1
Exhibit 2.2
EXECUTED VERSION
ASSET PURCHASE AGREEMENT
DATED AS OF JANUARY 23, 1996
BY AND AMONG
CORION CORPORATION
(as Seller)
and
THERMO VISION CORPORATION
(as Purchaser)
2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of January 23, 1996, is made by and among Corion
Corporation, a Massachusetts corporation (the "Seller") and Thermo Vision
Corporation, a Delaware corporation (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company desires to sell substantially all of the assets of the
Company for the consideration hereinafter set forth, all upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Purchaser desires to purchase such assets upon such terms and
conditions;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained and other valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto, intending to be
legally bound, do hereby covenant and agree as follows:
ARTICLE I
THE TRANSACTION
1.01 SALE AND PURCHASE OF ASSETS.
(a) ASSETS TO BE PURCHASED. At the Closing referred to in Section 1.04
hereof (the "Closing"), the Seller will sell, convey, transfer, assign and
deliver or cause to be sold, conveyed, transferred, assigned and delivered to
the Purchaser, and the Purchaser will purchase from the Seller, for the purchase
price specified in Section 1.02 and subject to the terms and conditions hereof,
the "Assets," as hereinafter defined. Subject to Section 1.01(b) below, the term
"Assets" shall mean all of the Seller's right, title and interest in and to all
tangible and intangible personal property, wheresoever situated and whether or
not specifically referred to herein or in any instrument or conveyance delivered
pursuant hereto, used or useful in the business of the Seller (the "Business")
including, without limitation, the tangible and intangible personal property
described below in this Section 1.01(a), and the other assets described below in
this Section 1.01(a):
(i) INVENTORIES. All of the Seller's inventories of raw
materials, work in process, finished products and resale merchandise, scrap
inventory, expendable manufacturing supplies and similar items (the
"Inventories");
(ii) MACHINERY AND EQUIPMENT. All of the Seller's machinery and
equipment, wherever located, for the manufacture, production, assembly,
handling, distribution and sale of its products, together with the spare parts
inventories and all manufacturing or
1
3
production tools and maintenance supplies pertaining thereto, including, without
limitation (A) all such machinery, equipment, spare parts inventories,
manufacturing or production tools and maintenance supplies physically located at
or on any of the premises currently occupied by the Seller (the "Premises") and
(B) the equipment described in Schedule 1.01(a)(ii) of the disclosure statement
delivered by the Seller in connection herewith ("Disclosure Statement");
(iii) FURNITURE AND FIXTURES. All of the Seller's office
furniture, office equipment and office supplies and computer hardware,
including, without limitation, all such office furniture, office equipment and
supplies and computer hardware physically located at or on any of the Premises;
(iv) PERSONAL AND REAL PROPERTY LEASES. All right, title and
interest of the Seller under (A) leases for personal property included in the
Assumed Liabilities (as defined in Section 1.03(a) of this Agreement) as set
forth on Schedule 1.01(a)(iv) of the Disclosure Statement, and (B) those certain
month-to-month leases for (I) storage space located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ and (II) the Seller's sales office in the United
Kingdom;
(v) INTELLECTUAL PROPERTY. All right, title and interest in,
under or to all patents, trademarks, service marks, copyrights, trade names,
logos, and applications therefor listed or described in Schedule 2.09 of the
Disclosure Statement;
(vi) TECHNICAL INFORMATION. All inventions, discoveries (whether
patentable or unpatentable), processes, designs, know-how, trade secrets,
proprietary data, technology and other intellectual property of all kinds owned
by or licensed to the Seller, including, without limitation, all drawings,
plans, specifications, processes, patterns, dies, designs, blueprints, records,
data, product development records, production outlines, information, or
knowledge and procedures relating to any of such intellectual property;
(vii) CONTRACT RIGHTS AND MISCELLANEOUS INTANGIBLES. All right,
title and interest of the Seller in, under and to all sales, distribution and
purchase agreements, and all other agreements, contracts, sales orders, backlog,
and commitments to which the Seller is a party (collectively, the "Contracts"),
and in, under and to all equipment lists, parts lists, computer tapes and discs,
systems and programs, and proprietary software that pertain to the Assets and
the operation and use thereof;
(viii) MOTOR VEHICLES. All of the Seller's cars, trucks and other
motor vehicles, as listed or described on Schedule 1.01(a)(viii) of the
Disclosure Statement;
(ix) BOOKS AND RECORDS. All general books of account, books of
original entry and other records physically located at the Premises and all
other general books of account, books of original entry and other records of the
Seller, wherever located, that the Seller is required to retain pursuant to any
statute, rule or regulation (it being understood that the Seller may retain
copies of such books and records to facilitate the winding up of its affairs);
2
4
(x) LICENSES. All existing permits, licenses, regulatory
approvals and franchises of or from any national, regional, state or local
government or authority relating to the Business, as set forth on Schedule
1.01(a)(x) of the Disclosure Statement;
(xi) MISCELLANEOUS SUPPLIES. All of the Seller's catalogs,
brochures, product literature, printed materials, shipping and packaging
materials and labels, cartons and shipping containers, pallets, shipping
equipment, graphics, art work, photographic film, slides, negatives, color
separations, printer's and photographer's plates and so-called "camera ready
materials" and sales and advertising materials; and
(xii) ACCOUNTS RECEIVABLE. All accounts and notes receivable of
the Seller existing on the Closing Date (the "Accounts Receivable");
(b) RETAINED ASSETS. Notwithstanding anything contained in Section
1.01(a) to the contrary, the Seller shall retain and the Assets shall not
include any of the following assets (the "Retained Assets"):
(i) all of the Assets of the Seller which shall have been
transferred or disposed of prior to the Closing Date in transactions conducted
in the ordinary course of business (including, without limitation, those set
forth on Schedule 2.07(f) of the Disclosure Statement);
(ii) all cash, cash in banks, cash equivalents, deposits,
investments, securities, funds, certificates of deposit, drafts, checks and
similar instruments of the Seller outstanding and in existence on the Closing
Date;
(iii) all Assets in the possession of the Seller but owned by
third parties, other than third party owned assets that, under generally
accepted accounting principles, are appropriate to be reflected on the Balance
Sheet (as defined in Section 1.03) as Assets, subject to any third party rights
in respect of the same being reflected thereon as liabilities of the Seller;
(iv) Assets that are not assignable to the Purchaser as a matter
of law;
(v) any shares of capital stock of any corporation;
(vi) any foreign currency agreement to which the Seller is a
party;
(vii) all leasehold improvements;
(viii) the lease relating to the premises at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and any other leases of real property in which
Seller has an interest except as specifically set forth in Section 1.04(a)(iv);
(ix) all of Seller's insurance policies; and
3
5
(x) any Assets set forth on Schedule 1.01(b) of the Disclosure
Statement.
1.02 PURCHASE PRICE.
(a) DETERMINATION AND PAYMENT. The aggregate purchase price to be paid
to the Seller by the Purchaser for the Assets shall be an amount equal to the
sum of (i) the net tangible assets of the Seller (which term shall be deemed to
include the Seller's accounts receivable and the Seller's software) as set forth
on the balance sheet for the Seller at December 31, 1995 (such amount is
referred to herein as the "Adjustment Amount"), and (ii) $1,490,000 (such sum is
referred to herein as the "Base Purchase Price"), plus the assumption of certain
liabilities of the Seller as hereinafter provided, and subject to adjustment as
set forth below. From the Base Purchase Price, $350,000 (the "Escrow Amount")
will be withheld by the Purchaser pursuant to the escrow agreement among the
parties and BayBank, N.A., as Escrow Agent, attached hereto as EXHIBIT A.
