR Act), in form
and substance satisfactory to the other Party, necessary to permit such Party to
perform its obligations hereunder, to consummate the transactions contemplated
herein, and to continue to conduct the Business as presently conducted and in
accordance with applicable Law.
SECTION 6.2. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The
Purchaser's obligations under Article I and Article II of this Agreement shall
be further subject to the satisfaction or to the waiver by the Purchaser of the
following conditions precedent:
(a) PERFORMANCE OF OBLIGATIONS OF SELLER. Each of the Sellers'
pre-Closing obligations shall have been duly performed in all material respects,
and each of the representations and warranties of the Sellers contained in this
Agreement shall be true and correct, in all material respects as of the date of
this Agreement and as of the Closing as if made immediately prior to the Closing
(except as to any representation or warranty which specifically relates to
another date), and the Purchaser shall have received a certificate to that
effect signed by an officer of each Seller substantially in the form attached
hereto as EXHIBIT A.
(b) SECRETARY'S CERTIFICATE. Purchaser shall have received from the
Secretary of each Seller, substantially in the form attached hereto as EXHIBIT
B, a certificate enclosing the certified certificate of incorporation and
by-laws of each Seller,
33
corporate resolutions authorizing all of the transactions contemplated herein,
and a good standing certificate of each Seller dated as of a date reasonably
close to the Closing Date.
(c) CONSULTING AGREEMENT. A consulting agreement containing a ten
(10) year term in consideration for the payment of Four Hundred Twenty-Five
Thousand Dollars ($425,000) per annum for the first three (3) years of such
agreement substantially in the form attached hereto as EXHIBIT D (the
"CONSULTING AGREEMENT"), shall have been executed by Xxx. Xxxxxxxx Xxxx and
delivered to the Purchaser.
(d) CONTRACT CONSENTS. Any and all requisite consents, waivers or
authorizations from third parties required for the assumption by the Purchaser
of the Material Contracts listed on SECTION 3.12(A) of the Disclosure Schedule
and the Ordinary Course Contracts shall have been obtained without any adverse
effect on the terms of such contracts.
(e) CHANGES OF NAMES OF THE SELLERS. The Purchaser shall have
received a duly executed amendment to the Certificate of Incorporation of each
Seller, and all terminations or amendments to the foreign qualifications,
registrations, fictitious names, doing business and similar filings,
registrations or certificates of the Sellers deleting and removing any
trademarks or trade names, referred to in Section 3.19 hereof of any variation
of such trademarks or trade names, in each case in a form reasonably acceptable
to the Purchaser and suitable for filing with each applicable Governmental
Authority.
(f) XXXX OF SALE. The Purchaser shall have received a Xxxx of Sale
selling and transferring to Purchaser the Business and all of the Assets,
executed by each Seller and substantially in the form attached hereto as EXHIBIT
E.
(g) SUPPLY AGREEMENT. The Purchaser shall have received the Supply
Agreement executed by each Seller and Oryx in substantially the form attached
hereto as EXHIBIT I (THE "SUPPLY AGREEMENT").
(h) OTHER DOCUMENTS. The Purchaser shall have received any such
other documents or other materials it may reasonably request to consummate the
34
transactions contemplated herein, including, without limitation, the legal
opinion of Seller's counsel in a form reasonably acceptable to Purchaser.
SECTION 6.3. CONDITIONS TO THE OBLIGATIONS OF THE SELLERS. The Sellers'
obligations under Article I and Article II of this Agreement shall be further
subject to the satisfaction or to the waiver by the Sellers of the following
conditions precedent:
(a) CLOSING PAYMENT. The Sellers shall have received the Cash
Payment by wire transfer of immediately available funds from the Purchaser.
(b) PERFORMANCE OF OBLIGATIONS OF PURCHASER. Each of the
pre-Closing obligations of the Purchaser shall have been duly performed, and the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct, in all material respects as of the date of this
Agreement and as of the Closing Date as though made immediately prior to the
Closing (except as to any representation or warranty which specifically relates
to another date), and the Sellers shall have received a certificate to that
effect signed by an officer of the Purchaser substantially in the form attached
hereto as EXHIBIT F.
