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Exhibit 2.1
Execution Version
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AMENDED AND RESTATED
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STOCK PURCHASE AGREEMENT
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THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT is made and entered
into as of the 30th day of June, 1999, by and between XXXXX TECHNOLOGIES, INC.,
a Delaware corporation with its principal executive offices in Xxxxxxxx Heights,
Ohio (the "Seller"), and L-3 COMMUNICATIONS CORPORATION, a Delaware corporation
with its principal executive offices in New York, New York (the "Buyer").
Certain capitalized terms are defined in Section 9.14 hereof.
RECITALS
A. The parties hereto executed that certain Stock Purchase Agreement,
dated April 18, 1999 (the "Original Purchase Agreement"), and on this date are
executing and delivering (i) the Real Estate Purchase Agreement for the purchase
and sale of the Fee Property, and (ii) this Agreement to amend and restate the
Original Purchase Agreement in its entirety pursuant to the terms hereof, and to
give effect to the Real Estate Purchase Agreement.
B. The Seller is the sole record and beneficial owner of all issued and
outstanding capital stock (the "Shares") of Interstate Electronics Corporation,
a California corporation (the "Company").
C. Upon the terms and conditions hereinafter set forth, the Seller
desires to sell and transfer to the Buyer, and the Buyer desires to purchase
from the Seller, all of the Shares.
In reliance upon the representations and warranties made herein and in
consideration of the mutual covenants and agreements herein contained, the Buyer
and the Seller hereby agree as follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES
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1.1 SALE AND PURCHASE. Upon the terms and subject to the conditions
contained herein, the Seller will sell, assign, transfer and deliver to the
Buyer, and the Buyer will purchase and accept from Seller, the Shares on the
Closing Date (as hereinafter defined).
1.2 PURCHASE PRICE. In consideration of the sale and transfer described
in Section 1.1 hereof, the Buyer hereby agrees to pay to the Seller an aggregate
purchase price on the Closing Date equal to Forty Four Million Five Hundred
Thousand Dollars ($44,500,000). Such purchase price may be adjusted following
the Closing pursuant to Section 1.4 hereof (as adjusted, the "Purchase Price").
1.3 PAYMENT OF THE PURCHASE PRICE. The Purchase Price shall be payable
by the Buyer on the Closing Date by wire transfer in immediately available funds
to the Seller to such bank account designated by the Seller in writing at least
three days prior to the Closing Date.
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1.4 CLOSING DATE NET WORTH.
(a) DETERMINATION OF THE CLOSING DATE NET WORTH. As promptly
as reasonably practicable, and in any event within 90 days following the Closing
Date, the Seller shall deliver to the Buyer an audited balance sheet of the
Company, dated as of the close of business on the Closing Date (but for purposes
of such audited balance sheet without giving effect to the Closing or any of the
transactions contemplated hereby) (the "Closing Date Balance Sheet"), prepared
by Xxxxxx Xxxxxxxx L.L.P. ("AA") on an accrual basis in accordance with Modified
GAAP. For purposes of this Agreement, "Modified GAAP" shall mean GAAP applied on
a basis consistent with the Baseline Financial Statements (including the
Baseline Balance Sheet) with contract estimates at completion ("EACs") and
estimates to complete ("ETCs") determined on a basis consistent with the method
used for the determination of the Baseline Financial Statements (including the
Baseline Balance Sheet), except as modified (1) as set forth in subparagraphs
(i) through (viii) below in this Section 1.4(a), and (2) as set forth on
Schedule 1.4(a). The Closing Date Balance Sheet shall provide the Company's
aggregate net worth, which shall be the Company's total assets less its total
liabilities as reflected on the Closing Date Balance Sheet, prepared in
accordance with the preceding sentence (the "Closing Date Net Worth").
Modified GAAP requires that these additional principles be applied with
respect to the preparation of the Closing Date Balance Sheet and the
determination of the Closing Date Net Worth:
(i) ADJUSTMENT OF RESERVES AND VALUATION ACCOUNTS. The amount
of any reserve or valuation accounts shall be determined by applying
methods, practices, assumptions, policies, factors and underlying data
consistent with those used in determining the reserves or valuation
accounts included in the Baseline Balance Sheet, and there shall be no
changes made to any reserves or valuation accounts (including contract
reserves, purchase accounting reserves, deferred tax asset valuation
accounts, allowances for bad debts, inventory reserves of any kind,
warranty reserves and other reserves), except to the extent that such
changes are required by facts and events occurring after December 31,
1998 and before the Closing Date. It is further understood that there
shall be no increase or decrease in the Closing Date Net Worth as a
result of changes of reserves unless such changes arise out of facts or
events that occur after December 31, 1998 and on or before the Closing
Date.
(ii) CONTRACT ESTIMATES AT COMPLETION. There shall be no
changes to the contract EACs from those contract EACs used in the
preparation of the Baseline Balance Sheet, except to the extent that
such changes are required by facts and events occurring after December
31, 1998 and on or before the Closing Date, including the items set
forth on Schedule 3.6. Notwithstanding subparagraph (v) below in this
Section 1.4(a), it is further understood that if the contract EACs used
in preparation of the Baseline Balance Sheet are discovered to be
incorrect because certain costs were omitted from or included in those
contract EACs, for whatever reason(s), including misallocation of
direct or indirect costs to such contract EACs, such costs that were
omitted from or included in the contract EACs used in the preparation
of the Baseline Balance
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Sheet, as the case may be, shall be corrected in the contract EACs used
in the preparation of the Closing Date Balance Sheet.
(iii) LOSS CONTRACTS. There shall be no changes made to the
provisions for loss contracts from those used in the preparation of the
Baseline Balance Sheet, except to the extent that such changes are
required by facts and events occurring after December 31, 1998 and on
or before the Closing Date.
(iv) ADJUSTMENT OF LIABILITY AND ACCRUAL ACCOUNTS. The amount
of all liability and accrual accounts shall be determined by applying
methods, practices, assumptions, policies, factors and underlying data
consistent with those used in determining the liability and accrual
account included in the Baseline Balance Sheet, and there shall be no
changes made to any liability and accrual accounts, except to the
extent that such changes are required by facts and events occurring
after December 31, 1998 and on or before the Closing Date. It is
further understood and agreed that there shall be no increase or
decrease in the Closing Date Net Worth as a result of changes of
liability and accrual accounts, unless such changes arise out of facts
or events that occur after December 31, 1998 and on or before the
Closing Date.
(v) CONSISTENT APPLICATION OF ACCOUNTING POLICIES, METHODS AND
PRACTICES. The accounting policies, methods and practices and their
related applications used by the Seller to prepare the Closing Date
Balance Sheet shall be consistent with those underlying the Baseline
Balance Sheet. Use of different or alternative accounting policies and
methods that are otherwise in accordance with GAAP is not permitted
because such use violates this consistency requirement. Specifically,
AA shall be precluded from waiving or allowing "inconsistency"
adjustments recorded by the Company during the preparation of the
Closing Balance Sheet on the basis of "materiality" as the term is used
and understood by the Company and/or AA.
(vi) ACCOUNTING FOR CERTAIN ASSUMED LIABILITIES. The Closing
Date Balance Sheet shall include liabilities for obligations of the
Company not retained by Seller hereunder that accrue from the date of
the Baseline Balance Sheet to the Closing Date either because of the
passage of time or the achievement or reasonably expected achievement
of a performance measurement, even if such liabilities were not
included in the Baseline Balance Sheet. Examples of these types of
liabilities include, but are not limited to, management incentive
bonuses (covered in clause (vii) below), profit sharing plans, employer
matching contributions for Company sponsored savings plans, and
compensated absences (vacation time, sick pay, etc.), in any event,
only to the extent not retained by Seller.
(vii) MANAGEMENT PERFORMANCE BONUS. The Seller shall establish
an appropriate accrual for the Company's management performance bonus,
if any, for calendar year 1999 through the Closing Date, accrued
ratably through the Closing Date based upon an annual accrual of
$600,000.
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(viii) FEE PROPERTY. The assets and liabilities associated
with the Fee Property shall be included in the calculation of the
Closing Date Balance Sheet and Closing Date Net Worth, notwithstanding
the fact that such assets and liabilities may not be owned by the
Company but are owned by Cafig Inc., and that such assets and
liabilities are being transferred pursuant to the Real Estate Purchase
Agreement.
The Closing Date Balance Sheet shall be accompanied by the report of AA
thereon, which shall state that the Closing Date Balance Sheet presents fairly
in all material respects the financial condition of the Company at the Closing
Date in conformity with Modified GAAP as defined in this Section 1.4(a).
The parties shall use their best efforts to cause the Closing of the
transaction to be on a month end. The Buyer shall cause (i) the books and
records of the Company to be made reasonably available during normal business
hours to the Seller after the Closing, and (ii) the necessary personnel of the
Company to cooperate and assist the Seller in its preparation of the Closing
Date Balance Sheet, including granting access to the Seller and its
representatives to the facilities and other assets of the Company as reasonably
requested by Seller. All fees, costs and expenses incurred by the Seller
relating to the preparation of the Closing Date Balance Sheet shall be borne by
the Seller.
(b) DISPUTE PROCEDURES. After receipt of the Closing Date Balance
Sheet, the Buyer shall have 30 days to review it. The Buyer and
PricewaterhouseCoopers LLP, its independent accounting firm ("PWC"), shall have
reasonable access during normal business hours to the books and records and
appropriate employees of the Seller and AA in accordance with and adhering to
the reasonable policy and procedures of AA for such requests, to the extent
reasonably required to complete their review of the Closing Date Balance Sheet.
All fees, costs and expenses incurred by the Buyer relating to Buyer's review of
the Closing Date Balance Sheet shall be borne by the Buyer. The Buyer must,
within thirty (30) days after the Buyer's receipt of the Closing Date Balance
Sheet from the Seller, give written notice (the "Review Notice") to the Seller
specifying in reasonable detail the Buyer's specific objections, if any, with
respect thereto. If the Buyer does not provide the Review Notice within such
30-day period, the Closing Date Net Worth set forth on the Closing Date Balance
Sheet delivered by the Seller shall be final and binding on the parties and the
provisions set forth in Section 1.4(c) shall then apply. The Buyer agrees that
the specific objections that it raises in the Review Notice shall be the only
items subject to dispute under the subsequent procedures set forth in this
Section 1.4(c), with all other matters not specifically objected to by the Buyer
in the Review Notice being deemed to have been agreed upon by the parties. With
respect to any such disputed amounts, the parties agree to meet and negotiate in
good faith to resolve any such disputes during the thirty (30) day period after
the date that the Seller receives the Review Notice, or longer if mutually
agreed upon in writing by the Buyer and the Seller (the "Resolution Period"). If
the parties are able to resolve all of their disputes, the Closing Date Net
Worth, as mutually agreed upon, shall be final and binding on the parties and
the provisions set forth in Section 1.4(c) shall then apply. If the parties are
unable to resolve all such disputes within the Resolution Period, then within
five (5) business days after the expiration of the Resolution Period, all
unresolved disputes shall be submitted to a nationally recognized independent
accounting firm jointly selected by the Buyer and the Seller (the "Independent
Accountant"). The Independent Accountant shall be engaged to
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provide a final and conclusive resolution of all unresolved disputes within
thirty (30) days after such engagement. The determination of the Independent
Accountant shall be final and binding on the parties and the provisions set
forth in Section 1.4(c) shall then apply. The fees and expenses of the
Independent Accountant shall be borne 50% by the Buyer and 50% by the Seller.
When engaged, the Independent Accountant shall have exclusive jurisdiction over,
and resort to the Independent Accountant as provided herein shall be the sole
recourse and remedy of the parties against one another or any other Person with
respect to, the determination of the Closing Date Net Worth.
(c) PAYMENT OF THE DEFICIENCY OR SURPLUS IN THE CLOSING DATE NET WORTH.
To the extent that the Closing Date Net Worth (as determined by the Seller,
mutually agreed upon by the parties, or as finally determined by the Independent
Accountant, as the case may be), is less than Twenty Four Million Six Hundred
Sixteen Thousand Dollars ($24,616,000) (the "Target Net Worth"), such difference
(the "Closing Date Net Worth Deficiency") shall be paid by the Seller to the
Buyer by wire transfer in immediately available funds within five (5) business
days after the Closing Date Net Worth is finally determined, together with
interest from and including the Closing Date up to, but excluding, the date of
payment at the rate of 8.5% per annum. To the extent that the Closing Date Net
Worth (as determined by the Seller, mutually agreed upon by the parties, or as
finally determined by the Independent Accountant, as the case may be), is
greater than Target Net Worth, such difference (the "Closing Date Net Worth
Surplus") shall be paid by the Buyer to the Seller by wire transfer in
immediately available funds within five (5) business days after the Closing Date
Net Worth is finally determined, together with interest from and including the
Closing Date up to, but excluding, the date of payment at the rate of 8.5% per
annum.
ARTICLE 2
CLOSING AND TERMINATION
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2.1. CLOSING. Subject to satisfaction or waiver of the conditions set
forth in this Agreement, the closing of the transaction provided for herein (the
"Closing") will take place at the offices of Xxxxxxx Breed Xxxxxx & Xxxxxx LLP
in New York, New York at 9:00 a.m. (local time) on or before June 30, 1999 or at
such other date, time and place as the Buyer and the Seller shall agree (the
date of the Closing being the "Closing Date").
The Closing shall be effective as of the close of business on the Closing Date.
2.2. TRANSACTIONS ON THE CLOSING DATE.
(a) At the Closing, the Seller will deliver to the Buyer
the following:
(i) stock certificates evidencing the Shares, in each
case endorsed in blank in proper form for transfer or with
executed blank stock powers attached, which certificates shall
be submitted to the Company for transfer;
(ii) a stock certificate representing the Shares,
registered in the name of the Buyer, duly executed by the
Company;
(iii) resignations of each of the directors and
officers of the Company;
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(iv) a copy of the Articles of Incorporation of the
Company certified by the Secretary of State of the State of
California as of a date as near as reasonably practicable to
the Closing Date;
(v) a good standing certificate of the Company from
the Secretary of State of the State of California as of a date
as near as reasonably practicable to the Closing Date;
(vi) a copy of the By-laws of the Company as in
effect on the Closing Date certified by the Secretary of the
Company;
(vii) a notification that the waiting period under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act") has terminated or expired;
(viii) the available minute book(s) and the available
stock records of the Company;
(ix) each of the certificates and other documents
contemplated by Article 7 hereof;
(x) evidence of the release and termination of the
Encumbrances (and related UCC financing statements) set forth
on Schedule 2.2(a)(x);
(xi) certificates of each director and officer of the
Company, in form and substance reasonably satisfactory to the
Buyer, dated the Closing Date, certifying that (A) no claims
have been brought or, to the best of such Person's knowledge,
threatened against such Person which would or may give rise to
a right to indemnification from the Company, and (B) such
Person has no claim against the Company (other than for any
accrued and unpaid wages, benefits and expense reimbursement);
(xii) a certificate of Seller, dated as of the
Closing Date and sworn to under penalty of perjury, setting
forth the name, address and federal tax identification number
of Seller and stating that Seller is not a "foreign person"
within the meaning of Section 1445 of the Code, such
certificate to be in the form set forth in the regulations
promulgated thereunder;
(xiii) a letter, on the Company's letterhead, setting
forth all information reasonably requested by Buyer relating
to the base period research and experimental expenses and
other information reasonably requested by the Buyer to allow
the Buyer or the Company to claim research and experimental
tax credits in accordance with the relevant sections of the
Code and the regulations promulgated thereunder; and
(xiv) evidence of termination of intercompany
agreements (including tax sharing agreements) in form, scope
and substance reasonably satisfactory to the Buyer.
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(b) At the Closing, the Buyer will deliver to the Seller the following:
(i) the Purchase Price, pursuant to Section 1.3 hereof;
(ii) a notification that the waiting period under the HSR Act
has terminated or expired; and
(iii) each of the certificates and other documents
contemplated by Article 6 hereof.
2.3. TERMINATION. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time:
(a) by mutual written consent of the Buyer and the Seller;
(b) by the Seller or the Buyer after July 31, 1999 (the
"Final Termination Date"); provided, however, that if the Closing has
not occurred by the Final Termination Date as the result of a breach of
this Agreement, then the party responsible for such breach may not
avail itself of the right to terminate under this Section 2.3(b);
(c) by the Buyer, if there has been a violation or breach
by the Seller of any agreement, representation or warranty contained in
this Agreement which has rendered the satisfaction of any condition to
the obligations of Buyer impossible and such violation or breach has
not been waived by the Buyer; or
(d) by the Seller, if there has been a violation or breach by
the Buyer of an agreement, representation or warranty contained in this
Agreement which has rendered the satisfaction of any condition to the
obligations of the Seller impossible and such violation or breach has
not been waived by the Seller.
2.4. PROCEDURE AND EFFECT OF TERMINATION. In the event of termination
of this Agreement and abandonment of the transactions contemplated hereby by any
or all of the parties pursuant to Section 2.3, written notice thereof shall
forthwith be given by the terminating party to the other party and, in such
event, this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by any of the parties hereto, and
neither party shall have any rights against the other party or any of such other
party's directors, officers, employees, agents, consultants, representatives,
advisers, shareholders or Affiliates; provided, however, that (a) the foregoing
shall not be construed to deprive any party hereto of any remedy hereunder or at
law or equity if this Agreement is terminated in violation of this Agreement or
to deprive the non-breaching party of any remedy if it is terminated pursuant to
Section 2.3 (c) or (d) hereof; and (b) the provisions of Section 9.2 shall
survive termination of this Agreement. If this Agreement is terminated pursuant
to the terms hereof, the parties acknowledge and agree that the Real Estate
Purchase Agreement also shall terminate and the transactions contemplated
thereby shall be abandoned, without further action by any of the parties
thereto.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER
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The Seller represents and warrants to the Buyer that:
3.1. ORGANIZATION; AUTHORITY. Each of the Seller and the Company is a
corporation organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with, in the case of the Seller, the
requisite power and authority to enter into this Agreement and to perform its
obligations hereunder. The Company has the full corporate power and authority to
carry on its business and to own or lease and to operate its properties as and
in the places where its business is conducted and such properties are owned,
leased or operated. The Company is qualified to do business and in good standing
in each jurisdiction in which the nature of its business requires it to be so
qualified and where the failure to be so duly qualified would cause a Material
Adverse Effect. The Seller has delivered to the Buyer true, complete and correct
copies of the Company's articles of incorporation and by-laws. The minute books
of the Company, as previously made available to the Buyer, contain accurate
records of meetings of and resolutions of, or written consents by, its
stockholders and its Board of Directors (and committees thereof). The available
stock record books of the Company are true and correct to the extent set forth
therein. The execution and delivery of this Agreement and all agreements and
documents contemplated hereby by the Seller, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by all requisite
corporate action on the part of the Seller. This Agreement has been duly
executed and delivered by the Seller and constitutes, and all agreements and
documents specifically contemplated hereby when executed and delivered pursuant
hereto will constitute, the legal, valid, binding, and enforceable obligations
of the Seller, enforceable in accordance with their respective terms.