(b) PURCHASE PRICE ADJUSTMENT. The Base Purchase Price shall be
subject to adjustment after the Closing Date as follows. By no later than
February 5, 1996, the Seller shall prepare and deliver to the Purchaser an
unaudited statement of the net tangible assets of the Seller as of December 31,
1995 (the "December Net Asset Statement"). For purposes of this Agreement, the
net tangible assets of the Seller shall mean the tangible Assets minus the
Assumed Liabilities (as defined in Section 1.03) determined in accordance with
generally accepted accounting principles applied on a consistent basis with the
Balance Sheet (as defined in Section 1.03(a)) both as to classification of items
and methodology for determining amounts; PROVIDED, HOWEVER, that (i)
amortization and depreciation of fixtures and equipment shall be terminated as
of August 31, 1995, (ii) the reserve for bad debts shown on the Balance Sheet
will be reversed, (iii) a warranty reserve equal to $40,000 will be established,
(iv) there shall be no accrual for liabilities which are not being assumed by
the Purchaser, (v) adjustments regarding reserves for excess and obsolete
inventory shall be made in accordance with the Thermo Electron Corporation
Policy/Procedure Statement dated October 1, 1993, as interpreted pursuant to the
memorandum from ▇▇▇ ▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇ dated October 26, 1995 which is attached
hereto as part of the Disclosure Statement, and (vi) the December Net Asset
Statement shall reflect normal year-end adjustments consistent with past
practice. In the event that the Purchaser disputes the December Net Asset
Statement, the Purchaser shall notify the Seller in writing of the amount,
nature and basis of such dispute on or before February 22, 1996 (the "Dispute
Notice"). The parties shall use their best efforts to resolve the dispute on or
prior to February 29, 1996. If they are unable to agree upon a resolution of the
dispute within such period, then either party may terminate this Agreement by
notice to the other party. At the Closing, the Base Purchase Price shall be
adjusted as follows (as so adjusted, the "Adjusted Purchase Price"):
(i) if the net tangible assets of the Seller as shown on the final
December Net Asset Statement are less than the Adjustment Amount,
the amount of the deficiency shall be subtracted from the Base
Purchase Price; and
4
6
(ii) if the net tangible assets of the Seller as shown on the December
Net Asset Statement are greater than the Adjustment Amount, the
excess shall be added to the Base Purchase Price.
If no adjustment is made pursuant to this subsection (b), the Adjusted Purchase
Price shall be the Base Purchase Price.
(c) OPERATING ADJUSTMENT. The parties intend that the Seller operate
the Business for the account of the Purchaser for the period commencing December
31, 1995 (the "Effective Date"). Accordingly, as an additional purchase price
adjustment, the Adjusted Purchase Price shall be further adjusted as follows (as
so adjusted, the "Final Purchase Price"). By no later than 10 business days
following the Closing Date, the Seller shall prepare and deliver to the
Purchaser a statement of the net cash generated or consumed by the Business (the
"Operating Statement") between the Effective Date and the Closing Date. It is
understood and agreed by the parties hereto that the Operating Statement shall
be computed by the Seller without taking into consideration any cash consumed by
the Business due to (i) the payment of any liabilities of the Business which are
not Assumed Liabilities, and (ii) any transaction relating to assets of the
Business which are not Assets being purchased by the Purchaser (it being
understood that lease payments and insurance policy premiums shall be included
in computing the operating Statement). In the event the Purchaser disputes the
Operating Statement, the Purchaser shall notify the Seller in writing of the
amount, nature and basis of such dispute within 5 business days after delivery
of the Operating Statement (the "Operating Adjustment Dispute Notice"). The
parties shall use their best efforts to resolve the dispute within 10 days after
delivery of the Operating Adjustment Dispute Notice. If they are unable to agree
upon a resolution of the dispute within such 10-day period, the dispute shall be
submitted to Deloitte & Touche for resolution. The determination of such
accountants as to the resolution of any dispute shall be binding and conclusive
upon all parties hereto. The fees and expenses of such accountants shall be
shared equally by the Seller and the Purchaser. Immediately upon the expiration
of the 10-day period for giving the Operating Adjustment Dispute Notice (if no
Operating Adjustment Dispute Notice is given), or immediately upon the
resolution of disputes, if any, the Adjusted Purchase Price shall be reduced by
the net amount of any cash generated by the Business between the Effective Date
and the Closing Date, or increased by the net amount of any cash consumed by the
Business between the Effective Date and the Closing Date. Any amounts due to the
Purchaser or the Seller pursuant to this subsection (c) shall be payable no
later than three business days following the date of determination of the
Adjusted Purchase Price. All such amounts shall be paid in cash, by cashiers or
certified check or by wire transfer of immediately available funds to an account
designated by the party receiving payment.
(d) ALLOCATION OF PURCHASE PRICE. The Base Purchase Price shall be
allocated among the Assets and the Assumed Liabilities as the parties shall
agree on or prior to the Closing Date. The Seller and the Purchaser each will
report the federal, state, provincial, foreign and local income and other tax
consequences of the purchase and sale contemplated hereby in a manner consistent
with such allocation and will not take any position inconsistent therewith upon
examination of any tax return, in any refund claim, in any litigation, or
otherwise. If the Base Purchase Price is adjusted pursuant to Section 1.02(b) or
(c) hereof, such allocation shall be
5
7
appropriately modified by the parties to reflect increases or decreases in the
various categories which give rise to such adjustment.
1.03 ASSUMPTION OF LIABILITIES. (a) Subject to the terms and conditions
contained in this Agreement, at the Closing the Purchaser will assume and agree
to pay or perform, or cause to be paid or performed, only those liabilities and
obligations of the Seller (whether created or accrued before or after the
Closing) that: (i) are reflected (but only to the extent so reflected) on the
balance sheet for the Seller at November 30, 1995, attached hereto as EXHIBIT B
(the "Balance Sheet"), except for any such liabilities which are Excluded
Liabilities as defined in Section 1.03(b) and except for any such liabilities
discharged since the date of the Balance Sheet; (ii) have been incurred by the
Seller since the date of the Balance Sheet, but only to the extent such
liabilities have been incurred in the ordinary course of business consistent
with past practice; (iii) arise after the date hereof (the "Signing Date") under
any contract, lease, license, permit or other agreement assigned to the
Purchaser pursuant hereto; or (iv) arise out of (A) warranty obligations
undertaken by the Seller with respect to products shipped or sold, or services
rendered, prior to the Closing or (B) the product recalls set forth on Schedule
2.20(d) of the Disclosure Statement (such obligations and liabilities being
referred to herein as the "Assumed Liabilities").
