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Exhibit 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
CCIR OF CALIFORNIA CORP.
AND
PCA DESIGN INCORPORATED
DATED AS OF FEBRUARY 9, 1998
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TABLE OF CONTENTS
Page
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RECITALS ......................................................................1
ARTICLE 1
DEFINITIONS...........................................................1
1.1 "Accounts"...................................................1
1.2 "Account Payment"............................................1
1.3 "Accrued Employee Benefits"..................................1
1.4 "Agreement"..................................................2
1.5 "Assumed Liabilities"........................................2
1.6 "Xxxx of Sale"...............................................2
1.7 "Business"...................................................2
1.8 "Buyer"......................................................2
1.9 "Buyer's Closing Certificate"................................2
1.10 "Cash".......................................................2
1.11 "CERCLA".....................................................2
1.12 "Closing"....................................................2
1.13 "Closing Date................................................2
1.14 "Code".......................................................2
1.15 "Commission Agreement".......................................2
1.16 "Continental"................................................2
1.17 "Contracts"..................................................3
1.18 "Corporate Documents"........................................3
1.19 "Damages"....................................................3
1.20 "Deposit"....................................................3
1.21 "Dollars"....................................................3
1.22 "Employee Benefit Plans".....................................3
1.23 "Employment Agreement".......................................3
1.24 "Environmental Claim"........................................3
1.25 "Environmental Laws".........................................4
1.26 "Environmental Release"......................................4
1.27 "ERISA"......................................................4
1.29 "Escrow Agent"...............................................4
1.30 "Escrow Instructions"........................................4
1.31 "Financial Information"......................................4
1.32 "Fixed Assets"...............................................4
1.33 "Hazardous Materials"........................................4
1.34 "Insurance Contracts"........................................5
1.35 "Intangible Assets"..........................................5
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1.36 "Inventory"..................................................5
1.37 "Knowledge"..................................................5
1.38 "Law"........................................................5
1.39 "Leased Assets"..............................................5
1.40 "Letter of Investment Intent"................................5
1.41 "Lien".......................................................5
1.42 "Opinion of Buyer's Counsel".................................6
1.43 "Opinion of Buyer's California Counsel"......................6
1.44 "Opinion of Seller's Counsel"................................6
1.45 "Permits"....................................................6
1.46 "Premises"...................................................6
1.47 "Purchase Price".............................................6
1.48 "Purchased Assets"...........................................6
1.49 "Records"....................................................6
1.50 "Registration Rights Agreement"..............................6
1.51 "Retained Assets"............................................6
1.52 "Retained Liabilities".......................................7
1.53 "Seller".....................................................7
1.54 "Seller's Closing Certificate"...............................7
1.55 "Shares".....................................................7
1.56 "Software....................................................7
1.57 "WARN Act"...................................................7
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS;
OTHER AGREEMENTS......................................................7
2.1 Purchase and Sale............................................7
2.2 Payment of Purchase Price....................................7
2.3 Allocation of Purchase Price.................................8
2.4 Prorations...................................................8
2.5 Referrals and Deliveries.....................................8
2.6 Risk of Loss.................................................8
2.7 Access to Records............................................8
2.8 Employee Matters.............................................8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER..............................9
3.1 Organization; Business.......................................9
3.2 Authorization; Enforceability................................9
3.3 No Violation or Conflict....................................10
3.4 Purchased Assets............................................10
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3.5 Financial Information.......................................10
3.6 Absence of Certain Changes; Conduct of Business.............11
3.7 Contracts...................................................12
3.8 Performance of Contracts; Business Relationships............12
3.9 Accounts....................................................12
3.10 Intangible Assets...........................................13
3.11 Licenses....................................................13
3.12 Violations of Law...........................................13
3.13 Books of Account............................................14
3.14 Disclosure..................................................14
3.15 Brokers.....................................................14
3.16 Taxes.......................................................14
3.17 Permits.....................................................14
3.18 Environmental Matters.......................................14
3.19 Employment Matters..........................................16
3.20 Litigation..................................................17
3.21 Insurance...................................................17
3.22 Nondisclosure Agreements....................................17
3.23 Products....................................................18
3.24 Pricing.....................................................18
3.25 Distributors................................................18
3.26 Transactions with Related Parties...........................18
3.27 Customers and Suppliers.....................................18
3.28 Capitalization..............................................19
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER..............................19
4.1 Organization................................................19
4.2 Authorization; Enforceability...............................19
4.3 No Violation or Conflict....................................19
ARTICLE 5
CERTAIN MATTERS PENDING THE CLOSING..................................19
5.1 Full Access.................................................20
5.2 Conduct of Business.........................................20
5.3 Prohibited Action...........................................21
5.4 Preservation of Relationships...............................21
5.5 No Default..................................................21
5.6 Publicity...................................................21
5.7 Compliance with Laws........................................21
5.8 Exclusive Dealing...........................................21
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5.9 Cooperation.................................................21
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.....................22
6.1 Compliance with Agreement...................................22
6.2 Proceedings and Instruments Satisfactory....................22
6.3 Litigation..................................................22
6.4 Representations and Warranties..............................22
6.5 No Adverse Change...........................................23
6.6 Due Diligence...............................................23
6.7 Commission and Employment Agreements........................23
6.8 Leases......................................................23
6.9 Deliveries at Closing.......................................23
6.10 Other Deliveries............................................23
6.11 Approvals and Consents......................................24
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER....................24
7.1 Compliance with Agreement...................................25
7.2 Proceedings and Instruments Satisfactory....................25
7.3 Litigation..................................................25
7.4 Representations and Warranties..............................25
7.5 Payment of Purchase Price...................................25
7.6 Commission and Employment Agreements........................25
7.7 Deliveries at Closing.......................................25
7.8 Other Documents.............................................25
7.9 Approvals and Consents......................................26
ARTICLE 8
INDEMNITY; TERMINATION; MISCELLANEOUS................................26
8.1 Seller's Indemnity..........................................26
8.2 Buyer's Indemnity...........................................27
8.3 Termination.................................................28
8.4 Rights on Termination; Waiver...............................28
8.5 Further Assurances..........................................29
8.6 Survival of Representations and Warranties..................29
8.7 Entire Agreement; Amendment.................................29
8.8 Expenses....................................................29
8.9 Governing Law...............................................29
8.10 Assignment..................................................29
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8.12 Counterparts; Headings......................................30
8.13 Income Tax Position.........................................31
8.14 Taxes and Fees..............................................31
8.15 Interpretation..............................................31
8.16 Severability................................................31
8.17 No Reliance.................................................31
8.18 Legal Proceedings...........................................31
SIGNATURES....................................................................25
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EXHIBITS
Exhibit Description
1 Xxxx of Sale
2 Buyer's Closing Certificate
3 Seller's Closing Certificate
4 Escrow Agreement
5 Commission Agreement
6 Employment Agreement
7 Opinion of Buyer's Counsel
8 Opinion of Seller's Counsel
9 Registration Rights Agreement
10 Opinion of Buyer's California Counsel
11 Letter of Investment Intent
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SCHEDULES
Schedule No. Description
1.1 Accounts
1.5 Assumed Liabilities
1.17 Contracts
1.32 Fixed Assets
1.36 Inventory
1.39 Leased Assets
1.45 Permits
2.3 Allocation of Purchase Price
3.10(a) Intangible Assets
3.10(b) Intangible Asset Licenses
3.19(a) Employees
3.19(b) Employee Benefit Plans
3.19(e) Unemployment Compensation
3.21(a) Insurance Policies
3.21(b) Insurance Claims
3.22 Nondisclosure Agreements
3.23 Products
3.24 Pricing
3.25 Distributors
3.27 Customers and Suppliers
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of this 9th day of February,
1998, by and among CCIR OF CALIFORNIA CORP., a California corporation ("Buyer")
and PCA DESIGN INCORPORATED, a California corporation ("Seller").
RECITALS
WHEREAS, Seller, is and has been engaged for many years in the
ownership and operation of the Business; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all of the assets, rights and properties relating to
the Business as an operating business, and the goodwill of Buyer, on the terms
and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions, and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE 1
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
1.1 "Accounts" shall mean Seller's open trade accounts and notes
receivable, rights to payment for goods and services sold, notes and associated
rights related to the Business as of the Closing Date, totaling approximately
$450,000, descriptions and exact amounts of which are listed and set forth on
Schedule 1.1 hereto.
1.2 "Account Payment" shall mean $_________, the amount of the Cash and
Accounts net of Seller's accounts payable.
1.3 "Accrued Employee Benefits" shall have the meaning set forth in
Section 2.9(a).