3.2. ABILITY TO CARRY OUT AGREEMENT. Except as disclosed on Schedule
3.2 and compliance with the HSR Act, neither the Seller nor the Company nor any
of their respective material properties or assets is subject to or bound by any
provision of (i) any Applicable Law or judicial or administrative decision; (ii)
its Articles or Certificate of Incorporation, as the case may be, or By-laws;
(iii) any judgment, order, writ, injunction or decree of any Governmental
Authority or arbitrator; or (iv) any contract, agreement, note, indenture or
other document or instrument that, in any case, would prevent, or be violated
by, or under which there would be a default or the creation of any Encumbrance
as a result of, nor is the consent of any Person under any contract or agreement
or otherwise required for, the execution, delivery and performance by the Seller
of this Agreement and the transactions contemplated hereby, other than, in the
case of clause (iv) above, such violations, defaults or failures to obtain
consents which do not have and are not reasonably expected to have a Material
Adverse Effect.
3.3. CAPITALIZATION OF THE COMPANY; OWNERSHIP.
(a) The authorized capital stock of the Company is set forth in
Schedule 3.3. The Shares are duly authorized, validly issued, fully paid and
nonassessable and have been issued in full compliance with all Applicable Laws.
There are no outstanding subscriptions, options, warrants, rights, stock-based
or stock-related awards, convertible, exercisable or exchangeable securities or
other agreements or other rights or commitments of any kind or
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character (contingent or otherwise) (including conversion or preemptive rights)
of any kind to acquire any additional shares of capital stock of the Company or
securities convertible or exercisable into or exchangeable for, or which
otherwise confer on the holder thereof any right to acquire, any such additional
shares of capital stock or other securities of the Company (including any
agreement or commitment obligating the Seller or the Company to enter into any
employee compensation arrangement based on any valuation or transaction price
of, or change of ownership in, shares of its capital stock, excluding the Sales
Bonus to be paid to certain employees upon the consummation of the transactions
contemplated hereby), nor is the Company or the Seller committed to issue,
grant, award, purchase, acquire, sell or transfer any such option, warrant,
right, stock or security.
(b) The Shares are owned of record and beneficially by the Seller.
The Seller has good and valid title to the Shares, and at the Closing the Shares
will be free and clear of any and all Encumbrances. Upon delivery to the Buyer
at the Closing, against payment of the Purchase Price therefor, of certificates
representing the Shares, duly endorsed in favor of Buyer, or accompanied by
stock powers duly endorsed in favor of Buyer, in proper form for transfer, good
and valid title to the Shares will pass to the Buyer, free and clear of all
Encumbrances of any kind, other than those arising from acts of the Buyer.
(c) Subject to the accuracy of the representations of the Buyer
contained in this Agreement, neither the Company nor the Seller has violated any
applicable federal or state securities laws in connection with the offer, sale,
issuance or delivery of any of the Company's capital stock hereunder and the
offer and sale of the Shares hereunder do not require registration under the
Securities Act of 1933, as amended (the "Securities Act") or any applicable
state securities laws. There are no contracts or restrictions involving,
affecting or related to the right of the Seller to convey such Shares to Buyer
or to vote such Shares.
3.4. INVESTMENTS. Except as set forth in Schedule 3.4, the Company does
not have, directly or indirectly, any equity interest in any other corporation,
joint venture, partnership, association, business organization or other Person.
3.5. FINANCIAL STATEMENTS. Schedule 3.5 sets forth copies of the
unaudited condensed balance sheets of the Company as of December 31, 1996, 1997,
and 1998, and the related statements of income for the years then ended (the
"Financial Statements"). Except as set forth on Schedule 3.5(a), the Financial
Statements have been prepared in conformity with U.S. generally accepted
accounting principles, consistently applied by the Seller in the preparation of
the Financial Statements, except for the absence of footnote disclosure and
fairly present the financial condition and results of operations of the Company
as at and for the periods specified. The unaudited condensed balance sheet of
the Company as of December 31, 1998 and the related statement of income for the
year then ended included in the Financial Statements are herein sometimes called
the "Baseline Financial Statements."
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 3.6, since December 31, 1998, the Company has conducted its business in
the ordinary course consistent with past practice and has not:
(a) suffered any Material Adverse Effect;
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(b) incurred, assumed, guaranteed or discharged any debt,
claim, commitment, obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, or any
indebtedness (including any Debt), except in the ordinary course of
business consistent (in amount and kind) with prior practice;
(c) mortgaged, pledged or subjected to any other Encumbrance,
any property, business or assets, tangible or intangible (other than
Permitted Encumbrances);
(d) sold, transferred, leased to others or otherwise disposed
of any material assets, except for Inventories of the Company sold in
the ordinary course of business consistent (in amount and kind) with
past practice, or canceled or compromised any debt, claim, commitment,
liability or obligation, or waived or released any right of substantial
value;
(e) received any written notice of termination of any material
Contract;
(f) suffered any damage, destruction or loss (whether or not
covered by insurance), in any case or in the aggregate, in excess of
$100,000;
(g) transferred or granted any rights under, or entered into
any settlement regarding the breach, misappropriation, infringement or
violation of, any Material Intellectual Property, or modified any
existing rights with respect thereto;
(h) made any change in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or paid or
agreed or orally promised to pay, conditionally or otherwise, any
bonus, incentive, retention or other compensation, retirement, welfare,
fringe or severance benefit or vacation pay, to or in respect of (i)
any employee of the Company whose annual compensation exceeded $100,000
in calendar year 1998, or (ii) any distributor or agent of the Company
whose annual compensation exceeded $100,000 in calendar year 1998;
(i) made any change in the accounting or auditing methods,
practices or principles of the Company;
(j) encountered any labor union organizing activity, had any
actual or threatened employee strikes, work stoppages, slowdowns or
lockouts, or had any material change in its relations with its
employees, distributors, agents, customers or suppliers;
(k) entered into any transaction, contract, arrangement,
order, license, lease, permit, instrument, agreement or commitment
other than in the ordinary course of business consistent (in amount and
kind) with past practice, or paid or agreed to pay any legal,
accounting, brokerage, finder's fee, Taxes or other expenses in
connection with, or incurred any severance pay obligations by reason
of, this Agreement or the transactions contemplated hereby;
(l) made any grant of credit to any significant customer or
distributor on terms or in amounts materially more favorable than had
been extended to that customer or distributor in the past;
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(m) amended its charter or by-laws or merged with or into or
consolidated with any other Person, subdivided, combined or in any way
reclassified any shares of its capital stock or changed or agreed to
change in any manner the rights of its outstanding capital stock or the
character of its business;
(n) made any declaration of, or set aside or paid, any dividend or
other distribution (whether in cash, stock or other property) with
respect to the capital stock of the Company, or issued, pledged or sold
any shares of capital stock of the Company, or any other securities or
rights, convertible or exercisable into or exchangeable for or
conferring the right to purchase shares of capital stock of the Company
(or entered into any agreement, arrangement or other understanding to
do the same) or directly or indirectly purchased, redeemed, retired or
otherwise acquired any shares of capital stock of the Company or other
securities convertible or exercisable into, exchangeable for or
conferring the right to purchase shares of capital stock of the Company
(or entered into any agreement, arrangement or other understanding to
do the same);
(o) to the Seller's knowledge, submitted a bid or proposal (or
series of related bids or proposals) that was bid at a price or prices
less than the associated costs, including the Company's allocation of
selling, general and administrative expenses that will result from
performance under such bid or proposal (or series of related bids or
proposals); or
(p) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
3.7. TITLE TO PROPERTIES; LIENS.
(a) The Company has good and valid title to, a subsisting
leasehold interest in, or a license or right to use, all of the properties and
assets used solely in the businesses of the Company, free and clear of any
Encumbrances, except for the following Encumbrances (collectively, the
"Permitted Encumbrances"): (i) Encumbrances that do not materially interfere
with the present use by the Company of the property or assets subject thereto or
affected thereby, (ii) Encumbrances for taxes, assessments or governmental
charges, or landlords', mechanics', workmen's, materialmen's or similar liens,
in each case that are not delinquent or which are being actively contested in
good faith by appropriate proceedings and for which appropriate reserves have
been established in accordance with GAAP, (iii) Encumbrances which do not and
will not individually or in the aggregate have a Material Adverse Effect, and
(iv) Encumbrances set forth on Schedule 3.7.
(b) The Company does not own any real property. The only leasehold
interests or licenses held by the Company with respect to any material
properties or assets are the leases and licenses disclosed on Schedule 3.10(a)
(the "Leases and Licenses"). To the knowledge of the Sellers, any rent or fees
due and payable in connection with the Leases and Licenses has been paid in
full.
(c) All of the Leases and Licenses are being used in accordance
with all zoning laws and regulations promulgated by any Governmental Authority
having jurisdiction,
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except where the failure to comply with such zoning laws and regulations does
not and will not individually or in the aggregate have a Material Adverse
Effect.
(d) The equipment owned or leased by the Company and used by
it in connection with its business is, in the aggregate, in sufficient operating
condition, and suitable for the operation of its business as presently
conducted.
3.8. LITIGATION.
(a) Except as disclosed on Schedule 3.8(a), there is no action,
claim, demand, suit, proceeding arbitration, grievance, citation, summons,
subpoena, or investigation, civil, criminal or regulatory, pending or, to the
Seller's knowledge, threatened by or against, or to the Seller's knowledge,
relating to, the Company at law, in equity or otherwise, seeking unspecified
damages, damages in excess of $50,000 or any injunctive or other equitable
relief.
(b) Except as disclosed on Schedule 3.8(b), there are no judgments
unsatisfied against the Company or consent decrees or injunctions to which the
Company is subject.
(c) There is no action, claim, suit or proceeding pending, or to
the Seller's knowledge threatened, by or against or affecting the Seller or the
Company in connection with or relating to the transactions contemplated by this
Agreement or any of the actions taken or to be taken in connection herewith or
the consummation of the transactions contemplated hereby.
(d) Except as set forth on Schedule 3.8(d), since January 1, 1993,
there have been no product liability claims, suits, actions or proceedings
involving the Company or, to the Seller's knowledge, relating to products or
services manufactured, sold or provided by the Company for unspecified damages,
damages in excess of $50,000 or any injunctive or equitable relief.
3.9. COMPLIANCE WITH LAW; CERTAIN REGULATORY MATTERS.
(a) Except as disclosed on Schedule 3.9(a), the business of the
Company is being conducted in compliance with all Applicable Laws applicable to
the Company, except for violations, if any, which have not had, or are not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) Schedule 3.9(b) sets forth all Governmental Approvals and
other Consents necessary for, or otherwise material to, the conduct of the
business of the Company. Except as set forth in Schedule 3.9(b), all such
Governmental Approvals and Consents have been obtained and are in full force and
effect and are being complied with in all material respects, except for such
which have not had, or are not reasonably expected to have, a Material Adverse
Effect. The provisions of this Section 3.9 shall not apply to Environmental
Laws.
3.10. CONTRACTS.
(a) Schedule 3.10(a) contains a true, complete and correct list of
all agreements, contracts, commitments, orders, licenses, leases, and other
instruments and arrangements (whether written or, to the Seller's knowledge,
oral) (hereafter, the "Contracts") of
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the types described below outstanding as of the date hereof to which the Company
is a party or by which it or any of its assets is bound:
(i) leases (with monthly lease payments in excess of $5,000
per month), licenses, franchises, Governmental Approvals and other
contracts concerning or relating to the real property owned, leased or
used by the Company;
(ii) employment, consulting, agency, collective bargaining or
other similar contracts, agreements, and other instruments and
arrangements relating to or for the benefit of employees, sales
representatives, distributors, dealers, agents or independent
contractors (excluding suppliers and customers);
(iii) loan agreements, indentures, letters of credit,
mortgages, security agreements, pledge agreements, deeds of trust,
bonds, notes, and guarantees and other agreements relating to the
borrowing of money or obtaining of or extension of credit;
(iv) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting the use of,
any Material Intellectual Property Rights;
(v) brokerage or finder's agreements;
(vi) joint venture, partnership and similar contracts
involving a sharing of profits or expenses (including joint research
and development and joint marketing contracts);
(vii) asset purchase agreements, stock purchase agreements and
other acquisition or divestiture agreements;
(viii) any contract with respect to which the aggregate amount
that could reasonably be expected to be paid or received thereunder in
the future exceeds $500,000 per annum;
(ix) sales agency, manufacturer's representative, marketing or
distributorship agreements;
(x) contracts, agreements or arrangements with respect to the
representation of the business of the Company in foreign countries;
(xi) purchase commitments for inventory items or supplies
that, together with amounts on hand, constitute in excess of six months
normal usage;
(xii) any agreement, understanding, contract or commitment
(written or oral) with (A) any employee, agent, consultant,
distributor, dealer or franchisee, other than those involving in the
aggregate consideration or other expenditure of more than $50,000, or
(B) any Affiliate;
(xiii) any guarantee of the payment or performance of any
Person or any agreement to act as a surety, or other agreement to be
contingently or secondarily liable
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for the obligations of any Person other than (A) the endorsement of
checks in the ordinary course of business, and (B) guarantees or
agreements which in the aggregate do not exceed $50,000; and
(xiv) any other contracts, agreements or commitments that are
material to the business of the Company.
(b) The Seller has made available to the Buyer true, complete
and correct copies of all written Contracts, together with all amendments
thereto, set forth in Schedule 3.10(a). The Seller has made available to the
Buyer true, complete and correct summaries of all oral Contracts listed on
Schedule 3.10(a).
(c) There does not exist under any Contract any event of
default or event or condition on the part of the Company or, to the Seller's
knowledge, of the other parties thereto, that, after notice or lapse of time or
both, would constitute a violation, breach or event of default thereunder by any
party to any of the Contracts except as set forth in Schedule 3.10(c) and except
for such events or conditions that, individually or in the aggregate (i) have
not had or resulted in, and could not reasonably be expected to result in the
future in, a Material Adverse Effect, and (ii) have not materially impaired the
ability of the Seller to perform its obligations under this Agreement. Except as
set forth in Schedule 3.10(c), each Contract (A) is in full force and effect,
and (B) is a legal, valid, binding and enforceable obligation of the Company
and, to the knowledge of the Seller and the Company, the other parties thereto.
Except as set forth in Schedule 3.10(c), no Consent of any Person is required
under any Contract as a result of or in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby. Except as set forth in Schedule 3.30(c), to the Seller's
knowledge, no outstanding bid or proposal was intentionally bid at a loss.
3.11. BROKERS AND INTERMEDIARIES. Except for Quarterdeck Investment
Partners, Inc. ("Quarterdeck"), neither the Seller nor the Company has employed
any broker, finder, advisor or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to a broker's, finder's
or similar fee or commission, or for any bonus payable to any officer, director,
employee, agent, sales representative, relative of or consultant to the Seller
or the Company or its Affiliates upon consummation of the transactions
contemplated hereby. The Seller shall be solely responsible for all payment
obligations payable to Quarterdeck in connection with the consummation of the
transactions contemplated herein and will indemnify and hold harmless the Buyer
Indemnities from and against, and pay or reimburse the Buyer Indemnitees for,
any Losses resulting from and arising out of the Seller's agreement with
Quarterdeck.
3.12. UNDISCLOSED LIABILITIES. The Company has no material debts,
claims, commitments, liabilities or obligations of any nature whether accrued,
absolute, contingent or otherwise, except those (i) provided for or reserved
against in the December 31, 1998 balance sheet that is part of the Financial
Statements (the "Baseline Balance Sheet"), (ii) which have arisen in the
ordinary course of business since the date of the Baseline Balance Sheet, or
(iii) set forth on Schedule 3.12.
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3.13. TAX MATTERS. All Tax Returns, declarations of estimated tax and
tax reports required to be filed with respect to the Company, or any of its
income, properties, franchises or operations have been duly and timely filed.
All such Tax Returns, declarations and reports are true, complete and correct.
All Taxes owed by the Company (whether or not shown on such Tax Returns,
declarations or reports and on assessments received with respect to the
Company), have been paid to the extent that such Taxes have become due, other
than Taxes being contested in good faith (and for which adequate provision has
been made in accordance with GAAP on the books and records of the Company). The
Company has not extended or otherwise waived the benefit of any applicable
statute of limitations or agreed to any extension of time with respect to a Tax
assessment or deficiency. Except as set forth on Schedule 3.13, the Company has
withheld all required amounts in respect of Taxes from its employees, agents,
contractors and nonresidents and, to the extent required, has remitted such
amounts to the proper agencies. To the Seller's knowledge no authority is
expected to assess additional Taxes for any period for which Tax Returns have
been filed. Schedule 3.13 hereto lists all federal, state, local and foreign
income Tax Returns filed with respect to the Company for taxable periods since
January 1, 1993 that have been audited and indicates those Tax Returns that
currently are the subject of audit. The Seller has made available to the Buyer
true, correct and complete copies of all federal, state, local and foreign
income Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Company since January 1, 1993.
3.14. LABOR MATTERS. The Company is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company. Neither the Company nor the Seller knows of any
activities or proceedings of any labor union or other organization to organize
any such employees. To the Seller's knowledge, there have been no strikes,
picketing, slowdowns, work stoppages, lockouts, concerted refusal to work
overtime or similar labor activity or threats thereof, by or with respect to any
of the employees of the Company. Except as set forth on Schedule 3.14, there are
no collective bargaining or union disputes currently subject to any grievance
procedure, arbitration or litigation and there is no representation petition
pending or, to the knowledge of the Seller, threatened with respect to any
employee of the Company.
3.15. EMPLOYEE BENEFIT PLANS.
(a) Definitions. The following terms, when used in this
Agreement, shall have the following meanings. Any of these terms may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference.
(I) BENEFIT ARRANGEMENT, COMPANY BENEFIT ARRANGEMENT, INTERSTATE
BENEFIT ARRANGEMENT, AND XXXXX BENEFIT ARRANGEMENT. "Benefit
Arrangement" shall mean any employment, consulting, severance or other
similar contract, understanding, arrangement or policy and each plan,
arrangement, understanding or program which provides for insurance
coverage (including any self-insured arrangements), disability
benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, life, health, disability or accident benefits or
for deferred compensation, profit-sharing bonuses, stock options, stock
appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits
which is not a Welfare Plan, a Pension Plan or a Multiemployer Plan.