(b) EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
contained in Section 1.03(a) of this Agreement, the Purchaser shall not assume,
agree to pay, perform, discharge or be liable with respect to any liabilities,
obligations or claims of Seller other than the Assumed Liabilities (all such
other liabilities or obligations referred to collectively herein as the
"Excluded Liabilities"). The Excluded Liabilities shall include, but shall not
be limited to:
(i) any and all liabilities, damages, losses and expenses
(including, without limitation, attorney's fees) ("Losses") incurred by the
Purchaser arising out of: (A) any actual or alleged release of any Materials of
Environmental Concern (as defined in Section 2.14) into the environment (I)
relating to the operation of the Business prior to the Closing or (II) at any
site owned or operated by the Seller whether prior to or after the Closing or
(III) to which any Materials of Environmental Concern were actually or allegedly
transported by or on behalf of the Seller prior to or after the Closing; or (B)
the actual or alleged violation of any Environmental Law (as defined in Section
2.14) by the Seller commencing prior to or after the Closing;
(ii) any legal suit, action or proceeding of any kind (it being
understood that such terms shall not include the cost of fulfilling warranty
obligations which are Assumed Liabilities hereunder) filed and commenced against
the Seller prior to the Closing, or the commencement of which was threatened
prior to the Closing, including, without limitation, the proceedings set forth
on Schedule 1.03(b)(ii) of the Disclosure Schedule (the "Excluded Litigation");
(iii) any liability, whether direct or indirect, for federal,
state, local, foreign and provincial or other income, capital gains, property
transfer, payroll, withholding, excise, sales, use, use and occupancy, business
and occupation, mercantile, real estate, personal property, value added, capital
stock, franchise or other taxes and estimated taxes relating thereto (including
6
8
interest, penalties and additions to such taxes) with respect to any taxable
periods ending on or before the Effective Date and the portion ending on the
Effective Date of any taxable period that begins before but has not ended on the
Effective Date, including, without limitation, any accruals for deferred taxes;
(iv) any overdraft facility, bank credit line or third party
indebtedness for money borrowed to the extent not reflected on the Balance
Sheet;
(v) all of the Seller's indebtedness to Shawmut Bank;
(vi) the Subordinated Notes of the Seller due 2002 held by ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇;
(vii) subject to Section 4.03(c), (A) any claims against, or
liabilities or obligations of or in connection with, any Plans (as defined in
Section 4.03) not specifically assumed by the Purchaser pursuant to this
Agreement, (B) any claims for severance pay, termination pay, redundancy pay,
pay in lieu of notice or any other claim for similar compensation or damages
relating to the termination of any employee prior to the Closing (including,
without limitation, the Chen arbitration and the ▇▇▇▇▇▇ MCAD dispute) or (C) any
claims for compensation or bonuses by any employee for or relating to services
rendered prior to the Closing (provided, however, that such claims for
compensation or bonuses shall be deemed to be Assumed Liabilities to the extent
they arise in the ordinary course of the Business in the period between the
Effective Date and the Closing); provided that the foregoing clauses (B) and (C)
shall not include claims for severance, termination or redundancy pay or pay in
lieu of notice relating to the termination of any Transferred Employee (as
defined in Section 4.03) on or after the Closing;
(viii) any claim (including, without limitation, claims alleging
death or injury to persons or damage to property), whether based in tort,
contract or otherwise resulting from or caused by any product shipped or sold,
or service provided, by the Seller prior to the Closing (it being understood
that the cost of fulfilling warranty obligations of the Business arising prior
to Closing shall be an Assumed Liability hereunder);
(ix) any claim, suit or proceeding relating to the actual or
alleged infringement commencing prior to the Closing by the Seller of the
intellectual property rights of any third party;
(x) all amounts due to or accrued on behalf of KPMG Peat Marwick,
the Seller's auditors;
(xi) liabilities or obligations under foreign currency contracts
to which the Seller is a party; and
(xii) agreements relating to the sale or other disposition of any
Assets (other than inventory sold in the ordinary course of business) prior to
Closing.
7
9
1.04 CLOSING.
(a) GENERAL. The Closing of the sale and purchase of the Assets
contemplated by this Agreement (the "Closing") shall take place on February 29,
1996, or at such earlier time as the parties mutually agree. The date on which
the Closing occurs is referred to herein as the "Closing Date."
(b) DELIVERIES AND PROCEEDINGS AT CLOSING.
(i) DELIVERIES BY THE SELLER. The Seller will deliver to the
Purchaser such bills of sale and other instruments of conveyance, transfer and
assignment, dated the Closing Date and in form and substance reasonably
satisfactory to Purchaser's counsel, as shall in the judgment of such counsel be
sufficient to vest in the Purchaser all of the Seller's right, title and
interest in and to the Assets. In addition to the foregoing, the obligations of
the Purchaser to consummate the transactions contemplated hereby are subject to
the satisfaction, on or before the Closing, of the following conditions (unless
waived in writing by the Purchaser):
(A) CONSENTS. Any governmental authority having jurisdiction
over the Seller, the Purchaser or the Assets, or any other person in any
contractual or other relationship with the Seller, to the extent that its
consent or approval is required by applicable law or regulation or any
applicable contract or other instrument for the performance of this Agreement or
the consummation of the transactions contemplated hereby or for the continuation
of any material existing contractual relationship, shall have granted any
necessary consent or approval; PROVIDED, HOWEVER, that it shall not be a
condition to closing that consents to the transfer to Purchaser of Seller's
right, title and interest in and to the contracts set forth on Schedule 2.02 of
the Disclosure Statement (other than items 2 and 3 thereon) shall have been
received.
(B) PERMITS AND APPROVALS. Any and all consents, permits
approvals or other actions of any person, jurisdiction or authority required in
the reasonable opinion of the Purchaser for lawful consummation of the
transactions contemplated hereby shall have been obtained, and shall be in full
force and effect, and no such consent, permit, approval or other action shall
contain any provision that in the reasonable judgment of the Purchaser is unduly
burdensome.
(C) GOOD STANDING CERTIFICATES. The Seller shall have
delivered to the Purchaser a long-form corporate good standing certificate from
its jurisdiction of incorporation and good standing certificates from each
jurisdiction in which the Seller is qualified to transact business.
(D) LEGAL OPINION. The Purchaser shall have received an
opinion of Hill & ▇▇▇▇▇▇, counsel to the Seller, dated the Closing Date and in
form reasonably satisfactory to Purchaser and its counsel.
8
10
(E) NO LITIGATION. No legal action or other proceedings to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement shall be pending or threatened.
(F) ESCROW AGREEMENT. The Escrow Agreement shall have been
executed by the parties hereto and shall be in full force and effect.
(G) CONSULTING AGREEMENTS. The Purchaser and each of ▇▇▇▇▇
▇▇▇▇▇ shall have entered into a consulting agreement in the form attached hereto
as EXHIBIT C.
(H) NONCOMPETITION AND CONFIDENTIALITY AGREEMENTS. The
Purchaser and each of ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ shall have entered into a
noncompetition and confidentiality agreement in the form attached hereto as
EXHIBITS D AND E, respectively.
(I) PERSONAL GUARANTEES. The Purchaser and each of ▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ shall have entered into a personal guarantee agreement in
the form attached hereto as EXHIBITS F AND G, respectively (the "Personal
Guarantees").
(J) MATTERS REGARDING ▇▇▇▇▇▇▇ ▇▇▇▇▇▇. The Seller and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ shall have entered into an amendment (in form and substance reasonably
satisfactory to the Purchaser) to the Employment Agreement between them pursuant
to which (i) ▇▇. ▇▇▇▇▇▇' employment by the Seller shall be terminated effective
on or before the Closing, and (ii) any severance payments to be made to ▇▇.
▇▇▇▇▇▇ pursuant to such termination shall be made prior to the Closing.
(K) FINANCING STATEMENTS. The Seller shall have delivered to
the Purchaser executed termination statements on Form UCC-3 (or other
appropriate forms) terminating all security interests of record with respect to
the Seller's assets being transferred to the Purchaser hereunder.
(L) DOCUMENTS SATISFACTORY. The form and substance of all
legal matters contemplated herein and of all papers used or delivered hereunder
shall be reasonably acceptable to the Purchaser, and the Purchaser shall have
received all documents that it may have reasonably requested in connection with
the transactions contemplated hereby, in form and substance reasonably
satisfactory to it.