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1.4 "Agreement" shall mean this Asset Purchase Agreement, together with
the Schedules and Exhibits hereto, as the same shall be amended from time to
time in accordance with the terms hereof.
1.5 "Assumed Liabilities" shall mean only certain debts of Seller
outstanding as of the Closing Date, totaling approximately $875,000,
descriptions and exact amounts of which are listed and set forth on Schedule 1.5
hereto.
1.6 "Xxxx of Sale" shall mean the Xxxx of Sale and Assumption of
Liabilities, substantially in the form of Exhibit 1 hereto.
1.7 "Business" shall mean the business conducted by Seller which
consists of the design of printed circuit boards.
1.8 "Buyer" shall mean CCIR of California Corp., a California
corporation wholly owned by Continental.
1.9 "Buyer's Closing Certificate" shall mean a certificate of Buyer,
substantially in the form of Exhibit 2 hereto.
1.10 "Cash" means all cash generated by Seller in the normal course of
business, without any extraordinary treatment of payables, receivables or
inventories.
1.11 "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.A. Section 9601, et
seq., and the rules, regulations and orders promulgated thereunder.
1.12 "Closing" shall mean the conference to be held on the Closing Date
at the offices of Seller at 10:00 a.m. or such other time and place as the
parties may mutually agree at which the transactions contemplated by this
Agreement shall be consummated.
1.13 "Closing Date" shall mean February 9, 1998, or such other date as
Buyer and Seller may actually consummate the transactions contemplated by this
Agreement.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
1.15 "Commission Agreement" shall mean the Commission Agreement,
substantially in the form of Exhibit 5 hereto.
1.16 "Continental" shall mean Continental Circuits Corp., a Delaware
corporation.
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1.17 "Contracts" shall mean all of the agreements whether written, oral
or implied, under which Seller conducts the Business. Said Contracts are listed
and briefly described on or attached to Schedule 1.17 hereto.
1.18 "Corporate Documents" shall mean Seller's corporate seal, minute
books, charter documents, corporate stock, corporate record books and such other
books and records as pertain to the organization, existence or share
capitalization of Seller and such records as are necessary to enable Seller to
file its tax returns and reports, and such other books and records not a part of
the Records.
1.19 "Damages" shall have the meaning set forth in Section 8.1(a)
hereof.
1.20 "Deposit" shall mean the deposit in the amount of $50,000
previously paid into the Escrow Account by Buyer.
1.21 "Dollars" shall mean the lawful currency of the United States of
America.
1.22 "Employee Benefit Plans" shall mean any pension plan, profit
sharing plan, bonus plan, incentive compensation plan, stock purchase plan,
stock option plan, stock appreciation plan, benefit plan, benefit policy,
retirement plan, fringe benefit program, insurance plan, severance plan or any
other plan or program to provide income or benefits to active or former
employees of Seller.
1.23 "Employment Agreement" shall mean the Employment Agreement,
substantially in the form of Exhibit 6 hereto.
1.24 "Environmental Claim" shall mean any and all administrative,
regulatory, judicial, or third party actions, suits, demands, demand letters,
directives, claims, Liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any person or entity alleging
damage or other adverse effect on the environment, or potential liability
(including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from: (i) the presence, or
release into the environment, of any Hazardous Materials, contaminant, odor,
audible noise, or other release into the environment from or at any location,
whether or not owned by any Seller; or (ii) environmental aspects of the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with the operation of the Business; or (iii) circumstances forming
the basis of any violation or alleged violation of any Environmental Law; or
(iv) any and all claims by any person or entity seeking damages, contribution,
indemnification, cost, recovery, compensation or injunctive relief resulting
from the presence or release of any Hazardous Materials.
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1.25 "Environmental Laws" shall mean all federal, state, local,
foreign, and other applicable jurisdiction Laws relating to the environment or
the use, disposal, existence, or release of any Hazardous Materials, including
but not limited to any and all Laws concerning, affecting, controlling, or in
any way relating to, whether in whole or in part, noise levels, ground
vibrations, air pollutants, water pollutants, process waste water, or Hazardous
Materials.
1.26 "Environmental Release" shall mean any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or property.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
1.28 "Escrow Account" shall mean the deposit account or accounts
established with the Escrow Agent for the Deposit.
1.29 "Escrow Agent" shall mean Arizona Escrow & Financial Corporation,
which is the escrow agent selected by the parties hereto to monitor and service
the Escrow Account.
1.30 "Escrow Instructions" shall mean the agreement between the Escrow
Agent and the parties hereto with respect to their various rights and
obligations regarding the Escrow Account, the form of which is attached hereto
as Exhibit 4.
1.31 "Financial Information" shall mean (a) the unaudited financial
statements of the Business for the fiscal year ended December 31, 1996; (b) the
unaudited financial statements of the Business for the fiscal year ended
December 31, 1997; (c) the books and records of account of Seller relating to
the Business; and (d) all other financial information relating to the financial
condition of the Business delivered or to be delivered by Seller to Buyer.
1.32 "Fixed Assets" shall mean the manufacturing, production, computer,
maintenance, packaging and/or testing machinery, equipment, supplies, furniture,
office equipment, fixtures, molds, tools, spare and maintenance parts, software
programs, any products currently under development, and all other real or
tangible property owned by Seller and used by or useful to Seller in the
operation of the Business, including but not limited to those assets which are
listed and set forth on Schedule 1.32 hereto.
1.33 "Hazardous Materials" shall mean: (a) any waste, hazardous waste,
pollutant, contaminant, or hazardous or toxic substance as specified, listed,
identified, or defined in (i) the Resource Conservation and Recovery Act, 42
U.S.C.A. Section 6901, et seq., and the rules, regulations and orders
promulgated thereunder; (ii) CERCLA; (iii) the Clean Water Act, 33 U.S.C. 1251,
et seq., and the rules, regulations and orders promulgated thereunder; (iv) the
Clean Air Act, 42 U.S.C. 7401 et seq., and the rules, regulations and orders
promulgated thereunder; (v) the Toxic Substances Control Act, 15 U.S.C. 2601, et
seq., and the rules, regulations and orders
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promulgated thereunder; (vi) the Hazardous Materials Transportation Act, 49
U.S.C. 1801, et seq., and the rules, regulations and orders promulgated
thereunder; (vii) the Occupational Safety and Health Act, 29 U.S.C. 651 et seq.,
and the rules, regulations, and orders promulgated thereunder; and (viii) any
other applicable U.S. federal, state, local, foreign, or other statutes or Laws,
and the rules, regulations, and orders promulgated thereunder; (b) asbestos; (c)
formaldehyde; (d) polychlorinated biphenyls; (e) radioactive materials; (f)
waste oil and other petroleum products; and (g) any other substance which
constitutes a nuisance or hazard to the environment or to the public health,
safety, or welfare.
1.34 "Insurance Contracts" shall mean all contracts of insurance,
insurance proceeds or claims made by Seller, relating to property or equipment
repaired, replaced or restored by Seller prior to the Closing Date.
1.35 "Intangible Assets" shall mean, all of the intangible assets owned
or used by Seller in the Business, including but not limited to trade secrets,
know-how, operating methods and procedures, proprietary information, processes,
technical knowledge, formulae, advertising formats, logos, trademarks, trade
designations, service marks, tradenames, patents, copyrights, applications for
any of the foregoing, goodwill, advertising and promotional rights, franchise
rights, customer lists, telephone number(s), and related rights.
1.36 "Inventory" shall mean all of Seller's inventories of raw
materials and supplies, work in process, and finished goods owned or used in the
Business, descriptions and quantities of which are listed and set forth on
Schedule 1.36 hereto.
1.37 "Knowledge" shall mean, with respect to a corporate party, the
knowledge of any stockholder, officer, manager, or supervisor of such party, or
knowledge which any such person reasonably should have by virtue of his or her
position with such party and, with respect to an individual party, the knowledge
of such party after due inquiry.
1.38 "Law" shall mean any federal, state, foreign, local or other law,
ordinance, rule, regulation, or governmental requirement or restriction of any
kind, including any rules, regulations, and orders promulgated thereunder, and
any final orders, decrees, consents, or judgments of any regulatory agency or
court.
1.39 "Leased Assets" shall mean all items of real or personal property
which Seller leases and uses in the Business, including but not limited to those
items listed and set forth in Schedule 1.39 hereto.
1.40 "Letter of Investment Intent" shall mean the Letter of Investment
Intent substantially in the form of Exhibit 11 hereto.
1.41 "Lien" shall mean with respect to any asset: any mortgage, pledge,
lien, charge, claim, restriction, reservation, condition, easement, covenant,
lease, encroachment, title defect,
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imposition, security interest, inchoate lien, or other encumbrance of any kind
and the interest of a vendor or lessor under any conditional sale agreement,
financing lease or other title retention agreement related to such asset.
