Exhibit 2.2
ASSET PURCHASE AGREEMENT
between
GEI ACQUISITION INC.
and
HIGH VOLTAGE ENGINEERING CORPORATION
Dated as of March 25, 1998
TABLE OF CONTENTS
Page
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ARTICLE I SALE AND PURCHASE OF THE ASSETS
1.1. Assets.................................................. 1
1.2. Excluded Asset.......................................... 3
ARTICLE II THE CLOSING
2.1. Place and Date.......................................... 4
2.2. Purchase Price.......................................... 4
2.3. Allocation of Purchase Price............................ 5
2.4. Assumption of Liabilities............................... 5
2.5. Excluded Liabilities.................................... 5
2.6. Consent of Third Parties................................ 6
2.7. The Purchase Price Adjustment........................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.1. Authorization, etc...................................... 8
3.2. No Conflicts, etc....................................... 8
3.3. Corporate Status........................................ 9
3.4. Financial Statements.................................... 9
3.5. Undisclosed Liabilities, etc............................ 9
3.6. Absence of Changes...................................... 10
3.7. Tax Matters............................................. 12
3.8. Assets; Operations of the Division...................... 13
3.9. Real Property; Personal Property........................ 13
3.10. Contracts............................................... 14
3.11. Intellectual Property................................... 16
3.12. Insurance............................................... 18
3.13. Litigation.............................................. 18
3.14. Compliance with Laws and Instruments; Consents;
Governmental Contracts.................................. 19
3.15. Environmental Matters................................... 20
3.16. Affiliate Transactions.................................. 21
3.17. Employees, Labor Matters, etc........................... 21
3.18. Employee Benefit Plans and Related Matters; ERISA;
Workers' Compensation................................... 22
3.19. Accounts Receivable..................................... 23
3.20. No Guaranties........................................... 23
3.21. Inventories............................................. 23
3.22. Customers; Sales Representatives........................ 23
3.23. Suppliers; Raw Materials................................ 24
3.24. Products................................................ 24
3.25. Absence of Certain Business Practices................... 25
3.26. Territorial Restrictions................................ 25
3.27. Brokers, Finders, etc................................... 25
3.28. No Other Warranties.................................... 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1. Representations and Warranties of the Buyer............. 26
4.2. Corporate Status; Authorization, etc.................... 26
4.3. No Conflicts, etc....................................... 26
4.4. Litigation.............................................. 27
4.5. Brokers, Finders, etc................................... 27
ARTICLE V COVENANTS OF SELLER
5.1. Conduct of Business..................................... 27
5.2. No Solicitation......................................... 28
5.3. Access and Information.................................. 28
5.4. Financial Statements.................................... 29
5.5. Public Announcements.................................... 29
5.6. Further Actions......................................... 29
5.7. Further Assurances...................................... 30
5.8. Liability for Transfer Taxes............................ 30
5.9. Certificates of Tax Authorities......................... 31
5.10. Use of Business Names and Marks......................... 31
5.11. Environmental Assessment................................ 31
5.12. Novation Agreements..................................... 31
5.13. Bank Accounts........................................... 31
5.14. Insurance............................................... 31
5.15. Phsy-Chem Agreement..................................... 32
5.16 No Excluded Technology.................................. 32
ARTICLE VI COVENANTS OF BUYER
6.1. Public Announcements.................................... 32
6.2. Further Actions......................................... 33
6.3. Further Assurances...................................... 33
6.4. Use of Business Names and Marks by the Buyer............ 33
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ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
7.1. HSR Act Notification.................................... 34
7.2. No Injunction, etc...................................... 34
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
8.1. Representations, Performance............................ 35
8.2. Consents................................................ 35
8.3. No Material Adverse Effect.............................. 35
8.4. Ancillary Agreements.................................... 35
8.5. Subsequent Monthly Financial Statements................. 35
8.6. Opinion of Counsel...................................... 36
8.7. Corporate Proceedings................................... 36
8.8. Transfer Documents...................................... 36
8.9. Environmental Assessment................................ 36
8.10. Consents and Estoppels.................................. 36
8.11. FIRPTA Certificate...................................... 37
8.12. Releases and Reassignments.............................. 37
8.13. Corporate Proceedings of Buyer.......................... 37
8.14. Non-Transferred Contracts............................... 37
8.15. Suppliers............................................... 37
8.16. GSA Contract............................................ 37
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
9.1. Representations, Performance, etc....................... 38
9.2. Assumption Agreement.................................... 38
9.3. Opinion of Counsel...................................... 38
9.4. HSR Approval............................................ 38
9.5. Ancillary Agreements.................................... 38
9.6. Environmental Assessment................................ 38
ARTICLE X EMPLOYEES AND EMPLOYEE BENEFIT PLANS
10.1. Employment of the Seller's Employees................... 39
10.2. Welfare and Fringe Benefit Plans....................... 40
10.3. Workers' Compensation.................................. 40
10.4. Employment Taxes....................................... 40
ARTICLE XI TERMINATION
11.1. Termination............................................ 41
11.2. Effect of Termination.................................. 42
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ARTICLE XII DEFINITIONS, MISCELLANEOUS
12.1. Definition of Certain Terms............................ 42
12.2. Indemnification........................................ 47
12.3. Survival of Representations and Warranties, etc........ 51
12.4. Expenses............................................... 51
12.5. Severability........................................... 52
12.6. Notices................................................ 52
12.7. Headings............................................... 53
12.8. Entire Agreement....................................... 53
12.9. Counterparts........................................... 53
12.10. Governing Law, etc.................................... 53
12.11. Binding Effect........................................ 53
12.12. Assignment............................................ 54
12.13. No Third Party Beneficiaries.......................... 54
12.14. Amendment; Waivers, etc............................... 54
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SCHEDULES
Schedule 1.2(c) Excluded Assets
Schedule 2.7(a) Agreed Accounting Principles
Schedule 3.3(b) Qualifications and Assumed Name Filings
Schedule 3.4(a) Division Financial Statements
Schedule 3.5 Undisclosed Liabilities
Schedule 3.6 Absence of Changes
Schedule 3.7(a) Taxes
Schedule 3.7(b) Taxes
Schedule 3.7(c) Taxes
Schedule 3.7(d) Taxes
Schedule 3.7(e) Taxes
Schedule 3.8(a) Xxxxxxx Controls Inventory
Schedule 3.9(b) Leases
Schedule 3.9(g) Personal Property
Schedule 3.10(a) Contracts
Schedule 3.10(b) Enforceability and Consents of Contracts
Schedule 3.10(c) Government Contracts
Schedule 3.11(a) Owned Intellectual Property
Schedule 3.11(b) Division Intellectual Property Not Owned
Schedule 3.11(c) Licensing and Similar Arrangements
Schedule 3.11(d) Infringement on Division Intellectual Property
Schedule 3.11(e) Intellectual Property Litigation
Schedule 3.11(f) Due Registration of Intellectual Property
Schedule 3.11(g) Use of Name and Xxxx
Schedule 3.11(h) Calendar Function
Schedule 3.12 Insurance
Schedule 3.13 Litigation
Schedule 3.14(a) Compliance
Schedule 3.14(b)(i) Consents
Schedule 3.14(b)(ii) Governmental Permits
Schedule 3.15(b) Environmental Permits
Schedule 3.16 Affiliate Transactions
Schedule 3.17 Employment and Labor Matters
Schedule 3.18(a) Employee Benefit Plans
Schedule 3.18(d) Division Employment Agreements
Schedule 3.21 Inventories
Schedule 3.22(a) Customers
Schedule 3.22(b) Sales Representatives
Schedule 3.23 Suppliers and Raw Materials
Schedule 3.24(a) Warranties
Schedule 3.24(b) Product Liability
Schedule 3.26 Territorial Restrictions
v
Schedule 4.3 Consents
Schedule 5.6(d) Non-Transferred Contracts
Schedule 8.5 Monthly Financial Statements
Schedule 10.1(a) Bonus Payments
vi
EXHIBITS
EXHIBIT A Form of Assumption Agreement
EXHIBIT B Form of Seller Non-Competition Agreement
vii
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of March 25, 1998, between GEI
Acquisition Inc., a Delaware corporation (the "Buyer"),and High Voltage
Engineering Corporation, a Massachusetts corporation (the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller is in the business of, among other things,
designing, developing, assembling, manufacturing and selling relative humidity
measurement instruments and sensors, as well as humidity calibration instruments
in the United States through General Eastern Instruments, an unincorporated
division of the Seller (the "Division"); and
WHEREAS, the Buyer wishes to purchase or acquire from the Seller, and
the Seller wishes to sell, assign and transfer to the Buyer, all of the assets
and properties primarily relating to or used or held for use in connection with,
or necessary for the conduct of the business and operations of the Division as
currently conducted by the Seller , and the Buyer has agreed to assume the
Assumed Liabilities, all for the purchase price and upon the terms and subject
to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE ASSETS
1.1 Assets. Subject to and upon the terms and conditions set forth in
this Agreement, at the Closing (as defined in Section 2.1), the Seller will
sell, transfer, convey, assign and deliver to the Buyer, and the Buyer will
purchase or acquire from the Seller, all right, title and interest of the Seller
in and to the properties, assets and rights of every nature, kind and
description, tangible and intangible (including goodwill), whether real,
personal or mixed, whether accrued, contingent or otherwise and whether now
existing or hereinafter acquired (other than the Excluded Assets (as defined in
Section 1.2)) primarily relating to or used or held for use in connection with,
or necessary for the conduct of the business and operations of the Division as
currently conducted by the Seller as the same may exist on the Closing Date
(collectively, the "Assets"), including, without limitation, all those items in
the following categories that conform to the definition of the term "Assets":
(a) all machinery, equipment, computer hardware and peripherals,
furniture, furnishings, automobiles, trucks, vehicles, tools, dies, molds and
parts and similar property (including, but not limited to, any of the foregoing
purchased subject to any conditional
sales or title retention agreement in favor of any other Person (as
such term and any other term used herein without definition is defined in
Section 12.1));
(b) all inventories of raw materials, work in process, finished
products, goods, spare parts, replacement and component parts, and office and
other supplies (collectively, the "Inventories"), including Inventories held at
any location controlled by the Seller and Inventories previously purchased and
in transit to the Seller at such locations;
(c) all rights in and to products sold or leased (including, but not
limited to, products hereafter returned or repossessed and unpaid sellers'
rights of rescission, replevin, reclamation and rights to stoppage in transit);
(d) all rights (including, but not limited to, any and all Intellectual
Property ights) in and to the products sold or leased and in and to any products
or other Intellectual Property rights under research or development prior to or
on the Closing Date;
(e) all of the rights of the Seller under all Contracts, including,
without limitation, any right to receive payment for products sold or services
rendered, and to receive goods and services, pursuant to such Contracts and to
assert claims and take other rightful actions in respect of breaches, defaults
and other violations of such Contracts;
(f) all of the rights of the Seller under all Leases (including, but
not limited to, credits and reimbursements for leasehold improvements pursuant
to the Lease set forth on Schedule 3.9(b);
(e) all credits, prepaid expenses, deferred charges, advance payments,
security deposits and prepaid items;
(f) all notes and accounts receivable held by the Seller and all notes,
bonds and other evidences of indebtedness of and rights to receive payments from
any Person held by the Seller;
(g) all Intellectual Property and all rights thereunder or in respect
thereof primarily relating to or used or held for use in connection with,
necessary for the conduct of the business or operations of the Division as
currently conducted by the Seller, including, but not limited to, rights to xxx
for and remedies against past, present and future infringements thereof, and
rights of priority and protection of interests therein under the laws of any
jurisdiction worldwide and all tangible embodiments thereof (together with all
Intellectual Property rights included in the other clauses of this Section 1.1,
the "Division Intellectual Property");
(h) all books, records, manuals and other materials (in any form or
medium), including, without limitation, all records and materials maintained at
the headquarters of the Seller or the offices of any of its Affiliates,
advertising matter, catalogues, price lists,
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correspondence, mailing lists, lists of customers, distribution lists,
photographs, production data, sales and promotional materials and records,
purchasing materials and records, personnel records, manufacturing and quality
control records and procedures, blueprints, research and development files,
records, data and laboratory books, Intellectual Property disclosures, media
materials and plates, accounting records, sales order files and litigation
files;
(i) to the extent their transfer is permitted by law, all governmental
approvals or consents, including all applications therefor;
(h) all licenses, permits, approvals and qualifications
relating to any real property issued to the Seller by any
governmental authority or agency;
(j) all rights to causes of action, lawsuits, judgments, claims and
demands of any nature available to or being pursued by the Seller with respect
to the business or operations of the Division or the ownership, use, function or
value of any Asset, whether arising by way of counterclaim or otherwise;
(k) all guarantees, warranties, indemnities and similar rights in favor
of the Seller with respect to any Asset; and
(l) all rights in favor of the Seller with respect to any employment,
consulting, confidentiality, non-competition and retention agreements (the
"Division Employment Agreements").
Subject to the terms and conditions hereof, at the Closing, the Assets
shall be transferred or otherwise conveyed to the Buyer free and clear of all
liabilities, obligations, liens and encumbrances excepting only Assumed
Liabilities and Permitted Liens.
1.2 Excluded Assets. The Seller will retain and not transfer, and the
Buyer will not purchase or acquire, the following assets, notwithstanding use by
the Division (collectively, the "Excluded Assets"):
all insurance policies and the rights to claims
thereunder of the Seller;
all books and records pertaining to both the Seller and the Division
(provided, that the Seller will furnish copies of portions of such books and
records relating to the Division) and all books and records the Seller is
required by law to retain;
any Contracts of the Seller relating to the business or
operations of the Division not expressly assumed by the Buyer
as set forth on Schedule 1.2(c);
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the name and xxxx "High Voltage Engineering Corporation", (ii) the
name and xxxx "High Voltage Engineering", in whole or in part and (iii) any name
or xxxx derived from or including any of the foregoing;
all cash and cash equivalents; and
all personnel files of any employee of the Seller
employed in the business or operations of the Division who is
not a Transferred Employee.
ARTICLE II
THE CLOSING
2.1 Place and Date. The closing of the sale and purchase of the Assets
(the "Closing") shall take place at 10:00 A.M. local time on April 6, 1998 at
the offices of Xxxxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000-0000. In the event that the conditions set forth in Sections 7.1, 8.2 and
8.10 have not been satisfied as of such date, the Closing shall take place
within two business days after the date on which such conditions have been
satisfied or waived by the relevant party, or such other time and place upon
which the parties may agree. The day on which the Closing actually occurs is
herein sometimes referred to as the "Closing Date".
2.2 Purchase Price. On the terms and subject to the conditions set
forth in this Agreement, the Buyer agrees (a) to pay or cause to be paid to the
Seller an aggregate amount equal to the sum of (i) $18,000,000 (the "Initial
Purchase Price"), plus (ii) $3,000,000 (the "Seller Non- Compete Consideration")
in consideration of the Seller Non- Competition Agreement (as defined in Section
8.4) and (b) to assume the Assumed Liabilities as provided in Section 2.4. The
following portions of the Initial Purchase Price and the Seller Non-Compete
Consideration shall be payable, as follows:
(a) At the Closing, $20,150,000 will be wire transferred to such bank
account or accounts as specified in written instructions of the Seller, given to
the Buyer at least five days prior to the Closing; and
(b) At the Closing, $600,000 shall be deposited by the Buyer in escrow
for the satisfaction of the Seller's obligations under Section 12.2 and $250,000
(the "Purchase Price Escrow Deposit") shall be deposited by the Buyer in escrow
for satisfaction of the Seller's obligations under Section 2.7, in each case
pursuant to the Escrow Agreement (the "Escrow Agreement"), in substance and form
reasonably satisfactory to the Buyer and the Seller.