(c) SECRETARY'S CERTIFICATE. Sellers shall have received from the
Secretary of the Purchaser, substantially in the form attached hereto as EXHIBIT
G, a certificate enclosing appropriate corporate resolutions authorizing the
Purchaser's performance of the transactions contemplated herein, and a good
standing certificate of Purchaser dated as of a date reasonably close to the
Closing Date.
(d) CONSULTING AGREEMENT. The Consulting Agreement shall have been
executed by the Purchaser and delivered to Xxx. Xxxxxxxx Xxxx.
(e) ASSUMPTION AGREEMENT. The Sellers shall have received an
Assumption Agreement assuming the Assumed Liabilities, executed by the Purchaser
and substantially in the form attached hereto as EXHIBIT H.
35
>
(f) SUPPLY AGREEMENT. Each Seller shall have received a copy of the
Supply Agreement executed by the Purchaser.
(g) OTHER DOCUMENTS. The Sellers shall have received from the
Purchaser any such other documents or other materials Sellers may reasonably
request to consummate the transactions contemplated herein, including, without
limitation, the legal opinion of Purchaser's counsel in a form reasonably
acceptable to Sellers.
ARTICLE VII.
SURVIVAL AND INDEMNIFICATION
SECTION 7.1. SURVIVAL. All representations, warranties, covenants and
agreements contained in this Agreement and the Related Documents shall be deemed
to have been relied upon by the parties hereto, and shall survive the Closing;
provided that any such representations, warranties, covenants and agreements
shall be fully effective and enforceable only for a period of one year following
the Closing Date, and shall thereafter be of no further force or effect, except
that the representations and warranties set forth in Section 3.13 (Employee
Benefit Plans; Labor Relations), Section 3.14 (Taxes) and Section 3.15
(Environmental Matters) and the indemnification obligations of any party hereto
in respect of any misrepresentations or related warranties to which such party
had knowledge prior to the Closing shall survive indefinitely. Additionally, the
parties agree that the indemnification obligations set forth in this Article VII
shall survive with respect to any Existing Litigation and as to any claims made
within the applicable survival period until finally resolved. The
representations, warranties, covenants, and agreements contained in this
Agreement or in any certificate, schedule, document, or other writing delivered
by or on behalf of any party pursuant hereto shall not be affected by any
investigation, verification, examination or knowledge acquired or capable of
being acquired by any other party hereto or by any person acting on behalf of
any such other party.
36
SECTION 7.2. INDEMNIFICATION OF THE PURCHASER. From and after the
Closing, the Sellers agree to, jointly and severally, indemnify, defend and hold
harmless the Purchaser and its directors, officers, employees, owners, agents
and affiliates and their successors and assigns or heirs and personal
representatives, as the case may be (each a "PURCHASER INDEMNIFIED PARTY") from
and against, and to promptly pay to or reimburse a Purchaser Indemnified Party
for, any and all losses, damages and expenses (including, without limitation,
reasonable attorneys' and other advisors' fees and expenses), suits, actions,
claims, deficiencies, liabilities or obligations (collectively, the "LOSSES")
sustained by such Purchaser Indemnified Party relating to, caused by or
resulting from:
(a) any misrepresentation, breach of warranty, or failure to
fulfill or satisfy any covenant or agreement made by any Seller;
(b) the operations and business of any Seller through the Closing
Date, to the extent such Losses do not constitute Assumed Liabilities; and
(c) the Excluded Liabilities.