"Company Benefit Arrangement"
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shall mean any Benefit Arrangement which is entered into, maintained,
or contributed to, as the case may be, by the Company and which
provides benefits to any employee or former employee of the Company
with respect to his or her relationship with the Company. "Interstate
Benefit Arrangement" shall mean any Company Benefit Arrangement which
does not provide benefits to employees or former employees of Seller or
any subsidiary of Seller other than the Company. "Xxxxx Benefit
Arrangement" shall mean any Company Benefit Arrangement other than an
Interstate Benefit Arrangement.
(ii) CODE. "Code" shall mean the Internal Revenue Code of 1986,
as may be amended from time to time.
(iii) EMPLOYEE PLANS, COMPANY EMPLOYEE PLANS, INTERSTATE EMPLOYEE
PLANS, AND XXXXX EMPLOYEE PLANS. "Employee Plans" shall mean all
Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare
Plans. "Company Employee Plans" shall mean all Employee Plans which are
entered into, maintained, or contributed to, as the case may be, by the
Company and which provides benefits to any employee or former employee
of the Company with respect to his or her relationship with the
Company. "Interstate Employee Plans" shall mean any Company Employee
Plan which does not provide benefits to employees or former employees
of Seller or any subsidiary of Seller other than the Company. "Xxxxx
Employee Plan" shall mean any Company Employee Plan other than an
Interstate Employee Plan.
(iv) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(v) ERISA AFFILIATE. "ERISA Affiliate" shall mean any entity
which is a member of a "controlled group of corporations" with or under
"common control" with the Company as defined in Section 414(b) or (c)
of the Code.
(vi) MULTIEMPLOYER PENSION PLAN. "Multiemployer Pension Plan"
shall mean any "employee pension benefit plan" as defined in Section
3(2) of ERISA which is a "multiemployer plan," as defined in Section
4001(a)(3) of ERISA.
(vii) MULTIEMPLOYER WELFARE PLAN. "Multiemployer Welfare Plan"
shall mean any "employee welfare benefit plan" as defined in Section
3(1) of ERISA which is a "multiemployer plan," as defined in Section
3(37) of ERISA.
(viii) PENSION PLAN, COMPANY PENSION PLAN, INTERSTATE PENSION
PLAN, AND XXXXX PENSION PLAN. "Pension Plan" shall mean any "employee
pension benefit plan" as defined in Section 3(2) of ERISA, other than a
Multiemployer Pension Plan. "Company Pension Plan" shall mean any
Pension Plan which the Company maintains or contributes to, as the case
may be, and which provides benefits to any employee or former employee
of the Company with respect to his or her relationship with the
Company. "Interstate Pension Plan" shall mean any Company Pension Plan
which does not provide benefits to employees or former employees of
Seller or any subsidiary of Seller other than the
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Company. "Xxxxx Pension Plan" shall mean any Company Pension Plan other
than an Interstate Pension Plan.
(ix) WELFARE PLAN, COMPANY WELFARE PLAN, INTERSTATE WELFARE PLAN,
AND XXXXX WELFARE PLAN. "Welfare Plan" shall mean any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA, other than one which
is a "multiemployer plan," as defined in Section 3(37) of ERISA.
"Company Welfare Plan" shall mean any Welfare Plan which the Company
maintains or contributes to, as the case may be, and which provides
benefits to any employee or former employee of the Company with respect
to his or her relationship with the Company. "Interstate Welfare Plan"
shall mean any Company Welfare Plan which does not provide benefits to
employees or former employees of Seller or any subsidiary of Seller
other than the Company. "Xxxxx Welfare Plan" shall mean any Company
Welfare Plan other than an Interstate Welfare Plan.
(b) DISCLOSURE; DELIVERY OF COPIES OF RELEVANT DOCUMENTS AND
OTHER INFORMATION. SCHEDULE 3.15 contains a complete list of all written Company
Employee Plans and, to the Seller's knowledge, each of the oral Company Employee
Plans, true and complete copies of each of which have been made available by the
Company to Buyer, including: (i) each such Company Welfare Plan and Company
Pension Plan and all amendments thereto and the current summary plan
description, if any, for each such plan, (ii) each such written Company Benefit
Arrangement, and (iii) each Annual Report on Form 5500 Series filed with any
governmental agency for each such Company Welfare Plan and each such Company
Pension Plan for the most recent plan year. Schedule 3.15 also indicates which
of the Company Employee Plans are Interstate Employee Plans.
(c) Except as set forth in SCHEDULE 3.15, Seller represents as
follows:
(i) PENSION PLANS; MULTIEMPLOYER PENSION PLANS. There are no
Interstate Pension Plans. The only Company Pension Plans are Xxxxx
Pension Plans.
(ii) CODE OR ERISA LIABILITY. To Seller's knowledge, no
liability is currently owed or expected to be incurred by the Company
under or pursuant to the Code or Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code or
ERISA relating to Interstate Employee Plans and Xxxxx Employee Plans
and, to the knowledge of the Seller, no event, transaction or condition
has occurred or exists that could result in any such liability to the
Company or, following the Closing, the Company or the Buyer.
(iii) PBGC. None of the assets of the Company are subject to
any Encumbrance in favor of, or enforceable by, the Pension Benefit
Guaranty Corporation.
(iv) COMPENSATION. SCHEDULE 3.15 lists (i) the name and total
of annual rate of compensation (including bonuses, commissions and
incentive compensation) of each employee of and consultant to the
Company whose annual compensation exceeds $100,000, (ii) the aggregate
compensation of all employees and consultants to the Company, and (iii)
the name of each officer and director of the Company. Except as set
forth in Schedule 3.15, none of the persons referred to above in items
(i) and (ii) have
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notified the Seller that such person will cancel or otherwise terminate
such person's relationship with the Company.
(v) COMPLIANCE. To Seller's knowledge, each of the Interstate
Employee Plans and Xxxxx Employee Plans listed in SCHEDULE 3.15 is and
has at all times been in compliance in all respects with all applicable
provisions of ERISA, the Code and other applicable law.
(vi) QUALIFICATION. To Seller's knowledge, each Xxxxx Pension
Plan which is intended to meet the requirements of Section 401(a) of
the Code now meets, and since its inception has met or by utilization
of remedial programs established by the Internal Revenue Service
("IRS") is deemed to have met, the requirements for qualification under
Section 401(a) of the Code and nothing has occurred which would
adversely affect the qualified status of any such Xxxxx Pension Plan.
To Seller's knowledge, the IRS has issued a favorable determination
letter with respect to the qualification under the Code of each Xxxxx
Pension Plan and the IRS has not taken any action to revoke any such
letter.
(vii) BONDS. To Seller's knowledge, each fiduciary and every
plan official of each of the Interstate Employee Plans and Xxxxx
Employee Plans is bonded to the extent required by Section 412 of
ERISA. To Seller's knowledge, those sections of all annual reports
heretofore filed with the IRS, the Department of Labor and the PBGC by
or on behalf of each of the Interstate Employee Plans and Xxxxx
Employee Plans which were required to be certified were only certified
without qualification by the accountants or actuaries of such
Interstate Employee Plans or such Xxxxx Employee Plans.
(viii) TRIGGER EVENT. The execution and performance of the
transactions contemplated by this Agreement will not constitute an
event under any Company Employee Plan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, or
vesting or increase in benefits (other than as agreed to by the parties
in Section 5.6 and other than as provided in the Employment Agreements)
with respect to any employee, former employee, consultant, agent or
director of the Company or any of its ERISA Affiliates. No payment
which the Company is required to pay to any employee, former employee,
director, consultant or agent thereof as a result of the transactions
contemplated by this Agreement will or could be characterized as an
"excess parachute payment" within the meaning of Section 280G(b)(1) of
the Code.
(ix) MULTIEMPLOYER PLANS. At no time has the Company
contributed to, been required to contribute to, or incurred any
withdrawal liability (within the meaning of Section 4201 of ERISA) with
respect to any Employee Plan which is a multiemployer plan as defined
in Section 3(37) of ERISA.
(x) VEBAS. The Company does not sponsor or contribute to any
Company Employee Plan which is funded by an association described in
Section 501(c)(9) of the Code.
(xi) COBRA. To Seller's knowledge, each "group health plan"
(within the meaning of Section 4980B of the Code) maintained by the
Seller has been administered
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in compliance with the coverage continuation requirements contained in
the Consolidated Omnibus Budget Reconciliation Act of 1985 and as
provided under Section 4980B of the Code and any regulations
promulgated or proposed under the Code.
(xii) FUNDED STATUS. There are no Interstate Employee Plans
which are funded, or are required by applicable law to be funded.
(xiii) CONTRIBUTIONS. To Seller's knowledge, Seller and its
ERISA Affiliates have made all contributions required to be made to
each Xxxxx Pension Plan under the terms of the plan and applicable law.
To Seller's knowledge, no prohibited transaction (as defined in Section
4975 of the Code or Section 406 of ERISA) has occurred with respect to
any Employee Plan listed, which could subject any Interstate Employee
Plan or any related trust, the Company, the Buyer or any director or
employee of any of them to any tax or penalty imposed under Section
4975 of the Code or Section 502(c), 502(i) or 502(1) of ERISA, either
directly or indirectly, and whether by way of indemnity or otherwise.
(xiv) RETIREE MEDICAL. The Company does not maintain, sponsor
or contribute to any plan or program providing retiree medical or life
insurance benefits.
(d) Except for the Consulting Agreement and for the deemed
terminations under the benefit plans as provided under Section 5.6, to the
Seller's knowledge, neither the Seller, nor the Company, has deferred laying off
or terminating any employee of the Company or any consultant to the Company or
has any present intention or at the Closing Date will have any intention of
laying off or terminating any employee of the Company or any consultant of the
Company.
3.16. INTELLECTUAL PROPERTY. The following representations and
warranties are qualified in their entirety to the exceptions set forth on
Schedule 3.16:
(a) Schedule 3.16 lists all material Intellectual Property
Rights that are either owned by the Company or with respect to which (as noted
on Schedule 3.16) the Company has a right or license (the "Material Intellectual
Property"). The Material Intellectual Property provides the Company with
sufficient rights to conduct its business as the same is currently conducted.
The Company owns all right, title and interest in, or has a valid license to
use, the Material Intellectual Property, and such licenses are not terminable
due to any breach or noncompliance by the Company and shall not be adversely
affected by the transactions contemplated herein. No other Person has any right,
title or interest in, to or under any of the Material Intellectual Property
owned by the Company, except for the provisions under any license listed on
Schedule 3.16 and except any such right, title or interest which has not had and
could not reasonably be expected to have individually or in the aggregate, a
Material Adverse Effect. Schedule 3.16 indicates which Material Intellectual
Property is owned by the Company (and identifies the licenses thereof by the
Company) and indicates which Material Intellectual Property is licensed to the
Company. All licenses of Material Intellectual Property by the Company are
non-exclusive.
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(b) The Material Intellectual Property owned by the Company is
not subject to any Encumbrance in favor of any third party. None of the
Company's rights in or to any of its Material Intellectual Property shall be
adversely affected by its execution or delivery of this Agreement or by the
performance of its obligations hereunder or by the transaction contemplated
herein. No claims with respect to any Material Intellectual Property are being
asserted or, to the Seller's knowledge, threatened by any Person (i) against the
Company, or (ii) against any other Person based on its use of any Material
Intellectual Property owned, licensed or used by the Company or based on any
product or service provided by the Company, except for such claims which have
not had and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. None of the Company's past or present
activities, including, but not limited to, the manufacture, use, sale or
distribution of any product and the provision of any service, and no
manufacture, use, sale or distribution of any of the Company's products by any
Person, constitutes or has constituted an infringement, misappropriation,
unauthorized use or other violation of any valid intellectual property of any
third party and to the knowledge of the Seller, no valid grounds exist for any
bona fide claims against the Company or any such Person, which has had or which
reasonably would be expected to have a Material Adverse Effect. There has not
been, nor is there presently, any unauthorized use, infringement,
misappropriation or violation of any of the Material Intellectual Property by
any Person, except those which have not had and could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. The
Company has the full right to make, have made, sell, possess, use, copy,
distribute, display, transfer and license, in any such case without payment, all
Material Intellectual Property except pursuant to those licenses listed on Item
1(f) of Schedule 3.16, and except for those limitations on such right which have
not had and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(c) To the knowledge of the Seller, no Material Intellectual
Property owned by the Company is subject to any outstanding order, award,
decision, injunction, judgment, decree or stipulation restricting the transfer,
use, enforcement or licensing thereof by the Company. The Company has not
entered into any agreement granting any third party the right to bring
infringement actions with respect to, or otherwise to enforce rights with
respect to, any Material Intellectual Property owned by the Company. The Company
has the exclusive right to file, prosecute and maintain all applications and
registrations with respect to Material Intellectual Property owned by the
Company.
(d) The Company has taken all reasonable and necessary steps
to maintain the Material Intellectual Property owned by the Company and its
rights thereunder, and no such rights to Material Intellectual Property have
been canceled or are in jeopardy of being canceled. The Company has paid all
fees, annuities and all other payments which have heretofore become due by the
Company to any Governmental Authority with respect to Material Intellectual
Property owned or licensed by the Company, except those which have not had and
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(e) To the knowledge of the Seller, all source code for all
computer programs and other software constituting Material Intellectual Property
owned by the Company is in the sole possession of the Company and is being
maintained on a confidential basis. The Company has no obligation to afford any
Person access to any source code for any computer program or other software
constituting Intellectual Property owned by the Company.
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(f) Neither the Company nor the Seller has granted to any other
Person any right, title or interest in or to any Invention Agreement.
3.17. WNRO AND YEAR 2000 COMPLIANCE. The Company has reviewed its
assets, products (including products sold by the Company prior to the Closing
Date), components, systems, processes and controls (including any of the
foregoing that are used by the Company pursuant to a valid license) to determine
whether such assets, products, components, systems, processes and controls will
not be materially adversely affected, and will function at least as effectively
and reliably, in all material respects, notwithstanding the occurrence of or
calculation involving calendar dates after (i) August 21, 1999 ("WNRO
Compliant"); and (ii) December 31, 1999 ("Year 2000 Compliant"). The Company has
initiated, but not yet completed, a program (the "Program") intended to cause
such assets, products, components, systems, processes and controls to be WNRO
Compliant and Year 2000 Compliant, a summary of which Program is substantially
as set forth in Schedule 3.17 as of the date set forth thereon. Except as
expressly specified in this Section 3.17, Seller does not make and has not made
any representation or warranty relating to whether the Company's assets,
products, components, systems, processes and controls are, or will be, WNRO
Compliant or Year 2000 Compliant in any respect. The Program, as designed by the
Company, has not failed to incorporate the assessment of any asset, product,
component, system, process or control; however, if there was such an omission
such omitted asset, product, component, system, process or control will not be
found to be non-WNRO Compliant or non-Year 2000 Compliant in any material
respect. Provided the Company uses commercially reasonable efforts and provides
adequate funding as required, the Seller has no knowledge of any circumstances
that are reasonably likely to occur that would preclude the Company from
achieving the successful implementation and completion of the Program.
3.18. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES; KNOWLEDGE;
DISCLOSURE.
(a) The Seller does not make, and has not made, any
representations or warranties relating to the Seller, the Company or the
business of the Company or otherwise in connection with the transaction
contemplated hereby other than those expressly set forth herein.
(b) No representation or warranty of the Seller in this Agreement
or in any certificate or instrument delivered by the Seller or the Company in
accordance with the terms hereof contains any untrue statement of a material
fact or omits any statement of a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.
(c) Whenever a representation or warranty made by the Seller
herein refers to the knowledge or expectation of the Seller, such knowledge or
expectation shall be deemed to consist only of the actual knowledge or
expectation of any of those persons listed on Schedule 3.18 or the knowledge or
expectation which would have been present after reasonable due inquiry by the
persons on Schedule 3.18 based on his or her position with the Seller and/or the
Company.
3.19. PRODUCT WARRANTIES. Schedule 3.19 sets forth a list of all
pending or, to the Seller's knowledge, threatened product warranty claims in
excess of $25,000. Except as set forth in Schedule 3.19 and in the Contracts,
there are no outstanding written warranties with respect to
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the products currently being offered or sold by the Company. The Seller is not
aware of any facts that indicate that the reserves for product warranties
reflected in any of the balance sheets included in the Financial Statements are
materially understated.
3.20. ORDER BACKLOG. A true and complete list of (a) all firm product
and service purchase orders and contracts for the sale of goods or the delivery
of services by the Company to Persons other than Governmental Authorities in
excess of $25,000, and (b) all firm funded product and service purchase orders
and contracts for the sale of goods or the delivery of services by the Company
to Governmental Authorities in excess of $25,000 (collectively, the "Backlog"),
pending as of the latest practical date prior to the date of this Agreement is
set forth in Schedule 3.20 attached hereto.
3.21. INSURANCE. Schedule 3.21 contains a true, complete and correct
list of all insurance policies currently maintained by the Seller or the Company
covering the Company's property and operations and no written notice of
cancellation, termination, or reduction of coverage, and no written notice of
intention to cancel, terminate or reduce coverage, has been received. The Seller
or the Company has given, or will give, the Buyer access to true, complete and
correct copies of all such policies together with all riders and amendments
thereto. Such policies are in full force and effect, and all premiums due
thereon have been paid.
3.22. DEALINGS WITH AFFILIATES. Schedule 3.22 sets forth a complete
list of all contracts, arrangements or other agreements (written or oral)
involving an annual receipt or expenditure of $25,000 or more between the
Company and its Affiliates. The Seller or the Company heretofore has delivered
or made available to the Buyer true and complete copies (or a detailed summary
in the case of an oral agreement) of each such contract, arrangement or other
agreement.
3.23. TERRITORIAL RESTRICTIONS. Except as set forth on Schedule 3.23,
to the Seller's knowledge, the Company is not restricted by any enforceable
written agreement with any other Person from carrying on its business anywhere
in the world.
3.24. EFFECT OF TRANSACTION. No creditor, employee, consultant or other
Person (other than customers or suppliers) having a material business
relationship with the Company has informed the Seller or the Company in writing
that such Person intends to terminate or materially adversely change the
relationship with the Company because of the purchase and sale of the Shares,
nor does the Seller have knowledge of any such intent.
3.25. RECEIVABLES. The Company's receivables, which have arisen in
connection with the Company's business and which are reflected in the Baseline
Balance Sheet or will be reflected in the Closing Date Balance Sheet, have
arisen only from bona fide transactions in the ordinary course of business
consistent with past practice.
3.26. INVENTORIES. Inventories provided for in the Baseline Balance
Sheet ("Inventories") net of the reserves set forth therein (i) are of such a
quality and quantity as to be usable in the ordinary course of business, and
(ii) that are finished goods are saleable in the ordinary course of business.