2.3 Allocation of Purchase Price. The parties agree to allocate the
aggregate of the Initial Purchase Price (as adjusted pursuant to Section 2.7)
and the Assumed Liabilities (as defined in Section 2.4) among the Assets, in
accordance with an allocation schedule to be agreed to by the Buyer and the
Seller no later than the earlier of (i) 30 days after the
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determination of the Final Net Worth pursuant to Section 2.7 or (ii) 30 days
before the date by which either the Buyer or the Seller is required to file a
Tax Return which includes the purchase and sale contemplated hereby. Such
allocation schedule shall be prepared in accordance with section 1060 of the
Code. In connection with the determination of such allocation schedule, the
parties shall cooperate with each other and provide such information as either
of them shall reasonably request. The parties will each report the federal,
state and local and other Tax consequences of the purchase and sale contemplated
hereby (including the filing of Internal Revenue Service Form 8594) in a manner
consistent with such allocation schedules.
2.4. Assumption of Liabilities. Subject to the terms and conditions set
forth herein, at the Closing the Buyer shall assume and agree to pay, honor and
discharge when due all of the following liabilities relating to the Assets, to
the extent such liabilities exist at or arise on or after the Closing Date
(collectively, the "Assumed Liabilities"):
(i) trade accounts payable and accrued expenses reflected on the
Closing Balance Sheet incurred in the ordinary course of business consistent
with past practices, outstanding as of the Closing Date;
(ii) all capital leases and operating leases set forth on Schedules
3.9(b) and 3.10(a), but not including any obligation or liability for any breach
thereof occurring prior to or on the Closing Date;
(iii) any and all liabilities, obligations and commitments arising out
of the agreements, contracts and commitments set forth on the Schedule 3.10(a),
but not including any obligation or liability for any breach thereof occurring
prior to or on the Closing Date unless any such breach occurring on the Closing
Date is solely attributable to
any action of the Buyer and is in no way attributable to any
action of the Seller; and
(iv) liabilities in respect of Transferred Employees to the extent
specifically assumed by the Buyer pursuant to Article X.
Notwithstanding the foregoing, the Assumed Liabilities shall not
include any liability (x) with respect to Taxes or (y) accrued pursuant to Item
1 of Schedule 2.7(a), whether or not any such liability is reflected on the
Closing Balance Sheet.
(b) At the Closing, the Buyer shall assume the Assumed Liabilities
relating to the business and operations of the Division by executing and
delivering to the Seller an Assumption Agreement, substantially in the form
attached hereto as Exhibit A (the "Assumption Agreement").
2.5 Excluded Liabilities. Notwithstanding the provisions of Section 2.4
or any other provision hereof or any schedule or exhibit hereto and regardless
of any disclosure to the Buyer, the Buyer shall not assume any liabilities,
obligations or commitments of the Seller
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of any nature whatsoever, whether known or unknown, contingent or otherwise,
other than the Assumed Liabilities, including, but not limited to, any such
liabilities, obligations or commitments to any Affiliates of the Seller or any
other third party (the "Excluded Liabilities").
2.6 Consent of Third Parties. Notwithstanding anything to the contrary
in this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any instrument, contract, lease, permit or other agreement or
arrangement or any claim, right or benefit arising thereunder or resulting
therefrom if an assignment or transfer or an attempt to make such an assignment
or transfer without the consent of a third party would constitute a breach or
violation thereof; and any transfer or assignment to the Buyer by the Seller of
any interest under any such instrument, contract, lease, permit or other
agreement or arrangement that requires the consent of a third party shall be
made subject to such consent or approval being obtained. In the event any such
consent or approval is not obtained on or prior to the Closing Date, the Seller
shall continue to use all reasonable efforts to obtain any such consent or
approval after the Closing Date until such time as such consent or approval has
been obtained, and the Seller will cooperate with the Buyer in any lawful and
economically feasible arrangement to provide that the Buyer shall receive the
interest of the Seller in the benefits under any such instrument, contract,
lease or permit or other agreement or arrangement, including performance by the
Seller, as agent, if economically feasible, provided that the Buyer shall
undertake to pay or satisfy the corresponding liabilities for the enjoyment of
such benefit to the extent the Buyer would have been responsible therefor
hereunder if such consent or approval had been obtained. The Seller shall pay
and discharge, and shall indemnify and hold the Buyer harmless from and against,
any and all out-of-pocket costs of seeking to obtain or obtaining any such
consent or approval after the Closing Da te. Nothing in this Section 2.6 shall
be deemed a waiver by the Buyer of its right to have received on or before the
Closing an effective assignment of all of the Assets nor shall this Section 2.6
be deemed to constitute an agreement to exclude from the Assets any assets
described under Section 1.1.
2.7 The Purchase Price Adjustment. As soon as practicable (but in no
event later than 60 days) following the Closing Date, the Buyer shall prepare
and deliver to the Seller a balance sheet for the Division as of the Closing
Date (the "Closing Balance Sheet"), which shall (i) reflect Sections 1.1, 1.2,
2.4 and 2.5 and (ii) be prepared, except as set forth in Schedule 2.7(a),
consistently with (x) the Division Balance Sheet to the extent such Division
Balance Sheet has been prepared in accordance with GAAP and (y) GAAP to the
extent such Division Balance Sheet has not been prepared in accordance with
GAAP.
(b) Following the Closing Date, upon reasonable notice and during
normal business hours, the Seller shall afford the Buyer and its Affiliates and
their respective employees and advisors access to all books and records relating
to the Division and make available the assistance of any employees of the Seller
related to the Division, in each case as is necessary to enable the Buyer to
prepare the Closing Balance Sheet.
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(c) The Seller shall have a period of 30 days to review the Closing
Balance Sheet following delivery thereof by the Buyer. During such period, the
Buyer shall afford the Seller and its Affiliates and their respective employees
and advisors access to any of its books, records and work papers relating
exclusively to the Closing Balance Sheet. The Closing Balance Sheet will become
final and binding upon the parties on the 31st day following delivery thereof,
unless the Seller delivers a written notice (the "Seller's Notice") to the Buyer
prior to such date which specifies in reasonable detail the amount by which and
the reasons why it thinks particular line items in the Closing Balance Sheet
either contain mathematical errors or were not prepared in accordance with the
methodology specified in Section 2.7(a). The Seller's Notice may not specify any
other basis for disagreement with the Closing Balance Sheet other than as set
forth in the preceding sentence.
(d) If the Seller delivers a Seller's Notice in accordance with Section
2.7(c), then the parties shall, during the 30-day period beginning on the
Buyer's receipt of the Seller's Notice, seek in good faith to resolve in writing
any differences which they may have with respect to the matters specified in the
Seller's Notice. If the Seller and the Buyer are unable to resolve all of the
Seller's objections within such 30-day period, then such unresolved objections
shall be submitted to the New York office of Ernst & Young LLP (the "Third Party
Accountants") for review and final and binding resolution of any and all matters
which remain in dispute and which were properly included in the Seller's Notice.
The Seller and the Buyer shall use reasonable efforts to cause the Third Party
Accountants to render a decision resolving the matters in dispute within 30 days
following the final submission of such matter to the Third Party Accountants for
decision following such briefing and other procedures as the Third Party
Accountants shall establish. The Seller and the Buyer agree that judgment may be
entered upon the determination of the Third Party Accountants in any court
having jurisdiction over the party against which such determination is to be
enforced. The fees, costs and expenses of the Third Party Accountants (i) shall
be borne by the Seller in the proportion that the aggregate dollar amount of
such disputed items so submitted that are unsuccessfully disputed by the Seller
(as finally determined by the Third Party Accountants) bears to the aggregate
dollar amount of such items so submitted and (ii) shall be borne by the Buyer in
the proportion that the aggregate dollar amount of such disputed items so
submitted that are successfully disputed by the Seller (as finally determined by
the Third Party Accountants) bears to the aggregate dollar amount of such items
so submitted.
(e) Within 10 days after (x) the Closing Balance Sheet becomes final
pursuant to Section 2.7(c) or (y) the parties reach agreement pursuant to
Section 2.7(d) or (z) the Third Party Accountants render their decision pursuant
to Section 2.7(d), a final adjustment to the Purchase Price will be made as
follows and the Buyer and the Seller shall deliver joint instructions to the
Escrow Agent (as defined in the Purchase Price Escrow Agreement) for the
disposition of the Purchase Price Escrow Amount in accordance therewith:
(i) If the net worth of the Division as finally determined
(the "Final Net Worth") is less than $2,652,000, then the Initial
Purchase Price shall be decreased by the difference between $2,652,000
and the Final Net Worth and the Buyer shall be
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entitled to receive such difference (the "Buyer Adjustment"). The Buyer
shall receive from the Escrow Account, in accordance with the Escrow
Agreement, an amount equal to the Buyer Adjustment. If the Purchase
Price Escrow Deposit is insufficient to pay the entire Buyer
Adjustment, the Seller shall promptly pay to the Buyer, in cash, an
amount equal to the difference between the Buyer Adjustment and the
Purchase Price Escrow Deposit.
(ii) If the Final Net Worth exceeds $2,652,000, then the
Purchase Price shall be increased by such excess and the Buyer shall
promptly pay such excess to the Seller in cash and the Purchase Price
Escrow Deposit shall be returned to the Seller in accordance with the
Escrow Agreement, provided that notwithstanding the foregoing or
anything to the contrary in this Agreement the amount of such excess
payable by the Buyer pursuant to this subsection (ii) shall in no event
be more than $1,000,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller represents and warrants to the Buyer as follows, as of the
date hereof and as of the Closing Date:
3.1 Authorization, etc. The Seller has full corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Agreements, the performance of the Seller's
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all requisite
corporate action of the Seller. The Seller has duly executed and delivered this
Agreement and on the Closing Date will have duly executed and delivered the
Ancillary Agreements. This Agreement constitutes, and each such Ancillary
Agreement when so executed and delivered will constitute, the legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its respective terms.
3.2 No Conflicts, etc. The execution, delivery and performance of this
Agreement and the Ancillary Agreements by the Seller, and the consummation of
the transactions contemplated hereby and thereby, do not and will not conflict
with, contravene, result in a violation or breach of or default under (with or
without the giving of notice or the lapse of time or both), create in any other
Person a right or claim of termination, amendment, or require modification,
acceleration or cancellation of, or result in the creation of any Lien (or any
obligation to create any Lien) upon any of the properties or assets of the
Seller under, (a) any law applicable to the Seller or its properties or assets,
(b) any provision of any of the Organizational Documents of the Seller or (c)
any Contract to which the Seller is a party or
8
by which any of its properties or assets may be bound, except, in the case of
this clause (c), for violations and defaults that, individually and in the
aggregate, will not have or result in a Material Adverse Effect.
3.3 Corporate Status. (a) Organization. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of
Massachusetts, and has full corporate power and authority to conduct the
business of the Division and to own or lease and to operate the Assets as and in
the places where the business of the Division is conducted and such Assets are
owned, leased or operated.
(b) Qualification; Assumed Name Filings. The Seller is duly qualified
or licensed to do business and is in good standing and, by the Closing Date will
have made, assumed name filings in each of the jurisdictions specified in
Schedule 3.3(b), which are the only jurisdictions where the nature of its
activities conducted in connection with the business or operations of the
Division or the character of the properties owned, based or operated by it in
connection with the business or operations of the Division require such
qualification or licensing and filing.
(c) Organizational Documents. The Seller has delivered to the Buyer
complete and correct copies of the Organizational Documents of the Seller, as
amended, modified or waived through and in effect on the date hereof. Each of
the Organizational Documents of the Seller is in full force and effect.
3.4 Financial Statements. Schedule 3.4(a) sets forth complete and
correct copies of the Division Financial Statements. The Division Financial
Statements are complete and correct in all respects, have been (i) derived from
the accounting books and records of the Division, (ii) prepared in accordance
with GAAP applied on a consistent basis throughout the periods presented in the
Division Financial Statements subject only to normal recurring year-end
adjustments, (iii) otherwise prepared in a manner consistent with the Audited
Financial Statements and (iv) included in the Audited Financial Statements
without material adjustments thereto.
(b) The Division Balance Sheet presents fairly the financial position
of the Division as at the date thereof, and the statement of income included in
such Division Financial Statements presents fairly the results of operations of
the Division for the period indicated.
3.5 Undisclosed Liabilities, etc. The Seller has no liabilities or
obligations absolute, accrued, contingent or otherwise and whether due or to
become due, arising out of or related to the business or operations of the
Division except (a) as set forth in Schedule 3.5, (b) as and to the extent
disclosed or reserved against in the Division Balance Sheet or specifically
disclosed in the notes thereto and (c) for liabilities and obligations that (i)
are incurred after the date of the Division Balance Sheet in the ordinary course
of business and are not prohibited by this Agreement and (ii) individually and
in the aggregate, will not be material to the business or operations of the
Division or have or result in a Material Adverse Effect.
9
3.6 Absence of Changes. Since the date of the Division Balance Sheet,
there has not occurred or come to exist any Material Adverse Effect or any
event, occurrence, fact,
condition, change, development or effect that, individually or in the aggregate,
will have orresult in a Material Adverse Effect, the Seller has conducted the
business and operations of the Division only in the ordinary course and has not,
on behalf of, in connection with or relating to the business or operations of
the Division or the Assets:
(a) mortgaged, pledged or otherwise subjected to any Lien, any
Real Property or other properties or assets, tangible or intangible,
except for Permitted Liens in the ordinary course of business;
(b) forgiven, cancelled, compromised, waived or released any
debts, claims or rights, except for debts, claims and rights against
Persons, forgiven, cancelled, compromised, waived or released in the
ordinary course of business;
(c) discharged or satisfied any Lien, other than those then
required to be discharged or satisfied, or paid any obligation or
liability, absolute, accrued, contingent or otherwise, whether due or
to become due, other than current liabilities shown on the Division
Balance Sheet and current liabilities incurred since the date thereof
in the ordinary course of business;
(d) except as set forth in Schedule 3.6(d), modified any
existing Contract or entered into (x) any agreement, commitment or
other transaction, other than agreements entered into in the ordinary
course of business and involving an expenditure of less than $100,000
in each case, or (y) any agreement or commitment that, pursuant to its
terms, is not cancelable without penalty on less than 30 days' notice;
(e) received any notice of termination of any existing
Contract, lease or other agreement which, in any case or in the
aggregate, will have or result in a Material Adverse Effect;
(f) except as set forth in Schedule 3.6(f), paid any bonus to
any officer, employee, sales representative, agent or consultant, or
granted to any officer, director, employee, sales representative, agent
or consultant any other increase in compensation in any form;
(g) entered into, adopted or amended any employment,
consulting, retention, change-in-control, collective bargaining, bonus
or other incentive compensation, profit-sharing, health or other
welfare, stock option or other equity, pension, retirement, vacation,
severance, deferred compensation or other employment, compensation or
benefit plan, policy, agreement, trust, fund or arrangement for the
10
benefit of any officer, director, employee, sales representative,
agent, consultant or Affiliate (whether or not legally binding);
(h) except as set forth in Schedule 3.6(h), suffered any
damage, destruction or loss (whether or not covered by insurance), or
any strike or other employment-related problem, or any change in
relations with or any loss of a supplier, customer or employee, that,
individually or in the aggregate, will have or result in a Material
Adverse Effect;
(i) amended any of its Organizational Documents;
(j) changed in any respect its accounting practices,
policies or principles;
(k) made any capital expenditures or capital additions or
betterments in excess of $50,000 individually, or $150,000 in the
aggregate;
(l) except as set forth in Schedule 3.6(l), incurred, assumed,
guaranteed or otherwise become directly or indirectly liable with
respect to any liability or obligation in excess of $20,000 at any one
time outstanding (whether absolute, accrued, contingent or otherwise
and whether direct or indirect, or as guarantor or otherwise with
respect to any liability or obligation of any other Person);
(m) transferred or granted any rights or licenses under, or
entered into any settlement regarding the infringement of, Intellectual
Property or modified any existing rights with respect thereto;
(n) sold, transferred, leased to others or otherwise disposed
of any of the Assets with a value in excess of $25,000 in each case or
$100,000 in the aggregate, other than inventory in the ordinary course
of business;
(o) instituted, settled or agreed to settle any Litigation,
before any court or governmental body relating to the Division or the
Assets;
(p) failed to replenish the Division's inventories and
supplies in a normal and customary manner consistent with its prior
practice and prudent business practices prevailing in the industry, or
made any purchase commitment in excess of the normal, ordinary and
usual requirements of its business or at any price in excess of the
then current market price or upon terms and conditions more onerous
than those usual and customary in the industry;
(o) suffered any change, event or condition which, in any case
or in the aggregate, will have or result in a Material Adverse Effect,
including, without limitation, any change in the Division's revenues,
costs, backlog or relations with its employees, agents, customers or
suppliers;
11
(p) entered into any transaction, contract or commitment other
than in the ordinary course of business 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 thereby;
(s) made any material changes in policies or practices
relating to selling practices, returns, discounts or other terms of
sale or accounting therefor or in policies of employment; or
(t) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
3.7. TAX MATTERS. Except as set forth on Schedule 3.7(a), (i) all Tax
Returns relating to the Seller or the business or operations of the Division or
the Assets that were required to be filed on or before the Closing Date have
been duly and timely filed and are correct and complete in all material
respects, (ii) all Taxes shown as owing on such Tax Returns have been paid and
(iii) the Seller is not currently the beneficiary of any extension of time
within which to file any Tax Return.