1.42 "Opinion of Buyer's Counsel" shall mean the opinion of Xxxxxxx &
Xxxxx, substantially in the form of Exhibit 7 hereto.
1.43 "Opinion of Buyer's California Counsel" shall mean the opinion of
Xxxxxxx, Xxxxxxx & XxXxxxxx, LLP, substantially in the form of Exhibit 10
hereto.
1.44 "Opinion of Seller's Counsel" shall mean the opinion of Xxxxx X.
Xxxx, attorney at law, substantially in the form of Exhibit 8 hereto.
1.45 "Permits" shall mean those permits, licenses, approvals,
registrations, filings, notices, and governmental authorizations required for
the conduct of the Business as presently conducted and the use of the Purchased
Assets. Said Permits are listed and briefly described on Schedule 1.45 hereto.
1.46 "Premises" shall mean the buildings in Saratoga, California,
Loveland, Colorado and Georgetown, Texas at which Seller conducts the Business.
1.47 "Purchase Price" shall mean two hundred fifty thousand dollars
($250,000), the Shares, the Account Payment, and the assumption of the Assumed
Liabilities less the Deposit.
1.48 "Purchased Assets" shall mean all assets of Seller used or useful
in the conduct of the Business, including but not limited to the Accounts,
Contracts, Fixed Assets, Intangible Assets, Inventory, Leased Assets, Permits,
Records and Software, but not including the Retained Assets.
1.49 "Records" shall mean the books, documents and records owned or
used by Seller in connection with the Purchased Assets, including personnel
records, correspondence, governmentally required records, manuals, engineering
data, designs, drawings, blueprints, plans, specifications, lists, customer
lists, computer media, software and software documentation, property records,
manufacturing records, and other written materials.
1.50 "Registration Rights Agreement" shall mean the Registration Rights
Agreement, substantially in the form of Exhibit 9 hereto.
1.51 "Retained Assets" shall mean the following assets of Seller as of
the Closing Date which, although they relate to the Business, are not Purchased
Assets and are to be retained by Seller: Corporate Documents, and all other
assets not included in the Purchased Assets.
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1.52 "Retained Liabilities" shall mean all liabilities of Seller which
are not Assumed Liabilities
1.53 "Seller" shall mean PCA Design Incorporated, a California
corporation.
1.54 "Seller's Closing Certificate" shall mean a certificate of the
Seller, substantially in the form of Exhibit 3 hereto.
1.55 "Shares" shall mean 20,000 shares of the authorized but previously
unissued common stock of Continental with the rights and restrictions set forth
in the Registration Rights Agreement.
1.56 "Software" shall mean Seller's 60% ownership interest in the
"Power Links" software product.
1.57 "WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act, as amended.
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS;
OTHER AGREEMENTS
2.1 Purchase and Sale. At the Closing, and upon all of the terms and
subject to all of the conditions of this Agreement:
(a) Seller shall sell, assign, convey, and deliver to Buyer,
and Buyer shall purchase and accept from Seller, the Purchased Assets; and
(b) Buyer shall assume and agree to perform in accordance with
and be bound by all of the covenants, terms, and obligations under the Assumed
Liabilities. Buyer shall also forgive the repayment of a shareholder loan made
by Seller to Xxxxxx X. Xxxx in the amount of approximately $25,000. Except as
otherwise specifically provided for herein, Buyer is not assuming any
liabilities or obligations of Seller, and Seller shall satisfy all of the
Retained Liabilities in the ordinary course of business.
2.2 Payment of Purchase Price. The Purchase Price shall be paid as
follows:
(a) At the Closing, Buyer shall pay the cash portion of the
Purchase Price, less the Deposit, in immediately available funds via check or
wire transfer, and assume the Assumed Liabilities.
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(b) Buyer shall cause the registrar and transfer agent of the
common stock of Continental to issue the Shares to Seller.
2.3 Allocation of Purchase Price. The Purchase Price shall be allocated
in accordance with Section 1060 of the Code and substantially as set forth on
Schedule 2.3 hereto. Buyer and Seller shall cooperate with each other in the
preparation and filing of I.R.S. Form 8594 in connection with the Purchase Price
allocation. Neither Buyer nor Seller, nor any of their respective affiliates,
shall take any position (whether in financial statements, audits, tax returns or
otherwise) which is inconsistent with the allocation of the consideration unless
required to do so by applicable Law.
2.4 Prorations. All personal property taxes, real property expenses,
rent, utility expenses, and other similar expenses in connection with the
Purchased Assets if any, payable after the Closing shall be prorated, whereby
Seller shall be responsible for that portion of the prorated expenses accrued
for the period ending as of the Closing, and Buyer shall be responsible for that
portion of the prorated expenses attributable to the period beginning as of the
Closing. Prorated expenses shall be settled between the parties promptly after
the determination from time to time of said prorated expenses.
2.5 Referrals and Deliveries. After the Closing, Buyer shall promptly:
(a) Deliver to Seller, in the form received with the addition
of any required endorsements by Buyer, any cash, checks, or other payments
received after the Closing Date by Buyer relating to the conduct of the Business
after the Closing, but not relating to the Purchased Assets; and
(b) Refer to Seller any and all inquiries or purchase orders
from customers or suppliers of Seller or other persons relating to the Business.
2.6 Risk of Loss. Risk of loss with respect to the Purchased Assets
shall remain with Seller until the Closing and shall pass to Buyer upon the
Closing.
2.7 Access to Records. Seller shall permit Buyer, and its attorneys,
accountants, agents and designees, such access to, and right to copy, all books,
papers and records of Seller which are not a part of the Purchased Assets, from
and after the Closing Date hereof as Buyer may deem necessary or desirable. Any
such examination shall be at the expense of Buyer, shall be performed during
normal business hours at the place where such records are regularly maintained
by Seller and shall not unreasonably interfere with the normal business
activities of Seller. Seller shall notify Buyer at any time within the five (5)
year period after the Closing Date if it intends to destroy any or all of the
books, papers, and records described above, and Buyer shall have the right to
review and remove any of such books, papers and records at Buyer's expense.
2.8 Employee Matters.
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(a) Buyer shall not be under any obligation to hire any
employees of Seller. Immediately prior to the Closing, Seller shall terminate
the employment of all employees of Seller. Buyer shall then hire the employees
of Seller that Buyer desires to hire as employees of Buyer.
(b) With respect to all employees of Seller, Seller shall
provide any notices to such employees required by the WARN Act, if applicable,
and, Seller shall make all payments to said employees for wages, commissions,
bonuses, vacations, severance and other similar forms of compensation owing to
or accrued by such employees.
(c) Buyer shall not be obligated to Seller or any other party
for any labor-related obligations or liabilities arising out of any person's
employment with Seller, and Seller agrees to satisfy said obligations and/or
liabilities.
(d) Seller and Buyer agree that the responsibilities for
furnishing Form W-2s for the 1998 calendar year with respect to employees of the
Business hired by Buyer in accordance with Section 2.10(a) hereof shall be
Buyer's pursuant to the Alternative Procedure described in Section 5 of Rev.
Proc. 83-66. Seller shall provide Buyer with all payroll and other records and
documents (including, without limitation, Form W-4s) necessary for Buyer to
comply with such Alternative Procedure.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
3.1 Organization; Business. Seller is a corporation duly and validly
organized and existing and in good standing under the Laws of the State of
California and has full corporate power to own its assets and to convey the
Purchased Assets to Buyer pursuant to this Agreement. Seller is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which Seller conducts business.
3.2 Authorization; Enforceability. The execution, delivery, and
performance of this Agreement, and all of the documents and instruments required
hereby, by Seller are within the corporate power of Seller and have been duly
authorized by all necessary corporate action by Seller. This Agreement is, and
the other documents and instruments required hereby will be, when executed and
delivered by Seller, the valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, and sufficient to
transfer and convey to Buyer all of Seller's right, title, and interest in and
to the Purchased Assets.
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3.3 No Violation or Conflict. The execution, delivery and
performance of this Agreement and the other documents and instruments to be
executed and delivered by Seller pursuant hereto, and the consummation by
Seller of the transactions contemplated herein or therein:
(a) will not violate or conflict with any applicable Law;
(b) will not require any authorization, consent, approval,
exemption or other action by or notice to any government entity (including,
without limitation, under any "plant closing" or similar law); or
(c) will not violate or conflict with, or constitute a default
(or event which, with notice or lapse of time, or both, would constitute a
default) under, or will not result in the termination of, or accelerate the
performance required by, or result in the creation of any Lien upon any of the
Purchased Assets under, any term or provision of the Seller's articles of
incorporation or bylaws, or any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which Seller
is a party or by which Seller or any of the Purchased Assets may be bound or
affected.