(ii) DELIVERIES BY THE PURCHASER. The Purchaser will deliver to
the Seller by wire transfer the cash payment specified in Section 1.02(a)
hereof, and such instruments of assumption of liabilities, dated the Closing
Date and in form and substance reasonably satisfactory to the Seller's counsel,
as shall in the judgment of such counsel be sufficient to vest in the Purchaser
the obligations to satisfy and discharge the Assumed Liabilities. In addition to
the foregoing, the obligations of the Seller to consummate the transactions
contemplated hereby are subject to the satisfaction, on or before the Closing,
of the following conditions (unless waived in writing by the Seller):
9
11
(A) CONSENTS. Any governmental authority having jurisdiction
over the Seller, or any other person in any significant contractual or other
relationship with the Seller, to the extent that its consent or approval is
required by applicable law or regulation or any applicable contract or other
instrument for the performance of this Agreement by the Seller or the
consummation of the transactions contemplated hereby by the Seller shall have
granted any necessary consent or approval.
(B) PERMITS AND APPROVALS. Any and all consents, permits
approvals or other actions of any person, jurisdiction or authority required in
the reasonable opinion of counsel to the Seller for lawful consummation of the
transactions contemplated hereby shall have been obtained, and shall be in full
force and effect, and no such consent, permit, approval or other action shall
contain any provision that in the reasonable judgment of such counsel is unduly
burdensome.
(C) LEGAL OPINION. The Seller shall have received an opinion
of the General Counsel of the Purchaser, dated the Closing Date and in form
reasonably satisfactory to Seller and its counsel.
(D) NO LITIGATION. No legal action or other proceedings to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement shall be pending or threatened.
(E) DOCUMENTS SATISFACTORY. The form and substance of all
legal matters contemplated herein and of all papers used or delivered hereunder
shall be reasonably acceptable to the Seller and its counsel, and the Seller
shall have received all documents that it may have reasonably requested in
connection with the transactions contemplated hereby, in form and substance
reasonably satisfactory to it.
1.05 ADDITIONAL ACTION TO ASSURE TRANSFERS. Nothing in this Agreement shall
be construed to assign any contract, right, commitment, agreement, permit,
franchise, or claim included in the Assets (individually, a "Purchased Contract
Right") which is by its terms or by law nonassignable without the consent of the
other party or parties thereto, unless such consent shall have been given, or as
to which all the remedies for the enforcement thereof enjoyed by the Seller
would not, as a matter of law, pass to the Purchaser as an incident of the
assignments provided for by this Agreement. In order, however, to provide the
Purchaser the full realization and value of every Purchased Contract Right of
the character described above, the Seller at and after the Closing will, at the
request and under the direction of the Purchaser and in the name of the Seller
or otherwise as the Purchaser shall specify, take or cause to be taken all such
action (including, without limitation, the appointment of the Purchaser as
attorney-in-fact for the Seller, but with powers limited to the specific
purposes contemplated hereby) and do or cause to be done all such things as
shall in the reasonable opinion of the Purchaser or its counsel be necessary or
proper to (a) assure that the rights of the Seller under all Purchased Contract
Rights shall be preserved for the benefit of the Purchaser, and (b) facilitate
receipt by the Purchaser of the consideration to which the Seller would
otherwise be entitled in and under all Purchased
10
12
Contract Rights, which consideration shall be held for the benefit of, and shall
be delivered to, the Purchaser. In order to accomplish the foregoing, the Seller
may designate the Purchaser as subcontractor to perform obligations of the
Seller under Purchased Contract Rights. Nothing in this Section shall in any way
diminish the obligations hereunder of the Seller to use its best efforts to
obtain all consents and approvals and to take all such other actions prior to or
at Closing as are necessary to enable the Seller to convey or assign valid title
to all the Assets to the Purchaser. In no event shall the Seller be required to
make any payment relating to obtaining such consents and approvals.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to the Purchaser that, except as set
forth in a schedule (specifically identifying the relevant Section of this
Article II) to the Disclosure Statement:
2.01 ORGANIZATION AND GOOD STANDING. The Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all requisite corporate power and
authority to own or lease the properties and assets to be transferred by it
hereunder, to carry on the Business currently conducted by it as and where now
being conducted and to enter into this Agreement and to perform its obligations
hereunder. The Seller is duly qualified and in good standing as a foreign
corporation and duly authorized to do business in all jurisdictions wherein the
character of the properties owned or leased by it or the nature of the
activities thereof makes such qualification necessary, except where the failure
to so qualify would not have a material adverse effect upon the Business as
carried on by the Seller. The Seller has no subsidiaries and is not a partner or
joint venturer with any other person or entity.
2.02 AUTHORIZATION AND ENFORCEABILITY. The Seller has full right, power,
capacity and authority to execute, deliver and perform this Agreement and the
other agreements, documents and certificates executed and delivered by it
pursuant to this Agreement and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by the Seller of
this Agreement and of each instrument to be executed and delivered by the Seller
pursuant hereto (a) have been duly and validly authorized by all necessary
corporate actions on the part of the Seller, (b) will not contravene any
provision of the governing instruments of the Seller, nor violate any provision
of law, rule, ordinance or regulation or any order, judgment or decree
applicable to the Seller, (c) except as disclosed in Schedule 2.02 of the
Disclosure Statement, will not, with or without the giving of notice or the
lapse of time, or both, constitute a breach of or default under, require the
consent or approval of any other party to, or cause the acceleration of any
obligation under, any agreement or instrument to which the Seller is a party or
by which the Assets are bound, (d) will not result in the creation or imposition
of any lien, encumbrance, charge, claim or restriction upon any of the Assets,
and (e) will not result in the loss of or require the repayment of any
government grant, subsidy or tax credit. This Agreement has been duly executed
and delivered by the Seller, and the Agreement and each of the instruments to be
executed and delivered by them pursuant hereto shall constitute the legal, valid
and binding obligations of the Seller, enforceable in accordance with their
respective terms.
11
13
2.03 TITLE TO ASSETS; BOOKS AND RECORDS. Except as disclosed in Schedule
2.03 of the Disclosure Statement, the Seller has good title to all of the Assets
which it purports to own, and a valid leasehold or licensed interest in all of
the Assets which it purports to lease or license, in each case subject to no
mortgage, attachment, lien, pledge, option, title retention, conditional sale or
other security interest, restriction, claim, charge or other encumbrance of any
kind, and has the complete and unrestricted right to sell assign, transfer,
convey and deliver such Assets to the Purchaser at the Closing without any
restrictions of any kind. All liens set forth on Schedule 2.03 shall be
discharged at or prior to Closing.
2.04 LITIGATION. Except as disclosed in Schedule 2.04 of the Disclosure
Statement, the Seller is not engaged in, or a party to, or, to the Seller's
knowledge, threatened with, any claim or legal action or other proceeding before
any court, any arbitrator of any kind or any administrative agency, or any
governmental investigation, which seeks to prevent the execution, delivery or
performance of this Agreement or which affects the Business or any of the
Assets. Except as disclosed in Schedule 2.04 of the Disclosure Statement, there
is no (a) outstanding order, ruling, injunction, judgment, writ, decree or
stipulation, or (b) ongoing litigation (other than the Excluded Litigation), to
which the Seller is a party or by which any of the Assets are bound or which
would affect the Business or any of the Assets.
2.05 BROKERS. The Seller has not made any agreement or taken any other
action which might cause any person or entity to become entitled to a broker's
fee, finder's fee or commission from the Purchaser as a result of the
transactions contemplated by this Agreement.