In the event that Purchaser suffers any Loss which is covered by
insurance of the Purchaser and/or any Seller, the parties agree:
(a) if the Loss is covered by insurance of the Purchaser and any
Seller, the parties will look first to the insurance of any Seller, then to the
insurance of the Purchaser and the balance of any Loss shall remain the
responsibility of the Sellers;
(b) if the Loss is covered by insurance of the Purchaser and not by
any Seller, the parties will look first to the insurance of the Purchaser and
the balance of any Loss shall remain the responsibility of the Sellers;
(c) if the Loss is covered by insurance of any Seller and not by
the Purchaser, the parties will look first to the insurance of the Seller and
the balance of any Loss shall remain the responsibility of the Sellers; and
37
(d) that the Purchaser will not have to exhaust its remedies with
any insurance company and that if a claim is denied, Purchaser will then be able
to seek redress against Sellers for the denied claim
SECTION 7.3. INDEMNIFICATION OF THE SELLER. From and after the Closing,
the Purchaser agrees to indemnify, defend and hold harmless the Sellers and
their directors, officers, employees, owners, agents and affiliates and their
successors and assigns or heirs and personal representatives, as the case may be
(each, a "SELLER INDEMNIFIED PARTY") from and against, and to promptly pay to or
reimburse a Seller Indemnified Party for, any and all Losses sustained by such
Seller Indemnified Party relating to, caused by or resulting from: (a) any
misrepresentation, breach of warranty, or failure to fulfill or satisfy any
covenant or agreement made by the Purchaser contained herein or in any of the
Related Documents; (b) the operation of the Business solely by the Purchaser
after the Closing; and (c) failure to timely satisfy the Assumed Liabilities.
SECTION 7.4. INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS AGAINST
INDEMNIFIED PARTIES.
(a) In the event that subsequent to the Closing any Purchaser
Indemnified Party or Seller Indemnified Party (each, an "INDEMNIFIED PARTY")
receives notice of the assertion of any claim or of the commencement of any
action, suit or proceeding by any entity who is not a party to this Agreement (a
"THIRD PARTY CLAIM", which term also shall encompass all Existing Litigation)
against such Indemnified Party, with respect to which the Purchaser or the
Sellers (the "INDEMNIFYING PARTY"), as the case may be, are required to provide
indemnification under this Agreement, the Indemnified Party shall promptly give
written notice, together with a statement of any available information regarding
such claim (collectively, the "THIRD PARTY INDEMNIFICATION NOTICE"), to the
Indemnifying Party within thirty (30) days after learning of such claim (or
within such shorter time as may be necessary to give the Indemnifying Party a
reasonable
38
opportunity to respond to such claim). The Indemnifying Party shall have the
right, upon delivering written notice to the Indemnified Party (the "DEFENSE
NOTICE") within thirty (30) days after receipt from an Indemnified Party of a
Third Party Indemnification Notice, to conduct, at the Indemnifying Party's sole
cost and expense, the defense against such Third Party Claim in the Indemnifying
Party's own name, or, if necessary, in the name of the Indemnified Party;
provided, however, that the Indemnified Party shall have the right to reasonably
approve the defense counsel representing the Indemnifying Party, which approval
shall not be unreasonably withheld, and in the event that the Indemnifying Party
and the Indemnified Party cannot agree upon such counsel within ten (10) days
after the Defense Notice is provided, then the Indemnifying Party shall propose
an alternate defense counsel, which shall be subject again to the Indemnified
Party's reasonable approval in accordance with the terms hereof.
(b) In the event that the Indemnifying Party shall fail to give the
Defense Notice within the time and as prescribed by Section 7.4(a) hereof, then
in any such event the Indemnified Party shall have the right to conduct such
defense in good faith with counsel reasonably acceptable to the Indemnifying
Party, but the Indemnified Party shall be prohibited from compromising or
settling any such claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld and shall be deemed
given in the absence of providing the Indemnified Party with a written response
within ten (10) days of any request therefor. If the Indemnified Party fails to
diligently defend such claim with counsel reasonably satisfactory to the
Indemnifying Party, or settles any such claim without the Indemnifying Party's
prior written consent or otherwise breaches this Article VII, the Indemnified
Party will be liable for all costs, expenses, settlement amounts or other Losses
paid or incurred in connection therewith, and the Indemnifying Party shall have
no obligation to indemnify the Indemnified Party with respect to such claim.
39
(c) In the event that the Indemnifying Party delivers a Defense
Notice and thereby elects to conduct the defense of the subject Third Party
Claim, the Indemnified Party will cooperate with and make available to the
Indemnifying Party such assistance and materials as the Indemnifying Party may
reasonably request, all at the sole cost and expense of the Indemnifying Party.