(b) Except as set forth on Schedule 3.7(b), (i) all Taxes that are or
may become payable by the Seller or chargeable as a Lien upon the Assets as of
the Closing Date have been, or will as of the Closing Date be, duly and timely
paid and (ii) the Seller has duly and timely withheld all Taxes required to be
withheld in connection with the business or operations of the Division or the
Assets, and such withheld Taxes have been either duly and timely paid to the
proper governmental authorities or properly set aside in accounts for such
purpose.
(c) Except as set forth on Schedule 3.7(c), there has been no claim or
issue (other than a claim or issue that has been finally settled) concerning any
liability for Taxes of the Seller asserted, raised or threatened by any taxing
authority and, to the knowledge of the Seller and its Affiliates, no
circumstances exist to form the basis for such a claim or issue.
(d) Schedule 3.7(d) lists all Income Tax Returns that have been filed
with respect to the Seller for taxable periods ended on or after January 1,
1990, and that have not yet been audited or are currently the subject of audit.
(e) Except as set forth on Schedule 3.7(e), the Seller has not (i)
waived any statute of limitations, (ii) agreed to any extension of the period
for assessment or collection or (iii) executed or filed any power of attorney
with respect to Taxes, which waiver, agreement or power of attorney is currently
in force.
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3.8 ASSETS; OPERATIONS OF THE DIVISION. ASSETS. The Assets, taken as a
whole, constitute all of the properties and assets primarily relating to or used
or held for use in connection with, necessary for the conduct of or otherwise
material to, the Division during the past twelve months (except (i) inventories
sold, (ii) cash disposed of, (iii) accounts receivable collected, (iv) prepaid
expenses realized, (v) contracts fully performed, (vi) properties or assets
replaced by equivalent or superior properties or assets, in each case in the
ordinary course of business, (vii) employees not hired by the Buyer, and (viii)
the Excluded Assets). The Assets comprise all assets the use of which is
necessary for the continued conduct of the Division by the Buyer as currently
conducted by the Seller. Except for Excluded Assets, there are no assets or
properties used in the business or operations of the Division and owned by any
Person (other than the Seller) other than assets or properties leased or
licensed under agreements which shall be assigned to the Buyer in accordance
with Section 8.8. The Seller owns, or otherwise has sufficient and legally
enforceable rights to use the Assets. The Seller has good, valid and marketable
title to, or in the case of leased property has good and valid leasehold
interests in, all Assets that are material to the business or operations of the
Division, including, but not limited to, all such Assets reflected in the
Division Balance Sheet or acquired since the date thereof (except as may be
disposed of in the ordinary course of business after the date hereof and in
accordance with this Agreement), in each case free and clear of any Lien, except
Permitted Liens. The Seller has maintained all tangible Assets that are material
to such business or operations in good repair, working order and operating
condition subject only to ordinary wear and tear and maintenance expenditures
consistent with prior practice, provided that no representation is made with
respect to the condition of the equipment recently assigned to the Division by
Xxxxxxx Controls, Inc. set forth on Schedule 3.8(a).
(b) OPERATION OF THE DIVISION. The Seller has conducted the business
and operations of the Division only through the Division and not through any
other divisions or any direct or indirect subsidiary or affiliate of the Seller.
No part of the business or operations of the Division is operated by the Seller
through any entity other than the Seller.
3.9 REAL PROPERTY; PERSONAL PROPERTY. OWNED REAL PROPERTY. There is no
real property owned by the Seller or any of its Affiliates primarily relating to
or used or held for use in connection with, necessary for the conduct of the
business or operations of the Division as currently conducted.
(b) LEASES. Schedule 3.9(b) contains a complete and correct list of all
Leases setting forth the address, landlord and tenant for each Lease. The Seller
has delivered to the Buyer correct and complete copies of the Leases. Each Lease
is legal, valid, binding, in full force and effect and enforceable against the
Seller, and to the knowledge of the Seller, against the landlord, party thereto,
except to the extent that any failure to be so enforceable, individually and in
the aggregate, will not have or result in a Material Adverse Effect. The Seller
is not, and, to the knowledge of the Seller, no other party is, in default,
13
violation or breach in any respect under any Lease, and no event has occurred
and is continuing that constitutes or, with notice or the passage of time or
both, would constitute a default, violation or breach in any respect under any
Lease, except as would not have a Material Adverse Effect. Each Lease grants the
tenant under the Lease the exclusive right to use and occupy the premises and
rights demised and intended to be demised thereunder. The Seller has good and
valid title to the leasehold estate under its respective Leases free and clear
of any Liens other than Permitted Liens. The Seller enjoys peaceful and
undisturbed possession under its respective Leases for the Leased Real Property.
(c) LEASEHOLD INTERESTS, ETC. The Leased Real Property constitutes all
the leasehold interests in real property held by the Seller in connection with
the business or operation of the Division, except for any such leasehold
interest acquired or disposed of in the ordinary course of business after the
date hereof and in accordance with this Agreement, and constitutes all of the
leasehold interests in real property relating to, used or held for use in
connection with, necessary for the conduct of, or otherwise material to, the
Division.
(d) NO PROCEEDINGS. There are no proceedings in eminent domain or other
similar proceedings pending or, to the knowledge of the Seller, threatened
affecting any portion of the Leased Real Property. There exists no writ,
injunction, decree, order or judgment outstanding, nor any litigation, pending
or threatened, relating to the ownership, lease, use, occupancy or operation by
any Person of any Leased Real Property.
(e) CURRENT USE. The use and operation of the Leased Real Property by
the Seller does not violate in any material respect any instrument of record or
agreement affecting the Leased Real Property. There is no violation of any
covenant, condition, restriction, easement or agreement or order of any
governmental authority or agency that affects the Leased Real Property or the
use or occupancy thereof. No material damage or destruction has occurred with
respect to any of the Leased Real Property that, individually or in the
aggregate, will have or result in a Material Adverse Effect.
(f) REAL PROPERTY TAXES. Each parcel included in the Leased Real
Property is assessed for real estate tax purposes as a wholly independent tax
lot, separate from any adjoining land or improvements not constituting a part of
that parcel.
(g) PERSONAL PROPERTY. Schedule 3.9(g) contains a complete and correct
list of all personal property. The Seller has good, valid and marketable title
to the personal property, free and clear of all Liens, other than Permitted
Liens.
3.10 CONTRACTS. DISCLOSURE. Schedule 3.10(a) contains a complete and
correct list, as of the date hereof, of all Contracts, including those Contracts
in respect of advances by customers of the Division, but excluding (i) Contracts
(other than employment contracts) entered into in the ordinary course involving
aggregate payment obligations of less than $10,000 over the term of each such
Contract and (ii) sales and purchase orders for goods or services issued in the
ordinary course in each case involving aggregate payment obligations of less
than $50,000. The Seller has delivered to the Buyer complete and correct copies
of all written Contracts together with all amendments thereto, and accurate
descriptions of all
14
material terms of all oral Contracts, set forth or required to be set forth in
Schedule 3.10(a). None of (x) the International Representative and
Distributorship Agreements with each of Elcowa S.A., Able, X.X. Industrial Inst.
Ply Ltd, Quiminel, Instrunova ATS, Electroa-Xxxxxxx, Aries Ingenieria Y
Sistemas, S.A., Dycor Industrial Research, Xxxxxx Engineering, Shinyei
Corporation of America, F.P. Israel Sales & Service Ltd., Segatec SDN.BHD., and
Measuretronics Ltd. or (y) the Representative Agreements identified on Schedule
3.10(a) as U.S. representative agreements contain any terms and conditions that
are materially different from those contained in the form of representative
agreement set forth in Schedule 3.10(a).
(b) ENFORCEABILITY. (i) All Contracts are legal, valid, binding, in
full force and effect and enforceable against each party thereto, except to the
extent that any failure to be enforceable, individually and in the aggregate,
will not have or result in a Material Adverse Effect. Except as set forth in
Schedule 3.10(b), there does not exist under any Contract any violation, breach
or event of default, or event or condition that, after notice or lapse of time
or both, would constitute a violation, breach or event of default thereunder, on
the part of the Seller or, to the knowledge of the Seller, any other Person.
Except as set forth in Schedule 3.10(b), no consent by any third party is
required under any Contract as a result of or in connection with the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements.
(ii) The Seller has no outstanding powers of attorney relating to the
Division, except powers of attorney relating to representation before
governmental agencies or given in connection with qualification to conduct
business in another jurisdiction.
(c) GOVERNMENT CONTRACTS. Schedule 3.10(c) sets forth all Contracts
with any governmental authority or agency and the Seller has furnished correct
and complete copies of all such Contracts and all modifications, amendments and
waivers thereto to the Buyer (including correct and complete written
descriptions of all oral government contracts and any oral modifications,
waivers, amendments and supplements to any of them). The Seller has not received
notice of any material default under or notice of any material violation of the
terms of any Contract with any governmental authority or agency relating to the
Division, either directly or as a subcontractor, consultant or otherwise. The
Seller is not participating in any investigation by any governmental authority
or agency relating to the Contracts, xxxxxxxx, claims or business practices of
the Division that could lead to criminal or civil penalties, and, to the
knowledge of the Seller, the Division is not the subject of such an
investigation. The Seller has not been and is not debarred or suspended by any
governmental authority or agency from bidding for or obtaining any governmental
contract, and no such process is pending or to the knowledge of the Seller
threatened, which could result in the debarment or suspension of the Seller. No
material portion of the business or operations of the Division is dependent upon
the Seller's status as a "small company" under the Federal Acquisition
Regulations. Set forth on Schedule 3.10(c) is a list of all approvals,
clearances, permits, licenses, classifications and other authorizations the
Seller has received in order to fulfill its obligations under the Contracts
listed on Schedule 3.10(c).
15
3.11. INTELLECTUAL PROPERTY. DISCLOSURE. Schedule 3.11(a) sets forth a
complete and correct list of all Intellectual Property that is owned by the
Seller and primarily related to, used or held for use in connection with, or
necessary for the conduct of, the business or operations of the Division as
currently conducted by the Seller (the "Owned Intellectual Property"), except
for any Owned Intellectual Property that consists of (i) inventions, trade
secrets, processes, formulae, know-how, designs, research and development,
ideas, engineering notebooks, and confidential business and technical
information and (ii) Intellectual Property that is not registered or subject to
application for registration and that is not material to the business or
operations of the Division.
(b) TITLE. All of the Division Intellectual Property (as defined in
Section 1.1(h)) is owned by the Seller, except as set forth in Schedule 3.11(b).
The Division Intellectual Property is valid, in full force and effect and Seller
has not received any notice or claim that any of the Division Intellectual
Property is invalid or unenforceable by it. The Seller has the exclusive right
to use the Division Intellectual Property for the life thereof in connection
with the business and operations of the Division free from any Liens (except for
Permitted Liens incurred in the ordinary course of business) and free from any
requirement of any past, present or future royalty payments, license fees,
charges or other payments, or conditions or restrictions whatsoever. The
Division Intellectual Property comprises all of the Intellectual Property
necessary for the Buyer to conduct and operate the Division as now being
operated by the Seller. Immediately after the Closing, the Buyer will own all of
the Owned Intellectual Property and will have a right to use all other Division
Intellectual Property, in each case free from Liens (except for Permitted Liens
incurred in the ordinary course of business) and on the same terms and
conditions as in effect prior to the Closing.
(c) LICENSING AND SIMILAR ARRANGEMENTS. Schedule 3.11(c) sets forth all
written or oral agreements, arrangements and applicable laws (i) pursuant to
which the Seller has licensed Division Intellectual Property to, or the use of
Division Intellectual Property is otherwise permitted (through non- assertion,
settlement or similar agreements or otherwise) with respect to, any other Person
(including any of the Seller's Affiliates), and (ii) pursuant to which the
Seller has had Intellectual Property licensed to it, or has otherwise been
permitted to use Intellectual Property (through non-assertion, settlement or
similar agreements or otherwise). All of the agreements, arrangements or
applicable laws set forth or required to be set forth in Schedule 3.11(c): (i)
are in full force and effect and enforceable in accordance with their terms, and
no default exists or is threatened thereunder by the Seller, or to the knowledge
of the Seller after due inquiry, by any other Person, (ii) are free and clear of
all Liens (except for Permitted Liens incurred in the ordinary course of
business), and (iii) except as set forth in Schedule 3.11(c)(iii) do not contain
any assignment, change in control or other terms or conditions that will become
applicable or inapplicable as a result of the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements. The Seller has
delivered to the Buyer true and complete copies of all agreements and
arrangements (including amendments) set forth on Schedule 3.11(c). All
royalties, license fees, charges and other amounts payable by, on
16
behalf of, to, or for the account of, the Seller in respect of any Intellectual
Property are disclosed in the Division Financial Statements.
(d) NO INFRINGEMENT. The conduct of the business and operations of the
Division does not infringe or otherwise conflict with any rights of any Person
in respect of any Intellectual Property. To the knowledge of the Seller, none of
the Division Intellectual Property is being infringed or otherwise used or
available for use by any Person. Except as set forth in Schedule 3.11(d), the
Seller has not taken or omitted to take any action which would have the effect
of waiving any rights to the Division Intellectual Property, the waiver of which
would have the effect of making the Buyer or its subsidiaries unable to operate
the Division as currently operated by the Seller or of allowing any other Person
to compete more effectively with the Buyer or its subsidiaries than it now does
with the Seller.