2.06 FINANCIAL STATEMENTS. Schedule 2.06 of the Disclosure Statement sets
forth (a) the unaudited balance sheet of the Seller as of November 30, 1995 and
the unaudited statement of operations and retained earnings of the Seller for
the eleven-month period then ended, and (b) the audited balance sheet of the
Seller as of December 31, 1994, December 31, 1993 and December 31, 1992, and the
audited statements of operations and retained earnings, and statement of cash
flows of the Seller for the twelve-month periods then ended, together with a
report of KPMG Peat Marwick thereon (the "Financial Statements"). Except as set
forth on Schedule 2.06 of the Disclosure Schedule, the Financial Statements
fairly present the financial condition of the Seller as at the dates specified
and the results of operations for the periods then ended, and have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis with previous years both as to classification of
items and amounts (except as may be indicated therein or in the notes thereto,
and subject to normal year-end adjustments and the lack of footnotes in the case
of the interim financial statements).
2.07 NO CHANGES. Except as disclosed on Schedule 2.07(a) of the Disclosure
Statement, since the date of the Balance Sheet (November 30, 1995), there has
not been:
(a) Any material adverse change in the financial or other condition,
results of operation, assets or liabilities of the Business;
12
14
(b) Any damage, destruction or loss (whether or not covered by
insurance) to property which materially and adversely affects the condition
(financial or otherwise), results of operation, assets, liabilities or prospects
of the Business;
(c) Any increase in the compensation or benefits payable or to become
payable by the Seller to any of its employees or officers, or any bonus
arrangement made with any thereof, except for ordinary increases for
non-management employees in accordance with prior practices;
(d) To the Seller's knowledge, any statute, rule, regulation,
ordinance, order or government policy adopted, which is specifically applicable
to the Seller's business (and not businesses in general), which may adversely
affect the Business or any of the Assets;
(e) Any material reduction in the rate of, or aggregate gross margins
associated with, bookings or orders for the commercial products and services of
the Business, or any material deterioration in the commercial backlog level of
the Business;
(f) Any sale, assignment, transfer or other disposition of any
tangible asset used in the Business, except in the ordinary course of business,
or any sale, assignment, lease, transfer or other disposition of any patent,
trademark, trade name, brand name, copyright, license or other intangible asset
used in the Business;
(g) Any amendment, termination or waiver of any material right
belonging to the Seller, including with respect to government contracts;
(h) Any strike, labor dispute or any other event, development or
condition of any character relating to the Seller's employees and adversely
affecting the Business or the Assets;
(i) Any declaration, setting aside or payment of any dividend, or
other distribution, in respect of the Seller's capital stock, or any direct or
indirect redemption, purchase or other acquisition of such stock;
(j) Any mortgage, lien, attachment, pledge, encumbrance or security
interest created on any asset, tangible or intangible, of the Seller, or
assumed, either by the Seller or by others, with respect to any such asset,
except for liens for taxes not yet due, and for equipment leases and purchase
money security interests entered into in the ordinary course of business;
(k) Any indebtedness or other liability or obligation (whether
absolute, accrued, contingent or otherwise) incurred, or other transaction
(except that reflected in this Agreement) engaged in by the Seller, except in
the ordinary course of business consistent with past practice;
(l) Any transaction or contract with a Shareholder, a director or
officer of the Seller, or a member of any such person's family, including a
loan, change of employment conditions, change of pension rights or bonus; or
13
15
(m) Any other action or event not in the ordinary course of business.
2.08 PURCHASE AND SALE COMMITMENTS. The outstanding purchase commitments
included in the Assumed Liabilities are not in excess of the normal, ordinary
and usual requirements of the Business, and the aggregate of the contract prices
under such outstanding purchase commitments is not so excessive when compared
with current market prices for the relevant commodities or services that a loss
is likely to result. There are no suppliers of goods or services to the Business
with respect to which practical alternative sources of supply, or comparable
products, are not available on commercially reasonable terms and conditions.
2.09 INTELLECTUAL PROPERTY. The Seller owns the patents, patent rights,
registered trademarks, trade names and unregistered trademarks listed or
described in Schedule 2.09 of the Disclosure Statement, free and clear of any
encumbrance, lien, claim or right of others. The conduct of the Business does
not infringe any patent, trademark, trade name, copyright or other intellectual
property right of any other person. The Seller has never received any claim or
demand, or notice of any proceeding of any kind, alleging any such infringement,
nor, to the Seller's knowledge, has any such claim, demand or proceeding been
threatened. The conduct of the Business does not utilize any patent, trademark,
trade name, copyright, trade secret, vendor or customer list which is not
included in the Assets. Except as disclosed in Schedule 2.09 of the Disclosure
Statement, the Seller is not aware of any infringement or unauthorized use by a
third party of any copyright, patent, patent right, registered trademark, trade
name or unregistered trademark listed or described in said Schedule 2.09 or of
any other invention, technology, technical know-how, process, design, trade
secret, vendor or customer list or other intellectual property included in the
Assets.
2.10 LABOR RELATIONS. Except as disclosed on Schedule 2.10 of the
Disclosure Statement, (a) no employee of the Seller is represented by any union
or other labor organization, and the Seller is not a party to any collective
bargaining agreement with any labor union or other labor organization with
respect to any employee of the Seller; (b) there is no unfair labor practice
complaint pending or threatened relating to any such employee, nor has any such
complaint been pending or threatened at any time during the last three years;
(c) there is no labor strike, dispute, slow down or stoppage actually pending or
threatened on the part of any such employee which would affect the Business, nor
has any such event occurred or been threatened at any time during the last three
years; (d) there is no grievance, arbitration, charge or other proceeding
arising from or relating to complaints made or filed by any such employee
against the Seller, nor has any such grievance, arbitration, charge or other
proceeding been made or filed at any time during the last three years; and (e)
no private agreement restricts the ability of the Purchaser to relocate, close
or terminate any of the operations or facilities of the Business.
2.11 GOVERNMENTAL CONSENTS. No consent, approval or authorization of, or
registration or filing with, any governmental authority or other regulatory
agency is required by the Seller in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
14
16
2.12 CONTRACTS.
(a) Schedule 2.12(a) of the Disclosure Statement contains a list of
all contracts, commitments, agreements, sales and purchase orders and other
obligations relating to the Business which are Assets or Assumed Liabilities
(including any and all amendments thereto), to which the Seller is a party or by
which the Seller or any of the Assets may be bound, and which involves unpaid or
unperformed aggregate obligations by either the Seller or a third party of more
than $20,000, or which otherwise materially affects the Business (each, a
"Material Contract").
(b) Except as set forth on Schedule 2.12(b) of the Disclosure
Statement, the Seller has made available to the Purchaser a true, correct and
complete copy of each such Material Contract.
2.13 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 2.13 of the
Disclosure Statement, all of the Accounts Receivable have arisen in the ordinary
course of business and are in the process of collection.
2.14 ENVIRONMENTAL MATTERS.
(a) There is no pending or, to Seller's knowledge, threatened civil or
criminal litigation, written notice of violation, formal administrative
proceeding or investigation, inquiry or information request by any governmental
authority under any Environmental Law (as defined below) involving or relating
to the Business. Set forth in Schedule 2.14 of the Disclosure Schedule is a list
of all of the solid and hazardous waste transporters and treatment, storage and
disposal facilities that have been utilized by the Seller within the past five
years. The Seller has not received written notice of any liability under any
Environmental Law of any such transporter or facility.