3.4 Purchased Assets.
(a) Seller owns and will convey to Buyer at Closing good and
marketable title to all of the Purchased Assets, free and clear of all Liens of
any nature whatsoever. Seller is in sole possession of, and has sole control of,
the Purchased Assets. Except for the Leased Assets set forth on Schedule 1.39
hereto, none of the Purchased Assets is leased, rented, licensed, or otherwise
not owned by Seller.
(b) The Purchased Assets include all of the assets of Seller
which are used in or necessary for the operation of the Business, excepting
therefrom only any Retained Assets.
(c) The Fixed Assets and Leased Assets are in good operating
condition and repair, normal wear and tear excepted, free from any defects
(except minor defects as do not interfere with the use thereof in the conduct of
the normal operations of the Business), have been maintained consistent with the
standards generally followed in the industry, and are sufficient to carry on the
Business as previously conducted by Seller.
(d) All of the tangible Purchased Assets are physically
located on the Premises.
3.5 Financial Information.
(a) The Financial Information is accurate and complete in all
material respects, was prepared in accordance with generally accepted accounting
principles consistently applied throughout all periods, was prepared on a
consistent basis, and presents fairly the financial
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condition and the results of operations of the Business as of the relevant dates
thereof and for the periods covered thereby.
(b) Seller has no material liabilities or indebtedness,
contingent, absolute, accrued, or otherwise, in connection with the Business,
other than as set forth in the Financial Information.
3.6 Absence of Certain Changes; Conduct of Business.
Except as set forth in this Agreement or the Exhibits hereto,
since the date of the Financial Statements:
(a) there has not been any material adverse change in the
business, financial condition, results of operations or prospects (financial or
otherwise) of Seller;
(b) no event has occurred (or to the Knowledge of Seller is
likely to occur) which so far as reasonably can be foreseen at this time, may
result in any such change;
(c) there has not been any loss, damage or destruction to the
properties of the Seller (whether or not covered by insurance) materially
adversely affecting Seller's business or properties;
(d) there has not been any labor dispute or disturbance which
has or may materially adversely affect the Seller's business;
(e) the Seller has conducted its business only in, and has not
taken any action other than in, the usual and ordinary course of its business;
and
(f) the Seller has not:
(i) entered into any commitment or transaction (including,
without limitation, any capital expenditure) other than in the ordinary
course of business;
(ii) granted any security interest in, mortgage, pledge or
other lien or encumbrance affecting or relating to any of its
properties or assets;
(iii) sold or otherwise disposed of any assets or properties
other than in the ordinary course of business or entered into any joint
venture, partnership or other agreement with respect thereto;
(iv) entered into any fixed term employment contract or
deferred compensation arrangement with or granted any material increase
in the compensation payable or to become payable to, any of its key
employees, made any material increase in any bonus,
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insurance, pension or other employee benefit plan, payment or
arrangement made to, for, or with any of its employees or instituted
any retirement plan or policy for the issuance of severance pay; or
(v) incurred or guaranteed any material liability (whether
absolute or contingent and whether or not currently due and payable),
or entered into or assumed any material contract, agreement,
arrangement, lease (as lessor or lessee), license or other commitment,
whether written or oral, other than in the ordinary course of business.
(g) Seller knows of no facts, circumstances, or proposed or
contemplated events which would materially adversely affect the operations,
results, or prospects of the Business after the Closing Date.
3.7 Contracts. Seller is not a party to any written or unwritten
agreement that is material to the ongoing operations of the Business and that is
not otherwise contained on Schedule 1.17 hereto and being assigned to Buyer
hereunder.
3.8 Performance of Contracts; Business Relationships.
(a) Seller and, to the Knowledge of Seller, each party to each
Contract, have performed in all material respects each term, covenant, and
condition of each Contract which is to be performed by them at or before the
date hereof. Each of the Contracts is in full force and effect and constitutes
the legal and binding obligation of Seller and, to the Knowledge of Seller, the
other parties thereto. Except as conspicuously disclosed on Schedule 1.17, no
Contract requires the written consent of, or prior notice to, any third party in
order for Seller to assign such contract to Buyer hereunder.
(b) Seller maintains a good business relationship with each of
the customers and suppliers of the Business, and Seller knows of no unresolved
complaint or dispute which presently exists.
(c) Buyer will not be obligated or liable to any of Seller's
vendors, suppliers, or other parties who may have or may have had a contractual
relationship with Seller, unless said relationship arises from a Contract being
assigned pursuant to Section 2.1 above or is otherwise an Assumed Liability.
3.9 Accounts.
(a) All of the Accounts have arisen from bona fide
transactions by Seller, are collectable in the ordinary course, and no portion
of any such Account is subject to counterclaim or set-off or, to Seller's
Knowledge, is in dispute.
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(b) Since December 31, 1997, Seller has not discounted any
accounts receivable relating to the Business in order to collect same or
implemented any other collection procedures not consistent with Seller's past
practices.
3.10 Intangible Assets.
(a) Schedule 3.10(a) lists all Intangible Assets relating to
the Business in which Seller now has any interest, specifying whether such
Intangible Assets are owned, controlled, used or held (under license or
otherwise) by Seller, and also indicating which of such Intangible Assets are
registered. All Intangible Assets shown as registered in Schedule 3.10(a) have
been properly registered or ownership rights have been perfected in the name of
Seller, all pending registrations and applications have been properly made and
filed and all annuity, maintenance, renewal and other fees relating to
registrations or applications are current.
(b) Schedule 3.10(b) hereto sets forth all license and similar
agreements that Seller is a party to with respect to intellectual property
either licensed by or licensed to Seller in relation to the Business.
(c) Seller owns the entire right, title, and interest in and
to each of the patents, trademarks, and licenses set forth on Schedules 3.10(a)
and 3.10(b) hereto, and all other Intangible Assets of the Business. Neither the
Purchased Assets, nor the Business infringes on any intellectual property rights
of others. There are no claims, demands or proceedings instituted, pending or,
to the Knowledge of Seller, threatened, by any third party pertaining to or
challenging Seller's rights to any of the intellectual property rights used in
the Business. Seller knows of no facts which would render any of the
intellectual property rights used in the Business invalid or unenforceable. All
patents, patent applications, and rights to discoveries or inventions (whether
or not patentable) owned or held by any officer, director, employee, former
employee, or independent contractor engaged by Seller and relating to the
Business have been, or on or prior to the Closing Date shall have been, duly and
effectively transferred to Seller.
3.11 Licenses.
There are no license or similar agreements that Seller is a
party to with respect to intellectual property either licensed by or licensed to
Seller in relation to the Purchased Assets.
3.12 Violations of Law.
(a) None of the present or past operation of the Business, the
products of the Business, or the Purchased Assets violates or conflicts, in any
material respect, with any Permits, any Law (including Environmental Laws),
governmental specification, authorization, or requirement, or any decree,
judgment, order, or similar restriction. To the Knowledge of Seller, neither
Seller nor any supplier of Seller is the subject of an inspection or inquiry
regarding violations or alleged violations of any Law by any other state,
federal, or local agency.
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(b) There are no proceedings, threatened proceedings, orders,
notice of violations, inspection reports, and other similar occurrences, if any,
relating to the conduct of the Business or the Purchased Assets.
(c) Seller has not been the subject of an Occupational and
Safety Health Administration inspection, or found by any agency to be in
violation of any state or federal occupational safety or health Law in the
conduct of the Business.
3.13 Books of Account. The books of account of the Business relating to
the Purchased Assets are complete and correct in all material respects, and
reflect all transactions entered into by Seller or to which Seller is a party
and which relate to the Purchased Assets.
3.14 Disclosure. Seller has furnished to Buyer complete and accurate
copies or originals of all documents and/or information requested by Buyer. No
disclosure (including the Schedules hereto) or statement of fact by Seller
contained in this Agreement and no disclosure or statement of fact furnished or
to be furnished by Seller to Buyer pursuant to this Agreement or pursuant to
Buyer's due diligence contains or will contain any untrue statement of a
material fact or omits or will omit to state any item or a material fact
necessary in order to make the statements herein or therein contained not
misleading. The Schedules to this Agreement are complete and accurate in all
material respects with respect to the information the Schedules purport to
provide.
3.15 Brokers. Seller shall pay and be responsible for any brokers',
finders', or similar fee it has incurred in connection with the transactions
contemplated by this Agreement.
3.16 Taxes. Seller has paid or made provision for all federal, state,
and local taxes or other governmental charges with respect to the Business
and/or Purchased Assets that may or could follow the Purchased Assets or
otherwise affect Buyer after the consummation of the transactions contemplated
herein, subject to Section 8.14. All required returns and reports with respect
to such taxes and charges have been duly and timely filed.