(e) NO INTELLECTUAL PROPERTY LITIGATION. No claim or demand of any
Person has been made or, to the knowledge of the Seller, threatened, nor is
there any Litigation that is pending or, to the knowledge of the Seller,
threatened, that (i) challenges the rights of the Seller in respect of any
Division Intellectual Property, (ii) asserts that the Seller is infringing or
otherwise in conflict with, or is (except as set forth in Schedule 3.11(e)),
required to pay any royalty, license fee, charge or other amount with regard to,
any Intellectual Property, or (iii) claims that any default exists under any
agreement or arrangement set forth or required to be set forth in Schedule
3.11(e). None of the Division Intellectual Property is subject to any
outstanding order, ruling, decree, judgment or stipulation by or with any court,
tribunal, arbitrator or other governmental authority or agency, or has been the
subject of any Litigation within the last ten years, whether or not resolved in
favor of the Seller.
(f) DUE REGISTRATION, ETC. The Owned Intellectual Property has been
duly registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office, the United States Copyright Office or other
filing offices, domestic or foreign, to the extent necessary or desirable to
ensure full protection under any applicable law, and such registrations,
filings, issuances and other actions remain in full force and effect, in each
case, to the extent material to the business or operations of the Division.
Except as set forth in Schedule 3.11(f), the Seller has taken all necessary
actions to ensure full protection of the Division Intellectual Property
(including reasonable and customary actions to maintain the secrecy of all
confidential Intellectual Property) under any applicable law.
(g) USE OF NAME AND XXXX. Except as set forth in Schedule 3.11(g),
there are, and immediately after the Closing will be, no contractual restriction
or limitations pursuant to any orders, decisions, injunctions, judgments, awards
or decrees of any governmental authority or agency on the Buyer's right to use
the names and marks "General Eastern" and "General Eastern Instruments" in the
conduct of the business or operations of the Division as presently carried on by
the Seller or as such business or operations may be extended by the Buyer.
(h) CALENDAR FUNCTION. All internally developed Software used in the
business or operations of the Division, including, but not limited to, any
Software used in the products and product test software products identified on
Schedule 3.11(h) and, to the knowledge of Seller, all other Software used in the
business or operations of the Division, to the extent such Software is intended
to process date/time data, is able to process date/time data (including, but not
limited to, calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations when used in accordance with the applicable instructions and will
be able to do so until December 31, 2077. With respect to the product test
software products identified on Schedule 3.11(h), this warranty is subject to
the assumption that all products (e.g., hardware, software and firmware) used in
combination with such products properly exchange date data with the product test
software products.
(i) GOVERNMENT CONTRACTS. There are no agreements or arrangements to
which the Seller is a party or under which the Seller has rights or obligations
or any governmental contract or subcontract pursuant to which any governmental
authority or agency is permitted to use the Owned Intellectual Property that
gives rise to any right of any governmental authority or agency in the Owned
Intellectual Property beyond "limited rights" with reference to technical data
or "restricted rights" with reference to computer software within the meaning of
the Federal Acquisition Regulations or the equivalent thereof under foreign
applicable law, nor has any governmental authority or agency acquired any rights
outside of any such agreements, arrangements or subcontracts as the result of
providing any funding relating to the development of the Owned Intellectual
Property directly or indirectly to the Seller.
3.12 INSURANCE. Schedule 3.12 contains a complete and correct list of
all insurance policies maintained by the Seller for the benefit of or in
connection with the Assets or the business or operations of the Division. The
Seller has delivered to the Buyer 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. The Seller
has complied in all material respects with the terms and provisions of such
policies. The insurance coverage provided by such policies is adequate and
suitable for the business or operations of the Division, and is on such terms
(including without limitation as to deductibles and self-insured retentions),
covers such risks, contains such deductibles and retentions, and is in such
amounts, as the insurance customarily carried by comparable companies of
established reputation similarly situated and carrying on the same or similar
business.
3.13 LITIGATION. Except as set forth on Schedule 3.13, there is no
Litigation pending or, to the knowledge of the Seller, threatened by, against or
affecting the Seller with respect to the properties or the business or
operations of the Division or the Assets, that, individually or in the
aggregate, will have or result in a Material Adverse Effect (in each case, if
adversely determined, and without regard to whether the defense thereof or
liability in respect thereof is covered by policies of insurance or any
indemnity, contribution, cost
18
sharing or similar agreement or arrangement by or with any other Person). There
are no outstanding orders, judgments, decrees or injunctions issued by any
governmental authority or agency against or affecting the Seller that will have
or result in a Material Adverse Effect.
3.14 COMPLIANCE WITH LAWS AND INSTRUMENTS; CONSENTS; GOVERNMENTAL
CONTRACTS. (A) COMPLIANCE. Except as set forth on Schedule 3.14(a), (i) the
Seller is not in conflict with or in violation or breach of or default under
(and there exists no event that, with notice or passage of time or both, would
constitute a conflict, violation, breach or default with, of or under) (x) any
law applicable to it or any of the properties, the Assets, or the business or
operations of the Division, (y) any provision of its Organizational Documents,
or (z) any Contract, or any other agreement or instrument to which it is party
or by which it or any of the properties or assets of the Division is bound or
affected, except in the case of the foregoing clauses (x) and (z) for any such
conflicts, breaches, violations and defaults that, individually or in the
aggregate, will not have or result in a Material Adverse Effect, and (ii) the
Seller has not received any notice or has knowledge of any claim alleging any
such conflict, violation, breach or default.
(b) CONSENTS. (i) Except as specified in Schedule 3.14(b)(i), no
governmental approval or other consent is required to be obtained or made by the
Seller in connection with the execution and delivery of this Agreement and the
Ancillary Agreements or the consummation of the transactions contemplated hereby
or thereby, except for consents the failure of which to be made or obtained,
individually and in the aggregate, will not have or result in a Material Adverse
Effect or the ability of the Buyer, following the Closing, to continue to
conduct the business or operations of the Division or to own or lease and to
operate the Assets.
(ii) Schedule 3.14(b)(ii) contains a complete and correct list
of all governmental permits and other authorizations necessary for, or otherwise
material to, the conduct of the business or operations of the Division. Except
as set forth in Schedule 3.14(b)(ii), all such governmental permits and other
authorizations have been duly obtained and are held by the Seller and are in
full force and effect. The Seller is in compliance with all governmental permits
and other authorizations held by it, except for such failures so to comply that,
individually and in the aggregate, will not have or result in a Material Adverse
Effect. There is no Litigation pending or, to the knowledge of the Seller,
threatened, that would result in the revocation, cancellation, suspension or
modification or nonrenewal of any such governmental permit or other
authorization; the Seller has not been notified that any such governmental
permit or other authorization will be modified, suspended, cancelled modified or
cannot be renewed in the ordinary course of business; and to the knowledge of
the Seller, there is no reasonable basis for any such revocation, cancellation,
suspension, modification or nonrenewal. The execution, delivery and performance
of this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not violate any
such governmental permit or other authorization, or result in any revocation,
cancellation, suspension, modification or nonrenewal thereof.
19
(c) GOVERNMENTAL FILINGS. Each registration, report, statement, notice
or other filing required to be filed by the Seller with the Commission or any
other governmental authority or agency under the Exchange Act, the Securities
Act or any other applicable law has been timely filed, and when filed complied
and continues to comply with applicable law in all material respects. As of
their respective dates, none of such registrations, reports, statements, notices
or other filings contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.15 ENVIRONMENTAL MATTERS. (a) COMPLIANCE WITH ENVIRONMENTAL LAW. The
Seller has complied and is in compliance in all material respects with all
applicable Environmental Laws pertaining to any of the Assets and the use and
ownership thereof, and to the operation of the business of the Division. No
material violation by the Seller has been or currently is being alleged of any
applicable Environmental Law relating to any of the Assets or the use or
ownership thereof, or to the operation of the business of the Division.
(b) PERMITS. All Environmental Permits are identified in Schedule
3.15(b), and the Seller currently holds, and at all times has held, all such
Environmental Permits necessary to the business or operations of the Division,
and all such Environmental Permits shall be validly transferred to the Buyer on
or prior to the Closing Date. The Seller has not been notified by any relevant
governmental authority or agency that any Environmental Permit will be modified,
suspended, cancelled or revoked, or cannot be renewed in the ordinary course of
business.
(c) OTHER ENVIRONMENTAL MATTERS. Neither the Seller nor to the
knowledge of the Seller any other Person (including any tenant) has caused or
taken any action that will result in, and the Seller is not subject to, any
material liability or obligation on the part of the Seller, or the Buyer or any
of its Affiliates, relating to (x) the environmental conditions on, under, or
about the real property or other properties or assets owned, leased, operated or
used by the Seller or any predecessor thereto at the present time or in the past
in connection with, necessary for the conduct of, or otherwise material to, the
business operations of the Division, including without limitation, the air, soil
and groundwater conditions at such properties or (y) the past or present use,
management, handling, transport, treatment, generation, storage, disposal or
Release or threatened Release of any Hazardous Materials.
(ii) The Seller has disclosed and made available to the Buyer all
information, including, without limitation, all studies, analyses and test
results, in the possession, custody or control of or otherwise known to the
Seller relating to (x) the environmental conditions on, under or about the real
property or other properties or assets owned, leased, operated or used by the
Seller or any predecessor in interest thereto at the present time or in the
past, and (y) any Hazardous Materials used, managed, handled, transported,
treated, generated, stored or Released by the Seller or any other Person on,
under, about or from any of the real
20
property, or otherwise in connection with the use or operation of any of the
properties and assets of the Seller or its business in connection with,
necessary for the conduct of, or otherwise material to, the business operations
of the Division.
(iii) None of the real property is, and the Seller nor any of its
Affiliates has transported or arranged for transportation of any Hazardous
Substances relating to the Assets or the real property to any location that is,
listed or proposed for listing under CERCLA, or on any similar state list, or
the subject of federal, state or local enforcement actions or investigations or
Remedial Action.
(iv) No work, repair, construction or capital expenditure is required
or planned in respect of the Assets pursuant to or to comply with any
Environmental Law, nor has the Seller or its Affiliates received any notice of
any such requirement, except for such work, repair, construction or capital
expenditure as is not material to the business or operations of the Division and
is in the ordinary course of business.
3.16 Affiliate Transactions. Except as set forth on Schedule 3.16,
during the past three years the Seller has not, primarily in connection with its
operation of the Division, directly or indirectly purchased, leased from others
or otherwise acquired any property or obtained any services from, or sold,
leased to others or otherwise disposed of any property or furnished any services
to, or otherwise dealt with (except with respect to remuneration for services
rendered as a director, officer or employee of Seller), in the ordinary course
of business or otherwise, (i) any Person beneficially owning 10% or more of the
common stock of the Seller (a "Major Stockholder") or (ii) any Person which,
directly or indirectly, alone or together with others, controls, is controlled
by or is under common control with the Seller. The Seller, in connection with
its operation of the Division, does not owe any amount to, or has any contract
with or commitment to, any Major Stockholders, directors, officers, employees or
consultants (other than compensation for current services not yet due and
payable and reimbursement of expenses arising in the ordinary course of
business), and none of such persons owes any amount to the Seller in connection
with its operation of the Division.
3.17 Employees, Labor Matters, etc. Except as set forth on Schedule
3.17, the Seller is not a party to or bound by any collective bargaining
agreement, and there are no labor unions or other organizations representing,
purporting to represent or attempting to represent any employees employed by the
Seller in connection with the Division. Since February 1995, there has not
occurred or been threatened any material strike, slowdown, picketing, work
stoppage, concerted refusal to work overtime or other similar labor activity
with respect to any employees of the Seller in connection with the Division.
Except as set forth on Schedule 3.17, there are no labor disputes currently
subject to any grievance procedure, arbitration or litigation and there is no
representation petition pending or threatened with respect to any employee of
the Seller in connection with the Division. The Seller has complied with all
applicable laws pertaining to the employment or termination of employment of the
employees employed in connection with the Division, including, without
21
limitation, all such laws relating to labor relations, equal employment
opportunities, fair employment practices, prohibited discrimination or
distinction and other similar employment activities, except for any failure so
to comply that, individually and in the aggregate, will not result in any
material liability or obligation on the part of the Seller or the Buyer or any
of its Affiliates, or have or result in a Material Adverse Effect.
3.18 Employee Benefit Plans and Related Matters; ERISA; Workers'
Compensation. Employee Benefit Plans. Schedule 3.18(a) sets forth a complete and
correct list of each "employee benefit plan", as such term is defined in section
3(3) of ERISA, and each bonus, incentive or deferred compensation, severance,
termination, retention, change of control, stock option, stock appreciation,
stock purchase, phantom stock or other equity-based, performance or other
employee or retiree benefit or compensation plan, program, arrangement,
agreement, policy or understanding, whether written or unwritten, that provides
or may provide benefits or compensation in respect of any employee or former
employee of the Seller or the beneficiaries or dependents of any such employee
or former employee in connection with the Division (collectively, the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by the Seller or any other trade or business, whether or not
incorporated, which, together with the Seller is or would have been at any date
of determination occurring within the preceding six years, treated as a single
employer under section 414 of the Code (such other trades and businesses
hereinafter referred to as the "Related Persons"), or to which the Seller or any
Related Person contributes or is or has been obligated or required to contribute
(collectively, the "Plans"). With respect to each such Plan, the Seller has
provided the Buyer complete and correct copies of such Plan, if written, or a
description of such Plan, if not written. To the knowledge of the Seller, there
are no claims pending or threatened for employees of the Division for workers'
compensation benefits.
(b) Qualification. Each Plan intended to be qualified under section
401(a) of the Code, and the trust (if any) forming a part thereof, has received
a favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and nothing has occurred since the date of such
determination letter that could reasonably be expected to adversely affect such
qualification or tax-exempt status. None of the Assets are subject to any lien
in favor of, or enforceable by, the Pension Benefit Guaranty Corporation.
(c) Affirmative Action Plans. The Seller is in compliance with
Executive Order 11246, as amended (the "Order") and the Office of Federal
Contract Compliance Programs ("OFCCP") regulations implementing the Order.
(d) Employment Agreements. Schedule 3.18(d) sets forth a complete and
correct list of all employment, consulting, confidentiality, non-competition,
severance, change of control, retention and termination agreements that have
been entered into by the Seller and are primarily related to, used or held for
use in connection with the employees, business or
22
operations of the Division. All of the rights in and to the Division Employment
Agreements (as defined in Section 1.1(o)) are owned by the Seller, except as set
forth in Schedule 3.18(d). The Division Employment Agreements are valid, in full
force and effect and Seller has not received any notice or claim that any of the
Division Employment Agreements are invalid or unenforceable by it. Immediately
after the Closing, the Buyer will own all of the rights in and to the Division
Employment Agreements and will have a right to enforce all such agreements on
the same terms and conditions as in effect prior to the Closing.
3.19 Accounts Receivable. The Seller has delivered or caused to be
delivered to the Buyer a complete and accurate aging of all accounts receivable
of the Division as of the end of each monthly period since the date of the
Division Balance Sheet. All accounts receivable reflected on the Division
Balance Sheet or on such books have been generated in the ordinary course of
business and reflect a bona fide obligation for the payment of goods or services
provided by the Seller. The Seller has no knowledge of any facts or
circumstances generally (except general economic conditions) which would result
in any material increase in the uncollectability of such receivables in excess
of the reserves therefor set forth on the Division Balance Sheet.
3.20 No Guaranties. None of the obligations or liabilities of the
Seller incurred in connection with its operation of the Division is guaranteed
by or subject to a similar contingent obligation of any other person, firm or
corporation, nor has the Seller guaranteed or become subject to a similar
contingent obligation in respect of the obligations or liabilities of any other
person, firm or corporation.
3.21 Inventories. All inventories of raw materials, supplies, work in
progress and finished goods of the Division are of good, usable and merchantable
quality in all material respects, and, except as set forth in Schedule 3.21, do
not include a material amount of obsolete or discontinued items except as fully
and adequately reserved against as reflected in the Division Balance Sheet.