(b) For purposes of this Agreement: (i) "Environmental Law" means any
federal, state, foreign or local law or statute, or any rule or regulation
implementing such law or statute, in each case existing and in effect on the
date hereof relating to pollution or protection of the environment, including,
without limitation, any statute or regulation pertaining to (A) treatment,
storage, disposal, generation or transportation of Materials of Environmental
Concern (as defined below); (B) air, water and noise pollution; (C) groundwater
and soil contamination; (D) the release or threatened release into the
environment of hazardous substances, or solid or hazardous waste, including,
without limitation, emissions, discharges, injections, spills, escapes or
dumping of Materials of Environmental Concern; (E) the protection of wildlife,
marine sanctuaries and wetlands, including without limitation all endangered and
threatened species; (F) above ground or underground storage tanks, vessels and
containers; (G) abandoned, disposed or discarded barrels, tanks, vessels,
containers and other closed receptacles; and (H) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
Materials of Environmental Concern; (ii) the terms "release" and "environment"
shall have the meaning set forth in the federal Comprehensive Environmental
Compensation, Liability and Response Act of 1980, as amended ("CERCLA"); and
(iii) "Materials of Environmental Concern" means any pollutants or
15
17
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and hazardous wastes (as such terms are defined under the federal
Resources Conservation and Recovery Act of 1976, as amended), radioactive
materials, toxic materials, oil or petroleum and petroleum products.
2.15 GOVERNMENTAL REGULATION. There is no fact or circumstance known to the
Seller relating to governmental regulation which would prevent or materially
limit or restrict the Purchaser from continuing to operate the Business in the
manner in which it is presently conducted by the Seller. There are no disputes
pending between the Seller and any governmental authority about the operations
of the Business as presently being conducted.
2.16 NATURE OF ASSETS. Except as disclosed in Schedule 2.16 of the
Disclosure Statement, there has not been excluded from the Assets any assets,
properties or rights which are necessary to the operation of the Business.
2.17 NO UNDISCLOSED LIABILITIES; NO EXISTING DEFAULTS. The Seller has no
liabilities or obligations of any nature other than those shown on the Balance
Sheet and those which have arisen since the date of the Balance Sheet in the
ordinary course of business which are not in the aggregate or individually
material. As used in the preceding sentence, the term "liability" includes any
indebtedness, claim, loss , damage, deficiency (including deferred income tax),
cost, expense, guaranty or responsibility, whether known or unknown, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, asserted or
unasserted, due or to become due, or otherwise. Except as set forth in Schedule
2.20(c) of the Disclosure Statement, the Seller is not in default or violation,
and there exists no condition or event which, after notice or lapse of time or
both, would constitute such a default or violation, under any commitment,
contract, agreement, license, lease or other instrument, whether written or
oral, by which any of the Assets is bound or to which the Purchaser will become
subject as an Assumed Liability.
2.18 EMPLOYEES. (A) Set forth on Schedule 2.18 of the Disclosure Statement
is a list of all employees of the Seller as of the date hereof (the "Business
Employees"), their respective dates of hire and their respective dates of birth.
Except as indicated by an asterisk on said Schedule 2.18, no Business Employee
has advised any officer of the Seller that he or she intends to terminate
employment with the Business or not to accept employment by the Purchaser.
Schedule 2.18 of the Disclosure Statement also sets forth for each Business
Employee such person's current salary, date of last adjustment in salary, and
date and amount of most recent bonus.
(b) Schedule 2.18 of the Disclosure Statement also lists all employee
benefit plans (as defined in Section 3(3) of ERISA), and all compensation plans,
agreements or arrangements, including, without limitation, insurance coverage,
disability benefits, bonus, deferred compensation, incentive compensation,
severance or termination pay, severance benefit plan, post-retirement
compensation, change in control compensation, death benefit, stock purchase,
phantom stock, stock appreciation and stock option plans or arrangements and
vacation, maintained or contributed to by or on behalf of the Seller (the
"Plans"). The Seller does not provide medical coverage under the Seller's
medical and dental plans for former employees of the
16
18
Business who have retired. All Plans of the Seller have been administered in
compliance with their terms, ERISA and, where applicable, the requirements of
the Internal Revenue Code (the "Code"). Each Plan that meets or purports to meet
the requirements of Code Section 401(a) (a "Qualified Plan") has received a
favorable determination letter from the Internal Revenue Service ("IRS") and no
event has occurred and no condition exists which could reasonably be expected to
result in the revocation of any such determination. The Seller has heretofore
delivered to the Purchaser true and complete copies or accurate written
descriptions of all of the Plans. Except as described in Schedule 2.18 of the
Disclosure Statement: (i) there are no inquiries or investigations by the IRS,
the U.S. Department of Labor, no termination proceedings and no actions, suits
or claims pending or, to the knowledge of the Seller, threatened against any
Qualified Plan or the assets thereof; and (ii) no act or omission has occurred
and no condition exists with respect to any employee benefit plan maintained by
the Seller or any ERISA Affiliate that would subject the Seller or the Assets to
any fine, penalty, tax or liability of any kind imposed under ERISA or the Code.
2.19 PRINCIPAL CUSTOMERS. Set forth on Schedule 2.19 of the Disclosure
Statement is a list of the 25 largest customers of the Business.
2.20 MATTERS RELATING TO THE PRODUCTS OF THE BUSINESS.
(a) BACKLOG. Schedule 2.20(a) of the Disclosure Statement contains an
accurate list of all commercial (non-military) purchase orders for the Seller's
services and products that comprise the Seller's backlog as of the Effective
Date. The aggregate amount of such backlog is not less than $900,000. All such
purchase orders and any quotations for work which are outstanding as of the date
of this Agreement contain terms and conditions that are consistent with the
Seller's practices over the past year.
(b) PRODUCT QUALITY. Except as set forth in Schedule 2.20(b) of the
Disclosure Statement, since January 1, 1995, there has not existed any return of
shipments by customers, cancellation of purchase orders, rejection of products
by customers or claims by customers for allowances that would indicate a problem
with respect to the quality of any products sold by the Seller. Since January 1,
1995, no products sold by the Seller have been authorized to be returned or
rejected by the Purchaser which products have not, in either case, been returned
to and accepted by the Seller prior to the Closing, except as disclosed in said
Schedule 2.20(b) and except for such returns and rejections of items occurring
in the normal course of business and not exceeding $50,000 in the aggregate.
(c) PRODUCT WARRANTIES. A statement of the current standard product
warranty used for each of the catalog products of the Seller is set forth on
Schedule 2.20(c) of the Disclosure Statement.
(d) RECALLS. Except as set forth on Schedule 2.20(d) of the Disclosure
Statement, there is no basis for the recall, withdrawal or suspension of any
approval by any governmental regulatory agency with respect to any product or
service sold or proposed to be sold by the Seller. Except as set forth on
Schedule 2.20(d), none of the products or services of
17
19
the Seller is the subject of any recall proceedings, no such proceedings have
been threatened, and no product or service of the Seller has ever been recalled.
(e) INVENTORY. Except as set forth in Schedule 2.20(e) of the
Disclosure Schedule, (i) all inventory of the Seller, whether or not reflected
on the Balance Sheet, consists of a quality and quantity usable and salable in
the ordinary course of business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Balance Sheet or on the accounting records of the
Seller as of the Closing Date, as the case may be, (ii) all inventories not
written off have been priced at the lower of cost or market value on a FIFO
basis, and (iii) the quantities of each item of inventory (whether raw
materials, work-in-progress, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Business.
2.21 FIXED ASSETS. Except as set forth on Schedule 2.07(a) of the
Disclosure Statement, all of the fixed assets of the Business are in normal
operating condition and repair, including normal wear and tear and occasional
breakdowns in the ordinary course of business. Normal maintenance has been
performed with respect to such fixed assets.