3.17 Permits. The Permits listed on Schedule 1.45 constitute all
licenses, permits, approvals, qualifications, and governmental specifications,
authorizations, registrations, or requirements which Seller currently has in
connection with the Purchased Assets or the Business (including the products
thereof) and constitute all such licenses, permits, approvals, qualifications,
and governmental specifications, authorizations, registrations, and requirements
necessary for the ownership or use of the Purchased Assets or conduct of the
Business as currently conducted by Seller.
3.18 Environmental Matters.
(a) The Purchased Assets and the Business are in conformance
with all applicable Environmental Laws, and there are no past or present (or, to
the Knowledge of Seller, future) events, conditions, circumstances, activities,
practices, incidents, actions, omissions or
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plans (i) which, in connection with the Business or the Purchased Assets, may
interfere with or prevent compliance or continued compliance with Environmental
Laws or with any order issued, entered, promulgated or approved thereunder, or
(ii) which may subject Seller or Buyer to damages (including liability under
CERCLA), penalties, injunctive relief, or cleanup costs under any Environmental
Laws or pursuant to any third-party claim, or which require or are likely to
require reporting, cleanup, removal, remedial action, or other response pursuant
to Environmental Laws or a third party claim.
(b) To the Knowledge of Seller, there are not now, nor have
there ever been, tanks or other facilities in, on, or under any property that is
or was owned, leased, used, or occupied by Seller in connection with the conduct
of the Business or the use of the Purchased Assets or at any time in its care,
custody, or control, that contain materials which, if known to be present in
soils or groundwater, would require reporting, clean up, removal, or some other
action under Environmental Laws.
(c) Neither Seller, nor, to the Knowledge of Seller, any other
person or entity has caused or permitted any Environmental Releases of materials
on, under, or at the Premises, or at any other real estate previously owned or
occupied by Seller or at any time in its care, custody, or control, which
materials, if known to be present, would require reporting, clean-up, removal,
or some other action under Environmental Laws.
(d) Seller is not subject to any judgment, decree, order, or
citation related to or arising out of applicable Environmental Laws in
connection with the conduct of the Business or the use of the Purchased Assets.
(e) Seller possesses all permits, licenses, and approvals, if
any, required under applicable Environmental Laws in connection with the conduct
of the Business, all of which are included on Schedule 1.44 hereto.
(f) Seller has not received (nor, to the Knowledge of Seller,
has there been issued) any notice, whether from a public or governmental
authority, citizens' group, employee or any other person or entity, that alleges
that the Business is or may not be in compliance with any Environmental Law or
Permit.
(g) No friable asbestos or asbestos requiring remediation
under applicable Environmental Laws is present on or at the Premises.
(h) No real property at any time owned, leased, operated, used
or controlled by Seller in the conduct of the Business is currently listed on
the National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated under CERCLA, or
on any comparable state or foreign list, and Seller has not received any written
notice from under or relating to CERCLA or any comparable state or local
Law.
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(i) No off-site location at which Seller has disposed or
arranged for the disposal of any waste is listed on the National Priorities List
or on any comparable state or foreign list and Seller has not received any
written notice with respect to any off-site location, of potential or actual
liability or a written request for information under or relating to CERCLA or
any comparable state or local Law.
3.19 Employment Matters.
(a) Schedule 3.19(a) hereto lists all employees of the
Business, their current rates of compensation and most recent pay increase, date
of hire, benefits, location of employment, whether such employee is a senior
management employee, and other related information requested by Buyer. Seller
has not increased the rate of compensation of any employee of the Business since
December 31, 1997, except as set forth on Schedule 3.19(a) hereto.
(b) Schedule 3.19(b) hereto lists and describes all of
Seller's present or past Employee Benefit Plans. Each Employee Benefit Plan is
and at all times has been in full compliance with all applicable Laws (including
ERISA). Seller is not contributing to, and has not contributed to any
multi-employer plan, as defined in ERISA. Any past Employee Benefit Plan that
has been terminated was done so in full compliance with all applicable Laws, and
there is no basis for further liability or obligation of Seller pursuant to any
and all past Employee Benefit Plans.
(c) Seller has no Employee Benefit Plan or other agreements
(including collective bargaining agreements), arrangements, or plans which would
bind or in any way affect Buyer after the Closing Date, regardless of whether
Buyer employs any such employees.
(d) Seller is in material compliance with all federal,
foreign, state, or other applicable laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, and has not and
is not engaged in any unfair labor practice that would in any way affect Buyer
after the Closing Date.
(e) No present or former employee of the Business has any
claim against Seller (whether under federal, foreign or state Law, under any
employee agreement or otherwise), that would in any way affect Buyer after the
Closing Date, on account of or for (i) overtime pay, other than overtime pay for
the current payroll period; (ii) wages or salaries, other than wages or salaries
for the current payroll period; or (iii) vacations, time off or pay in lieu of
vacation or time off, other than vacation or time off (or pay in lieu thereof)
earned in the past twelve-month period.
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(f) Schedule 3.19(e) sets forth Seller's unemployment
compensation contribution and solvency rates. Seller has made all required
payments to its unemployment compensation reserve account with the appropriate
governmental department under California law, such accounts have positive
balances and, except as set forth on Schedule 3.19(e) and to the Knowledge of
Seller, there are no current or former employees (i) receiving unemployment
compensation benefits which are being charged against such account, (ii) that
are eligible for such benefits, or (iii) that are claiming such benefits.
3.20 Litigation.
(a) There is not now, nor has there been, any (i) litigation;
(ii) charge, grievance or other labor-related claim, strikes, lockouts or union
organizing drives; (iii) product liability claim; (iv) Environmental Claim; (v)
arbitration; (vi) proceeding; (vii) governmental investigation or inquiry;
(viii) citation; (ix) action of any kind; or (x) order, notice of violation or
inspection report, pending, or, to the Knowledge of Seller, proposed or
threatened against Seller, relating to the Business or any of the Purchased
Assets, nor is there any basis known to Seller for any such action.
(b) There are no actions, suits or proceedings pending, or, to
the Knowledge of Seller, proposed or threatened, by any person or governmental
agency which question the legality, validity, or propriety of the transactions
contemplated by this Agreement.
3.21 Insurance.
(a) Schedule 3.21(a) hereto lists and describes all of
Seller's insurance policies covering any of the Purchased Assets or the
Business. Said policies are in full force and effect.
(b) Schedule 3.21(b) hereto lists and summarizes all claims in
excess of $10,000 under said insurance policies made or pending since December
31, 1997.
(c) During the last five (5) years, no lapse of insurance
coverage has occurred, and Seller has not had any application for such insurance
coverage denied or any insurance policy or coverage thereunder canceled,
withdrawn, or not renewed.
(d) The insurance policies, with respect to their amounts and
types of coverage, are adequate to insure fully against risks to which the
Purchased Assets and the Business are normally exposed.
3.22 Nondisclosure Agreements. Schedule 3.22 hereto lists all
persons, other than vendors or customers, who have executed nondisclosure or
secrecy agreements relating to the Business with Seller since December 31, 1997.
At the request of Buyer, Seller shall diligently enforce said nondisclosure
agreements for a five (5) year period commencing on the Closing Date. Said
enforcement shall be at the specific request of Buyer and any legal fees or
costs incurred as
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a result of said request shall be borne solely by Buyer. Seller shall assign its
rights under said agreements to Buyer.
3.23 Products.
(a) Schedule 3.23 hereto lists all products of Seller relating
to the Business, including all products offered for sale since December 31,
1997. Such products meet all product and/or process specifications (including
product testing procedures) that they purport or are required to meet.
(b) The Products of the Business satisfy all applicable United
States Environmental Protection Agency, United States Department of
Transportation, and all other governmental agency requirements, including
registration, notice, and label requirements, and Seller is current on all
applicable fees, renewals, reports, and other similar obligations.
3.24 Pricing. Schedule 3.24 describes all special (i.e., differs
from published price list) pricing and rebate arrangements and/or commitments of
Seller currently in effect which relate to the Business. Except as set forth on
Schedule 3.24, no customer of the Business will be entitled to or, to the
Knowledge of Seller will be expectant of, any rebates, or similar commitments
after the Closing Date.
3.25 Distributors.
(a) Schedule 3.25 hereto: (i) lists all persons or entities
that purchased Seller's products as distributors during the last fiscal year of
Seller; (ii) lists all non-employee persons or entities that serve as a
manufacturer's representative for Seller's products; and (iii) describes and
sets forth the terms of the arrangement or agreement (written or unwritten) with
each such distributor or representative.