3.27. SUPPLIERS AND CUSTOMERS. Schedule 3.27 sets forth the 10 largest
suppliers of the Company, all sole source suppliers of the Company and the 10
largest customers of the Company
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for the period January 1, 1997 through the date hereof. To the Seller's
knowledge none of such suppliers or customers has notified the Company in
writing that it intends to cancel or otherwise substantially modify its
relationship with the Company or limit its services, supplies or materials to
the Company, or its usage or purchase of the services and products of the
Company either as a result of the transactions contemplated hereby or otherwise.
3.28. ANTITAKEOVER PROVISIONS. No "fair price", "moratorium", "control
share acquisition" or other form of antitakeover statute, regulation, charter
provision or contract is applicable to the purchase of the Shares by the Buyer
or any of the other transactions contemplated by this Agreement.
3.29. CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT
AND OTHER RESPONSIBILITY MATTERS. Neither the Seller nor the Company has, within
the last six years, had any contracts terminated for default by any United
States federal agency. Except as set forth on Schedule 3.29, neither the Seller
nor the Company, nor, to the Seller's knowledge, any of their respective
officers, directors, or employees having management or supervisory
responsibilities: (a) is disbarred, suspended, proposed for debarment, or
declared ineligible for the award of contracts by any federal agency; (b) has,
within the last six years, been convicted of or had a civil judgment rendered
against them for: commission of fraud or a criminal offense in connection with
obtaining, attempting to obtain, or performing a public (federal, state or
local) contract or subcontract; violation of federal or state antitrust statutes
relating to the submission of offers; or commission of embezzlement, theft,
forgery, bribery, falsification or destruction of records, making false
statements, tax evasion, or receiving stolen property; or (c) is presently
indicted for, or otherwise criminally or civilly charged by a Governmental
Authority with, commission of any of the offenses listed in clause (b) above.
3.30. GOVERNMENTAL CONTRACTS.
(a) Except as set forth in Schedule 3.30(a), with respect to each
fixed price Government Contract with a backlog value in excess of $500,000; each
"cost plus" Government Contract with a backlog value in excess of $500,000, and
each Bid that, if accepted, would result in such a Government Contract (a
"Government Bid") to which the Company is a party, to the Seller's knowledge (i)
the Company has complied with all material terms and conditions of such
Government Contract or Government Bid, including all clauses, provisions and
requirements incorporated expressly, by reference or by operation of law
therein; (ii) the Company has complied with all requirements of all Applicable
Laws or agreements pertaining to such Government Contract or Government Bid;
(iii) all representations and certifications executed, acknowledged or set forth
in or pertaining to such Government Contract or Government Bid were complete and
correct as of their effective date, and the Company has complied in all material
respects with all such representations and certifications; (iv) neither the
Governmental Authority nor any prime contractor, subcontractor or other Person
has notified the Company in writing that the Company has breached or violated
any Applicable Law or material certification, representation, clause, provision
or requirement pertaining to such Government Contract or Government Bid; (v) no
termination for convenience, termination for default, cure notice or show cause
notice is currently in effect pertaining to such Government Contract or
Government Bid; (vi) no cost incurred by the Company pertaining to such
Government Contract or Government Bid is currently being questioned or
challenged, is the subject of any investigation
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or has been disallowed by the Governmental Authority; (vii) no money due to the
Company pertaining to such Government Contract or Government Bid has been (or
has attempted to be) withheld or set off and the Company is entitled to all
progress payments with respect thereto; and (viii) each Government Contract is
valid, subsisting and in full force and effect.
(b) Except as set forth in Schedule 3.30(b), neither the Company,
any of its employees, nor, to the Seller's knowledge, any of its consultants or
agents is (or during the last six years has been) under administrative, civil or
criminal investigation, indictment or information by any Governmental Authority,
or any audit or investigation by the Company with respect to any alleged
irregularity, misstatement or omission arising under or relating to any
Government Contract or Government Bid. Except as set forth in Schedule 3.30(b),
the Seller has no knowledge of any irregularity, misstatement or omission
arising under or relating to any Government Contract or Government Bid that has
led or could reasonably be expected to lead, either before or after the Closing,
to any of the consequences set forth in the immediately preceding sentence or
any other damage, penalty, assessment, recoupment of payment or disallowance of
cost, which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.30(c), there exists: (i) no
outstanding claims against the Company by any Governmental Authority or any
prime contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract or Government Bid referred to in Section
3.30(a); and (ii) no disputes between the Company and any Governmental Authority
under the Contract Disputes Act or any other federal statute or between the
Company and any prime contractor, subcontractor or vendor arising under or
relating to any such Government Contract or Government Bid, which individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect.
(d) Except as set forth in Schedule 3.30(d), to the Seller's
knowledge all test and inspection results the Company has provided to the
Governmental Authority pursuant to any Government Contract referred to in
Section 3.30(a) or to any other Person pursuant to any such Government Contract
or as a part of the delivery to the Governmental Authority pursuant to any such
Government Contract of any article designed, engineered or manufactured in the
Business were complete and correct in all material respects as of the date so
provided. Except as set forth in Schedule 3.30(d), to the Seller's knowledge,
the Company has provided all test and inspection results to the Governmental
Authority pursuant to any such Government Contract as required by Applicable Law
and the terms of such Government Contract.
3.31. GOVERNMENT FURNISHED EQUIPMENT. Schedule 3.31 incorporates the
most recent schedule delivered to the U.S. Government which identifies by
description or inventory number certain material equipment and fixtures loaned,
bailed or otherwise furnished to or held by the Company by or on behalf of the
United States and such schedule is accurate in all material respects as of June
28, 1999.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
The Buyer represents and warrants to the Seller that:
4.1. ORGANIZATION AND AUTHORITY OF THE BUYER. The Buyer is a
corporation organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with the requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement and all agreements and documents
contemplated hereby by the Buyer, and the consummation by it of the transaction
contemplated hereby, have been duly authorized by all requisite corporate action
on the part of the Buyer. This Agreement has been duly executed and delivered by
the Buyer and constitutes, and all agreements and documents contemplated hereby
when executed and delivered pursuant hereto will constitute, the valid, binding
and enforceable obligation of the Buyer, enforceable in accordance with their
terms.
4.2. ABILITY TO CARRY OUT THE AGREEMENT. Except as disclosed on
Schedule 4.2 and except for compliance with the HSR Act, the Buyer is not
subject to or bound by any provision of (i) any Applicable Laws; (ii) its
certificate of incorporation or by-laws; (iii) any material mortgage, deed of
trust, lease, note, shareholders' agreement, bond, indenture, other material
instrument or agreement, license, permit, trust, custodianship, or other
restriction; or (iv) any judgment, order, writ, injunction or decree of any
Governmental Authority that, in any case, would prevent, or be violated by, or
under which there would be a default as a result of, nor is the consent of, or
filing with any Person or Governmental Authority under any material agreement
required for, the execution, delivery and performance by the Buyer of this
Agreement and the transactions contemplated hereby.
4.3. CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED DEBARMENT
AND OTHER RESPONSIBILITY MATTERS. The Buyer has not, within the last six years,
had any contracts terminated for default by any United States federal agency.
Neither the Buyer, nor, to the Buyer's knowledge, any of its officers, directors
or employees having management or supervisory responsibilities: (a) is
disbarred, suspended, proposed for debarment, or declared ineligible for the
award of contracts by any federal agency; (b) has, within the last six years,
been convicted of or had a civil judgment rendered against them for: commission
of fraud or a criminal offense in connection with obtaining, attempting to
obtain, or performing a public (federal, state or local) contract or
subcontract; violation of federal or state antitrust statutes relating to the
submission of offers; or commission of embezzlement, theft, forgery, bribery,
falsification or destruction of records, making false statements, tax evasion,
or receiving stolen property; or (c) is presently indicted for, or otherwise
criminally or civilly charged by a Governmental Authority with, commission of
any of the offenses listed in clause (b) above.
4.4. LITIGATION. There are no actions, suits, proceedings, criminal,
civil, regulatory or otherwise, orders or investigations pending or, to the
Buyer's knowledge, threatened by or against or affecting the Buyer at law or in
equity, or before or by any Governmental Authority that would materially
adversely affect the Buyer's ability to consummate the transactions contemplated
hereby or would prevent performance by the Buyer of this Agreement.
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4.5. BROKERS AND INTERMEDIARIES. Buyer has not employed any broker,
finder, advisor or intermediary in connection with the transaction contemplated
by this Agreement which would be entitled to a broker's, finder's or similar fee
or commission in connection therewith or upon the consummation thereof.
4.6. INVESTMENT INTENT. The Buyer is acquiring the Shares for its own
account for investment purposes, without a present view to the resale or other
distribution thereof in violation of federal or state securities laws and with
no present intention of distributing or reselling any part thereof. The Buyer
will not so distribute or resell the Shares in violation of any such law. The
Buyer is an "accredited investor" as that term is defined in Section 501 under
the Securities Act of 1933, as amended. The Buyer has sufficient knowledge and
experience in financial and business matters to enable it to evaluate the merits
and risks of the transactions contemplated by this Agreement.
4.7. FINANCIAL CAPABILITY. The Buyer has adequate funds to purchase the
Shares on the terms and conditions contained in this Agreement and will have
such funds on hand and readily available on the Closing Date.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS OF THE SELLER AND THE BUYER
------------------------------------------------------------
5.1. ACCESS AND INFORMATION; CONFIDENTIALITY; ACKNOWLEDGMENTS.
(a) The Seller shall continue to permit the Buyer and its
representatives to have reasonable access during normal business hours, upon
reasonable advance notice, to the books and records of the Company and to
appropriate employees and agents of the Company. Until the Closing, all
information provided to the Buyer pursuant hereto shall be subject to that
certain confidentiality agreement executed by and between the Buyer and the
Seller or Quarterdeck on behalf of the Seller (the "Confidentiality Agreement").
If the Closing occurs, then the Confidentiality Agreement shall cease to have
any force and effect automatically without further action of the parties
thereto.
(b) Each party shall notify the other party promptly upon its
discovery of any information which constitutes or would indicate a material
breach by the other party of any representation, warranty or agreement of the
Seller hereunder.
5.2. REGULATORY FILINGS. As promptly as practicable after the date of
the execution of this Agreement, the parties shall file notifications under and
in accordance with the HSR Act and any applicable antitrust or similar acts in
connection with the transaction contemplated hereby. The parties shall respond
as promptly as practicable to any inquiries received from the Federal Trade
Commission (the "FTC"), the Antitrust Division of the Department of Justice (the
"Antitrust Division"), and any applicable foreign agencies or authorities having
jurisdiction for additional information or documentation and to all inquiries
and requests received from any State Attorney General or other Governmental
Authority in connection with antitrust matters. Each of the parties hereto will
furnish to the other party hereto such necessary information and reasonable
assistance as such other party may reasonably request in connection with such
filings. Each party shall use reasonable efforts to vacate any injunction or
other order (whether
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temporary, preliminary or permanent) enacted, issued, promulgated or entered by
the FTC, the Antitrust Division or other Governmental Authority, which has the
effect of making the transaction contemplated by this Agreement illegal or
otherwise restraining or prohibiting consummation of such transaction. In
addition, if necessary, as promptly as practicable after the date of the
execution of this Agreement, the parties shall file notification under and in
accordance with the Exon-Xxxxxx Amendment in connection with the transactions
contemplated hereby, and shall respond as promptly as practicable to any
inquiries received from any applicable Governmental Authority having
jurisdiction for additional information or documentation in connection
therewith.
5.3. CONDUCT OF BUSINESS; INTERCOMPANY ACCOUNTS.
(a) Prior to the Closing, and except as otherwise contemplated by
this Agreement, the Real Estate Purchase Agreement, the Rollover Lease or
consented to or approved by the Buyer, or except in the ordinary course of
business, consistent with past practice, the Seller, with respect to the Company
shall:
(i) carry on the business of the Company in the ordinary
course, consistent with past practice and in substantially the same
manner as heretofore conducted; use commercially reasonable efforts to
maintain the business of the Company in good operating condition and
repair; and take all steps reasonably necessary to maintain the
intangible assets of the Company;
(ii) not grant (or commit to grant) any increase in the
compensation (including incentive or bonus compensation) of any
employee of the Company (provided any increase in the compensation of
any employee earning more than $75,000 shall be deemed outside of the
ordinary course of business) or institute, adopt or amend (or commit to
institute, adopt or amend) any compensation or benefit plan, policy,
program or arrangement or collective bargaining agreement applicable to
any employee of the Company;
(iii) not enter into any new employment agreement or
collective bargaining agreement or commitment (including any commitment
to pay retirement or other benefits) to or with any of the employees of
or consultants to the Company, provided any new employment agreement or
collective bargaining agreement shall be deemed outside of the ordinary
course of business;
(iv) not sell, assign, license, dispose of, or transfer any of
the assets of the Company having a fair market value of at least
$10,000 individually or $50,000 in the aggregate other than sales of
Inventories in the ordinary course of business consistent (in kind and
amount) with past practice, or incur any liabilities or obligations
(including liabilities with respect to indebtedness, capital leases or
guarantees thereof) in excess of $50,000 individually or $200,000 in
the aggregate which amounts shall be deemed outside of the ordinary
course of business;
(v) not (a) enter into or terminate any lease or license of
real estate, provided that any termination of any lease or license of
real estate shall be deemed outside of the
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ordinary course of business, (b) incur, create or assume any
Encumbrances on any of the assets of the Company except for Permitted
Encumbrances, or (c) make any modifications of or changes in or
terminate any existing Contract other than as may be required to
consummate the transactions contemplated hereby, provided any such
modification or change which exceed $100,000 in amount shall be deemed
outside of the ordinary course of business;
(vi) not make any capital expenditure or capital expenditure
commitment (other than in an emergency) in excess of $50,000
individually or $100,000 in the aggregate which amounts shall be deemed
outside of the ordinary course of business;
(vii) not repay or prepay any liability or obligation prior to
its stated maturity in excess of $250,000 individually or $500,000 in
the aggregate which amounts shall be deemed outside of the ordinary
course of business;
(viii) maintain in full force and effect the existing
insurance described in Schedule 3.21; and
(ix) not make, give or grant any bid or proposal, or any
customer option relating to contracts in Backlog, (A) involving an
amount in excess of $250,000 (or amend, supplement or terminate any
existing bid or proposal, or any existing customer operation relating
to contracts in the Backlog, involving an amount in excess of
$250,000), each of which shall be deemed outside of the ordinary course
of business, (B) at a price or prices less than the associated costs,
including the Company's allocation of selling, general and
administrative expenses, which shall be deemed outside of the ordinary
course of business, or (C) not in the ordinary course of business,
consistent with past practice.
Notwithstanding the foregoing, the Buyer and the Seller
acknowledge and agree that (a) the Company shall either lease or
purchase (i) a new phone system, and (ii) certain computer equipment
and software, for an aggregate value of approximately $815,000, (b)
such events shall not be subject to the limitations set forth in this
Section 5.3(a), and (c) the Buyer will have the opportunity to review
proposals with respect to the foregoing and shall timely provide the
Seller a response as to whether the Company should lease or purchase
same.
(b) The Seller and the Buyer agree that all intercompany
accounts between the Seller and the Company otherwise recorded on the books and
records of the Company shall be canceled without payment as of the Closing, and
no further payment therefor shall be made after the Closing. All intercompany
agreements, including tax sharing agreements, between the Company and the Seller
or its Affiliates shall be cancelled effective as of the Closing.
Notwithstanding the foregoing, the parties acknowledge and agree that the Real
Estate Purchase Agreement, the Rollover Lease and the rights and obligations
under such agreements shall survive the Closing pursuant to the terms thereof.
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5.4. TAX MATTERS.
(a) The Seller shall cause the Company to be included in the
consolidated Federal Tax Returns that include the Seller for all periods for
which they are required to be so included, including but not limited to the
period from and including January 1, 1999 through the Closing Date, and in any
other required state, local and foreign consolidated, affiliated, combined,
unitary or other similar group Tax Returns that include the Seller, for all
periods ended on or prior to the Closing Date ("Pre-Closing Periods") for which
the Company is required to be so included. The Buyer shall cause the Company to
prepare information (including schedules, worksheets and other data) necessary,
in the Seller's reasonable judgment, to include the Company in the Tax Returns
for such period. The Buyer shall cause the Company to deliver to the Seller the
information not earlier than two (2) months after receiving the appropriate
reporting package of schedules, nor later than two (2) months prior to the due
date (including extensions thereof) of the applicable Tax Return, whichever is
later; provided, however, that in no event shall such delivery be made any later
than the date that is one month prior to such due date. The Seller shall pay all
Taxes of the Company for all Pre-Closing Periods. The Buyer shall cause the
Company to promptly reimburse the Seller for all Taxes of the Company paid by
the Seller with respect to all Pre-Closing Periods to the extent such Taxes are
accrued or otherwise reflected as a liability on the Closing Date Balance Sheet.
The Seller shall be entitled to all refunds of Taxes (including but not limited
to interest with respect thereto) that either Buyer, Seller or the Company may
receive relating to any Pre-Closing Period, and the Buyer shall pay, or cause
the Company to pay, to the Seller any such refund that Buyer or the Company may
receive promptly after receipt thereof. The Buyer shall be entitled to all
refunds of Taxes (including but not limited to interest with respect thereto)
that either Buyer, Seller or the Company may receive relating to any periods
other than the Pre-Closing Periods, and the Seller shall pay to the Buyer any
such refund that Seller may receive promptly after receipt thereof. At the
request of the Seller, the Buyer shall file, or shall cause the Company to file,
any claims for such refunds.
(b) The Seller and the Buyer shall cooperate to take or cause to
be taken, and shall, take or cause to be taken, all actions necessary and
appropriate to effect a timely proper election under Section 338(h)(10) of the
Code and the Treasury Regulations thereunder and, to the extent possible, to
make similar elections for state income tax purposes. The Seller and the Buyer
shall comply fully with all filing and other requirements necessary to
effectuate such elections on a timely basis and agree to cooperate in good faith
with each other in the preparation and timely filing of any Tax Returns required
to be filed in connection with the making of the elections, including the
exchange of information and the joint preparation and delivery to each other
within 180 days of the Closing of Form 8023 and, if applicable, Form 8594,
including related schedules (which form and related schedules shall promptly
thereafter be filed by the Buyer with the applicable District Director of the
Internal Revenue Service) and the filing of such form and related schedules with
their respective income tax returns in the time and manner prescribed by law.