2.22 NO TERMINATION OF RELATIONSHIPS. The Seller is not aware that any
material relationship between the Business and a distributor, customer,
supplier, employee or other person will be terminated or adversely affected as a
result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
2.23 INSURANCE. Schedule 2.23 of the Disclosure Schedule sets forth a list
(including the name of the insurer, the name of the policy holder, the name of
each insured, the policy number and periods of coverage, the scope of coverage
and a description of any retroactive premium adjustments or other loss-sharing
arrangements) of all policies of fire, theft, casualty, liability, burglary,
fidelity, workers compensation, business interruption, environmental, product
liability, automobile and other insurance under which the Seller is a party, a
named insured or otherwise the beneficiary of coverage. The Seller has not
received any notice from the insurer under any such policy disclaiming coverage,
reserving rights with respect to a particular claim or such policy in general,
or canceling or materially amending any such policy. All premiums due and
payable for such insurance policies have been duly paid, and such policies or
extensions or renewals thereof in such amounts will be outstanding and duly in
full force without interruption until the Closing Date. To the Seller's
knowledge, there exists no unusual condition or circumstance with respect to the
Business or the Assets which would cause the Purchaser's insurance carrier(s) to
charge the Purchaser premiums in excess of the premiums such carrier(s) would
have charged but for such unusual condition or circumstance.
2.24 TAXES. The Seller has prepared and duly and timely filed all federal,
state, local or foreign tax and other returns and reports which were required to
be filed, in respect of all income, franchise, excise, sales, use, property
(real and personal), payroll and other taxes, levies, imposts, duties, license
and registration fees, charges or withholdings of any nature whatsoever
("Taxes") applicable to the Seller, and has paid all Taxes shown as due on such
returns or for which an assessment has been received, except where the same are
being contested in good faith.
18
20
The Seller has delivered to the Purchaser true and complete copies of the Tax
returns of the Seller for the past three years. None of the federal, state,
local or foreign Tax returns of the Seller have been audited or examined by the
governmental department or agency having jurisdiction, nor has any deficiency
for any Tax with respect to the Seller been asserted which remains unpaid. No
waivers of any statutes of limitation are in effect in respect of any Taxes of
the Seller. The Seller has never filed a consolidated income tax return with any
other company or entity. The Seller will not have any liability for Taxes, or
for any interest, penalties or fines in respect thereof, for or in respect of
any Tax period commencing prior to the Closing, except to the extent reflected
on the Closing Net Asset Statement. The Seller has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party. There are no security interests in any of the Assets that arose in
connection with any failure (or alleged failure) by the Seller to pay any Tax.
2.25 ACCOUNTING FOR GOVERNMENT CONTRACTS. The pricing terms for all of the
Seller's current contracts with the U.S. Government are on a fixed-price basis.
The Seller has never entered into any contract with the U.S. Government on an
allocation of costs or accounting for cost basis, such that the Cost Accounting
Standards, as promulgated by the Cost Accounting Standards Board, would be
applicable to such contract.
2.26 COMPLIANCE WITH LAWS. Except as disclosed in Schedule 2.26 of the
Disclosure Statement, the conduct of the Business, as now conducted, complies in
all material respects with all applicable governmental laws, ordinances,
regulations, rules or orders. The Seller has not received any complaint from any
governmental authority, and none is threatened, alleging that the Seller has
violated any such law, ordinance, regulation, order or policy.
2.27 STATEMENTS TRUE AND CORRECT; FURTHER REPRESENTATIONS AND WARRANTIES.
The statements contained herein or in any written documents prepared and
delivered by or on behalf of the Seller pursuant to the terms hereof are true
and correct in all material respects, and such documents do not omit any fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading.
2.28 REPRESENTATIONS AND WARRANTIES SEPARATE. Each individual
representation and warranty contained herein shall be interpreted and enforced
separately, notwithstanding potentially overlapping subject matters. No
representation or warranty contained herein shall be construed as limiting any
other representation or warranty contained herein.
19
21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Seller as follows:
3.01 ORGANIZATION AND GOOD STANDING. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
3.02 AUTHORIZATION. The execution, delivery and performance by the
Purchaser of this Agreement and of each instrument to be executed and delivered
by the Purchaser hereunder has been duly and validly authorized by all necessary
corporate actions on the part of the Purchaser, will not contravene any
provision of the governing instruments of the Purchaser, nor violate any
provision of law, rule or regulation or any order, judgment or decree applicable
to the Purchaser, and will not, with or without the giving of notice or the
lapse of time, or both, constitute a breach of or default under, or require the
consent or approval of any other party to, any agreement or instrument to which
the Purchaser is a party or by which its property may be bound or affected.
3.03 VALIDITY AND ENFORCEABILITY. This Agreement has been, and all
instruments to be executed and delivered by the Purchaser hereunder shall be,
duly and validly authorized, executed and delivered by the Purchaser and shall
constitute legal, valid and binding obligations of the Purchaser, enforceable in
accordance with their respective terms.
3.04 LITIGATION. The Purchaser is not engaged in, or a party to, or
threatened with, any claim or legal action or other proceeding before any court,
any arbitrator of any kind or any administrative agency, or any governmental
investigation, which seeks to prevent the execution, delivery or performance of
this Agreement, nor does any basis for any such claim or legal action or other
proceeding or governmental investigation exist. There is no order, notice,
claim, litigation, proceeding or investigation by or before any court or
governmental agency pending or threatened against or affecting the Purchaser,
the outcome of which may adversely affect the ability of the Purchaser to
perform its obligations under this Agreement or to consummate the transactions
contemplated hereunder.
3.05 BROKERS. The Purchaser has not made any agreement or taken any other
action which may cause anyone to become entitled to a broker's fee, finder's fee
or commission from the Seller as a result of the transactions contemplated by
this Agreement.
3.06 GOVERNMENTAL CONSENTS. No consent, approval or authorization of, or
registration or filing with, any governmental authority or other regulatory
agency is required by the Purchaser in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
20
22
ARTICLE IV
CERTAIN COVENANTS
4.01 COSTS AND EXPENSES. Each party hereto shall pay all of its own
respective expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including (a) all costs and expenses stated
herein to be borne by a party and (b) all accounting and legal fees and closing
and settlement charges.
4.02 FURTHER ASSURANCES; COLLECTION OF ACCOUNTS RECEIVABLE.
(a) The Seller shall deliver to the Purchaser, from time to time and
at any time after the Closing, promptly after a request therefor and without
further payment by the Purchaser to the Seller, such instruments of assignment
and transfer, conveyances, bills of sale and other documents as the Purchaser
may reasonably request (and which, if practicable, the Purchaser will prepare)
in order to effect or evidence the transfer to the Purchaser of all of the
Seller's right, title, and interest in and to the Assets or to collect, and
reduce to the possession of the Purchaser, the Assets.
(b) The Purchaser shall deliver to the Seller, from time to time, and
at any time after the Closing, promptly after a request therefor and without
payment by the Seller to the Purchaser, such instruments of assumption as the
Seller may reasonably request (and which, if practicable, the Seller will
prepare) in order to effect or evidence the assumption by the Purchaser of the
Assumed Liabilities.
(c) (i) The Seller agrees that it shall forward promptly to the
Purchaser any moneys, checks or instruments received by it after the Closing
Date with respect to the Accounts Receivable, and shall provide to the Purchaser
such reasonable assistance as the Purchaser may request with respect to the
collection of any such Accounts Receivable, provided the Purchaser shall pay the
reasonable out-of-pocket expenses of the Seller and its officers, directors and
employees incurred in providing such assistance. For a period of six months
after the Closing Date (the "Collection Period"), the Purchaser shall use the
same efforts to collect the Accounts Receivable as it uses with respect to its
own receivables. All amounts received by the Purchaser from each account debtor
shall be allocated to the oldest outstanding receivable of such account debtor
which is not being contested by such account debtor, unless a payment is
specifically allocated by an account debtor to a particular receivable in
connection with a dispute. The Purchaser may, but shall not be obligated to, use
a collection agency or commence legal actions in connection with such collection
efforts. The Purchaser will use its best efforts to take no action which would
impair the collectability in full of the Accounts Receivable. Promptly after the
expiration of the Collection Period, the Purchaser shall give notice to the
Seller designating those Accounts Receivable which have not been collected as of
the end of the Collection Period and which the Purchaser wishes the Seller to
purchase. Within ten days after the receipt of such
21
23
notice from the Purchaser, the Seller shall purchase such designated Accounts
Receivable then remaining unpaid (without recourse to the Purchaser, and free
and clear of any liens or encumbrances thereon created by or attributable to the
Purchaser) for a purchase price equal to the unpaid principal balance thereof.