(b) Except as set forth on Schedule 3.25, all contracts with
distributors and/or manufacturer's representatives of the Business can be
terminated by Seller upon sixty (60) days' notice, with or without cause,
without liability, penalty, or premium of any nature whatsoever.
3.26 Transactions with Related Parties. Seller is not a party to
any transaction or proposed transaction, including, without limitation, the
leasing of property, the purchase or sale of raw materials or finished goods,
the furnishing of services or the borrowing or lending of money with any
director, officer or stockholders of Seller, or any person or entity who is an
affiliate of such director, officer or stockholders of Seller. No director,
officer or stockholders of Seller, nor any of their affiliates, own or have any
ownership interest in any corporation or other entity which is in competition
with the Business.
3.27 Customers and Suppliers. Schedule 3.27 hereto sets forth a
list of Seller's ten (10) largest customers relating to the Business and
Seller's ten (10) largest suppliers relating to
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the Business during Seller's two most recent fiscal years determined on the
basis of the total dollar amount of net sales to such customers and purchases
from such suppliers.
3.28 Capitalization. Seller currently has outstanding 1,000 shares of
its Common Stock, 130 shares of which are owned by Xxxxxx X. Xxxx, and 870
shares of which are owned by The Bird Charitable Trust, of which Xxxxxx X. Xxxx
and his wife Xxxxxxx Xxxx are Trustees. Seller currently has outstanding no
shares of Preferred Stock.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
4.1 Organization. Buyer is a corporation duly and validly organized and
existing and in current status under the laws of the State of California and has
full corporate power to consummate the transactions contemplated in and pursuant
to this Agreement.
4.2 Authorization; Enforceability. The execution, delivery, and
performance of this Agreement, and all of the documents and instruments required
hereby, are within the corporate power of Buyer and have been duly authorized by
all necessary corporate action by Buyer. This Agreement is, and the other
documents and instruments required hereby will be, when executed and delivered
by Buyer, the valid and binding obligations of Buyer, enforceable in accordance
with their respective terms.
4.3 No Violation or Conflict. The execution, delivery, and performance
of this Agreement (and the transactions contemplated herein) by Buyer do not and
will not conflict with or violate any Law, judgment, order, decree, the Articles
of Incorporation or Bylaws of Buyer, or any contract or agreement to which Buyer
is a party or by which Buyer is bound.
ARTICLE 5
CERTAIN MATTERS PENDING THE CLOSING
From and after the date of this Agreement and until the Closing Date:
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5.1 Full Access.
(a) Buyer and its authorized agents, officers, and
representatives shall have full and complete access to the Seller, Seller's key
personnel, and the Purchased Assets and Seller's books, records, facilities and
other documents and materials relating to Seller's assets, liabilities and
business during normal business hours in order to conduct such examination and
investigation of the Purchased Assets as it deems necessary, provided that such
examinations shall not unreasonably interfere with Seller' operations and
activities. Access to Seller's key personnel shall be determined by mutual
agreement of Buyer and Seller.
(b) If the transactions provided for herein are not
consummated, Buyer and its respective officers, agents, and representatives will
hold in strict confidence all information obtained from Seller and their
officers, agents, or representatives, and will promptly return to Seller, or
destroy at the written request of Seller, all documents obtained from Seller and
their officers, agents, or representatives, and all copies of such documents
made by Buyer and its officers, agents, and representatives, excepting however,
any such information or documents which: (i) was, is, or becomes in the public
domain; (ii) was in fact lawfully known or lawfully furnished to Buyer prior to
disclosure to Buyer by Seller or their officers, agents, or representatives;
(iii) was independently created by Buyer; or (iv) is lawfully disclosed or
lawfully furnished to Buyer by a third party (other than officers, directors,
employees, and agents of Seller) after disclosure to Buyer by Seller.
5.2 Conduct of Business. With regard to the Business, Seller
shall:
(a) carry on its business in the regular course and
substantially in the same manner as heretofore carried on by the Seller.
(b) satisfy its obligations under all material agreements and
commitments;
(c) maintain its books of account and records in the usual,
regular and ordinary manner in accordance with generally accepted accounting
principles applied on a consistent basis;
(d) continue to withhold and deposit all payroll withholding
taxes as and when due; and
(e) maintain its properties in customary repair, order and
condition, reasonable wear and tear excepted.
Seller shall promptly advise the Buyer of any adverse change
in the financial condition, properties, business, results of operations or
prospects (financial or otherwise) of the Seller's business, including the
Purchased Assets and the Assumed Liabilities.
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5.3 Prohibited Action. With regard to the Purchased Assets, except with
the prior consent of Buyer or as expressly contemplated by this Agreement,
Seller shall not:
(a) sell or otherwise dispose of, or grant any mortgage,
pledge security interest in, lien or encumbrance on, any of its assets or
properties other than in the ordinary course of business, or enter into any
agreement with respect thereto;
(b) enter into any employment contract or deferred
compensation arrangement with or grant any material increase in the compensation
payable or to become payable to any of its employees, make any material increase
in any bonus, insurance, or other employee benefit plan, payment, arrangement or
policy made to, for or with any such or employees, or institute any employee
benefit plan within the meaning of Section 3(3) of ERISA or institute any
retirement plan or policy for the issuance of severance pay; and
(c) waive any rights of substantial value in connection with
its operations or take any other material action which is not in the ordinary
course of business.
5.4 Preservation of Relationships. Seller will use its best efforts to
preserve its business relationships and will generally assist Buyer in arranging
for the orderly transfer and reception of the Purchased Assets from Seller to
Buyer.
5.5 No Default. The Seller shall not do any act or omit to do any act,
or permit any act or omission to act, which will cause a breach of any of the
Permits.
5.6 Publicity. All general notices, releases, statements and
communications to employees, suppliers, and customers of the Business and to the
general public and the press relating to the transactions covered by this
Agreement shall be made only at such times and in such manner as may be mutually
agreed upon by Buyer and Seller; provided however, that any party shall be
entitled to make a public announcement of the proposed transaction if, in the
opinion of its counsel, such announcement is required to comply with any Law or
any rule or regulation of any securities exchange or securities quotation system
and such party shall, to the extent practicable, consult with the other parties
with respect to such announcement and give reasonable prior written notice of
its intent to issue such announcement.
5.7 Compliance with Laws. Seller shall comply in all material respects
with all applicable Laws and orders of any court or federal, state, municipal,
or other governmental department.
5.8 Exclusive Dealing. Seller shall not, and shall not permit its
officers, directors, or shareholders to, negotiate or have discussions with any
other party relating to a sale of any portion of the Business or the Purchased
Assets, without the prior written consent of Buyer.
5.9 Cooperation. Seller and Buyer shall:
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(a) fully cooperate with each other and their respective legal
counsel and accountants in connection with any steps to be taken as part of
their obligations under this Agreement;
(b) use their reasonable efforts to satisfy those conditions
set forth in Articles 6 and 7 which are to be satisfied by them; and
(c) promptly give notice to the other party of the existence
or occurrence of any fact or condition which would make any representation or
warranty contained herein untrue in any material respect or which might
reasonably be expected to prevent the consummation of the transactions
contemplated hereby.
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent (any or all of which Buyer may expressly waive in
writing):
6.1 Compliance with Agreement. Seller shall have performed and complied
with all of their obligations under this Agreement which are to be performed or
complied with by them prior to or on the Closing Date.
6.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions contemplated
by this Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to Buyer and Buyer's counsel, and Seller
shall have made available to Buyer for examination the originals or true and
correct copies of all documents which Buyer may reasonably request in connection
with the transactions contemplated by this Agreement.
6.3 Litigation. No investigation, suit, action, or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks the restraint, prohibition, damages, or other relief in connection with
this Agreement or the consummation of the transactions contemplated by this
Agreement.
6.4 Representations and Warranties. The representations and warranties
made by Seller shall be true and correct in all material respects as of the date
hereof and as of the Closing Date with the same force and effect as though said
representations and warranties had been made at such times.
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6.5 No Adverse Change. During the period from the date of this
Agreement to the Closing Date there shall not have occurred or been discovered,
and there shall not exist on the Closing Date, any material damage to the
Purchased Assets, or any condition or fact which is or may be materially adverse
to the Purchased Assets.
6.6 Due Diligence. During the period from the date of this Agreement to
the Closing Date, Buyer shall have completed, to its sole satisfaction, its due
diligence investigation of Seller and the Purchased Assets, and nothing shall
have come to its attention that materially and adversely affects the value of
the Purchased Assets.
6.7 Commission and Employment Agreements. Buyer shall have received
executed copies of the Commission Agreement and the Employment Agreement.