The parties shall allocate the Adjusted Grossed-up Basis ("AGUP"), as determined
under Treasury Regulation section 1.338(b)-1, among Classes I, II, III, IV and V
in accordance with Treasury Regulation section 1.338(b)-2T(b). The foregoing
allocations of AGUP for the assets of the Company shall be binding on the
parties for income tax purposes. The Seller shall be responsible for any and all
Taxes of the Company or Taxes for which the Company may be responsible relating
to the making of the election under Section 338(h)(10) of
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the Code and the several liability under Consolidated Return Regulation Section
1.1502-6 of the Company for the income tax liability of the Seller and the
members of its consolidated group for such taxable periods as the Company was a
member of such consolidated group to the extent that such Taxes were not accrued
or otherwise reflected as a liability on the Closing Date Balance Sheet.
(c) Any Taxes with respect to the Company that relate to a tax
period beginning before the Closing Date and ending after the Closing Date (an
"Overlap Period") shall be allocated between the Seller and the Buyer as
determined from the books and records of the Company during the portion of such
period ending on the Closing Date and the portion of such period beginning on
the day following the Closing Date, and based on accounting methods, elections
and conventions then in effect and which are consistent with past tax accounting
practices and in accordance with the applicable Consolidated Return Regulations.
The Buyer shall cause the Company to file all Tax Returns for all periods after
the Closing Date and pay, or cause to be paid, when due all Taxes shown as due
on all such Tax Returns. The Seller shall promptly reimburse the Buyer for all
Taxes paid by the Company (or on behalf of the Company) after the Closing Date
to the extent that such Taxes are allocable to the Pre-Closing Periods and were
not accrued or otherwise reflected as a liability on the Closing Date Balance
Sheet. At least thirty (30) days prior to the due date for filing of any Tax
Return for the first period following the Closing Date, the Buyer shall provide
the Seller with a substantially final draft of such Tax Return, and the Seller
shall have the right to review such Tax Return. The Seller shall notify the
Buyer of any objections the Seller may have to any item set forth in such Tax
Return, and the Seller and the Buyer agree to consult and resolve in good faith
any such objection. At least 30 days prior to the due date for the filing of any
Tax Return which includes the results of operations of the Company for the last
taxable period during which it was a member of the Seller's consolidated group
and which the Seller is required to file, the Seller shall provide the Buyer
with a substantially final draft of such Tax Return (or such portion of any such
Tax Return) as relates to the operations of the Company for such taxable period,
and the Buyer shall have the right to review such Tax Return (or portion of such
Tax Return). The Buyer shall notify the Seller of any objections the Buyer may
have to any item set forth in such Tax Return (or portion of such tax Return),
and the Seller and the Buyer agree to consult and resolve in good faith any such
objections.
(d) The Buyer shall within ten (10) business days notify the
Seller in writing upon receipt by the Buyer or any Affiliate of the Buyer of
notice of (i) any pending or threatened federal, state, local or foreign Tax
audits or assessments of the Company so long as any Pre-Closing Period remains
open, and (ii) any pending or threatened federal, state, local or foreign Tax
audits or assessments of the Buyer or any Affiliate of the Buyer which may
affect the Tax Liabilities of the Company, in each case for Taxes and Tax
Returns with respect to which the Seller may be liable under this Agreement.
Failure of the Buyer to comply with the notification requirement set forth in
the preceding sentence shall relieve the Seller of its indemnification
obligations with respect to such liabilities, but only in the event and to the
extent that the Seller was prejudiced by such failure. The Seller shall promptly
notify the Buyer in writing upon receipt by the Seller or any Affiliate of the
Seller of notice hereafter received of any pending or threatened federal, state,
local or foreign Tax audits or assessments relating to the income, properties or
operations of the Company.
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(e) Except as otherwise disclosed on Schedule 5.4(e), there
are not presently pending or threatened in writing any audits of, or assessments
against, the Company by any federal, state, local or foreign tax authorities or
any such pending or threatened audits of, or assessments against, any of the
Company's Affiliates that could have a Material Adverse Effect on the Company.
(f) Except as set forth in Schedule 5.4(f), neither the
Company nor any Person on behalf of the Company (i) has executed or entered into
a closing agreement pursuant to Section 7121 of the Code or any predecessor
provision thereof or any similar provision of state, local or foreign law or any
other agreement relating to Taxes with any federal, state, local or foreign tax
authority, or (ii) has agreed that the Company will or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in method of accounting
initiated by the Company (or on behalf of the Company).
(g) Notwithstanding anything in this Agreement to the
contrary, the Seller shall have the right to represent the interests of the
Company in any Tax audit or administrative or court proceeding relating to Taxes
or Tax Returns with respect to which the Seller may be liable under this
Agreement (including without limitation any such proceedings relating to the
income, properties or operations of the Company for Pre-Closing Periods). The
Buyer agrees that it will reasonably cooperate with the Seller and its
representatives in the defense against or compromise of any claim in any such
proceeding. Without the prior written consent of the Seller, neither the Buyer
nor the Company may settle any Tax claim for the portion of the year or period
ending on the Closing Date which may be the subject of an indemnification claim
hereunder.
(h) After the Closing Date, the Buyer and the Seller shall
provide each other, and the Buyer shall cause the Company to provide the Seller,
with such cooperation and information relating to the Company as either party
reasonably may request in filing any Tax Return (or amended Tax Return) or
refund claim, determining any Tax liability or a right to a refund, conducting
or defending any audit or other proceeding in respect of Taxes or effectuating
the terms of this Agreement. The parties shall retain, and the Buyer shall cause
the Company to retain, all Tax Returns, schedules, work papers and other
material documents relating thereto, until the expiration of any relevant
statute of limitations (and, to the extent notified by any party, any extensions
thereof) and, unless such Tax Returns and other documents are offered and
delivered to the Seller or the Buyer, as applicable, until the final
determination of any Tax in respect of such years. Any information obtained
under this Section 5.4(i) shall be kept confidential, except as may be otherwise
necessary in connection with filing any Tax Return (or amended Tax Return) or
refund claim, determining any Tax liability or a right to a refund, conducting
or defending any audit or other proceeding in respect of Taxes or otherwise
effectuating the terms of this Agreement. Each party shall make available to the
other party (and the Buyer also shall cause the Company to make available to the
Seller), on a timely basis, the most appropriate personnel to satisfy the
obligations under this Section 5.4(i) at no cost to the requesting party.
Notwithstanding the foregoing, neither the Seller nor the Buyer, nor any of
their respective Affiliates, shall be required unreasonably to prepare any
document, or determine any information not then in its possession, in response
to a request under this Section 5.4(i); provided, however, no request shall be
deemed unreasonable if made in response to the request
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of a taxing authority for information or documents not in the possession of the
requested party nor otherwise reasonably available to it.
(i) All registration, stamp, value-added, sales or use or similar
taxes, and transfer taxes that are payable by reason of the transaction
contemplated by this Agreement or attributable to the sale, transfer or delivery
of the Shares hereunder shall be borne by the Buyer. The Buyer and the Seller
shall cooperate in filing all necessary Tax Returns and other documentation with
respect to the Taxes described in this Section 5.4(j).
5.5. AFFILIATE OBLIGATIONS. Effective as of the Closing, the Buyer
shall assume, and the Buyer shall use its commercially reasonable efforts to
obtain the unconditional release and discharge of the Seller in respect of, all
obligations of the Seller relating to the Company or the business of the Company
identified on Schedule 5.5.
5.6. EMPLOYEE BENEFIT MATTERS.
(a) DEFINITIONS. The terms defined in Section 3.15 hereof shall
have the same meanings whenever they are used in this Section 5.6. In addition,
the following terms shall have the following meanings whenever used in this
Agreement:
(i) CONSULTING AGREEMENT. "Consulting Agreement" shall mean
the Agreement between the Company and Xxxxx X. Xxxxxx as in existence
on the Closing Date.
(ii) DEFERRED COMPENSATION AGREEMENT. "Deferred Compensation
Agreement" shall mean the 1982 Deferred Compensation Agreement between
Xxxxx Technologies, Inc. (previously known as Figgie International
Inc.) and Xxxxxxx X. Xxxxxx as in existence on the date hereof.
(iii) DEFERRED COMPENSATION PLAN. "Deferred Compensation Plan"
shall mean the 1983 Xxxxx Technologies, Inc. (previously known as
Figgie International Inc.) Deferred Compensation Plan, including
related Deferred Compensation Agreements with Xxxxx X. Xxxxxxx, and
Xxxxxx X. Xxxxxx, as in existence on the date hereof.
(iv) DISABILITY PLAN. "Disability Plan" shall mean the Xxxxx
Technologies, Inc. Disability Plan for Salaried Employees as in
existence on the date hereof.
(v) EMPLOYMENT AGREEMENTS. "Employment Agreements" shall mean
all employment agreements between any Interstate Employee and the
Seller or the Company, as listed on Schedule 3.15, as in existence on
the date hereof.
(vi) EXECUTIVE BENEFITS PROGRAM. "Executive Benefits Program"
shall mean the Xxxxx Technologies, Inc. (previously known as Figgie
International Inc.) Senior Executive Benefits Program, including the
Participation Agreement with Xxxxxxx X. Xxxxxx, as in existence on the
Closing Date.
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(vii) FORMER INTERSTATE EMPLOYEE. "Former Interstate Employee"
shall mean a person who is not an employee of the Seller or any of its
subsidiaries on the Closing Date and who was an employee of the Company
on the day prior to his termination of employment from Seller's
Controlled Group. "Former Interstate Employee" shall also include any
employee of the Company who on the Closing Date is on a leave of
absence which is unapproved by the Company, or who is receiving
long-term disability benefits under, or who is determined to be
disabled under, any Company Employee Plan as of the Closing Date.
(viii) INTERSTATE EMPLOYEE. "Interstate Employee" shall mean
Xxxxxxx X. Xxxxxxx, Xxxxxx Xxxxxx, X.X. Xxxxxxxx and any person who is
an employee of the Company on the Closing Date. "Interstate Employee"
shall exclude any Former Interstate Employees.
(ix) NONQUALIFIED SAVINGS PLAN. "Nonqualified Savings Plan"
shall mean the Xxxxx Technologies, Inc. Nonqualified 401(k) Savings
Plan and related Rabbi Trust as in existence on the date hereof.
(x) RETIREMENT PLAN. "Retirement Plan" shall mean the Xxxxx
Technologies, Inc. Retirement Income Plan II as in existence on the
date hereof.
(xi) SAVINGS PLAN. "Savings Plan" shall mean the Xxxxx
Technologies, Inc. Savings Plan for Salaried Employees as in existence
on the date hereof.
(xii) XXXXX PLAN COVERED INTERSTATE PERSON. "Xxxxx Plan
Covered Interstate Person" shall mean each Interstate Employee, Former
Interstate Employee, and dependent or qualified beneficiary of an Interstate
Employee or Former Interstate Employee who immediately prior to the Closing Date
is covered under any Xxxxx Employee Plan in any capacity.
(xiii) SELLER'S CONTROLLED GROUP. "Seller's Controlled Group"
shall mean the Seller and any entity which is a member of a "controlled group of
corporations" with or under "common control" with the Seller as defined in
Section 414(b) or (c) of the Code.
(xiv) SEVERANCE PAY PLAN. "Severance Pay Plan" shall mean the
Xxxxx Technologies, Inc. Severance Pay Plan as in existence on the date hereof.
(xv) SPLIT DOLLAR PLAN. "Split Dollar Plan" shall mean the
Xxxxx Technologies, Inc. (previously known as Figgie International Inc.) Life
Insurance Plan, including the Split Dollar Life Insurance Agreement with Xxxxxxx
X. Xxxxxxx, as in existence on the date hereof.
(xvi) STOCK OPTION PLAN. "Stock Option Plan" shall mean the
Xxxxx Technologies, Inc. (previously known as Figgie International Inc.) Key
Employees' Stock Option Plan and Related Agreements as in existence on the date
hereof.
(b) RETIREMENT PLAN. All Interstate Employees shall cease to
be active participants in the Retirement Plan effective as of the Closing Date.
No Interstate Employee
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shall accrue additional benefits under the Retirement Plan as a result of
employment with the Company after the Closing Date. Seller shall cause each
Interstate Employee to be fully vested in his or her accrued benefits under the
Retirement Plan effective as of the Closing Date.
(c) SAVINGS PLAN. The Closing Date shall be the date of
cessation of participation of each Interstate Employee under the Savings Plan
for all purposes, and no Interstate Employee shall accrue additional benefits,
or receive additional contributions or allocations, under the Savings Plan as a
result of employment with the Company after the Closing Date. Effective as of
the Closing Date, Seller shall cause each Interstate Employee to be fully vested
in his or her accrued benefits under the Savings Plan effective as of the
Closing Date, shall cause each Interstate Employee to receive matching
contributions as provided under the Savings Plan with respect to the elective
contributions made by such Interstate Employee through the Closing Date, and
shall cause each Interstate Employee to share in any employer discretionary
contribution made to the Savings Plan for the 1999 plan year allocated on the
basis of the compensation earned by such Interstate Employee through the Closing
Date. Prior to the Closing Date, Seller shall spinoff that portion of the
Savings Plan which constitutes the Interstate Employees' interest in the Savings
Plan into a separate plan which shall be assumed by the Company (the "Company
Savings Plan"). Seller shall cause the trustee of the Savings Plan to transfer
to the funding agent of the Company Savings Plan such cash and other assets as
are allocated to the accounts of each Interstate Employee under the Savings Plan
as of the date of the transfer. The transfer contemplated by this Section 5.6(c)
shall be completed within ninety (90) days after the Company creates the Company
Savings Plan, files an application with the Internal Revenue Service requesting
a determination that the Company Savings Plan satisfies the requirements of Code
Section 401(a), and delivers to Seller a representation by the Company that it
will take all steps reasonably necessary to obtain such determination. The
Company shall file such application with the Internal Revenue Service within the
one hundred eighty (180) day period following the Closing Date. The Company
Savings Plan as approved by the Internal Revenue Service shall provide all
benefits, rights and features required to be provided under Code Section
411(d)(6) with respect to the Interstate Employees for whom amounts are to be
spunoff and transferred pursuant to this Section 5.6(c). The Company Savings
Plan shall provide, as of the date of such transfer, an account balance for each
Interstate Employee which is at least equal to his or her account balance under
the Savings Plan as of the date of such transfer.
(d) XXXXX WELFARE PLANS AND XXXXX BENEFIT ARRANGEMENTS. The
Closing Date shall be the date of "termination of employment" of each Interstate
Employee under each Xxxxx Welfare Plan and each Xxxxx Benefit Arrangement and,
except as otherwise provided by Applicable Law or Section 5.6(o) hereof, shall
be the date of cessation of participation of each Interstate Employee and his or
her covered dependents under all Xxxxx Welfare Plans and all Xxxxx Benefit
Arrangements. To the extent that any such Xxxxx Welfare Plans and Xxxxx Benefit
Arrangements have incurred claims on the Closing Date which have not been paid
by the Closing Date (or such later date as may be provided under Section 5.6(o)
hereof), such incurred but unpaid claims shall be paid under the Xxxxx Welfare
Plan or Xxxxx Welfare Arrangement in accordance with its terms and Seller shall
be responsible for the amount of such claims. Immediately after the Closing Date
(and in any event no later than the deadline set forth in Section 5.6(o)
hereof), the Buyer shall cause the Company to establish replacement Welfare
Plans and Benefit Arrangements substantially comparable in the aggregate to the
Xxxxx Welfare Plans and Xxxxx Benefit Arrangements in effect immediately prior
to the Closing Date, for the
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Interstate Employees and their dependents who are covered under any Xxxxx
Welfare Plan or Xxxxx Welfare Arrangement on the Closing Date so that there is
no interruption in their coverage. The replacement Welfare Plans and Benefit
Arrangements shall in all material respects in the aggregate be comparable to
the Xxxxx Welfare Plans and Xxxxx Benefit Arrangements which they are replacing
and shall not contain any "preexisting condition" exclusion or "actively at
work" requirement which would cause any of such Interstate Employees or their
covered dependents or any existing medical condition of such Interstate
Employees or their covered dependents to be excluded from the replacement
Welfare Plans or Benefit Arrangements. Notwithstanding anything herein to the
contrary, neither the Company nor the Buyer shall be required to provide any of
the Interstate Employees with any employee pension benefit plan (as defined in
Section 3(2) of ERISA) or with any stock-based plans relating to equity
securities (or their equivalent, such as phantom stock plans or SARs) except as
provided in Section 5.6(c) with respect to the Company Savings Plan.
(e) COBRA. Seller shall timely provide all notices and any
continuation of health benefit coverage (including but not limited to medical
and dental coverage) required to be provided to any Xxxxx Plan Covered
Interstate Person, under Part 6 of Subtitle B of Title 1 of ERISA or Section
4980B(f) of the Code ("COBRA") to the extent such notices and continuation of
health benefit coverage are required to be provided by reason of the
transactions contemplated by this Agreement, or any "qualifying event" (within
the meaning of ERISA Section 603 and Code Section 4980B(f)(3)) of any Xxxxx Plan
Covered Interstate Person occurring on the Closing Date, and shall provide any
health benefit coverage required by COBRA as a result thereof. To the extent any
claims are incurred relative to any Xxxxx Welfare Plan or Xxxxx Welfare
Arrangement due to the failure of the Seller to provide the notices or
continuation coverage required by this paragraph or COBRA, such claims shall be
paid by Seller, or the Xxxxx Welfare Plan or Xxxxx Welfare Arrangement, as
appropriate. Buyer hereby agrees that the Company will offer, to the Interstate
Employees and their dependents who are covered under any Xxxxx Welfare Plan or
Xxxxx Welfare Arrangement on the Closing Date, coverage under any and all health
benefit plans maintained by the Company commencing on the day after the Closing
Date (or following the postponement of cessation of coverage pursuant to Section
5.6(o) hereof) on the same terms and conditions including the same level of
employee contributions as coverage under such plans is available to other
Interstate Employees and their dependents without any "preexisting condition" or
"actively at work" requirement which would cause any of such Interstate
Employees or their covered dependents or any existing medical condition of such
Interstate Employees or their covered dependents to be excluded from coverage
under any such health benefit plans maintained by the Company. Buyer hereby
agrees that neither it, the Company, nor any employee or officer of either of
them, directly or indirectly, shall offer any inducement of any kind to such
Interstate Employees or their covered dependents to elect COBRA coverage under
the Xxxxx Welfare Plan.