Regardless of which party defends such claim, the other party hereto shall have
the right at its own cost and expense to participate in the defense assisted by
counsel of its own choosing. Without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld, the
Indemnifying Party will not enter into any settlement of any Third Party Claim
if pursuant to or as a result of such settlement, such settlement would lead to
liability or create any financial or other obligation on the part of the
Indemnified Party for which the Indemnified Party is not entitled to
indemnification hereunder. If a firm decision is made to settle a Third Party
Claim, which offer the Indemnifying Party is permitted to settle under this
Section 7.4(c), and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give at least ten (10) calendar days' prior
written notice to the Indemnified Party to that effect, setting forth in
reasonable detail the terms and conditions of any such settlement (the
"SETTLEMENT NOTICE"). If the Indemnified Party objects to such firm offer within
ten (10) calendar days after its receipt of such Settlement Notice, the
Indemnified Party may continue to contest or defend such Third Party Claim and,
in such event, the maximum liability of the Indemnifying Party as to such Third
Party Claim will not exceed the amount of such settlement offer described in the
Settlement Notice, plus costs and expenses paid or incurred by the Indemnified
Party up to the point such Settlement Notice had been delivered. If an
Indemnified Party settles any Third Party Claim without the prior written
consent of the Indemnifying Party, the Indemnifying Party shall have no
obligation to indemnify the Indemnified Party under this Article VII with
respect to such Third Party Claim.
40
(d) Any judgment entered or settlement agreed upon in the manner
provided herein shall be binding upon the Indemnifying Party, and shall be
conclusively deemed to be an obligation with respect to which the Indemnified
Party is entitled to prompt indemnification hereunder, subject to the
Indemnifying Party's right to appeal an appealable judgment or order. Such
indemnification shall be required to be made no later than the tenth day
following the expiration of any period in which an appeal may be taken, and
shall be satisfied by payment of the amount thereof by the Indemnifying Party in
cash.
SECTION 7.5. FAILURE TO GIVE TIMELY THIRD PARTY INDEMNIFICATION NOTICE.
Any failure by an Indemnified Party to give a timely, complete or accurate Third
Party Indemnification Notice as provided in this Article VII will not affect the
rights or obligations of any party hereunder except and only to the extent that,
as a result of such failure, any party entitled to receive such Third Party
Indemnification Notice was deprived of its right to recover any payment under
its applicable insurance coverage or was otherwise adversely affected or damaged
as a result of such failure to give a timely, complete and accurate Third Party
Indemnification Notice.
SECTION 7.6. NOTICE OF CLAIMS. In the case of a claim for
indemnification other than pursuant to Section 7.4 hereof, upon determination by
a Purchaser Indemnified Party or a Seller Indemnified Party, as the case may be,
that it has a claim for indemnification, the Indemnified Party shall deliver
notice of such claim (each, an "INDEMNIFICATION NOTICE") to the Indemnifying
Party, setting forth in reasonable detail the basis of such claim for
indemnification under Section 7.2 or Section 7.3 and the Indemnified Party's
reasonable estimate of the dollar amount of such claim (the "ESTIMATED
INDEMNIFICATION AMOUNT"). Upon the Indemnification Notice having been given to
the Indemnifying Party, the Indemnifying Party shall have thirty (30) days in
which to notify
41
the Indemnified Party in writing (the "DISPUTE NOTICE") that the amount of the
claim for indemnification is in dispute, setting forth in reasonable detail the
basis of such dispute. In the event that a Dispute Notice is not given to the
Indemnified Party within the required thirty (30) day period the Indemnifying
Party shall be obligated to pay to the Indemnified Party in the amount set forth
in the Indemnification Notice within sixty (60) days after the date that the
Indemnification Notice had been given to the Indemnifying Party.