6.8 Leases. Buyer shall have (a) entered into a lease of the Premises
in Saratoga, California and Loveland, Colorado with the current landlord of such
Premises on terms that are satisfactory to Buyer, and (b) received assignments
of the Leased Assets listed on Schedule 1.39 hereto.
6.9 Deliveries at Closing. Seller shall have delivered to Buyer the
following documents, each properly executed and dated as of the Closing Date:
(a) the Xxxx of Sale;
(b) the Seller's Closing Certificate;
(c) the Opinion of Seller's Counsel;
(d) the Registration Rights Agreement;
(e) the Letter of Investment Intent;
(f) the Escrow Agreement; and
(g) any assignments necessary to effect the transfer of
the Intangible Assets, Fixed Assets and Software to
Buyer.
6.10 Other Deliveries. Seller shall have delivered to Buyer prior to or
at Closing:
(a) such certificates and documents of officers of
Seller and public officials as shall be reasonably requested by Buyer's counsel
to establish the existence and good standing of Seller and the due authorization
of this Agreement and the transactions contemplated by this Agreement by Seller;
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(b) UCC terminations and releases for any security interests
encumbering the Purchased Assets (unless they relate to an Assumed Liability);
(c) legal title to and legal possession of the Purchased
Assets; and
(d) such deeds, bills of sale, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer as shall be
effective to vest in Buyer free and clear title to the Purchased Assets as
contemplated by this Agreement.
6.11 Approvals and Consents.
(a) Seller shall have filed all notices and obtained, in
writing, and conveyed to Buyer such permissions, approvals, determinations,
consents and waivers, if any, as may be required by Law, regulatory authorities,
the Contracts, the Permits, secured creditors of Seller or from any third party
pursuant to any contract to which Seller is a party, in order to consummate the
transactions contemplated by this Agreement and to vest in Buyer good and
marketable title to the Purchased Assets as contemplated by this Agreement.
(b) Seller shall have obtained the necessary approvals of
their respective shareholders and Board of Directors to enter into this
Agreement and consummate the transactions contemplated by this Agreement.
(c) Buyer shall have filed all notices and obtained in
writing, and conveyed to Seller such permissions, approvals, determinations,
consents and waivers, if any, as may be required by law, regulatory authorities
or from any third party pursuant to any contract to which Buyer is a party, in
order to consummate the transactions contemplated by this Agreement.
(d) Buyer shall have obtained, at Buyer's expense, all
approvals, authorizations, and permits, governmental and otherwise, that it
deems necessary and appropriate to conduct the Business and use the Purchased
Assets in substantially the same manner in which the Business is currently
conducted and the Purchased Assets are used on and after the Closing Date.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent (any or all of which Seller may expressly waive):
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7.1 Compliance with Agreement. Buyer shall have performed and complied
with all of its obligations under this Agreement which are to be performed or
complied with by it prior to or on the Closing Date.
7.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions contemplated
by this Agreement by Buyer, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Seller and Seller' counsel.
7.3 Litigation. No investigation, suit, action, or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks the restraint, prohibition, damages, or other relief in connection with
this Agreement or the consummation of the transactions contemplated by this
Agreement.
7.4 Representations and Warranties. The representations and warranties
made by Buyer in this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing Date with the same force
and effect as though such representations and warranties had been made at such
times.
7.5 Payment of Purchase Price. Buyer shall have paid to Seller the
Purchase Price as described in Section 2.2(a) of this Agreement.
7.6 Commission and Employment Agreements. Seller shall have received
executed copies of the Commission Agreement and the Employment Agreement.
7.7 Deliveries at Closing. Buyer shall have delivered to Seller the
following documents, each properly executed and dated as of the Closing Date:
(a) the Xxxx of Sale;
(b) the Buyer's Closing Certificate;
(c) the Opinion of Buyer's Counsel;
(d) the Opinion of Buyer's California Counsel;
(e) the Registration Rights Agreement; and
(f) the Escrow Instructions.
7.8 Other Documents. Buyer shall have delivered to Seller such
certificates and documents of officers of Buyer and of public officials as shall
be reasonably requested by Seller's
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counsel to establish the existence and current status of Buyer and the due
authorization of this Agreement and the transactions contemplated by this
Agreement by Buyer.
7.9 Approvals and Consents. Buyer shall have obtained the
necessary approvals of its Board of Directors to enter into this Agreement and
to consummate the transactions contemplated by this Agreement.
ARTICLE 8
INDEMNITY; TERMINATION; MISCELLANEOUS
8.1 Seller's Indemnity.
(a) Seller shall indemnify and hold Buyer harmless from and
against and shall defend promptly Buyer from and reimburse Buyer for any and all
losses, damages, costs, expenses, liabilities, obligations, and claims of any
kind (including, without limitation, reasonable attorneys' fees and other costs
and expenses) (collectively, "Damages") which Buyer may at any time suffer or
incur, or become subject to, as a result of or in connection with:
(i) any breach of this Agreement or inaccuracy of any
of the representations and warranties made by Seller in or pursuant to this
Agreement;
(ii) any failure by Seller to carry out, perform,
satisfy, and discharge any of its covenants, agreements, undertakings,
liabilities, or obligations under this Agreement or under any of the documents
delivered by Seller pursuant to this Agreement;
(iii) the Retained Liabilities;
(vi) the ownership, and/or operation of the Purchased
Assets or any property occupied or used by Seller in connection with the
Business, prior to the Closing;
(vii) noncompliance by Seller, the Business, the
Purchased Assets or any property occupied or used by Seller with any Law,
required specification, Environmental Law, or the infringement of property
rights of others;
(viii) any Environmental Claim arising out of
conditions existing as of or prior to the Closing at the Premises, former
properties owned or occupied by Seller, or present or former off-site disposal
locations used by Seller;
(ix) any remedial action reasonably taken by Buyer to
prevent an Environmental Claim or to achieve compliance with any Environmental
Laws with which Seller is not in compliance on or prior to the Closing;
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(x) any other Environmental Claim with respect to the
conduct of the Business as of or prior to the Closing;
(xi) the ownership and/or operation of the Business
by Seller prior to Closing, including but not limited to the employment and
termination of the employees of Seller by Seller, any litigation or governmental
claims arising from occurrences prior to Closing, the lack or inadequacy of
insurance coverage prior to Closing, and the use of any third party software
prior to Closing; and
(xii) any suit, action or other proceeding brought by
any governmental authority or person arising out of any of the matters referred
to in this Section 8.1(a) of this Agreement.
(b) Buyer shall promptly notify Seller of any claim, demand,
action, or proceeding for which indemnification will be sought under this
Section 8.1 of this Agreement and, if such claim, demand, action, or proceeding
is a third party claim, demand, action, or proceeding, Seller shall have the
right at their expense to assume the defense thereof using counsel reasonably
acceptable to Buyer. Buyer shall have the right to participate, at its own
expense, with respect to any such third party claim, demand, action, or
proceeding. In connection with any such third party claim, demand, action, or
proceeding, Buyer and Seller shall cooperate with each other and provide each
other with access to relevant books and records in their possession. No such
third party claim, demand, action, or proceeding shall be settled without the
prior written consent of Buyer and Seller. If a firm written offer is made to
settle any such third party claim, demand, action, or proceeding and Buyer
refuses to consent to such settlement, then: (i) Seller shall be excused from,
and Buyer shall be solely responsible for, all further defense of such third
party claim, demand, action, or proceeding; and (ii) the maximum liability of
Seller relating to such third party claim, demand, action, or proceeding shall
be the amount of the proposed settlement if the amount thereafter recovered from
Buyer on such third party claim, demand, action, or proceeding is greater than
the amount of the proposed settlement.
8.2 Buyer's Indemnity.
(a) Buyer shall indemnify and hold Seller harmless from and
against, and shall defend promptly Seller from and reimburse Seller for, any and
all Damages which Seller may at any time suffer or incur, or become subject to,
as a result of or in connection with:
(i) any breach or inaccuracy of any representations
and warranties made by Buyer in or pursuant to this Agreement;
(ii) any failure by Buyer to carry out, perform,
satisfy and discharge any of its covenants,
agreements, undertakings, liabilities, or obligations under this Agreement or
under any of the documents and materials delivered by Buyer pursuant to this
Agreement;
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(iii) the ownership, and/or operation of the
Purchased Assets after the Closing;
(v) the Assumed Liabilities; and
(vi) any suit, action, or other proceeding brought by
any governmental authority or person arising out of any of the matters referred
to in Section 8.2 of this Agreement.