(f) INTERSTATE WELFARE PLANS AND INTERSTATE BENEFIT
ARRANGEMENTS. Following the Closing Date, Buyer shall cause the Company to,
subject to any right which may exist to amend or terminate any Interstate
Welfare Plan or Interstate Benefit Arrangement, continue all Interstate Welfare
Plans and Interstate Benefit Arrangements and satisfy all obligations arising
thereunder; PROVIDED, HOWEVER, that (i) the Seller shall cause the Consulting
Agreement to be terminated and of no force and effect prior to the Closing, and
(ii) the Seller shall be responsible for any liabilities or obligations under
the Consulting Agreement (it being understood and agreed
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that neither the Company nor the Buyer shall have any liabilities or obligations
thereunder). Specifically, and not by way of limitation, Buyer shall cause the
Company to recognize Interstate Employees' vacation time and sick leave earned
but unused prior to the Closing Date under the relevant Interstate Welfare Plans
and Interstate Benefit Arrangements. Buyer shall cause the Company to, until at
least the first anniversary of the Closing Date, continue to permit earned but
unused vacation time and sick leave credits to be utilized in the same manner as
permitted immediately prior to the Closing Date.
(g) SEVERANCE BENEFITS. Buyer and Seller hereby agree that the
transactions contemplated by this Agreement shall not constitute a termination
of employment for purposes of determining an Interstate Employee's eligibility
for severance benefits under any Company Employee Plan, any Employment
Agreement, or any other agreement. Any severance payments due to an Interstate
Employee who terminates employment after the Closing Date, including but not
limited to benefits due under the Severance Pay Plan, shall be the sole
responsibility of the Company. Severance benefits for Former Interstate
Employees shall be the responsibility of the Seller.
(h) SALARY AND BONUS, EMPLOYMENT, AND DEFERRED COMPENSATION.
Following the Closing Date, Buyer shall cause the Company to continue Interstate
Employees' salaries and bonus opportunities, at no less than the current levels
during their continued employment with the Company until such salaries and
bonuses are changed by the Company in the ordinary course of business, but in no
event shall the level of such salaries and bonus opportunities (excluding any
such amounts paid with respect to this transaction) be decreased prior to the
first anniversary of the Closing Date. Seller shall cause each Interstate
Employee who is a participant in the Deferred Compensation Plan to be fully
vested in his or her accrued benefits under the Deferred Compensation Plan and
any related Deferred Compensation Agreement effective as of the Closing Date.
Effective immediately after the Closing Date, Seller and Buyer shall cause all
of Seller's rights, duties and obligations under any Employment Agreement
existing between the Seller and an Interstate Employee to be assigned to the
Company. Buyer shall cause the Company to continue its obligations under the
Employment Agreements until said first anniversary of the Closing Date or, if
earlier, such termination date as is provided under the terms of said agreement
which date is not subject to the discretion of the Company. Any compensation or
benefits payable under an Employment Agreement to an Interstate Employee after
the Closing Date shall be the sole responsibility of the Company.
Notwithstanding anything contained herein to the contrary, Seller shall be
responsible for, and following the Closing the Seller shall pay, the Sales
Incentive Bonus and Retention Bonus (as such terms are defined in, and
determined pursuant to, certain of the Employment Agreements), if any, to each
applicable Interstate Employee. Any deferred compensation payable with respect
to a Former Interstate Employee or an Interstate Employee under the Deferred
Compensation Agreement and the Deferred Compensation Plan shall be the sole
responsibility of the Seller.
(i) EXECUTIVE BENEFITS PROGRAM AND NONQUALIFIED SAVINGS PLAN.
The Seller represents and warrants that no Interstate Employee is currently
participating in the Executive Benefits Plan. The Closing Date shall be the date
of "termination of employment" of each Interstate Employee under the
Nonqualified Savings Plan, and no Interstate Employee shall receive additional
contributions or allocations, under such plan as a result of employment with the
Company after the Closing Date. The Seller shall cause each Interstate Employee
to be fully
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vested in his or her accrued benefits under the Nonqualified Savings Plan
effective as of the Closing Date. The Seller shall cause each Interstate
Employee participating in such plan to receive a "matching or employer
contribution" regardless of any "last day" or "service" requirement. Any amounts
payable to or with respect to an Interstate Employee or a Former Interstate
Employee under the Executive Benefits Program or the Nonqualified Savings Plan
shall be the sole responsibility of the Seller or its Affiliates.
(j) DISABILITY PLAN. The provisions of this Section 5.6(j),
and not those of Section 5.6(d) above, shall govern the obligations of the
parties with respect to the Disability Plan. The Closing Date shall be the date
of "termination of employment" of each Interstate Employee under the Disability
Plan, and shall be the date of cessation of participation of each Interstate
Employee under the Disability Plan. No Interstate Employee shall be covered
under the Disability Plan after the Closing Date and no further premium payments
or other contributions shall be made, and no benefits shall be paid, with
respect to any Interstate Employee under the Disability Plan after the Closing
Date. For a period of one year after the Closing Date, the Buyer shall cause the
Company to establish a replacement disability plan substantially comparable in
the aggregate to the Disability Plan as in effect immediately prior to the
Closing Date (the "Replacement Disability Plan") for the Interstate Employees so
that there is no interruption in their coverage. The Replacement Disability Plan
shall in all material respects in the aggregate be substantially comparable to
or better than the Disability Plan, and shall not contain any "preexisting
condition" or other exclusion or requirement which would cause any of the
Interstate Employees or any existing medical condition of the Interstate
Employees to be excluded from the Replacement Disability Plan.
(k) SPLIT DOLLAR PLAN. The provisions of this Section 5.6(k),
and not those of Section 5.6(d) above, shall govern the obligations of the
parties with respect to the Split Dollar Plan. The Closing Date shall be the
date of cessation of participation of each Interstate Employee under the Split
Dollar Plan. No Interstate Employee shall be covered under the Split Dollar Plan
after the Closing Date. Any obligations or amounts payable to or with respect to
an Interstate Employee or a Former Interstate Employee after the Closing Date
under the Split Dollar Plan shall be the sole responsibility of the Seller. To
the extent required under the applicable terms of the Split Dollar Plan and the
related Split Dollar Life Insurance Agreements, Seller shall provide each
affected Interstate Employee with the right to purchase all of the Seller's
right, title and interest in the affected Interstate Employee's insurance
policies for cash, by tendering the amount specified, within the time period
specified, under the terms of the Split Dollar Plan and the related Split Dollar
Life Insurance Agreements.
(l) STOCK OPTION PLAN. The provisions of this Section 5.6(l),
and not those of Section 5.6(d) above, shall govern the obligations of the
parties with respect to the Stock Option Plan. The Closing Date shall be the
date of "termination of employment" of each Interstate Employee under the Stock
Option Plan for all purposes, and no further grants or allocations shall be made
with respect to any Interstate Employee under the Stock Option Plan as a result
of employment with the Company after the Closing Date. The prior provisions of
this Section 5.6(l) notwithstanding, to the extent required under the applicable
terms of the Employment Agreement (Form A), Seller shall cause the stock options
and stock appreciation rights issued to Interstate Employees to become fully
vested and exercisable as of the Closing Date.
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(m) EMPLOYEE MEETINGS. After receipt of any necessary
governmental approvals and prior to the Closing, representatives of the Buyer
shall be entitled to hold an initial meeting with the Interstate Employees in
each jurisdiction upon reasonable notice to Seller and to explain and answer
questions about the conditions, policies and benefits of employment under the
Buyer. Thereafter, until the Closing, Seller shall cooperate with the Buyer in
communicating to Interstate Employees any additional information concerning
employment under the Buyer which the Interstate Employees may seek, or which the
Buyer may desire to provide, and during normal working hours shall allow such
additional meetings by representatives of the Buyer with Interstate Employees as
the Buyer may request. The Seller shall be entitled to have one or more
representatives attend all meetings.
(n) XXXXX PLAN LIABILITIES. Except as expressly provided under
this Agreement, the Company and the Buyer shall have no liability or obligation
with respect to any Employee Plan which the Seller or any ERISA Affiliate
maintains, sponsors or contributes to or is required to maintain, sponsor or
contribute to other than an Interstate Employee Plan, and Seller shall indemnify
and hold the Buyer and the Company harmless from and against any such liability
or obligation.
(o) INTERIM CONTINUATION UNDER CERTAIN XXXXX WELFARE PLANS AND
XXXXX BENEFIT ARRANGEMENTS. The prior provisions of Section 5.6(d)
notwithstanding, Seller shall postpone the date of cessation of participation of
the Interstate Employees in the Aetna UC Healthcare PPO, the Aetna US Healthcare
Dental, and the Unum Group Universal Life programs of Xxxxx Technologies, Inc.
Family Protection Plan (the "Interim Coverage Programs") from the Closing Date
until such date as the Company has established the required replacement plans
pursuant to Section 5.6(d) hereof; provided, however, that in no event shall
such cessation of participation be postponed beyond July 31, 1999. Any claims
incurred by the Interstate Employees under the Interim Coverage Programs during
the period of postponement shall be paid by the Interim Coverage Programs in
accordance with their terms, and the Company shall reimburse Seller for the
amount of the claims incurred (with respect to those benefits which are
self-insured) and premiums paid (with respect to those benefits which are
insured) by the Seller in connection with such continued coverage for the
Interstate Employees within fifteen (15) business days following Seller's
delivery to Company of an itemized written request for same.
5.7. INSURANCE MATTERS.
(a) INSURANCE POLICIES AND PROGRAMS. All insurance policies and
programs provided or maintained by Seller or any Affiliate of Seller excluding
the Company (collectively, the "Seller Group") to the extent applicable to the
Company's assets, employees, products or operations or otherwise related to the
Company (collectively, "Seller Group Coverages") may be terminated by the Seller
Group effective any time after the Closing Date; provided, however, that to the
extent the Seller Group Coverages relate to periods prior to the Closing, the
Seller shall assign to the Company, to the extent assignment is allowable under
existing coverages, the allocable coverages thereunder for occurrences prior to
the Closing and the Company shall assume all such obligations ("Assigned
Coverages"). The Buyer shall establish an arrangement, to be effective promptly
upon Closing, with a third party administrator (which could be the same
administrator as under the Seller Group Coverages) and the Seller shall provide
such reasonable cooperation in that regard as is requested. The Buyer and the
Seller acknowledge that the
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Company, as a subsidiary of the Seller, is currently an insured party under the
Seller Group Coverages. The Buyer and the Seller hereby agree to use
commercially reasonable efforts so that the Buyer and/or the Company will
continue to have access to the Seller Group Coverages for any pre-Closing
activities and operations of the Company. For that purpose, the Buyer and the
Seller agree that in the event any claim with respect to the Company relating to
occurrences prior to the Closing is duly and properly made, insured and paid
under any third party insurance policy providing Seller Group Coverage prior to
the Closing, the Buyer and the Company (subsequent to the Closing) will promptly
reimburse the Seller, without setoff or counterclaim, the full amount of any
related deductibles, copayment obligations, retention obligations, claim
adjusting fees and other related out-of-pocket costs or expenses incurred or
paid by any member of the Seller Group (other than the Company) incurred in
pursuing any claim on behalf of the Company and/or the Buyer (and not in respect
of any claim relating to any liability of the Company retained by the Seller or
for which the Seller is responsible hereunder). Notwithstanding the preceding
sentence, the obligation by the Buyer and the Company (subsequent to the
Closing) to reimburse any member of the Seller Group (other than the Company)
shall not supersede or override the parties' indemnification rights and
obligations under Article 8 of this Agreement. Subject to such reimbursement
from the Buyer and the Company, in the event that any member of the Seller Group
receives any such insurance proceeds, the Seller will promptly tender same to
the Company.
(b) INSURANCE CLAIMS. The Seller, on the one hand, and the Buyer
and the Company, on the other hand, shall provide or cause to be provided to
each other, at the requesting party's expense, such information and
documentation as such party may reasonably request relating to all pending
workers compensation and other insurance claims and all other workers
compensation and other insurance claims asserted after the Closing but arising
from the operations of the Company prior to the Closing (including information
and documentation relating to any applicable insurance coverages). Such
assistance shall include, as reasonably requested during normal business hours,
making employees available to the requesting party and its representatives, as
reasonably requested during normal business hours, and furnishing to or
permitting the copying of such information and documentation by the requesting
party or its representatives.
5.8. NON-SOLICITATION. From the date hereof to the Closing Date, the
Seller and the Company shall cause the Company and its employees, directors,
agents and Affiliates to immediately suspend any existing negotiations or
discussions relating to any sale, joint venture or other transfer of actual or
beneficial ownership of the Shares, the Company, its operations or a substantial
part of its assets (collectively, a "Transaction"), and the Company and the
Seller shall not, and shall instruct the Company's employees, director, agents
and Affiliates to not, (a) solicit any proposals or offers relating to a
Transaction, or (b) negotiate or discuss with any third party concerning any
proposal or offer for a Transaction.
5.9. ACCESS AND INFORMATION; PRESERVATION OF BOOKS AND RECORDS.
(a) From and after the Closing and until the sixth anniversary
thereof, (a) the Seller agrees to grant to the Buyer, upon reasonable notice and
during normal business hours, reasonable access to (and the right to copy) any
books and records of the Seller pertaining to the Company and existing on the
Closing Date, for any reasonable purpose of the Buyer, and (b) the
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Buyer agrees to grant to the Seller, upon reasonable notice and during normal
business hours, reasonable access to (and the right to copy) any books and
records of the Company that pertain to the operation of the business on or prior
to the Closing Date for any reasonable purpose of the Seller. Thereafter, Buyer
agrees not to destroy the books and records of the Seller pertaining to the
Company without written notice to the Seller and an opportunity by the Seller,
at Seller's sole cost and expense, to have the Buyer deliver to Seller such
books and records.
(b) Prior to the Closing, the Seller shall cause the Company and
its accountants, counsel, consultants, employees and agents to give the Buyer
and its respective accountants, counsel, consultants, employees and agents,
reasonable access during normal business hours to, and furnish them with all
documents, records, work papers and other information with respect to, all
properties, assets, books, contracts, commitments, reports and records of the
Company, as the Buyer shall from time to time reasonably request. In addition,
the Seller shall cause the Company to permit the Buyer and its accountants,
counsel, consultants, employees and agents, reasonable access to such personnel
of the Company during normal business hours as may be necessary to the Buyer in
its review of the properties, assets and business affairs of the Company and the
above-mentioned documents, records and information. The Buyer and the Buyer's
agents shall have the right, upon giving reasonable advance notice, to enter
upon and inspect any of the real property owned, leased or used by the Company,
including physical inspection of the surface and sub-surface land and all
improvements and the major components thereof. In connection with any physical
inspection of the properties and other assets of the Company, (i) the Buyer
shall use its reasonable best efforts to avoid any disruption to the normal
business activities of the Company, and (ii) following termination of this
Agreement, (x) shall indemnify and hold harmless the Seller, the Company and
their respective Affiliates, officers, directors and employees from and against
any and all losses arising out of the physical inspection of such properties or
assets, and (y) shall return such properties and assets to their original
condition.
5.10. PRE-CLOSING ACTIONS. As promptly as practicable, each of the
parties hereto will: (a) use commercially reasonable efforts to take all actions
and to do all things necessary, proper or advisable to consummate the
transactions contemplated hereby by the Closing Date; (b) file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied pursuant to Applicable Law in connection with
this Agreement, the sale and transfer of the Shares pursuant hereto and the
consummation of the other transactions contemplated hereby (including filings
pursuant to the HSR Act); (c) use all reasonable efforts to obtain, or cause to
be obtained, all Consents (including all Governmental Approvals and any Consents
required under any Contract) necessary to be obtained by it in order to
consummate the transactions contemplated pursuant to this Agreement; and (d)
coordinate and cooperate with each other in connection with any filings and
other actions to be taken in connection with this Agreement.
5.11. COVENANT NOT TO COMPETE. For a period of three years after the
Closing Date, the Seller will not, and will cause its Affiliates not to, engage
in any business that directly or indirectly competes with the business as
conducted by the Company on the date hereof or on the Closing Date, and none of
them shall for a period of two years induce, solicit or hire any employees,
sales representatives or distributors of the Company, directly or indirectly, in
each case without the prior consent of the Buyer (collectively, the "Covenant
Not to Compete"). The
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parties agree that the covenants deemed included in this Section are, taken as a
whole, reasonable in their geographic and temporal coverage and no party shall
raise any issue of geographic or temporal reasonableness in any proceeding to
enforce such covenant. The parties intend that the covenant contained in the
preceding sentence shall be construed as a series of separate covenants, one for
each jurisdiction located outside the United States and one for each state, city
and county included within the United States and, except for geographic coverage
each such separate covenant shall be deemed identical.
5.12. POST-CLOSING CONFIDENTIALITY. From and after the Closing, the
Seller agrees that at no time shall it or any of its Affiliates divulge, publish
or otherwise reveal to any Person, firm, corporation or other entity for any
reason or purpose whatsoever, any confidential information of the Company and
its business; except (i) as may be necessary for the Seller in connection with
any Tax or other audit, indemnification claim matter or any other such use by
Seller or its Affiliates to protect or enforce its interests; (ii) as it is or
becomes available to the Seller on a non-confidential basis by a third party and
the Seller and its Affiliates are not aware that such source has an obligation
to maintain the confidentiality of such information; or (iii) as such
information hereafter is in the public domain through no fault of the Seller or
its Affiliates; or (iv) if the Seller or its Affiliate(s) are compelled to
disclose the same by judicial or administrative process or by other requirements
of law, except as provided in clause (iv) above, if the Seller or any of its
Affiliates (the "Disclosing Party") is requested or required (by oral questions,
interrogatories, requests for information or documents in legal proceedings,
subpoena, civil investigative demand, rule of civil procedure or other similar
process) to disclose any such information, the Disclosing Party shall provide
the Buyer with prompt written notice of any such request or requirement so that
the Buyer or the Company may seek a protective order or other appropriate remedy
(all at the Buyer's expenses) and/or waive compliance with the provisions of
this Section. If, in the absence of a protective order or other remedy or the
receipt of a waiver by the Buyer, the Disclosing Party nonetheless, based on the
advice of counsel, is required to disclose such information to any tribunal or
else stand liable for contempt or suffer other censure or penalty, the
Disclosing Party, without liability hereunder, may disclose that portion of such
information which such counsel advises the Disclosing Party it is legally
required to disclose.
5.13. ANNOUNCEMENT. Prior to the Closing, neither the Seller nor the
Buyer will issue any press release or otherwise make any public statement with
respect to this Agreement and the transactions contemplated hereby without the
prior consent of the other (which consent shall not be unreasonably withheld),
except as may be required by Applicable Law or stock exchange regulations, and
in any such event the applicable party not making such release shall have the
right to review and comment on drafts of any such press releases or statements
prior to the making of any such release.