Except as set forth in Schedule 3.21, (a) all such inventories are of such
quality as to meet in all material respects the quality control standards of the
Seller and any applicable governmental quality control standards, (b) all such
finished goods are saleable as current inventories at the current prices of the
Division in the ordinary course of business, (c) all such inventories are
recorded on the books at the lower of cost or market value determined in
accordance with GAAP and (d) no write-down in any material inventory has been
made or should have been made pursuant to GAAP during the past two years.
3.22 Customers; Sales Representatives. Schedule 3.22(a) sets forth for
each of the years ended April 1996 and 1997 (a) the names and addresses of the
20 largest customers of the Division based on the aggregate value of goods and
services ordered from the Division by such customers during each such period and
the amount for which each such customer was invoiced during each such period and
(b) sets forth for the 9-month period ended January 25, 1998, the names and
addresses of the 20 largest customers of the Division and the amount for which
each such customer was invoiced during such period. The Seller has not received
any notice that any material customer of the Division (i) has ceased, or will
23
cease, to use the products, goods or services of the Division, (ii) has
materially reduced or will materially reduce, the use of products, goods or
services of the Division or (iii) has sought, or is seeking, to materially
reduce the price it will pay for products, goods or services of the Division,
which cessations and reductions, either individually or in the aggregate, will
have or result in a Material Adverse Effect. Notwithstanding, the foregoing, the
Seller has granted two customers certain discounts as disclosed on Schedule
3.22(a).
(b) Schedule 3.22(b) sets forth a complete and correct list of (a) each
sales representative who is individually responsible for the account of any
customer of the Division that ordered goods and services from the Division with
an aggregate value of $100,000 or more during the nine-month period ended
January 31, 1998 and (b) all sales representatives who collectively are
responsible for the account of any customer of the Division that ordered goods
and services from the Division with aggregate value of $75,000 or more during
the nine-month period ended January 31, 1998 (collectively, the "Sales
Representatives"), indicating with respect to each such Sales Representative the
aggregate value of goods and services ordered from the Division by customers for
whose accounts such Sales Representative was responsible.
3.23 Suppliers; Raw Materials. Schedule 3.23 sets forth for the period
since August 25, 1996 (which includes the nine-month period ending January 25,
1998) (a) the names and addresses of the 10 largest suppliers of the Division
based on the aggregate value of raw materials, supplies, merchandise and other
goods and services ordered by the Division from such suppliers during each such
period and (b) the amount for which each such supplier invoiced the Division
during each such period. Except as set forth in Schedule 3.6(h), the Seller has
not received any notice or has any reason to believe that there has been any
material adverse change in the price of such raw materials, supplies,
merchandise or other goods or services, or that any such supplier will not sell
raw materials, supplies, merchandise and other goods to the Division at any time
after the Closing Date on terms and conditions substantially the same as those
used in its current sales to the Division, subject to general and customary
price increases.
3.24 Products. (a) Warranties. The Seller has delivered to the Buyer
complete and correct copies of the standard terms and conditions of sale or
lease for each of the products or services of the Division (containing
applicable guaranty, warranty and indemnity provisions). Except as required by
law or as set forth on Schedule 3.24(a), no product manufactured, sold, leased
or delivered by, or service rendered by or on behalf of, the Seller in
connection with the Business is subject to any guaranty, warranty or other
indemnity, express or implied, beyond such standard terms and conditions.
(b) Product Liability. Except as set forth in Schedule 3.24(b), the
Seller has no liability or obligation accrued, absolute, contingent or
otherwise, and whether based on strict liability, negligence, breach of
warranty, breach of contract or otherwise, in respect of any product, component
or other item manufactured, sold, designed or produced prior to the Closing by,
or service rendered prior to the Closing by, the Seller in connection with the
24
business or operations of the Division, that (i) is not fully and adequately
covered by policies of insurance or by indemnity, contribution, cost sharing or
similar agreements or arrangements by or with other Persons, (ii) is not
otherwise fully and adequately reserved against as reflected in the Division
Balance Sheet or (iii) will not otherwise be fully and adequately reserved
against as reflected in the Closing Balance Sheet (as defined in Section 2.7).
(c) Product Returns. To the knowledge of the Seller, based upon the
Seller's historical rate of warranty returns, the products of the Seller sold
prior to the Closing in connection with the business or operations of the
Division and returned under warranty by any purchaser of such products to the
Seller following the Closing shall not exceed in the aggregate, based on the
cost to repair or replace such products, 0.5% percent of the aggregate gross
sales of the Division during the 12-month period immediately preceding the
Closing Date.
3.25 Absence of Certain Business Practices. Neither the Seller nor any
officer, employee or agent of Seller or the Division, or any other Person acting
on their behalf, has, within the past five years given or agreed to give any
gift or similar benefit to any customer, supplier, governmental employee or
other person who is or may be in a position to help or hinder the business or
operations of the Division (or assist the Seller in connection with any actual
or proposed transaction relating to the Division) (i) which subjected or might
have subjected the Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) which if not given in the past,
might have had an adverse effect on the Assets or the business or operations of
the Division, (iii) which if not continued in the future, might have an adverse
effect on the Assets, the business or operations of the Division or the
prospects of the Division or subject the Seller to suit or penalty in any
private or governmental litigation or proceeding, (iv) for any of the purposes
described in Section 162(c) of the Code or (v) for the purpose of establishing
or maintaining any concealed fund or concealed bank account.
3.26 Territorial Restrictions. Except as set forth in Schedule 3.26,
the Seller is not restricted by any written agreement or understanding with
third parties from carrying on the business or operations of the Division
anywhere in the world.
3.27 Brokers, Finders, etc. All negotiations relating to this
Agreement, the Ancillary Agreements and the transactions contemplated hereby and
thereby have been carried on without the participation of any Person acting on
behalf of the Seller in such a manner as to, and the transactions contemplated
hereby and thereby will not otherwise, give rise to any valid claim against the
Seller or the Buyer for any brokerage or finder's commission, fee or similar
compensation, or for any bonus payable to any officer, director, employee, agent
or representative of or consultant to the Seller upon consummation of the
transactions contemplated hereby or thereby.
25
3.28 No Other Warranties. Except for the representations and warranties
set forth in this Agreement, the Ancillary Agreements or the certificates or
other documents furnished by the Seller prior to or as of the Closing Date, the
Seller hereby expressly disclaims all representations and warranties express or
implied with respect to any and all of the Assets or the Assumed Liabilities,
including any warranty of merchantability or fitness of any Asset for a
particular purpose.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
4.1 Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller as follows; as of the date hereof and as of the
Closing Date:
4.2 Corporate Status; Authorization, etc. The Buyer is a corporation
duly organized, validly existing and in good standing, under the laws of the
jurisdiction of its incorporation with full corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Buyer of this
Agreement and the Ancillary Agreements, the performance of the Buyer's
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby, have been authorized by all requisite corporate
action of the Buyer. The Buyer has duly executed and delivered this Agreement
and on the Closing Date the Buyer will have duly executed and delivered the
Ancillary Agreements. This Agreement constitutes each such Ancillary Agreement
will constitute, the legal valid and binding obligation of the Buyer enforceable
against the Buyer in accordance with its respective terms.
4.3 No Conflicts, etc. The execution, delivery and performance by the
Buyer of this Agreement and each of the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not conflict with, contravene or result in a violation or breach of or
default under (with or without the giving of notice or the lapse of time, or
both) (i) the certificate of incorporation or by-laws of the Buyer, (ii) any law
applicable to the Buyer or any of its Affiliates or any of their respective
properties or assets or (iii) any contract, agreement or other instrument
applicable to the Buyer or any of its Affiliates or any of their respective
properties or assets, except, in the case of clause (iii), for violations and
defaults that, individually and in the aggregate, will not have a Material
Adverse Effect. Except as specified in Schedule 4.3, no governmental approval or
other consent is required to be obtained or made by the Buyer in connection with
the execution and delivery of this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated thereby.
26
4.4 Litigation. There is no action, claim, suit or proceeding pending,
or to the Buyer's knowledge threatened, by or against or affecting the Buyer in
connection with or relating to the transactions contemplated by this Agreement
or of any action taken or to be taken in connection herewith or the consummation
of the transactions contemplated hereby.
4.5 Brokers, Finders, etc. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
participation of any Person acting on behalf of the Buyer in such manner as to
give rise to any valid claim against the Seller for any brokerage or finder's
commission, fee or similar compensation.
ARTICLE V
COVENANTS OF SELLER
5.1 Conduct of Business. From the date hereof to the Closing Date,
except as expressly permitted or required by this Agreement or as otherwise
consented to by the Buyer in writing, the Seller will:
(a) carry on the business and operations of the Division in,
and only in, the ordinary course, in substantially the same manner as
heretofore conducted, and use all reasonable efforts to preserve intact
its present business organization, maintain its properties in good
operating condition and repair, keep available the services of its
present officers and significant employees, and preserve its
relationship with customers, suppliers and others having business
dealings with it, to the end that its goodwill and going business shall
be in all material respects unimpaired following the Closing;
(b) pay accounts payable and other obligations of the business
and operations of the Division when they become due and payable in the
ordinary course of business consistent with prior practice;
(c) perform in all material respects all of its obligations
under all Contracts and other agreements and instruments relating to or
affecting the business or operations of the Division or the Assets, and
comply in all material respects with all laws applicable to it, the
Assets or the business or operations of the Division;
(d) not enter into or assume any material agreement, contract
or instrument relating to the business or operations of the Division,
or enter into or permit any material amendment, supplement, waiver or
other modification in respect thereof;
(e) not grant (or commit to grant) any increase in the
compensation (including incentive or bonus compensation) of any
employee employed in the operation of the business of the Division or
institute, adopt or
27
amend (or commit to institute, adopt or amend) any compensation or
benefit plan, policy, program or arrangement or collective bargaining
agreement applicable to any such employee;
(f) not transfer or grant any rights or licenses under, or
enter into any settlement regarding the breach or infringement of, any
license or any Division Intellectual Property, or modify any existing
rights with respect thereto; and
(g) not take any action or omit to take any action, which
action or omission would result in a breach of any of its
representations and warranties set forth in Section 3.
5.2 No Solicitation. During the term of this Agreement, neither the
Seller, any of its Affiliates or any Person acting on their behalf shall (i)
engage in any discussions, solicitations or enter into any agreements with
respect to, the sale of all or any part of the business, operations or assets of
the Division or (ii) furnish or cause to be furnished any information concerning
the business, operations or assets of the Division to any Person (other than the
Buyer and its agents and representatives), except that the Seller may receive
unsolicited communications from third parties and inform any such third parties
that the Seller cannot engage in any discussions regarding the business,
operations or assets of the Division.
5.3 Access and Information. So long as this Agreement remains in
effect, the Seller will (and will cause each of its Affiliates and its and its
Affiliates' accountants, counsel, consultants, employees and agents), upon
reasonable notice, give the Buyer and its accountants, counsel, consultants,
employees and agents, full access during normal business hours to, and furnish
them with all documents, records, work papers and information with respect to,
all of such Person's properties, assets, books, contracts, commitments, reports
and records relating to the business or operations of the Division, as the Buyer
shall from time to time reasonably request. In addition, the Seller will permit
the Buyer and its accountants, counsel, consultants, employees and agents,
reasonable access to such personnel of the Seller during normal business hours
as may be necessary or useful to the Buyer in its review of the properties,
assets and business affairs of the Division and the above-mentioned documents,
records and information. The Seller will keep the Buyer generally informed as to
the affairs of the Division.
(b) The Seller will, and will cause each of its Affiliates to, retain
all books and records relating to the Division in accordance with the Seller's
record retention policies as presently in effect. During the seven-year period
beginning on the Closing Date, the Seller shall not dispose of or permit the
disposal of any such books and records not required to be retained under such
policies without first giving 60 days' prior written notice to the Buyer
offering to surrender the same to the Buyer at the Buyer's expense.
(c) The Seller shall take all steps necessary to preserve the
confidential nature of all material confidential information (including, without
limitation, any proprietary
28
information) with respect to the business and
operations of the Division, including, but not limited to, the manufacturing or
marketing of any of the products or services of the Division.
5.4 Financial Statements. Until the Closing, on or before the tenth
business day of each month, the Seller shall deliver to the Buyer unaudited
consolidated financial statements of the business and operations of the Division
as at and for the monthly period ending the last day of the preceding month,
which shall include a balance sheet and statement of income. At the time that
such financial statements are delivered to the Buyer, the Seller shall by such
delivery be deemed to have made the representations and warranties to the Buyer
set forth in Section 3.4 with respect to such financial statements.
5.5 Public Announcements. The Buyer acknowledges that circumstances may
arise where the Seller is advised by its financial advisors to make an
announcement in respect of the transactions contemplated hereby, and on the
execution of this Agreement, the Seller will be required to make a public
announcement in respect of the transactions contemplated hereby. Except as
required by applicable law or under the circumstances described in the prior
sentence (in which case the Seller shall obtain the Buyer's prior written
approval as to the form and wording of any such announcement), the Seller shall
not, and shall not permit any Affiliate to, make any public announcement in
respect of this Agreement or the transactions contemplated hereby without the
prior written consent of the Buyer. The Seller hereby grants the Buyer the
option, but not the obligation, to participate in any announcement or other
communication with any employees of the Seller employed in the business or
operations of the Division regarding the transactions contemplated hereby which
is required to be made prior to the Closing.
5.6 Further Actions. The Seller agrees to use all reasonable good faith
efforts to take all actions and to do all things necessary, proper or advisable
to bring about the satisfaction as soon as practicable of all the conditions
contained in Article VIII. Without limiting the generality of the foregoing:
(a) the Seller will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by it pursuant to applicable law in connection
with this Agreement, the Ancillary Agreements, the sale and transfer of the
Assets pursuant to this Agreement and the consummation of the other transactions
contemplated hereby and thereby, including, but not limited to, filings pursuant
to the HSR Act;
(b) the Seller, as promptly as practicable, will use all reasonable
efforts to obtain, or cause to be obtained, all consents (including, without
limitation, all governmental approvals and any consents required under any
Contract (including, but not limited to, those Contracts set forth on Schedule
3.10 and any Intellectual Property license)) necessary to be obtained by it in
order to consummate the sale and transfer of the Assets pursuant to this
Agreement and the consummation of the transactions contemplated hereby;
29
(c) the Seller will, and will cause each of its Affiliates to,
coordinate and cooperate with the Buyer in exchanging such information and
supplying such assistance as may be reasonably requested by the Buyer in
connection with the filings and other actions contemplated by Section 6.2;
(d) the Seller will, as promptly as practicable, use its good faith
reasonable efforts to obtain, or cause to be obtained from third parties, or
enter into with the Buyer such agreements and other arrangements (including
sublicenses and subleases) as are necessary or reasonably requested by Buyer to
provide the benefits received by the Division under the Non-Transferred
Contracts set forth on Schedule 5.6(d) to the Buyer on terms and conditions no
less favorable than those in effect under the Non-Transferred Contracts prior to
the Closing;
(e) the Seller shall deliver to the Buyer a complete copy of Contract
No. GS-24F-3034G, between the Seller, the Division and General Services
Administration, effective February 1, 1997 through July 31, 1999, with all
amendments thereto, including the amendments dated May 14, 1997 and November 12,
1997 ("xxx XXX Contract"); and
(f) at all times prior to the Closing, the Seller shall promptly notify
the Buyer in writing of any fact, condition, event or occurrence that will or
may result in the failure of any of the conditions contained in Articles VII and
VIII to be satisfied, promptly upon becoming aware of the same.