In the event that a Dispute Notice is timely given to an Indemnified
Party, the parties hereto shall have thirty (30) days to resolve any such
dispute. In the event that such dispute is not resolved by such parties within
such period, the parties shall have the right to pursue all legal remedies
available under Section 8.5.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
SECTION 8.1. AMENDMENT AND MODIFICATION; WAIVER OF COMPLIANCE. Neither
the Purchaser, on the one hand, nor the Sellers, on the other hand, will be
deemed as a consequence of any delay, failure, omission, forbearance or other
indulgence of such party: (i) to have waived, or to be estopped from exercising,
any of its rights or remedies under this Agreement; or (ii) to have modified or
amended any of the terms of this Agreement, unless such modification or
amendment is set forth in writing and signed by the party to be bound thereby.
No single or partial exercise by the Purchaser or the Sellers of any right or
remedy will preclude any other right or remedy, and a waiver expressly made in
writing on one occasion will be effective only in that specific instance and
only for the precise purpose for which given, and will not be construed as a
consent to or a waiver of any right or remedy on any future occasion or a waiver
of any right or remedy against any other party.
42
SECTION 8.2. VALIDITY. If any provision of this Agreement or the
application of any such provision to any party hereto or any circumstances
relating hereto shall be determined by any court of competent jurisdiction to be
invalid and unenforceable to any extent, the remainder of this Agreement or the
application of such provision to such party or circumstances, other than those
to which it is so determined to be invalid and unenforceable, shall not be
affected thereby, and each provision hereof shall be validated and shall be
enforced to the fullest extent permitted by Law.
SECTION 8.3. PARTIES IN INTEREST. This Agreement shall not confer upon
any other person any rights or remedies of any nature whatsoever.
SECTION 8.4. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given upon the earlier to occur of
delivery thereof if by hand or upon receipt if sent by mail (registered or
certified mail, postage prepaid, return receipt requested) or on the second next
business day after deposit if sent by a recognized overnight delivery service or
upon transmission if sent by facsimile (in each case with receipt verified) as
follows:
(a) If to the Purchaser:
Xx. Xxxxx Xxxxx
Vice President - Finance and Administration
SL Industries, Inc.
000 Xxxxxxxxxx Xxxx, Xxxxx X-000
Xx. Xxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
43
With a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
Four Stamford Plaza
000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
(b) if to the Sellers, to:
Xxxx Products, Inc.
c/o Xxx. Xxxxxxxx Xxxx
00 Xxxxxxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: (516) -
--- ----
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Ruskin Moscou Xxxxx & Faltischek P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
; provided that each of the parties hereto shall promptly notify the other
parties hereto of any change of address, which address shall become such party's
address for the purposes of this Section 8.4.
SECTION 8.5. GOVERNING LAW; CONSENT TO JURISDICTION.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the choice of law
principles thereof.
(b) Except as expressly provided elsewhere in this Agreement, all
claims and controversies arising out of or in connection with this Agreement
shall be subject to binding arbitration by a panel of three (3) arbitrators in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA"). Any
44
arbitration shall occur in New York and any judgment on the award rendered in
such arbitration shall be entered in any New York state or federal court having
jurisdiction. The prevailing party in any arbitration proceeding hereunder as
determined by the arbitrators or in any legal proceedings or actions arising
from or in connection with this Agreement shall be entitled to recover
reasonable attorneys' fees, costs and expenses and the losing party shall be
responsible for payment of the arbitrator's fee(s). Nothing herein shall
prohibit a party from seeking equitable relief in a court of law to maintain the
status quo while an arbitration is pending hereunder. The parties agree that the
arbitrator shall not have the power to award punitive damages.
(c) The parties recognize and agree that if for any reason any of
the obligations contained in Sections 5.2 and 5.7 of this Agreement are not
performed in accordance with their specific terms or are otherwise breached,
immediate and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to any other available remedies, the other party shall be entitled to
specific performance of the terms hereof or thereof, in addition to any other
remedy at law or equity and may commence a civil action in any court of
competent jurisdiction to obtain such relief. In the event that any action
should be brought in equity to enforce the provisions of this Agreement, no
party will allege, and each party hereby waives the defense, that there is an
adequate remedy at law. A party shall not be required to file an arbitration
proceeding in order to commence such a civil action for equitable relief.