5.14. COMMERCIALLY REASONABLE EFFORTS. Each of the parties hereto shall
use commercially reasonable efforts to fulfill or obtain the fulfillment of the
conditions of the Closing, including, without limitation, the execution and
delivery of all agreements contemplated hereunder to be so executed and
delivered.
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5.15. COOPERATION.
(a) If and for so long as the Seller is actively contesting or
defending against any charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand in connection with any fact, situation,
circumstance, condition, occurrence or event prior to the Closing, the Buyer
shall cooperate with the Seller and the Seller's representatives in the contest
or defense, make available the Company's personnel and provide access to such
books and records as shall be reasonably necessary in connection with the
defense or contest, in each case at the Seller's cost and expense.
(b) If and for so long as the Buyer is actively contesting or
defending against any charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand in connection with any fact, situation,
circumstance, condition, occurrence or event prior to or after the Closing, the
Seller shall cooperate with the Buyer and the Buyer's representatives in the
contest or defense, make available the Seller's personnel and provide access to
such books and records as shall be reasonably necessary in connection with the
defense or contest, in each case at the Buyer's cost and expense.
5.16. USE OF BUYER'S NAME. Prior to the Closing, neither the Seller nor
the Company shall use the name of the Buyer in any publicly available or
otherwise widely disseminated document or communication without the prior
consent of Buyer.
5.17. UNIFORM COMMERCIAL CODE. The Seller shall attempt prior to the
Closing Date, or will following the Closing (i) remove or cause to be removed
all financing statements (other than the Permitted Encumbrances), (ii) file or
cause to be filed in such jurisdictions a release or termination of such
financing statements, and (iii) deliver to the Buyer evidence satisfactory in
form and substance to the Buyer of compliance by the Seller with the provisions
of this Section.
5.18 ASSIGNMENT OF INVENTION AGREEMENTS. As of the Closing, the Seller
hereby assigns to the Company all right, title and interest of the Seller in and
to each and every Invention Agreement.
5.19 REAL ESTATE MATTERS. As of the Closing, the parties hereto
covenant and agree to (i) the termination of (or to cause the termination of)
the existing lease agreement between Cafig Inc. and the Company with respect to
the Fee Property, (ii) execute and deliver (or to cause the execution and
delivery of) the Real Estate Purchase Agreement, and (iii) execute and deliver
(or to cause the execution and delivery of) the Rollover Lease, if necessary.
ARTICLE 6
CONDITIONS PRECEDENT OF THE SELLER
----------------------------------
The obligation of the Seller to consummate the transaction described in
Article 1 hereof is subject to the receipt by the Seller of the Purchase Price
and the fulfillment of each of the following conditions prior to or at the
Closing.
6.1. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Buyer made hereunder that is qualified as to materiality shall
be true and correct and each such
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representation and warranty that is not so qualified shall be true and correct
in all material respects in each case on the date hereof and at and as of the
Closing Date, with the same force and effect as though made at and as of the
Closing Date.
6.2. AGREEMENTS. The Buyer shall have performed and complied in all
material respects with all its covenants, undertakings and agreements required
by this Agreement to be performed or complied with by the Buyer prior to or at
the Closing.
6.3. BUYER'S CERTIFICATE. The Seller shall have been furnished with a
certificate of an authorized officer of the Buyer, dated the Closing Date,
certifying that the conditions contained in Sections 6.1 and 6.2 have been
fulfilled. In addition, the Seller shall have received an appropriate
certificate of the Buyer's authorized officers, in form reasonably requested by
the Seller, in order to establish (i) the corporate power and authority of the
Buyer to consummate the transaction contemplated by this Agreement, and (ii)
compliance with the conditions to the Closing set forth herein.
6.4. NO INJUNCTION. No injunction, restraining order or decree of any
nature of any court or Governmental Authority shall exist against the Buyer, the
Seller, the Company or any of their respective Affiliates, or any of the
principals, officers or directors of any of them, that restrains or prevents the
transaction contemplated hereby.
6.5. CONSENTS. All material Governmental Approvals and Consents
required to be obtained by the Buyer or the Seller shall have been obtained or
effected, a list of which is attached hereto as Schedule 6.5.
6.6. MISCELLANEOUS CLOSING DELIVERIES. The Seller shall have received
all documents, instruments and other closing deliveries specified in Section
2.2(b) hereof.
6.7 REAL ESTATE PURCHASE AGREEMENT AND ROLLOVER LEASE. The applicable
parties to the Real Estate Purchase Agreement and the Rollover Lease, if
necessary, shall have executed and delivered such agreements to the respective
parties thereto.
ARTICLE 7
CONDITIONS PRECEDENT OF THE BUYER
---------------------------------
The obligation of the Buyer to consummate the transaction described in
Article 1 hereof is subject to the fulfillment of each of the following
conditions prior to or at the Closing.
7.1. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Seller made hereunder that is qualified as to materiality
shall be true and correct and each such representation and warranty that is not
so qualified shall be true and correct in all material respects in each case on
the date hereof and at and as of the Closing Date, with the same force and
effect as though made at and as of the Closing Date.
7.2. AGREEMENTS. The Seller shall have performed, and complied in all
material respects with, all of its respective undertakings and agreements
required by this Agreement to be performed or complied with by it prior to or at
the Closing.
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7.3. SELLER'S CERTIFICATE. The Buyer shall have been furnished with a
certificate of an authorized officer of the Seller, dated the Closing Date,
certifying that the conditions contained in Sections 7.1 and 7.2 have been
fulfilled. In addition, the Buyer shall have received an appropriate certificate
of the Seller's authorized officers, in form reasonably requested by the Buyer,
in order to establish (i) the corporate power and authority of the Seller to
consummate the transaction contemplated by this Agreement, and (ii) compliance
with the conditions to the Closing set forth herein.
7.4. NO INJUNCTION. No injunction, restraining order or decree of any
court or Governmental Authority shall exist against the Buyer, the Seller, the
Company or any of their respective Affiliates, or any of the principals,
officers or directors of any of them, that restrains or prevents the transaction
contemplated hereby.
7.5. CONSENTS. All Government Approvals and Consents required to be
obtained by the Buyer or the Seller shall have been obtained or effected, a list
of which is attached hereto as Schedule 7.5.
7.6. MISCELLANEOUS CLOSING DELIVERIES. The Buyer shall have received
all documents, instruments and other closing deliveries specified in Section
2.2(a) hereof.
7.7. NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall not
have occurred any Material Adverse Effect, or any event, condition or
circumstance that would reasonably likely result in a Material Adverse Effect in
the future.
7.8. TERMINATION OF MORTGAGES. Each of the deeds of trust listed on
Schedule 3.7 shall have been terminated and shall be of no further force and
effect.
7.9. LICENSE AGREEMENT. The Seller, the Company and Western Atlas
International, Inc. ("Western Atlas"), shall have executed and delivered a
non-exclusive patent license agreement.
7.10 CERTAIN LEASES. The real estate lease for the facility located at
Crystal Gateway Two, Suite 502, 1225 Xxxxxxxxx Xxxxx Highway, Arlington,
Virginia, shall have been assigned to the Company, pursuant to an instrument of
assignment in form and substance reasonably satisfactory to the Buyer. The real
estate lease for the facility located at 0000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
shall have been extended for a period ending June 30, 2000.
7.11 REAL ESTATE PURCHASE AGREEMENT AND ROLLOVER LEASE. The applicable
parties to the Real Estate Purchase Agreement and the Rollover Lease, if
necessary, shall have executed and delivered such agreements to the respective
parties thereto.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
-----------------------------------------------------------
8.1. SURVIVAL. The representations and warranties of the Seller herein
and of the Buyer herein shall survive for a period of two years following the
Closing, except those in (a) Sections 3.13 [Taxes] shall survive the Closing for
the period of the applicable statute of limitations
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(including any extensions thereof), (b) 3.16 [Intellectual Property] shall
survive for a period of five years, and (c) Section 3.3(b) [Ownership] shall
survive indefinitely. In addition, the indemnification of the Buyer Indemnitees
(i) under Section 8.2(b) [Environmental] and Section 8.2(e) [Contract Issue]
shall survive for a period of five years, and (ii) under Section 8.2(d) [Western
Atlas] shall survive for a period of four years.
8.2. SELLER'S INDEMNIFICATION OBLIGATIONS. Subject to the terms and
conditions of this Article 8 (including, specifically, the limitations set forth
in Section 8.4), the Seller hereby agrees to defend, indemnify and hold harmless
the Buyer, its Affiliates (including, after the Closing, the Company) and their
respective officers, directors, employees, agents, advisers and representatives
(collectively, the "Buyer Indemnitees"), from and against and pay or reimburse
the Buyer Indemnitees for any and all losses, claims, actions, damages,
liabilities, Taxes, obligations, fines, proceedings and deficiencies and any and
all out-of-pocket costs and expenses, including reasonable attorneys' fees and
disbursements and costs of investigation (individually a "Loss" and
collectively, "Losses"), incurred by the Buyer Indemnitees in connection
therewith, which arise by reason of:
(a) an inaccuracy in or breach of any of the representations or
warranties of the Seller set forth herein;
(b) any Environmental Claims, but only to the extent attributable
to circumstances or conditions relating to the Company's businesses or
properties existing, or events occurring, on or prior to the Closing Date; or
any Environmental Claims to the extent relating to any business, wholly or
partially-owned subsidiary, or property owned or operated of or by the Company
or the Seller prior to the Closing Date, that is not owned, used or operated by
the Company on the Closing Date;
(c) any breach or default by the Seller of any of its covenants
or agreements set forth in this Agreement, except for the covenants or
agreements under Sections 8.2(a), 8.2(b) and 8.2(d);
(d) any claim by Western Atlas that the products of the Company
or any act of the Company relating to any of its products infringe or have
infringed any Western Atlas patent relating to GPS that (i) has been issued as
of the Closing Date, (ii) has priority of an application which has been filed as
of the Closing Date, or (iii) is based on an invention of Western Atlas in
existence as of the Closing Date, except for such claims that are directed
against a product or products, or any act of the Company relating to a product
or products, based on a GPS design or GPS technology that is materially
different from any GPS design or GPS technology of the Company as of the Closing
Date (such Losses being referred to the "Western Atlas Losses"); or
(e) the matter described on Item 1 of Schedule 3.10(c), after
giving effect to any accrual and/or liability with respect to such item that
will be reflected on the Closing Date Balance Sheet (such Losses, after giving
effect to any such accrual and/or liability being herein referred to as "Item 1
Losses").
8.3. BUYER'S INDEMNIFICATION OBLIGATION. Subject to the terms and
conditions of this Article 8 (including, specifically, the limitations set forth
in Section 8.4), the Buyer hereby
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agrees to defend, indemnify and hold harmless the Seller, its Affiliates and
their respective officers, directors, employees, agents, advisers and
representatives (collectively, the "Seller Indemnitees"), from and against and
pay or reimburse the Seller Indemnitees for any and all Losses incurred by the
Seller Indemnitees in connection therewith which arise by reason of:
(a) an inaccuracy in or breach of any of the representations or
warranties of the Buyer set forth herein;
(b) the imposition following the Closing of any liability of the
Company or any action taken by the Buyer or the Company at any time after the
Closing, in each case except as otherwise specifically provided for in this
Agreement; provided, however, that this Section 8.3(b) shall not apply with
respect to any Losses in respect of which the Seller has an indemnification
obligation hereunder (without giving effect to the limitations on
indemnification herein) or for which the Seller is responsible hereunder after
the Closing; or
(c) any breach or default by the Buyer of any of its covenants or
agreements set forth in this Agreement, except for the covenants or agreements
under Sections 8.3(a) and 8.3(b).
8.4. LIMITATIONS ON INDEMNIFICATION. Indemnification under this Article
8 shall be limited as follows:
(a) No indemnification shall be made for Losses unless a written
claim for indemnification is made (identifying and describing such claim with
reasonable specificity) not later than the applicable survival periods set forth
in Section 8.1 hereof.
(b) The Seller shall not be responsible for the indemnification
of the Buyer Indemnitees for any Losses under Article 8 (except for
indemnification for any Losses under Section 8.2(c) in which case the limitation
in this Section 8.4(b) shall not apply), unless and until (i) the aggregate
amount of all indemnifiable Losses of the Buyer Indemnitees hereunder, plus (ii)
the aggregate amount of all indemnifiable Losses of the Purchaser Indemnified
Parties (as defined in the Real Estate Purchase Agreement) under Article 11 of
the Real Estate Purchase Agreement, plus (iii) the aggregate amount of all
indemnifiable Losses with respect to Environmental Claims of the Tenant
Indemnitees (as defined in the Rollover Lease) under Section 27(a)(ii) of the
Rollover Lease, in the aggregate exceeds Two Hundred Fifty Thousand Dollars
($250,000) (the "Seller's Threshold Amount"), in which case, the Seller shall
only be liable for Losses in excess of the Seller's Threshold Amount. Claims
thereafter may be asserted regardless of amount. Notwithstanding the foregoing,
the Seller shall not be responsible for any indemnification of the Buyer
Indemnitees (a) for Item 1 Losses pursuant to Section 8.2(e) hereof unless and
until such Item 1 Losses exceed One Million Dollars ($1,000,000) in the
aggregate, in which case the Seller shall only be liable for Item 1 Losses in
excess of such amount, and (b) for Western Atlas Losses pursuant to Section
8.2(d) hereof unless and until such Western Atlas Losses exceed Two Hundred
Fifty Thousand Dollars ($250,000) and the aggregate of (i) such Western Atlas
Losses in excess of $250,000, plus (ii) all other indemnifiable Losses, exceed
the Seller's Threshold Amount. FOR EXAMPLE, if at any time Western Atlas Losses
to date equal $200,000 and there are no other indemnifiable Losses, then, at
such time, no payment to the Buyer Indemnitees shall be made in respect of such
Western Atlas Losses. FOR EXAMPLE, if at
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any time Western Atlas Losses to date equal $550,000 and there are no other
indemnifiable Losses, then, at such time, a payment to the Buyer Indemnitees of
$50,000 shall be made in respect of such Western Atlas Losses. FOR EXAMPLE, if
at any time Western Atlas Losses to date equal $400,000 and there are other
indemnifiable Losses to date equal to $200,000, then, at such time, a payment to
the Buyer Indemnitees of $100,000 shall be made in respect of all such Losses
and the Seller's Threshold Amount has been met and any future Western Atlas
Losses are paid dollar for dollar. FOR EXAMPLE, if at any time Western Atlas
Losses to date equal $200,000 and there are other indemnifiable Losses to date
equal to $400,000, then, at such time, no payment to the Buyer Indemnitees shall
be made in respect of such Western Atlas Losses (although such $200,000 amount
shall continue to be counted in any future calculation of Western Atlas Losses)
and payment to the Buyer Indemnitees of $150,000 shall be made in respect of
such other indemnifiable Losses. The foregoing examples are illustrative of the
application of this "deductible" amount for Western Atlas Losses only, and shall
have no impact on the other applicable requirements set forth in this Article 8
relating to the Seller's indemnification obligations including specifically the
survival periods set forth in SECTION 8.1 hereof.
(c) The total liability of the Seller and/or any of its
Affiliates (or permitted assignees hereunder or under the Real Estate Purchase
Agreement) for indemnification under this Article 8 and under Article 11 of the
Real Estate Purchase Agreement and for indemnification for all indemnifiable
Losses with respect to Environmental Claims of the Tenant Indemnitees under
Section 27(a)(ii) of the Rollover Lease, shall in no event exceed an aggregate
amount of Twenty Million Dollars ($20,000,000), except for (i) indemnification
for any Losses under Section 8.2(c), in which case there shall be no limitations
on the total liability of the Seller, (ii) breach of the representation and
warranty of the Seller set forth in Section 3.3(b) hereof, in which case the
total liability of the Seller for Losses for breaches of Section 3.3(b) shall in
no event exceed the Purchase Price, or (iii) indemnification for any Losses
under Section 11.1(b) of the Real Estate Purchase Agreement, in which case there
shall be no limitations on the total liability thereunder.
(d) The Buyer shall not be responsible for the indemnification
of the Seller Indemnitees for any Losses under Section 8.3(a) unless and until
the aggregate amount of all indemnifiable Losses of the Seller Indemnitees
hereunder, plus the aggregate amount of all indemnifiable Losses of the Seller
Indemnified Parties (as defined in the Real Estate Purchase Agreement) under
Section 11.2(a) of the Real Estate Purchase Agreement in the aggregate exceed
Two Hundred Fifty Thousand Dollars ($250,000) (the "Buyer's Threshold Amount"),
in which case, the Buyer shall only be liable for Losses in excess of the
Buyer's Threshold Amount. Claims thereafter may be asserted regardless of
amount.
(e) The total liability of the Buyer and/or any of its
Affiliates (or permitted assignees hereunder or under the Real Estate Purchase
Agreement) for indemnification under Section 8.3(a) and under Section 8.3(b) and
under Section 11.2(a) of the Real Estate Purchase Agreement shall in no event
exceed an aggregate amount of Twenty Million Dollars ($20,000,000) (although
this limitation shall have no impact on the Company's liability, if any, for the
matters described under Section 8.3(b) after giving effect to the exception
contained in Section 8.3(b)); it being understood and agreed that there shall be
no duplication of recovery with respect to the matters described under Section
8.3(b). Effective as of the Closing, the Seller
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hereby agrees not to seek indemnification from or pursue a claim against the
Company for any Losses to the extent that the Seller has an indemnification
obligation therefor under this Agreement or for which the Seller is responsible
hereunder after the Closing.
(f) Except as provided in or as a result of the application of
Section 2.4 hereof and absent fraud, intentional misconduct or intentional
misrepresentation or criminal activity, each of the parties hereto hereby
acknowledges and agrees that the indemnifications provided by this Article 8
(subject to the terms and conditions contained in this Article 8) shall be the
sole and exclusive remedies of such party for monetary relief for any breach of
the representations, warranties, covenants or agreements of the other party set
forth in this Agreement (including the Schedules).
(g) Any indemnification shall be net of any amounts recovered
from any surety, insurance carrier or third party obligor, including any
customer (i.e., the government) (and shall not include the cost of maintaining
any surety or insurance policies), and no right of subrogation against the
indemnifying party shall accrue hereunder to or for the benefit of any surety,
insurance company or any third party. The indemnified party shall submit in a
timely manner to any applicable surety, insurance carrier or third party
obligor, including any customer (i.e., the government) all claims for
indemnifiable Losses for which it is reasonably likely that such entity would
have a payment obligation to any such indemnified party (or its predecessors)
and the indemnifying party shall be subrogated to the rights of such indemnified
party (or its Affiliates) to claim against such surety, insurance carrier or
third party; provided, however, that any failure to collect any such amounts
shall not constitute a defense to an obligation to indemnify for any such
Losses.