5.7 Further Assurances. Following the Closing, the
Seller shall, and shall cause each of its Affiliates to, from
time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall be
necessary, or otherwise reasonably requested by the Buyer, to confirm and assure
the rights and obligations provided for in this Agreement and in the Ancillary
Agreements and render effective the consummation of the transactions
contemplated hereby and thereby.
5.8 Liability for Transfer Taxes. The Seller shall be responsible for
the timely payment of, and shall indemnify and hold harmless the Buyer against,
(a) all sales (including, without limitation, bulk sales), use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("Transfer Taxes"), arising
out of or in connection with or attributable to the transactions effected
pursuant to this Agreement and the Ancillary Agreements and (b) all property
Taxes in respect of the Assets attributable to periods (or portions thereof) up
to and including the Closing Date. The Seller shall prepare and timely file all
Tax Returns required to filed in respect of Transfer Taxes (including, without
limitation, all notices required to be given with respect to bulk sales taxes),
provided that the Buyer shall be permitted to prepare any such Tax Returns that
are the primary responsibility of the Buyer under applicable law. The Buyer's
preparation of any such Tax Returns shall be subject to the Seller's approval,
which approval shall not be withheld unreasonably.
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5.9 Certificates of Tax Authorities. On or before the Closing Date, the
Seller shall provide to the Buyer copies of certificates from the appropriate
taxing authority stating that no Taxes are due to any state or other taxing
authority for which the Buyer could have liability to withhold or pay Taxes with
respect to the transfer of the Assets or the business or operations of the
Division, provided that any failure to provide such certificates to the Buyer
which is not the fault of the Seller shall not relieve the Buyer of its
obligations to enter into and complete the Closing. If the Seller shall fail to
provide such certificates, the Buyer shall withhold or, where appropriate,
escrow such amount as necessary based upon the Buyer's reasonable estimate of
the amount of such potential liability, or as determined by the appropriate
taxing authority, to cover such Taxes until such time as certificates are
provided.
5.10 Use of Business Names and Marks. After the Closing, the Seller
will not, directly or indirectly, use or do business, or allow any Affiliate to
use or do business, or assist any third party in using or doing business, under
the names and marks "General Eastern Instruments" and "General Eastern" (or any
other name or xxxx confusingly similar to such names and marks).
5.11 Environmental Assessment. The Buyer shall retain environmental
consultants to conduct an environmental assessment of the real property and the
other assets, equipment and facilities owned, leased, operated or used by the
Seller in connection with the Division of a scope satisfactory to the Buyer. The
costs of such environmental assessment shall be borne by the Buyer.
5.12 Novation Agreements. Each of the Seller and the Buyer agree to use
its reasonable efforts (including, without limitation, delivering all required
documentation, legal opinions and financial statements and reports) to enter
into novation agreements among the Seller, the government of the United States
and the Buyer, substantially in the form set forth in the Federal Acquisitions
Regulation as soon as practicable following the Closing.
5.13 Bank Accounts. The Seller shall, and shall cause each of its
Affiliates to, execute and deliver any instruments or documents and take such
other actions as shall be necessary, or otherwise reasonably requested by the
Buyer, to vest in the Buyer as of the Closing Date all right, title and interest
in and to the cash and cash equivalent accounts of the Division as of the
Closing Date.
5.14 Insurance. In the event that, after the Closing, the Buyer or any
of its Affiliates shall suffer any loss, arising out of a third party claim or
otherwise, that the Buyer in good faith notifies the Seller would be covered by
any insurance policy maintained by the Seller or any of its Affiliates for the
benefit of the Division, the Seller shall, and shall cause each of its
Affiliates to, present and diligently prosecute a claim for payment under such
policy in respect of such loss, and pay to the Buyer the proceeds of such claim
under such policy as reimbursement in respect of the amount of such loss,
subject to the provisions of this Section 5.14. The amount of proceeds of any
such insurance claim to be paid over to the
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Buyer shall be limited to the amount actually received by the Seller or its
Affiliates from their respective insurers with respect to such claim (net of
any self-insured retention amount, deductible amount, or other amount that
the Seller or any of its Affiliates is required to reimburse its insurers
under its contractual agreements with them, in each case with respect to such
claim), minus the aggregate amount of all reasonable out-of-pocket expenses
incurred by the Seller and its Affiliates in presenting and prosecuting such
claim (to the extent not paid or reimbursed by its insurers). Nothing
contained in this Section 5.14 shall require the Seller or any of its
Affiliates to keep in force and effect after the Closing any insurance
coverage in effect at the time of the Closing, provided that the Seller gives
the Buyer 30 days advance notice of any cancellation or non-renewal and such
cancellation is not made specifically to the insurance policies of the Seller
relating to the Division.
5.15 Phys-Chem Agreement. The Seller shall enforce its rights under
Articles 8 and 12 of the Phys-Chem Asset Purchase Agreement, by and among the
Seller, Phys-Chem Scientific Corp. and Xxxxxxx Xxxxxxxxx, dated as of June 25,
1997 (the "Phys-Chem Agreement") and take all actions as reasonably required to
obtain the benefit of the Phys-Chem Agreement for the Buyer, including, but not
limited to the delivery of indemnification proceeds, such that the Buyer obtains
the benefit of the Phys-Chem Agreement as if it had been assigned to the Buyer.
5.16 No Excluded Technology. The Seller hereby represents and warrants
to the Buyer that the conduct of the business and operations of the Division
immediately prior to the Closing Date does not use any proprietary or
intellectual property rights of the Seller or its Affiliates except for the
intellectual property and proprietary rights set forth on Schedule 3.11. To the
extent that the Schedule 3.11 does not include any intellectual property or
proprietary rights used by Seller in the operation of the business and
operations of the Division immediately prior to the Closing Date, the Seller
covenants that it shall not assert (and it shall cause its Affiliates not to
assert) any of said rights against the Buyer, the Buyer's customers or any other
person in the chain of title from such customers. The Buyer shall bear the
burden of establishing that any intellectual property or proprietary rights not
set forth on Schedule 3.11 were being used in the business or operations of the
Division immediately prior to the Closing Date.
ARTICLE VI
COVENANTS OF BUYER
6.1 Public Announcements. The Seller acknowledges that circumstances
may arise where the Buyer is advised by its financial advisors to make an
announcement in respect of the transactions contemplated hereby, and on the
execution of this Agreement, the Buyer will be required to make a public
announcement in respect of the transactions contemplated hereby. Prior to the
Closing, except as required by applicable law or in accordance with the rules of
the International Stock Exchange of the United Kingdom and the Republic of
Ireland Limited, as in effect from time to time or under the circumstances
described in the
32
prior sentence (in which case the Buyer shall obtain the Seller's prior
approval as to the form and wording of any such announcement), the Buyer
shall not, and shall not permit its Affiliates to, make any public
announcement in respect of this Agreement or the transactions contemplated
hereby without the prior written consent of the Seller.
6.2 Further Actions. The Buyer agrees to use all reasonable good faith
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) The Buyer will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by the Buyer pursuant to applicable law in
connection with this Agreement, the Ancillary Agreements, the Buyer's
acquisition of the Assets pursuant to this Agreement and the consummation of the
other transactions contemplated hereby and thereby, including, but not limited
to, filings pursuant to the HSR Act.
(c) The Buyer will coordinate and cooperate with the Seller in
exchanging such information and supplying such reasonable assistance as may be
reasonably requested by the Seller in connection with the filings and other
actions contemplated by Section 5.6.
(d) At all times prior to the Closing, the Buyer shall promptly notify
the Seller in writing of any fact, condition, event or occurrence that will or
may result in the failure of any of the conditions contained in Articles VII and
IX to be satisfied, promptly upon becoming aware of the same.
(e) The Buyer shall use good faith reasonable efforts to assist the
Seller in its obligations under Section 8.2(ii).
6.3 Further Assurances. Following the Closing, the Buyer shall, and
shall cause its Affiliates to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by the Seller,
to confirm and assure the rights and obligations provided for in this Agreement
and in the Ancillary Agreements and render effective the consummation of the
transactions contemplated hereby and thereby.
6.4 Use of Business Names and Marks by the Buyer. To the extent the
trademarks, service marks, brand names or trade, corporate or business names of
the Seller or of any of its Affiliates or divisions (other than the Division)
are used by the Division on stationery, signage, invoices, receipts, forms,
packaging, advertising and promotional materials, product, training and service
literature and materials, computer programs or like materials ("Marked
Materials") or appear on Inventory at the Closing, the Buyer may use such Marked
Materials or sell such Inventory after the Closing for a period of one year
without altering or modifying such Marked Materials or Inventory, or removing
such trademarks, service marks, brand names, or trade, corporate or business
names, but the Buyer shall not thereafter
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use such trademarks, service marks, brand names or trade, corporate or business
names in any other manner without the prior written consent of the Seller.
ARTICLE VII
CONDITIONS PRECEDENT
TO OBLIGATIONS OF EACH PARTY
The obligations of the parties to consummate the transactions
contemplated hereby shall be subject to the fulfillment on or prior to the
Closing Date of the following conditions:
7.1 HSR Act Notification. In respect of the notifications of the Buyer
and the Seller pursuant to the HSR Act, the applicable waiting period and any
extensions thereof shall have expired or been terminated.
7.2 No Injunction, etc. Consummation of the transactions contemplated
hereby shall not have been restrained, enjoined or otherwise prohibited by any
applicable law, including any order, injunction, decree or judgment of any court
or other governmental authority or agency. No court or other governmental
authority or agency shall have determined any applicable law to make illegal the
consummation of the transactions contemplated hereby or by the Ancillary
Agreements, and no proceeding with respect to the application of any such
applicable law to such effect shall be pending.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver by the Buyer)
on or prior to the Closing Date of the following additional conditions, which
the Seller agrees to use reasonable good faith efforts to cause to be fulfilled:
8.1 Representations, Performance. The representations and warranties of
the Seller contained in this Agreement and in the Ancillary Agreements (i) shall
be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof, and (ii) shall be repeated and
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) on and as of the Closing Date with the same effect as though made
on and as of the Closing Date. The Seller shall have duly performed and complied
in all material respects with all agreements and conditions required by this
Agreement and each of the Ancillary Agreements to be
34
performed or complied with by it prior to or on the Closing Date. The Seller
shall have delivered to the Buyer a certificate, dated the Closing Date and
signed by its duly authorized officers, to the foregoing effect.
8.2 Consents. The Seller shall have obtained and shall have delivered
to the Buyer copies of (i) all governmental approvals required to be obtained by
the Seller in connection with the execution and delivery of the this Agreement
and the Ancillary Agreements and the consummation of the transactions
contemplated hereby or thereby and (ii) all consents (including, without
limitation, all consents required under any Contract (including, but not limited
to, those Contracts set forth in Schedule 3.10 and any Intellectual Property
license) necessary to be obtained in order to consummate the sale and transfer
of the Assets pursuant to this Agreement and the consummation of the other
transactions contemplated thereby and by the Ancillary Agreements.
8.3 No Material Adverse Effect. Except as set forth in Schedule 3.6, no
event, occurrence, fact, condition, change, development or effect shall have
occurred, exist or come to exist since the date of the Division Balance Sheet
that, individually or in the aggregate, has constituted or resulted in, or could
reasonably be expected to constitute or result in, a Material Adverse Effect.
8.4 Ancillary Agreements. The Seller or one of its Affiliates, as the
case may be, shall have entered into each of the following agreements with the
Buyer:
(a) Non-Competition Agreement, substantially in the form
attached hereto as Exhibit B (the "Seller Non-Competition Agreement");
(b) an Employment and Non-Competition Agreement, in substance
and form reasonably satisfactory to the Buyer, pursuant to which Xxxxx
Xxxxxxxxxx agrees to enter into the employment of the Buyer;
(c) the Escrow Agreement (as defined in Section 2.2(b)), in
substance and form reasonably satisfactory to the Buyer and the Seller;
and
(d) a Transitional Services Agreement, in substance and form
reasonably satisfactory to the Buyer and the Seller.
8.5 Subsequent Monthly Financial Statements. The Buyer shall have
received the monthly financial statements referred to in Section 5.4. Except as
set forth in Schedule 8.5, such financial statements shall (a) contain no
liabilities in excess of $50,000 in the aggregate different in kind or in scope
from the liabilities set forth in the Division Balance Sheet, (b) confirm and be
consistent with the information concerning the business and operations of the
Division (including the projected results of operations) previously provided to
the Buyer by the Seller prior to the date hereof and (c) otherwise be
satisfactory to the Buyer.
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8.6 Opinion of Counsel. The Buyer shall have received an opinion,
addressed to it and dated the Closing Date, from Xxxxxxx Xxxx LLP, counsel to
the Seller, in substance and form reasonably satisfactory to the Buyer.
8.7 Corporate Proceedings. All corporate and other proceedings of the
Seller in connection with the this Agreement and the Ancillary Agreements and
the transactions contemplated hereby and thereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in substance and
form to the Buyer and its counsel, and the Buyer and its counsel shall have
received all such documents and instruments, or copies thereof, certified if
requested, as may be reasonably requested.
8.8 Transfer Documents. The Seller shall have delivered to the Buyer at
the Closing all documents, certificates and agreements necessary to transfer to
the Buyer good and marketable title to the Assets, free and clear of any and all
Liens thereon, other than Permitted Liens, including without limitation:
(a) xxxx of sale, assignment and general conveyance, in form
and substance reasonably satisfactory to the Buyer, dated the Closing
Date, with respect to the Assets (other than any Asset to be
transferred pursuant to any of the instruments referred to in any other
clause of this Section 8.8);
(b) assignments of all Contracts, Intellectual Property and
any other agreements and instruments constituting the Assets, dated the
Closing Date, assigning to the Buyer all of the Seller's right, title
and interest therein and thereto, with any required consent endorsed
thereon;
(c) an assignment of lease, dated as of the Closing Date, with
respect to each Lease, together with any necessary transfer
declarations or other filings; and
(d) certificates of title to all motor vehicles included in
the Assets to be transferred to the Buyer hereunder, duly endorsed for
transfer to the Buyer as of the Closing Date.
8.9 Environmental Assessment. The Buyer shall have received the
environmental assessment referred to in Section 5.11 and such environmental
assessment shall be in form and substance satisfactory to the Buyer.
8.10 Consents and Estoppels. The Buyer shall have received consents
from the lessor of each Lease listed on Schedule 3.9(b) to the assignment of
such Lease to the Buyer. The Buyer shall also have received estoppel
certificates addressed to the Buyer from the lessor of each Lease, dated within
30 days of the Closing Date, identifying the Lease documents and any amendments
thereto, stating that the Lease is in full force and effect and, to the best
knowledge of the lessor, that the tenant is not in default under the Lease and
no event has occurred that, with notice or lapse of time or both, would
constitute a default by
36
the tenant under the Lease and containing any other information reasonably
requested by the Buyer.
8.11 FIRPTA Certificate. The Buyer shall have received a certificate of
the Seller, dated the Closing Date and sworn to under penalty of perjury,
setting forth the name, address and federal tax identification number of the
Seller and stating that the 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
Treasury Regulations thereunder.
8.12 Releases and Reassignments. (a) Intellectual Property. The Seller
shall have delivered to the Buyer executed copies of any and all releases,
terminations of security interests, assignments, reassignments, powers of
attorney and any other documents and instruments necessary to release any and
all security interests in, terminate any collateral assignments of, or reassign
to the Seller any Intellectual Property included in Assets, file stamped to show
receipt by the United States Patent and Trademark Office or other appropriate
governmental authority.
(b) Financing Statements. The Seller shall have delivered to the Buyer
releases or terminations under the Uniform Commercial Code and any other
applicable federal, state or local statutes or regulations of any financing
statements or similar filings filed against any of the Assets (including,
without limitation, any Liens asserted by any governmental authority with
respect to Taxes) except for UCC-1 financing statements filed by lessors with
respect to equipment leases listed on Schedule 3.10(a).