(b) Seller shall promptly notify Buyer of any claim, demand,
action, or proceeding for which indemnification will be sought under this
Section 8.2 of this Agreement and, if such claim, demand, action, or proceeding
is a third party claim, demand, action, or proceeding, Buyer will have the right
at its expense to assume the defense thereof using counsel reasonably acceptable
to Seller. Seller shall have the right to participate, at its own expense, with
respect to any such third party claim, demand, action, or proceeding. In
connection with any such third party claim, demand, action, or proceeding, Buyer
and Seller shall cooperate with each other and provide each other with access to
relevant books and records in their possession. No such third party claim,
demand, action, or proceeding shall be settled without the prior written consent
of Seller and Buyer. If a firm written offer is made to settle any such third
party claim, demand, action, or proceeding and Seller refuses to consent to such
settlement, then: (i) Buyer shall be excused from, and Seller shall be solely
responsible for, all further defense of such third party claim, demand, action,
or proceeding; and (ii) the maximum liability of Buyer relating to such third
party claim, demand, action, or proceeding shall be the amount of the proposed
settlement if the amount thereafter recovered from Seller on such third party
claim, demand, action, or proceeding is greater than the amount of the proposed
settlement.
8.3 Termination. Time is of the essence. Unless otherwise agreed to in
writing, this Agreement may be terminated and the transactions contemplated by
this Agreement may be abandoned at any time as follows: (a) by mutual written
agreement of Seller and Buyer; (b) by Buyer (provided that it is not otherwise
in breach hereof) if any of the conditions set forth in Article 6 of this
Agreement shall not have been fulfilled on or prior to the Closing Date; (c) by
Seller (provided that it is not otherwise in breach hereof) if any of the
conditions set forth in Article 7 of this Agreement shall not have been
fulfilled on or prior to the Closing Date.
8.4 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 8.3 hereof, all further obligations of the parties under or
pursuant to this Agreement shall terminate without further liability of either
party to the other, except for violation of Section 5.9 (cooperation), and
except that Buyer's obligations contained in Section 5.1(b) (confidentiality) of
this Agreement shall survive any such termination. If any of the conditions set
forth in Article 6 of this Agreement have not been satisfied, Buyer may
nevertheless elect to proceed with the consummation of the transactions
contemplated by this Agreement and, if any of the conditions set forth in
Article 7 of this Agreement have not been satisfied, Seller may nevertheless
elect to proceed with the consummation of the transactions contemplated by this
Agreement.
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8.5 Further Assurances. From time to time after the Closing Date, upon
the request of Buyer, and without further cost or expense to Buyer, Seller shall
execute and deliver, and cause to be executed and delivered, such further
documents, including but not limited to instruments of conveyance, assignment,
and transfer and securities law filings and take such further action as Buyer
may reasonably request in order more effectively to sell, assign, convey,
transfer, reduce to possession, and record title to any of the Purchased Assets,
to assign and transfer the Permits to Buyer and to comply with any federal or
state securities laws. Seller agree to cooperate with Buyer in all reasonable
respects to assure to Buyer the continued title to and possession of the
Purchased Assets in the condition and manner contemplated by this Agreement.
8.6 Survival of Representations and Warranties. All representations and
warranties of Buyer and Seller contained in this Agreement or made pursuant to
this Agreement shall survive the Closing Date and the consummation of the
transactions contemplated by this Agreement.
8.7 Entire Agreement; Amendment. This Agreement and the documents
referred to herein and included herein by this reference and to be delivered
pursuant hereto constitute the entire agreement between the parties pertaining
to the subject matter hereof, and supersede all prior and contemporaneous
agreements, understandings, negotiations, and discussions of the parties,
whether oral or written, and there are no warranties, representations, or other
agreements between the parties or on which any of the parties have relied in
connection with the subject matter hereof, except as specifically set forth in
this Agreement. No amendment, supplement, modification, waiver, or termination
of this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision of this Agreement,
whether or not similar, nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
8.8 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall pay the fees and
expenses incurred by it, including the fees of respective counsel, accountants,
brokers, investment bankers, and other experts incident to the negotiation and
preparation of this Agreement and consummation of the transactions contemplated
by this Agreement.
8.9 Governing Law. This Agreement shall be construed and interpreted
according to the laws of the State of California.
8.10 Assignment. This Agreement shall not be assigned by Seller or
Buyer without the prior written consent of the other party; provided, however,
that Buyer shall have the right to assign all or any portion of its rights under
this Agreement or to delegate all or any portion of its obligations under this
Agreement, in each case with reference to all or any portion of the Purchased
Assets, to a subsidiary or affiliate of Buyer without Seller's consent. Any such
assignment shall not release Buyer from its obligations herein.
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8.11 Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date when actually delivered to an officer of a party or the
second business day after having deposited the notice or communication in the
United States mail, certified or registered mail, postage prepaid, return
receipt requested, or upon delivery by courier or facsimile with receipt of
confirmation, and addressed as follows, unless and until any of such parties
notifies the others in accordance with this section of a change of address:
If to Seller: PCA Design Incorporated
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx
President
Fax #: 000-000-0000
with a copy to: Xxxxx X. Xxxx, Esq.
c/o PCA Design Incorporated
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Fax #: 000-000-0000
If to Buyer: CCIR of California Corp.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx,
Vice President, Secretary and Treasurer
Fax #: 000-000-0000
with a copy to: P. Xxxxxx Xxxx, Esq.
Xxxxxxx & Xxxxx
Xxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Fax #: 000-000-0000
8.12 Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement. The Table of Contents
and Article and Section headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part of this Agreement.
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8.13 Income Tax Position. Neither Buyer nor Seller shall take a
position for income tax purposes which is inconsistent with this Agreement.
8.14 Taxes and Fees. Buyer shall pay all sales taxes of any kind which
arise as a result of the conveyance of the Purchased Assets to Buyer pursuant to
this Agreement. Buyer and Seller shall each pay fifty percent of all use or
other taxes and all escrow, documentary, stamp, recording and filing taxes or
fees which arise as a result of the conveyance of the Purchased Assets to Buyer
pursuant to this Agreement; provided, however, notwithstanding the above, that
Seller shall pay all income and gross receipts taxes.
8.15 Interpretation. Unless the context requires otherwise, all words
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular,
and all words in any gender shall extend to and include all genders.
8.16 Severability. If any provision, clause, or part of this Agreement,
or the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause, or
part under other circumstances, shall not be affected thereby.
8.17 No Reliance. Except for any assignees permitted by section 1.10 of
this Agreement: (a) no third party is entitled to rely on any of the
representations, warranties, and agreements of Buyer or Seller contained in this
Agreement; and (b) Buyer and Seller assume no liability to any third party
because of any such reliance.
8.18 Legal Proceedings. If a dispute arises between the parties
relating to this Agreement or any of the other agreements to be delivered
hereunder, the parties agree to use the following procedure prior to either
party pursuing other available remedies:
(a) A meeting shall be held promptly between the parties,
attended by individuals with decision-making authority regarding the dispute, to
attempt in good faith to negotiate a resolution of the dispute.
(b) If, within 30 days after such meeting, the parties have
not succeeded in negotiating a resolution of the dispute, they will jointly
appoint a mutually acceptable neutral person not affiliated with either of the
parties (the "neutral"), seeking assistance in such regard from the Center for
Public Resources if they have been unable to agree upon such appointment within
40 days from the initial meeting. The fees of the neutral shall be shared
equally by the parties.
(c) In consultation with the neutral, the parties will select
or devise an alternative dispute resolution procedure ("ADR") by which they will
attempt to resolve the dispute, and a time and place for the ADR to be held,
with the neutral making the decision as to
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the procedure, and/or place and time (but unless circumstances require
otherwise, not later than 60 days after selection of the neutral) if the parties
have been unable to agree on any of such matters within 20 days after initial
consultation with the neutral.
(d) The parties agree to participate in good faith in the ADR
to its conclusion as designated by the neutral. If the parties are not
successful in resolving the dispute through the ADR, then the parties may agree
to submit the matter to binding arbitration or a private adjudicated resolution
through the appropriate court.
(e) In the event legal proceedings through the courts are
commenced to enforce the parties' respective rights and obligations herein, the
prevailing party shall be entitled to reimbursement for its related costs and
expenses, including reasonable legal fees, incurred with respect to said legal
proceedings.
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IN WITNESS WHEREOF, the parties have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.
CCIR OF CALIFORNIA CORP.
By: /s/ Xxxxxxxxx X. XxXxxxx, III
------------------------------------------
Xxxxxxxxx X. XxXxxxx, III,
President
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxxx, Vice President,
Secretary and Treasurer
PCA DESIGN INCORPORATED
By: /s/ Xxxxxx X. Xxxx
------------------------------------------
Xxxxxx X. Xxxx,
Chief Executive Officer
By: /s/ Xxxxxx X. Xxxx
------------------------------------------
Xxxxxx X. Xxxx,
Secretary