(h) The term "Losses", as used in this Agreement, shall not
include (i) except in connection with any Losses covered under Section 8.2(d),
any consequential damages which an indemnified party may suffer; or (ii) any
cost or expense previously counted in determining any other Losses hereunder or
for indemnification under the Real Estate Purchase Agreement or for
indemnification under Section 27(a)(ii) of the Rollover Lease. The term "Losses"
as used in the Real Estate Purchase Agreement and the Rollover Lease shall have
the respective meanings set forth therein.
8.5. PROCEDURE FOR INDEMNIFICATION CLAIMS.
(a) NOTICE OF CLAIMS. For purposes of this Article 8,
"Indemnified Party" or "Indemnified Parties" shall refer to the Person or
Persons seeking indemnification under Section 8.2 or Section 8.3 above, as the
case may be, and "Indemnifying Party" shall refer to the Person or Persons from
whom indemnification is sought pursuant to Section 8.2 or Section 8.3 above, as
the case may be. If at any time an Indemnified Party seeks indemnification
hereunder, such party shall provide to the Indemnifying Party prompt written
notice of such claim upon becoming aware of the existence of such claim, it
being understood and agreed that the failure to provide such prompt notice shall
not relieve the Indemnifying Party of its indemnification obligations under this
Agreement except and only to the extent that such Indemnifying Party is actually
damaged as a result of such failure to give prompt notice. If such
indemnification claim is based upon or related to any claim, action or
proceeding commenced or threatened by a third party against such Indemnified
Party, (i) upon the written request of the Indemnifying Party,
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such Indemnified Party shall furnish to the Indemnifying Party copies of any
documents in the possession of the Indemnified Party which relate to such
third-party claim, action or proceeding, and (ii) the Indemnifying Party shall
promptly notify the Indemnified Party in writing as to whether it acknowledges
its indemnification obligation and agrees to accept liability for any Losses
resulting from such third party claim, action or proceeding, subject in any
event to the terms and conditions set forth in this Article 8 (including Section
8.5(b)).
(b) THIRD-PARTY CLAIMS. In the case of any claim asserted by a
third party against an Indemnified Party, notice shall be given by the
Indemnified Party to the Indemnifying Party as soon as practicable after such
Indemnified Party has knowledge of any claim as to which indemnity may be sought
(together with the documentation referenced in Section 8.5(a)), and the
Indemnified Party shall permit the Indemnifying Party (at the expense of such
Indemnifying Party) to assume the defense of any third party claim or any
litigation with a third party resulting therefrom; PROVIDED, HOWEVER, that (a)
the counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation, if it is not Xxxxxxx, Breed, Xxxxxx & Xxxxxx LLP on behalf
of the Buyer, or Xxxxxx, Halter & Xxxxxxxx LLP or behalf of the Seller, shall be
subject to the approval of the Indemnified Party (which approval shall not be
unreasonably withheld or delayed), (b) the Indemnified Party may participate in
such defense at such Indemnified Party's expense (which shall not be subject to
reimbursement or indemnification hereunder except as provided below), and (c)
the omission by any Indemnified Party to give notice as provided herein shall
not relieve the Indemnifying Party of its indemnification obligations under this
Agreement except and only to the extent that such Indemnifying Party is actually
damaged as a result of such failure to give prompt notice. Except with the prior
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed), no Indemnifying Party, in the defense of any
such claim or litigation, shall consent to entry of any judgment or enter into
any settlement that provides for injunctive or other nonmonetary relief
affecting the Indemnified Party or that does not include as an unconditional
term thereof the giving by each claimant or plaintiff (with respect to such
settlement or judgment) to such Indemnified Party of a release from any and all
liability with respect to such claim or litigation. If the Indemnified Party
shall in good faith determine that the Indemnified Party has available to it one
or more fundamental defenses or counterclaims that are inconsistent with one or
more of the fundamental defenses expected to be relied upon by the Indemnifying
Party in respect of such claim or any litigation relating thereto, the
Indemnified Party shall, in such instances, upon discovery of such conflict,
have the right to take over and assume control over the defense, settlement,
negotiations or litigation relating to any such claim at the cost of the
Indemnifying Party (to the extent required under this Article 8); PROVIDED,
HOWEVER, that if the Indemnified Party does so take over and assume control, the
Indemnified Party shall not settle such claim or litigation without the prior
written consent of the Indemnifying Party, such consent not to be unreasonably
withheld or delayed. As of the date hereof, no party is aware of any such
conflict or potential conflict in connection with the Seller's obligation to
indemnify the Buyer Indemnitees for the Western Atlas matter provided for in
Section 8.2(d). If the Indemnifying Party does not accept the defense of any
matter as above provided within 30 days after receipt of the notice from the
Indemnified Party above and the documents described in Section 8.2(a), the
Indemnified Party shall have the full right to defend against any such claim or
demand at the cost of the Indemnifying Party (to the extent required under
Article 8) and shall be entitled to settle or agree to pay in full such claim or
demand. In any event, the Indemnifying Party and the Indemnified Party shall
reasonably cooperate with the negotiation, defense and/or settlement of any
claim or
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litigation subject to this Article 8 and the records of each shall be reasonably
available to the other with respect to such negotiation defense and/or
settlement.
(c) ENVIRONMENTAL CLAIMS. If the Seller or the Company is
required to perform any investigation, monitoring, clean-up, containment,
response, removal, remedial, compliance or other action relating to any
Environmental Claim for which the Seller is obligated to defend, indemnify and
hold the Buyer Indemnitees harmless pursuant to Section 8.2(b) (such work is
referred to herein as the "Environmental Actions"), the Seller shall perform, or
cause to be performed, the Environmental Action(s), provided, however, that the
Seller shall have the continuing right of access during normal business hours
and without unduly interfering with the business of the Buyer or the Company
(including for its relevant consultants and independent contractors) and the
exclusive right to manage and control all Environmental Actions undertaken
pursuant to Section 8.2(b), including, without limitation, selection of any
contractor or consultant, any contracts entered into with such parties, any
disclosures to or agreements with any public or private agencies relating to the
Environmental Action and any written plan for the particular Environmental
Action, subject to the requirements of this Agreement. Seller shall conduct the
Environmental Actions at any Company owned or occupied property:
(1) using a nationally recognized environmental
consulting firm reasonably acceptable to the
Buyer;
(2) in a manner which does not impair the value,
in any material respect, of the Company's
business or the property, including, but not
limited to, refusing to accept any deed
restriction which may impair the value, in
any material respect, of the property; and
(3) in a manner reasonably consistent with the
Company's security requirements, and which
minimizes the intrusion upon business
operations; including, but not limited to,
providing reasonable notice at least
twenty-four hours prior to entry.
ARTICLE 9
MISCELLANEOUS
-------------
9.1. FURTHER ASSURANCES. From time to time after the Closing, each
party hereto will execute and deliver, or cause to be executed and delivered,
such instruments, documents, conveyances or assurances to the other party and
take such actions as shall be necessary or as the other party shall reasonably
request in order to confirm and assure the rights and obligations provided for
in this Agreement and to consummate more effectively the transactions
contemplated herein.
9.2. EXPENSES. Except to the extent otherwise provided hereby, each of
the parties hereto shall pay the fees and expenses of its respective counsel,
accountants and other experts and shall pay all other expenses incurred by it in
connection with the negotiation, preparation and execution of this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, (a) the cost of obtaining any necessary Consents required to be
obtained by it hereunder (it being understood and agreed that all Items on
Schedule 6.5 other
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than Item 7 shall be at the expense of Seller), and (b) the fees of Xxxxxxx
Breed Xxxxxx & Xxxxxx LLP incurred prior to the Closing in connection with its
review of matters relating to Western Atlas shall be at the expense of Buyer
(which fees shall not be considered Western Atlas Losses). The Seller shall be
solely responsible for all fees and expenses of Quarterdeck relating to the
transaction contemplated herein. The Buyer shall be solely responsible for the
filing fee with respect to the filing required pursuant to the HSR Act.
9.3. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the law of the State of Delaware without reference to choice
of law principles, including all matters of construction, validity and
performance.
9.4. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH IT IS A PARTY INVOLVING ANY
CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT.
9.5. NOTICES. All notices, waivers, demands, approvals, consents and
other communications hereunder (each, a "Notice") shall be in writing and shall
be deemed to have been duly given if signed by the respective Person giving such
Notice (in the case of any corporation the signature shall be by an authorized
officer thereof) upon receipt of hand delivery, certified or registered mail
(return receipt requested), or telecopy transmission and provided that the
original copy thereof also is sent by certified or registered mail with
confirmation of transmission, or the next business day after deposit with a
nationally recognized overnight delivery service, addressed as follows:
If to the Seller, to:
Xxxxx Technologies, Inc.
0000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx, President
Telecopy: 000-000-0000
With copies to:
Xxxxx Technologies, Inc.
0000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, General Counsel
Telecopy: 000-000-0000
and:
Xxxxxx, Xxxxxx & Xxxxxxxx XXX
0000 XxXxxxxx Xxxxxxxxxx Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
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Telecopy: 000-000-0000
If to the Buyer, to:
L-3 Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Telecopy: 000-000-0000
with a copy to:
Xxxxxxx, Breed, Xxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Gerkis, Esq.
Telecopy: 000-000-0000
Such names and addresses may be changed by the giving of a Notice as provided
herein.
9.6. ENTIRE AGREEMENT. Except for the Real Estate Purchase Agreement
and the Rollover Lease, this Agreement (including the Exhibits and Schedules
attached hereto, all of which are hereby made a part hereof) and the
Confidentiality Agreement contain the entire agreement and understanding of the
parties hereto with respect to the subject matter contained herein, supersede
and cancel all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting such subject matter.
9.7. AMENDMENT. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or assigns.
9.8. HEADINGS; REFERENCES. The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. All references
herein to "Articles", "Sections", "Exhibits" or "Schedules" shall be deemed to
be references to Articles, Sections or Exhibits hereof or Schedules hereto
unless otherwise indicated.
9.9. COUNTERPARTS. This Agreement may be executed (including by
facsimile transactions) with counterpart signature pages or in one or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same instrument.
9.10. PARTIES IN INTEREST; ASSIGNMENT. This Agreement shall inure to
the benefit of and be binding upon the Seller and the Buyer and their respective
successors and permitted assigns. No party to this Agreement may assign or
delegate all or any portion of its rights, obligations or liabilities under this
Agreement without the prior written consent of the other party to this
Agreement; provided, however, that the Buyer may assign this Agreement to any of
its Affiliates (it being understood and agreed that no such assignment by the
Buyer pursuant to this proviso shall relieve the Buyer of any of its obligations
hereunder); provided further, however, that from
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and after the Closing the Buyer shall have the right to assign this Agreement to
any Person (it being understood and agreed that no such assignment by the Buyer
pursuant to this proviso shall relieve the Buyer of any of its obligations
hereunder).
9.11. NO THIRD PARTY BENEFICIARIES. Except as provided in Article 8
with respect to indemnification of Indemnified Parties hereunder, nothing in
this Agreement shall confer any rights upon any Person other than the parties
hereto, the Company, and their respective heirs, legal representatives,
successors and permitted assigns.
9.12. SEVERABILITY; ENFORCEMENT. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
9.13. WAIVER. Any of the conditions to the Closing set forth in this
Agreement may be waived at any time prior to or at the Closing hereunder by the
party entitled to the benefit thereof.
9.14. CERTAIN DEFINITIONS.
"Affiliate" of a specified Person means any other Person which,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such specified Person. For
purposes of this definition, "control" of any Person means possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting capital
stock, by contract, or otherwise.
"Agreement" means this Amended and Restated Stock Purchase
Agreement (including the Exhibits and Schedules), as the same from time to time
may be amended, supplemented or waived.
"AGUP" is defined in Section 5.4(b).
"Antitrust Division" is defined in Section 5.2.
"Applicable Law" means any and all applicable provisions of any
and all (i) constitutions, treaties, statutes, laws (including the common law),
rules, regulations, ordinances, codes or orders of any Governmental Authority,
(ii) Governmental Approvals, and (iii) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any Governmental Authority.
"Assigned Coverages" is defined in Section 5.7(a).
"Backlog" is defined in Section 3.20.
"Balance Sheet" is defined in Section 3.12.
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"Buyer" is defined at the beginning of this Agreement.
"Buyer Indemnitees" is defined in Section 8.2.
"Buyer's Threshold Amount" is defined in Section 8.4(d).
"Closing" is defined in Section 2.1.
"Closing Date" is defined in Section 2.1.
"Closing Date Balance Sheet" is defined in Section 1.4(a).
"Closing Date Net Worth" is defined in Section 1.4(a).
"Closing Date Net Worth Deficiency" is defined in Section 1.4(c).
"Closing Date Net Worth Surplus" is defined in Section 1.4(c).
"Company" is defined in the Recitals.
"Confidentiality Agreement" is defined in Section 5.1.
"Consent" means any consent, approval, authorization,
stipulation, waiver, permit, grant, franchise, concession, agreement, license,
exemption or order of, registration, certificate, declaration or filing with, or
report or notice to, any Person, including any Governmental Authority.
"Disclosing Party" is defined in Section 5.13.
"EACs" is defined in Section 1.4.
"Encumbrance" means any mortgage, pledge, hypothecation, claim,
security interest, encumbrance, occupancy agreement, easement, encroachment,
title defect, title retention agreement, voting trust agreement, equity, option,
lien, right of first refusal or charge.
"Environmental Claims" means Losses for (i) non-compliance with
Environmental Laws, (ii) investigation or remediation of Hazardous Materials,
(iii) claims of bodily injury or property damages allegedly due to exposure to
Hazardous Materials, and (iv) claims for injunctive relief, including the
provision of medical monitoring due to actual or potential exposure to Hazardous
Materials.
"Environmental Laws" means all applicable federal, state and
local statutes, laws or regulations in effect on the date hereof relating to
pollution or protection of the environment.
"ETCs" is defined in Section 1.4.
"Fee Property" shall mean all real properties, buildings,
facilities, and improvements thereon owned by Cafig Inc., a second tier
subsidiary of the Seller, and presently utilized by the Company in Anaheim,
California.
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"Final Termination Date" is defined in Section 2.3(b).
"Financial Statements" is defined in Section 3.5.
"FTC" is defined in Section 5.2.
"GAAP" means generally accepted accounting principles.
"Government Bid" is defined in Section 3.30.
"Governmental Approval" means any Consent of, with or to any
Governmental Authority.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including any government authority, agency, department, board,
commission or instrumentality of the United States, any State of the United
States or any political subdivision thereof), any tribunal or arbitrator(s) of
competent jurisdiction, or any self-regulatory organization.
"Hazardous Materials" means any hazardous substance, extremely
hazardous substance, pollutant, contaminant and any other substance, material or
waste regulated by any applicable Environmental Law or which requires
investigation or remediation under any applicable Environmental Law.
"HSR Act" is defined in Section 2.2(a)(vi).
"include", "includes", "included" and "including": shall be
construed as if followed by the phrase "without being limited to".
"Independent Accountant" is defined in Section 1.4(b).
"Invention Agreements" means any and all agreements and
instruments executed by employees of and consultants to the Company (and its
predecessor companies), wherein such employee or consultant has assigned to the
Seller or the Company (or their predecessor companies) any of his, her or its
right, title or interest in any inventions, improvements, discoveries and other
Intellectual Property Rights.
"Intellectual Property Rights" means any intellectual property,
including trade names, trademarks and service marks and all registrations and
applications therefor, together with the goodwill of the business symbolized or
represented by the foregoing, mask works, works of authorship (including
software) and all copyrights related thereto and all registrations and
applications therefor, inventions, discoveries, designs, industrial models and
all patent rights relating thereto and all applications therefor and all
reissues, divisions, continuations, continuations-in-part and extensions
thereof, know-how, trade secrets, processes, technology, discoveries, formulae
and procedures, customer lists and other proprietary information, together with
the right to xxx for past infringement or improper, unlawful or unfair use or
disclosure of any of the foregoing.
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"Lease and Licenses" is defined in Section 3.7.
"Losses" is defined in Section 8.2.
"Material Adverse Effect" means any change, effect or
circumstance that (i) is materially adverse to the business, condition
(financial or otherwise) or results of operations, assets, properties or
liabilities of the Company taken as a whole, or (ii) prevents the consummation
of the transactions contemplated hereby.
"Material Intellectual Property" is defined in Section 3.16.
"Notice" is defined in Section 9.5.
"Overlap Period" is defined in Section 5.4(b).
"Permitted Encumbrance" is defined in Section 3.7.
"Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or governmental body.
"Pre-Closing Periods" is defined in Section 5.4(a).
"Purchase Price" is defined in Section 1.2.
"Quarterdeck" is defined in Section 3.11.
"Real Estate Purchase Agreement" means that certain agreement
among the Seller, the Buyer and Cafig Inc. for the sale to the Buyer, or its
designee or assignee, of the Fee Property.
"Resolution Period" is defined in Section 1.4(b).
"Rollover Lease" shall mean that certain lease agreement for the
Fee Property contemplated by the Real Estate Purchase Agreement.
"Sales Bonus" means the Sales Incentive Bonus as such term is
defined in, and determined pursuant to, certain of the Employment Agreements.
"Seller" is defined at the beginning of this Agreement.
"Seller Group" is defined in Section 5.7(a).
"Seller Group Coverages" is defined in Section 5.7(a).
"Seller's Indemnitees" is defined in Section 8.3.
"Seller's Threshold Amount" is defined in Section 8.4(b).
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"Shares" is defined in the Recitals.
"Target Net Worth" is defined in Section 1.4(c).
"Tax Return" means any report, return, election, notice,
estimate, declaration, information statement or other form or document
(including all schedules, exhibits and other attachments or amendments thereto,
or extensions thereof) relating to and filed or required to be filed with a
taxing authority in connection with any Taxes (including estimated Taxes).
"Taxes" means any federal, state, provincial, local or foreign
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales, use, goods and services, excise, customs duties,
transfer, conveyance, mortgage, registration, stamp, documentary, recording,
premium, severance, environmental (including taxes under Section 59A of the
Code), real property, personal property, ad valorem, intangibles, rent,
occupancy, license, occupational employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care, withholding,
estimated or other similar tax, duty or other governmental charge or assessment
or deficiencies thereof, and including any interest, penalties or additions to
tax attributable to the foregoing.
"WNRO Compliant" is defined in Section 3.17.
"Year 2000 Compliant" is defined in Section 3.17.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
XXXXX TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxx
----------------
Name: Xxxx X. Xxxx
------------
Title: Senior Vice President and Chief
-------------------------------
Executive Officer
-----------------
L-3 COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
----------------------
Title: Vice President
--------------
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