8.13 Corporate Proceedings of Buyer. This Agreement and the
transactions contemplated hereby shall have been approved by all necessary
corporate proceedings of the Buyer.
8.14 Non-Transferred Contracts. The Seller shall have obtained, or
caused to be obtained from third parties, or entered into with the Buyer such
agreements and other arrangements (including sublicenses and subleases) as are
necessary or reasonably requested by Buyer to provide the benefits received by
the Division under the Non-Transferred Contracts to the Buyer on terms and
conditions no less favorable than those in effect under the Non-Transferred
Contracts prior to the Closing.
8.15 Suppliers. The Buyer shall be satisfied that relationships with
certain key suppliers to be identified during due diligence are satisfactory and
will be available on a continuing basis.
8.16 GSA Contract. The Buyer shall have received a complete copy of and
be reasonably satisfied with the terms and conditions of the GSA Contract to be
provided by the Seller pursuant to Section 5.6(e).
37
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of the Seller to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver by the
Seller), on or prior to the Closing Date, of the following additional
conditions, which the Buyer agrees to use reasonable good faith efforts to cause
to be fulfilled.
9.1 Representations, Performance, etc. The representations and
warranties of the Buyer contained in this Agreement and the Ancillary Agreements
(i) shall be true and correct in all respects (in the case of any representation
or warranty containing any materiality qualification) or in all material
respects (in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof and (ii) shall be repeated and shall
be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) on and as of the Closing Date with the same effect as though made
at and as of such time. The Buyer shall have duly performed and complied in all
material respects with all agreements and conditions required this Agreement and
the Ancillary Agreements to be performed or complied with by it prior to or on
the Closing Date. The Buyer shall have delivered to the Seller a certificate,
dated the Closing Date and signed by its duly authorized officer, to the
foregoing effect.
9.2 Assumption Agreement. The Seller shall have received from the Buyer
the Assumption Agreement (as defined in Section 2.4(b)).
9.3 Opinion of Counsel. The Seller shall have received an opinion,
addressed to it and dated the Closing Date, of Debevoise & Xxxxxxxx, special
counsel for the Buyer, in form and substance reasonably satisfactory to the
Seller.
9.4 HSR Approval. The Seller shall have obtained notification that the
waiting period, or any extensions thereof, under the HSR Act have expired or
been terminated.
9.5 Ancillary Agreements. The Buyer shall have entered
into each of the Ancillary Agreements.
9.6 Environmental Assessment. The Seller shall have received the
environmental assessment referred to in Section 5.11 and such environmental
assessment shall be in form and substance satisfactory to the Seller.
ARTICLE X
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
38
10.1 Employment of the Seller's Employees. Effective as of the Closing
Date, Buyer shall offer employment to those employees selected by Buyer who are
employed by Seller principally in the operation of the Division. Such offers of
employment shall be at wage or salary levels that are substantially equivalent
to the total base salary compensation or hourly rates applicable to such
employees immediately prior to the Closing Date. For a period of one year
immediately following the Closing Date, the Buyer shall continue to provide to
the Transferred Employees (as defined below) employee benefits which in the
aggregate provide benefits that are substantially similar to those employee
benefits provided to them under the Plans as of the Closing Date, provided that
the aggregate cost of such benefits is reasonable as determined by Buyer, taking
into account Seller's aggregate cost of providing such benefits to the
Employees. Those employees who accept such offers of employment effective as of
the Closing Date shall be referred to herein as the "Transferred Employees".
Effective as of the Closing Date, the Buyer shall assume the liability of the
Seller in respect of the Transferred Employees for accrued but unpaid salaries,
wages, vacation and sick pay and fiscal 1998 incentive compensation (including,
but not limited to the Division's Management Bonus Plan), but only to the extent
such liability is properly reflected on the Closing Balance Sheet (as defined in
Section 2.7). Notwithstanding anything else to the contrary, the Seller shall
remain responsible for payment of any and all retention, change in control,
severance or other similar compensation or benefits which are or may become
payable in connection with the consummation of the transactions contemplated by
this Agreement or the Ancillary Agreements. With respect to the Division's
Management Bonus Plan, the Buyer shall pay bonuses equal to the total amount set
forth as "Total Bonus Payment" in Schedule 10.1(a).
(b) The Seller will, and will cause each of its Affiliates to, use all
reasonable efforts to cause the employees employed in the business and
operations of the Division to make available their employment services to the
Buyer. For a period of two years from the Closing Date, the Seller will not, and
will not permit any of its Affiliates to, solicit, offer to employ or retain the
services of or otherwise interfere with the relationship of the Buyer with any
Person employed by or otherwise engaged to perform services for the Buyer in
connection with the operation of the Division.
(c) Neither the Buyer nor any of its Affiliates shall have any Benefit
Liability with respect to any Employee (as defined in Section 3.18(a)) or Plan
(as defined in Section 3.18(a)) or any claim thereof or related thereto except
to the extent expressly provided in this Article X with respect to the
Transferred Employees. From and after the Closing, the Seller shall remain
solely responsible for any and all Benefit Liabilities in respect of the
Employees, including the Transferred Employees and their beneficiaries and
dependents, relating to or arising in connection with or as a result of (i) the
employment or the actual or constructive termination of employment of any such
Employee by the Seller (including, without limitation, in connection with the
consummation of the transactions contemplated by this Agreement or the Ancillary
Agreements), (ii) the participation in or accrual of benefits or compensation
under, or the failure to participate in or to accrue compensation or benefits
under, any Plan or other employee or retiree benefit or compensation plan,
program,
39
practice, policy, agreement or arrangement of the Seller or (iii) accrued but
unpaid salaries, wages, bonuses, incentive compensation, vacation or sick pay or
other compensation or payroll items (including, without limitation, deferred
compensation), except, in any such case, to the extent any such Benefit
Liability is (x) specifically assumed by Buyer pursuant to this Article X or (y)
reflected on the Closing Balance Sheet.
10.2 Welfare and Fringe Benefit Plans. From and after the Closing Date,
the Seller shall remain solely responsible for any and all Benefit Liabilities
to or in respect of the Transferred Employees or their beneficiaries or
dependents based upon the occurrence of any claims, whether such claims are
asserted before, on or after the Closing Date, for life, disability, accidental
death or dismemberment, supplemental unemployment compensation, medical, dental,
hospitalization, other health or other welfare or fringe benefits or expense
reimbursements which claims relate to or are based upon an occurrence on or
before the Closing Date (excluding claims for continuing treatment in respect of
any illness, accident, disability, condition or confinement which occurs or
commences on or before the Closing Date).
(b) From and after the Closing Date, the Seller shall remain solely
responsible for any and all Benefit Liabilities relating to or arising in
connection with the requirements of section 4980B of the Code to provide
continuation of health care coverage under any Plan in respect of (A) Employees,
other than the Transferred Employees and their covered dependents, and (B) to
the extent related to a qualifying event occurring on or before the Closing
Date, Transferred Employees and their covered dependents.
10.3 Workers' Compensation. From and after the Closing Date, the Seller
shall remain solely responsible for any and all Benefit Liabilities to or in
respect of any Employee relating to or arising in connection with any and all
claims for workers' compensation benefits arising in connection with any
occupational injury or disease occurring or existing on or prior to the Closing
Date, except for Benefit Liabilities relating to or arising in connection with
the reinstatement rights of any such Employee and the reinjury by any
Transferred Employee of an injury which occurred while such Transferred Employee
was employed by Seller.
10.4 Employment Taxes. The Seller will, and the Buyer will (i) treat
the Buyer as a "successor employer" and the Seller as a "predecessor," within
the meaning of sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to
Transferred Employees who are employed by the Buyer for purposes of Taxes
imposed under the United States Federal Unemployment Tax Act ("FUTA") or the
United States Federal Insurance Contributions Act ("FICA") and (ii) cooperate
with each other to avoid, to the extent possible, the filing of more than one
IRS Form W-2 with respect to each such Transferred Employee for the calendar
year within which the Closing Date occurs.
(b) At the request of the Buyer with respect to any particular
applicable Tax law relating to employment, unemployment insurance, social
security, disability, workers'
40
compensation, payroll, health care or other similar Tax other than Taxes imposed
under FICA and FUTA, the Seller will and the Buyer will (i) treat the Buyer as a
successor employer and Seller as a predecessor employer, within the meaning of
the relevant provisions of such Tax law, with respect to Transferred Employees
who are employed by the Buyer and (ii) cooperate with each other to avoid, to
the extent possible, the filing of more than one individual information
reporting form pursuant to each such Tax law with respect to each such
Transferred Employee for the calendar year within which the Closing Date occurs.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by the written agreement of the Buyer and the
Seller;
(b) by the Seller or the Buyer by written notice to the other
party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. New York City time on April 6,
1998, unless such date shall be extended by the mutual written consent
of the Seller and the Buyer;
(c) by the Buyer by written notice to the Seller if (i) the
representations and warranties of the Seller shall not have been true
and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material
respects (in the case of any representation or warranty without any
materiality qualification) as of the date when made or (ii) if any of
the conditions set forth in Articles VII or VIII shall not have been
fulfilled by 5:00 p.m. New York City time on April 6, 1998, unless such
failure shall be due to the failure of the Buyer to perform or comply
with any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing; or
(d) by the Seller by written notice to the Buyer if (i) the
representations and warranties of the Buyer shall not have been true
and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material
respects (in the case of any representation or warranty without any
materiality qualification) as of the date when made or (ii) if any of
the conditions set forth in Articles VII or IX shall not have been
fulfilled by 5:00 p.m. New York City time on April 6, 1998 unless such
failure shall be due to the failure of the Seller to perform or comply
with any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing.
41
11.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 11.1, this Agreement shall
become void and have no effect, without any liability to any Person in respect
hereof or of the transactions contemplated hereby on the part of any party
hereto, or any of its directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or Affiliates, except for the
Confidentiality Agreement, as specified in Sections 12.2 and 12.4 and except for
any liability resulting from such party's breach of this Agreement.
ARTICLE XII
DEFINITIONS, MISCELLANEOUS
12.1 Definition of Certain Terms. The terms defined in this Section
12.1, whenever used in this Agreement (including in the Schedules), shall have
the respective meanings indicated below for all purposes of this Agreement. All
references herein to a Section, Article or Schedule are to a Section, Article or
Schedule of or to this Agreement, unless otherwise indicated.
Affiliate: of a Person means a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
Agreement: this Asset Purchase Agreement, including the
Schedules hereto.
Ancillary Agreements: the agreements and other documents
and instruments described in Section 8.4.
Assumed Liabilities: as defined in Section 2.4.
Assumption Agreement: as defined in Section 2.4(b).
Audited Financial Statements: the consolidated financial statements of
the Seller as at and for the 12-month period ended April 27, 1997, together with
reports on such year-end statements by Xxxxx Xxxxxxx LLP, the Seller's
independent public accountants, including a balance sheet, a statement of
income, a statement of stockholders' equity and a statement of cash flow, and
accompanying notes.
Benefit Liabilities: liabilities, obligations, commitments, costs and
expenses, including reasonable fees and disbursements of attorneys and other
advisors, including any such expenses incurred in connection with the
enforcement of any applicable provision of this Agreement.
42
Buyer: as defined in the first paragraph of this
Agreement.
CERCLA: the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. s. 9601
et seq.
Closing: as defined in Section 2.1.
Closing Balance Sheet: as defined in Section 2.7(a).
Closing Date: as defined in Section 2.1.
Code: the Internal Revenue Code of 1986, as amended.
Confidentiality Agreement: the Confidentiality Agreement,
dated as of February 3, 1998, between High Voltage Engineering
Corporation and Xxxxxxxxx plc.
Contracts: contracts, arrangements, licenses, leases and
other agreements.
Division: as defined in the first WHEREAS clause of this
Agreement.
Division Balance Sheet: the unaudited balance sheet of
the Division as of December 27, 1997 contained in the Division
Financial Statements.
Division Financial Statements: the unaudited financial
statements of the Division as at and for the 8-month period
ended December 27, 1997, including a balance sheet and a
statement of income.
Division Intellectual Property: as defined in Section
1.1(h).
$ or dollars: lawful money of the United States.
Escrow Agreement: as defined in Section 2.2(b).
Employee: as defined in Section 3.18.
Environmental Laws: all applicable laws relating to the protection of
the environment, to human health and safety, or to any emission, discharge,
generation, processing, storage, holding, abatement, existence, Release,
threatened Release or transportation of any Hazardous Substances, including,
without limitation, (i) CERCLA, the Resource Conservation and Recovery Act, and
the Occupational Safety and Health Act, (ii) all other requirements pertaining
to reporting, licensing, permitting, investigation or remediation of emissions,
discharges, releases or threatened releases of Hazardous Materials into the air,
surface water, groundwater or land, or relating to the manufacture, processing,
43
distribution, use, sale, treatment, receipt, storage, disposal, transport or
handling of Hazardous Substances, and (iii) all other requirements pertaining to
the protection of the health and safety of employees or the public.
Environmental Liabilities and Costs: all Losses, whether direct or
indirect, known or unknown, current or potential, past, present or future,
imposed by, under or pursuant to Environmental Laws, including, without
limitation, all Losses related to Remedial Actions, and all fees, disbursements
and expenses of counsel, experts, personnel and consultants based on, arising
out of or otherwise in respect of: (i) the ownership or operation of the
Division, Real Property or Leases or any other real properties, assets,
equipment or facilities, by the Seller, or any of their predecessors or
Affiliates; (ii) the environmental conditions existing on the Closing Date on,
under, above, or about any Real Property or property subject to Leases or any
other real properties, assets, equipment or facilities currently or previously
owned, leased or operated by the Seller, or any of their predecessors or
Affiliates; and (iii) expenditures necessary to cause any Real Property or any
aspect of the business of the Division to be in compliance with any and all
requirements of Environmental Laws as of the Closing Date, including, without
limitation, all Environmental Permits issued under or pursuant to such
Environmental Laws, and reasonably necessary to make full economic use of any
Real Property.
Environmental Permits: any federal, state and local permit, license,
registration, consent, order, administrative consent order, certificate,
approval or other authorization with respect to the Seller necessary for the
conduct of the business of the Division as currently conducted or previously
conducted under any Environmental Law.
ERISA: the Employee Retirement Income Security Act of
1974, as amended.
Excluded Assets: as defined in Section 1.2.
Excluded Liabilities: as defined in Section 2.5.
GAAP: generally accepted accounting principles as in
effect in the United States.
Hazardous Substances: any material or substance that: (i) is or
contains asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum- derived substances or wastes, radon gas or related
materials (ii) requires investigation, removal or remediation under any
Environmental Law, or is defined, listed or identified as a "hazardous waste" or
"hazardous substance" thereunder, or (iii) is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is regulated by any Governmental Authority or Environmental Law.
HSR Act: the Xxxx-Xxxxx-Xxxxxx Anti-trust Improvements
Act of 1976, as amended.
44
Intellectual Property: any and all United States and foreign: (a)
patents (including design patents, industrial designs and utility models) and
patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations, continuations-in-part and extensions),
patent disclosures awaiting filing determination, inventions and improvements
thereto; (b) trademarks, service marks, trade names, trade dress, domain names,
logos, business and product names, slogans, and registrations and applications
for registration thereof; (c) copyrights (including software) and registrations
thereof; (d) inventions, processes, designs, formulae, trade secrets, know-how,
research and development, ideas, engineering notebooks, industrial models,
confidential and technical information, manufacturing, engineering and technical
drawings, product specifications and confidential business information; (e) mask
work and other semiconductor chip rights and registrations thereof; (f)
intellectual property rights similar to any of the foregoing; (g) Software,
firmware; (h) copies and tangible embodiments thereof (in whatever form or
medium, including electronic media) and (i) licenses of any of the foregoing.