SECTION 8.6. ENTIRE AGREEMENT. This Agreement and the Related Documents
embody the entire agreement and understanding of the parties hereto and
supersede all prior agreements and understandings between the parties hereto,
whether written or oral, express or implied, with respect to such subject matter
herein and therein.
45
SECTION 8.7. TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, but not later than the
Closing Date:
(i) by mutual written consent of the Purchaser and the Sellers;
(ii) by the Purchaser, in its sole discretion if any of the
representations or warranties of any Seller contained herein are not in all
material respects true, accurate and complete or if any Seller breaches any
covenant or agreement contained herein in any material respect;
(iii) by the Purchaser, if any required third party consents of
any Seller are not obtained or become unobtainable at no cost to the Purchaser
and without any adverse effect on the terms of such third party agreements;
(iv) by the Sellers, if any required third party consents of
the Purchaser are not obtained or become unobtainable at no cost to the Sellers
and without any adverse effect on the terms of such third party agreements;
(v) by the Sellers, in its sole discretion, if any of the
representations or warranties of the Purchaser contained herein are not in all
material respects true, accurate and complete or if the Purchaser breaches any
covenant or agreement contained herein in any material respect; or
(vi) by either the Purchaser, on the one hand, or the Sellers,
on the other hand, if the Closing has not taken place on or before August 31,
1999, unless the failure to consummate the Closing on or prior to such date is
solely due to such party's fault.
8.8. EFFECT OF TERMINATION. In the event of a termination of this
Agreement pursuant to Section 8.7, written notice thereof shall promptly be
given to the other party hereto and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned without further action by
the other party hereto, and this
46
Agreement shall forthwith become void and have no further effect, without any
liability on the part of any party hereto or its affiliates, directors, officers
or shareholders. Notwithstanding such termination and anything contained to the
contrary herein, each party shall have the right to seek all legal remedies
available under Section 8.5. Moreover, the provisions of paragraph 9 of the
letter of intent by and between the Purchaser and the Parent, dated June 15,
1999, shall survive the termination of this Agreement and remain in full force
and effect.
SECTION 8.9. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that this Agreement may be assigned by the
Purchaser to an affiliated corporation or other affiliated entity. Upon any such
assignment, such affiliate shall become a party to this Agreement and all
references herein to the Purchaser shall refer to such affiliate. Subject to the
foregoing, this Agreement will be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
permitted assigns.
SECTION 8.10. Option. The Sellers and Oryx, only upon the Closing,
hereby grant to Purchaser (or a designee of Purchaser which is an affiliate of
Purchaser), for a term of 12 months from the Closing, an option to purchase all
of the assets of Oryx for a purchase price of $1,000. The representations,
warranties, covenants, indemnification provisions and conditions to closing
shall be substantially similar to the provisions set forth herein and shall be
set forth in a separate agreement to be executed shortly after exercise of the
option. Upon Purchaser notifying the Sellers of its decision to exercise the
Option, all parties shall work diligently to effect such sale. If Purchaser
fails to exercise the foregoing Option, or otherwise fails to purchase the Oryx
assets, through no fault of the Sellers, Purchaser will assume the lease
obligations of Oryx for its facility in Reynosa, Temaulipas, Mexico.
47
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first above written.
PURCHASER:
CONDOR D.C. POWER SUPPLIES, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Director
SELLERS:
XXXX PRODUCTS CORP.
By: /s/ Xxxxx Xxxx
---------------------------------
Name: Xxxxx Xxxx
Title: CEO
XXXX POWER CORPORATION
By: /s/ Xxxxx Xxxx
---------------------------------
Name: Xxxxx Xxxx
Title: CEO
FOR PURPOSES OF SECTION 8.10 ONLY
ORYX de MEXICO de C.V.
By: /s/ Xxxxx Xxxx
----------------------------------
Name: Xxxxx Xxxx
Title: CEO
FOR PURPOSES OF SECTIONS 1.4 AND 2.3 ONLY
SL INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
48