IRS: the Internal Revenue Service.
knowledge: means, with respect to the Seller, actual knowledge after
due inquiry of a particular fact or other matter by Xxxxxxxx Xxxx, Xxxxx
Xxxxxxxxxx, Xxxxxx XxXxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxxxxxx.
Leased Real Property: means all interests leased pursuant
to the Leases.
Leases: means the real property leases, subleases, licenses and
occupancy agreements pursuant to which the Seller or any Subsidiary is the
lessee, sublessee, licensee or occupant other than real property leases,
subleases, licenses and occupancy agreements included in Excluded Assets.
Lien: any mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, lease, sublease, license, occupancy agreement,
adverse claim or interest, easement, covenant, encroachment, burden, title
defect, title retention agreement, voting trust agreement, interest, equity,
option, lien, right of first refusal, charge or other restrictions or
limitations of any nature whatsoever, including but not limited to such as may
arise under any Contracts.
Material Adverse Effect: any event, occurrence, fact, condition, change
or effect that is materially adverse to the business, operations, prospects,
results of operations, prospects, condition (financial or otherwise), properties
(including intangible properties), assets (including intangible assets) or
liabilities of the Division, or that will materially impair the ability of the
party to perform its obligations under this Agreement or the Ancillary
Agreements.
45
Non-Transferred Contracts: Contracts between (a) the Seller and third
parties that will not be assigned to the Buyer at the Closing and (b) the
Division and third parties that are non-transferrable or non-assignable.
Organizational Documents: as to any Person, its
certificate of incorporation or articles of incorporation, by-
laws and other organizational documents.
Owned Intellectual Property: as defined in Section
3.11(a).
Permitted Liens: (i) Liens for Taxes not yet due and payable or which
are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the Seller in
accordance with GAAP, or (ii) Liens that, individually and in the aggregate, do
not and would not materially detract from the value of any of the property or
assets of the Division or materially interfere with the use thereof as currently
used or contemplated to be used or otherwise.
Person: any natural person, firm, partnership,
association, corporation, company, trust, business trust,
governmental authority or other entity.
Plans: as defined in Section 3.18.
Purchase Price Escrow Deposit: as defined in Section
2.2(c).
Release: any releasing, disposing, discharging, injecting, spilling,
leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping,
dispersal, migration, transporting, placing and the like, including without
limitation, the moving of any materials through, into or upon, any land, soil,
surface water, ground water or air, or otherwise entering into the environment.
Seller: as defined in the first WHEREAS clause of this
Agreement.
Seller Non-Competition Agreement: as defined in Section
8.4(a).
Software: all computer software, including all source code and object
code versions thereof, in any and all forms and media, whether recorded on
paper, magnetic media or other electronic or non-electronic media (including
data and related documentation, user manuals, training materials, flow charts,
diagrams, descriptive tests and programs, computer print-outs, underlying tapes,
computer databases and similar items) and computer applications and operating
programs.
Subsidiaries: each corporation or other Person in which a Person owns
or controls, directly or indirectly, capital stock or other equity interests
representing at least 50% of the outstanding voting stock or other equity
interests.
46
Tax: any federal, state, provincial, local, foreign or other 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 (including all interest and penalties thereon and additions thereto
whether disputed or not).
Tax Return: any return, report, declaration, form, claim
for refund or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
Treasury Regulations: the regulations prescribed pursuant
to the Code.
12.2 Indemnification. (a) By Seller. The Seller covenants and agrees to
defend, indemnify and hold harmless the Buyer, its officers, directors,
employees, agents, advisers, representatives and Affiliates (collectively, the
"Buyer Indemnitees") from and against, and pay or reimburse the Buyer
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of the same or
in asserting any of their respective rights hereunder (collectively, "Losses"),
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
the Seller herein or under any Ancillary Agreement or document or
certificate delivered in connection herewith or therewith;
(ii) any failure of the Seller to perform any covenant or
agreement hereunder or under any Ancillary Agreement or fulfill any
other obligation in respect hereof or of any Ancillary Agreement;
(iii) any Excluded Liabilities (as defined in Section 2.5) or
Excluded Assets (as defined in Section 1.2);
(iv) any and all Taxes of the Seller and all
Affiliates;
(v) any and all Benefit Liabilities in respect of Employees
except, with respect to Transferred Employees, to the extent assumed by
the Buyer pursuant to Article X;
47
(vi) all Environmental Liabilities and Costs arising out of
the business or operations of the Division prior to the Closing Date or
relating to the Excluded Assets including, without limitation,
liabilities or remedial costs incurred in connection with
implementation of corrective measures recommended under the
environmental assessment conducted pursuant to Section 5.11;
(vii) any product liability claim with respect to products
manufactured or sold or events occurring prior to the Closing;
(viii) any failure of the Seller to comply with applicable
bulk sales laws (in consideration of which indemnification obligation
the Buyer hereby waives compliance by the Seller with any applicable
bulk sales laws);
(ix) any failure by the Seller to obtain, or cause to be
obtained for the Buyer, the benefits received by the Division prior to
the Closing under the Non-Transferred Contracts; and
(x) any violation, breach or event of default or alleged
breach, violation, breach or event of default, of the Seller of the
Sublicense Agreement between Energy Controls Inc. and the Division,
dated June 29, 1994 and modified on May 1, 1996 (the "Sublicense"),
provided, however, that the Seller's indemnification obligation with
respect to this subsection (x) shall not apply in the extent the Buyer
fails to use commercially reasonable efforts to promote, market and
sell Licensed Products as defined in Section 1.7 of the Sublicense) and
fulfill the market demands for Licensed Products.
(b) By the Buyer. The Buyer covenants and agrees to defend, indemnify
and hold harmless the Seller and its officers, directors, employees, agents,
advisers, representatives and Affiliates (collectively, the "Seller
Indemnities") from and against any and all Losses resulting from or arising out
of:
(i) any inaccuracy in any representation or warranty by the
Buyer made or contained in this Agreement or any Ancillary Agreement or
in connection herewith or therewith; or
(ii) any failure of Buyer to perform any covenant or agreement
made or contained in this Agreement or any Ancillary Agreement or
fulfill any other obligation in respect hereof or thereof;
(iii) the Assumed Liabilities;
(iv) the use by the Buyer of any tradenames of the Seller or
trademarks after the Closing Date as contemplated by Section 6.4; and
48
(v) the operation of the Division by the Buyer or the Buyer's
ownership, operation or use of the Assets following the Closing Date,
except to the extent such Losses result from or arise out of the Excluded
Liabilities or constitute Losses for which the Seller is required to indemnify
the Buyer Indemnities under Section 12.2(a).
(c) Effect of Indemnification. The provisions of this Section 12.2
shall in no way limit, supersede or otherwise affect the rights of any party
under Section 2.7, and nothing contained in Section 2.7 relating to an
adjustment to the Purchase Price shall limit, supersede or otherwise affect the
rights of any party under this Section 12.2; provided, that no party shall be
entitled to be compensated more than once for the same Loss.
(d) Limitations on Indemnity Obligation. Notwithstanding anything in
this Section 12.2 to the contrary, to the extent indemnification is sought under
Section 12.2(a)(i) or 12.2(b)(i), the Seller or the Buyer, as the case may be,
shall be required to provide indemnification only at such time as the aggregate
amount of Losses arising under Section 12.2(a)(i) or 12.2(b)(i), as the case may
be, exceeds $100,000, in which event the Indemnifying Party shall indemnify for
the full amount of Losses, without regard to such $100,000 limitation, up to a
maximum of $13,500,000, provided, however, that the Seller or the Buyer, as the
case may be, shall be required to provide indemnification for Losses resulting
from or arising out of a breach of any representation or warranty contained in
Section 3.7 without regard to such $100,000 limitation and Sections 3.7, 3.9(f)
and 10.4 or any other Losses under Sections 12.2(a) or 12.2(b) without regard to
such $13,500,000 cap, provided further, that the Seller's obligation to provide
indemnification for Losses shall be net of any insurance proceeds paid to and
actually realized by the Indemnified Party minus any related costs and expenses,
including, without limitation, the cost of pursuing any related insurance claims
and the cost of any corresponding increases in insurance premiums or other
chargebacks.
(e) Indemnification Procedures. (i) Third Party Claims. In the case of
any claim asserted by a third party against, or commencement of any action by a
third party reasonably believed to give rise to a claim for indemnification
from, a party entitled to indemnification under this Agreement (the "Indemnified
Party"), notice shall be given by the Indemnified Party to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and the Indemnified Party shall permit the Indemnifying Party (at the
expense of such Indemnifying Party) to assume the defense of any claim or any
litigation resulting therefrom, provided that (i) the counsel for the
Indemnifying Party who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified
Party may participate in such defense at such Indemnified Party's expense, and
(iii) the omission by any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its indemnification obligation under
this Agreement except to the extent that such omission results in a failure of
actual notice to the
49
Indemnifying Party and such Indemnifying Party is materially damaged as a result
of such failure to give notice. Except with the prior written consent of the
Indemnified Party, (such consent not to be unreasonably withheld) 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 to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
Tax liability or the ability of the Buyer to conduct its business, or that the
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand 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 cooperate in the defense of any claim or litigation subject to this
Section 12.2 and the records of each shall be available to the other with
respect to such defense.
(ii) Other Claims. In the event an Indemnified Party obtains knowledge
that it has sustained any Loss not involving a third party claim or action which
such Indemnified Party reasonably believes may give rise to a claim for
indemnification from an Indemnifying Party hereunder, notice shall be given by
the Indemnified Party to the Indemnifying Party promptly setting forth in
reasonable detail such claim or action, provided that the omission by any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its indemnification obligation under this Agreement except
to the extent that such omission results in a failure of actual notice to the
Indemnifying Party and such Indemnifying Party is materially damaged as a result
of such failure to give notice. If the Indemnifying Party does not notify the
Indemnified Party within 30 calendar days following its receipt of such notice
that the Indemnifying Party disputes its liability to the Indemnified Party
under this Section 12.2, such claim specified by the Indemnified Party in such
notice shall be conclusively deemed a liability of the Indemnifying Party under
this Section 12.2 and the Indemnifying Party shall pay the amount of such claim
to the Indemnified Party on demand or, in the case of any notice in which the
amount of the claim (or any portion thereof) is estimated, on such later date
when the amount of such claim (or such portion thereof) becomes finally
determined. If the Indemnifying Party has timely disputed its liability with
respect to such claim, as provided above, the Indemnifying Party
50
and the Indemnified Party shall proceed in good faith to negotiate a resolution
of such dispute and, if not resolved through negotiations, such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction in
accordance with Section 12.10.
(f) Time Limitation. All claims for indemnification under clause (i) of
the first sentence of Section 12.2(a) or clause (i) of the first sentence of
Section 12.2(b) must be asserted within 15 days of the termination of the
respective survival periods set forth in Section 12.3.
(g) Tax Treatment of Indemnity Payments. The parties agree to treat any
indemnity payment made pursuant to Section 12.2(a) or 12.2(b) as an adjustment
to the Initial Purchase Price for all Tax purposes unless otherwise required by
law.
12.3 Survival of Representations and Warranties, etc. The
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, any examination by or on behalf of the
parties hereto and the completion of the transactions contemplated herein, but
only to the extent specified below:
(a) except as set forth in clauses (b) and (c) below, the
representations and warranties contained in Articles III and IV shall
survive for a period of 18 months following the Closing Date.
(b) the representations and warranties contained in Section
3.15 shall survive for a period of three years following the Closing
Date.
(c) the representations and warranties contained in Sections
3.8(a), 3.9(a) and (h) shall survive without limitation;
(d) the representations and warranties of the Seller contained
in Sections 3.7, 3.9(f) and 3.18 and Article X shall survive as to any
Tax or ERISA matter covered by such representations and warranties for
15 days following the expiration of the applicable statute of
limitations for such Tax or ERISA matter; and
(e) notwithstanding anything in this Agreement to the
contrary, to the extent that a claim is brought within the time period
specified in Section 12.3, the representations and warranties which
underlie such claim will survive solely with respect to such claim
until the final resolution of such claim pursuant to Section 12.3.
12.4 Expenses. Except as provided in Section 5.8 and 2.7(d), the
Seller, on the one hand, and the Buyer, on the other hand, shall bear their
respective expenses, costs and fees (including attorneys', auditors' and
financing commitment fees) in connection with the transactions contemplated
hereby, including the preparation, execution and delivery of this Agreement and
compliance herewith, whether or not the transactions contemplated hereby shall
be consummated.
51
12.5 Severability. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
12.6 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or (c) sent by next-day or overnight
mail or delivery or (d) sent by telecopy or telegram.
(i) if to the Buyer to,
GEI Acquisition Inc.
c/o Tempo Instruments, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
(ii) if to the Seller,
High Voltage Engineering Corporation
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. XxXxxx, Xx.
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxxx, Esq.
52
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the day
after such delivery, (x) if by certified or registered mail, on the seventh
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered, (z) if by telecopy or telegram, on the next day
following the day on which such telecopy or telegram was sent, provided that a
copy is also sent by certified or registered mail.
12.7 Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
12.8 Entire Agreement. This Agreement (including the Schedules hereto)
and the Ancillary Agreements (when executed and delivered) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
12.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
12.10 Governing Law, etc. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of New York, without giving effect to the conflict of laws
rules thereof. The Buyer and the Seller hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the Federal courts of
the United States of America located in the State, City and County of New York
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents referred to in this Agreement, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any of such document may not be enforced
in or by said courts, and the parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in such
New York State or Federal court. The Buyer and the Seller hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of any such dispute and agree that mailing of process or other
papers in connection with any such action or proceeding in the manner provided
in Section 12.6, or in such other manner as may be permitted by law, shall be
valid and sufficient service thereof.
12.11 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
53
12.12 Assignment. This Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other
party hereto, provided that the Buyer may assign this Agreement to any
Subsidiary of the Buyer or to any lender to the Buyer or any Subsidiary or
Affiliate thereof as security for obligations to such lender in respect of the
financing arrangements entered into in connection with the transactions
contemplated hereby and any refinancings, extensions, refundings or renewals
thereof, provided, further, that no assignment to any such lender shall in any
way affect the Buyer's obligations or liabilities under this Agreement.
12.13 No Third Party Beneficiaries. Except as provided in Section 12.2
with respect to indemnification of Indemnified Parties hereunder, nothing in
this Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective heirs, successors and permitted assigns.
12.14 Amendment; Waivers, etc. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party may otherwise have at
law or in equity. The rights and remedies of any party based upon, arising out
of or otherwise in respect of any inaccuracy or breach of any representation,
warranty, covenant or agreement or failure to fulfill any condition shall in no
way be limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such inaccuracy or breach is based may also be
the subject matter of any other representation, warranty, covenant or agreement
as to which there is no inaccuracy or breach. The representations and warranties
of the Seller shall not be affected or deemed waived by reason of any
investigation made by or on behalf of the Buyer (including but not limited to by
any of its advisors, consultants or representatives) or by reason of the fact
that the Buyer or any of such advisors, consultants or representatives knew or
should have known that any such representation or warranty is or might be
inaccurate.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
GEI ACQUISITION INC.
By: /s/ L. Xxxx Xxxx
---------------------------
Name: L. Xxxx Xxxx
Title: President
HIGH VOLTAGE ENGINEERING CORPORATION
By: /s/ Xxxxxxxx X. Xxxx
---------------------------
Name: Xxxxxxxx X. Xxxx
Title: Chief Executive Officer
55