(ii) Upon the Seller's repurchase of any unpaid Account
Receivable, the Purchaser shall promptly deliver to the Seller any tangible
evidence of such Account Receivable then in the possession of the Purchaser or
under its control but in any event the Purchaser shall preserve and make
available to the Seller all documentation in relation to such Account
Receivables received by the Purchaser from the Seller at Closing. The Purchaser
will reasonably cooperate, at the Seller's expense, with the Seller in
collecting any Accounts Receivable which are repurchased by the Seller;
provided, however, that the foregoing shall not require the Purchaser to be a
party to any action brought by the Seller to collect such Accounts Receivable
unless the conveyance of the Account Receivable to the Seller is ineffective and
the Purchaser is deemed to hold title thereto. Any sums received in respect of
Accounts Receivable shall be credited to the oldest outstanding receivable of
such account debtor which is not being contested by such account debtor (unless
a payment is specifically allocated by an account debtor to a particular
receivable in connection with a dispute), and Purchaser shall promptly transmit
to Seller any such sums which are thus credited to Accounts Receivable after
their repurchase by Seller.
4.03 EMPLOYMENT AND EMPLOYEE BENEFITS.
(a) OFFER OF EMPLOYMENT. Except as otherwise set forth herein, the
Purchaser shall offer full time employment to all full time employees of the
Seller as of the Closing Date and (except as required by law) who are not then
absent due to serious bodily injury, long-term sickness or disability, layoff or
leave of absence; PROVIDED, HOWEVER, that ▇▇▇▇▇ ▇▇▇▇▇ shall not be offered such
employment and shall instead receive payments of (i) $47,218 and (ii) full
payment for his accrued vacation time ($12,358 assuming that the Closing takes
place on February 29, 1996), from Purchaser at the Closing. Such employment
shall be at will and not at less than the current cash compensation level of
each such employee. Employees who accept such offered employment are herein
collectively referred to as the "Transferred Employees". The Purchaser shall
afford to all Transferred Employees credit for all of their years of employment
with the Seller in the determination of (i) vesting and other rights under the
Purchaser's benefits programs and (ii) any severance payment made in connection
with a termination following the Closing Date (which terminations the Purchaser
reserve the absolute right to make in its discretion). The Seller shall
indemnify and hold the Purchaser harmless against any severance payments or
other obligations (including, without limitation, any liability for wrongful
discharge) that may be due by reason of (x) termination of employment of any
employees of the Seller who are not Transferred Employees whether or not such
termination occurred before or after the Closing Date, and (y) the sale of the
Business to the Purchaser being considered a constructive termination of
employment for Transferred Employees.
(b) NO THIRD PARTY RIGHTS. Nothing contained in this Agreement shall,
under any circumstances whatsoever, be construed as, expressly or impliedly,
constituting or creating any employment contract, offer of employment, promise
of continuing employment, promise of
22
24
employee benefits, or other obligation of any other kind of or by the Purchaser,
to, or in favor of, any employees or consultants of the Seller, and the
Purchaser expressly disclaims any and all liability to any such third party
arising out of this Agreement.
(c) EMPLOYEE BENEFITS. Contingent upon the occurrence of the Closing:
(i) GENERAL. Subject to this Section 4.03(c), each Transferred
Employee initially shall be provided with benefits, in the aggregate,
on a basis substantially consistent with the Purchaser's normal
practice for its existing comparable employees. The Purchaser shall
not be constrained by this Agreement from terminating the employment
of any Transferred Employee or from modifying or terminating any
benefit plan or program or other terms or conditions of employment at
any time or from time to time.
(ii) 401(k) PLAN. Effective as of the Closing Date, the Seller
shall cause each Transferred Employee to become fully vested in his or
her account balance under the Seller's Retirement Savings Plan (the
"Seller's 401(k) Plan"). The Purchaser shall take all action necessary
and appropriate to extend coverage, effective as soon as possible
after the Closing, under the Thermo Electron Corporation Money Match
Plus 401(k) Plan (the "Purchaser's 401(k) Plan") to the Transferred
Employees. Such Transferred Employees shall be credited under the
Purchaser's 401(k) Plan, for eligibility and vesting purposes, with
the service credited under the terms of the Seller's 401(k) Plan. The
Seller shall provide the Purchaser with all such information as is
necessary for the Purchaser to carry out its obligations under the
foregoing sentences. The Seller shall cause any and all contributions
that are required under the Seller's 401(k) Plan for the period prior
to the Closing Date to be made prior to distribution to Transferred
Employees or rollover to the Purchaser's 401(k) Plan. The Purchaser
shall allow the Transferred Employees to make direct cash rollovers
under Section 402(c) of the Code of their account balances from the
Seller's 401(k) Plan to the Purchaser's 401(k) Plan. The Purchaser
shall not assume the Seller's 401(k) Plan or any liability thereof.
The Seller agrees to take all appropriate steps necessary to terminate
the Seller's 401(k) Plan as soon as practicable following the Closing.
(iii) WELFARE PLANS.
(A) WELFARE BENEFIT PLAN CONTINUATION. Effective as of the
Closing Date, (I) the Seller shall cause each Transferred
Employee to cease to participate in each welfare benefit plan
sponsored by Seller (the "Seller's Welfare Plans") and (II) the
Purchaser shall cause each Transferred Employee to be covered by
the welfare benefit plans required to be provided by the
Purchaser to the Transferred Employees in accordance with Section
4.03(c)(i) of this Agreement except as otherwise provided in this
clause (iii). The Purchaser shall have no responsibility or
liability for medical or dental claims for employees (and/or
their dependents) who are terminated employees as of the Closing
Date and are currently receiving
23
25
or are eligible to receive continuation of medical coverage under
one or more of Seller's Welfare Plans under Section 4980B of the
Code and Part 6 of Subtitle B of Title I of ERISA.
(B) LONG-TERM DISABILITY BENEFITS. Employees and previous
employees of the Seller eligible to receive long-term disability
benefits pursuant to Seller's long-term disability benefits plan
(whether such eligibility arises prior to or after the Closing)
shall continue to receive such benefits pursuant to the terms of
such plan, and the Purchaser shall have no liability therefor.
(C) MEDICAL AND DENTAL BENEFITS. The Seller shall remain
liable for claims for medical and dental benefits incurred by
employees (and their respective covered dependents) of the Seller
(active or inactive) and by terminated employees previously
employed by the Seller (and their respective covered dependents)
under the Seller's medical and dental plan(s) with respect to
services and treatment rendered (i.e., claims incurred) prior to
the Closing Date. The Purchaser shall cause each of the
Transferred Employees (and their respective covered dependents)
to be covered immediately after the Closing under medical and
dental plans consistent with the Purchaser's existing plans.
These employees will be granted credit under the Purchaser's
medical and dental plans, for the year during which the Closing
Date occurs, with any deductible already incurred by such
Transferred Employees for such year under the plans of the Seller
and with any other out-of-pocket expenses that count against any
maximum out-of-pocket expense provision of Seller's or
Purchaser's medical or dental plan for such year. The Seller
agrees to provide this data to the Purchaser as soon as
practicable after the Closing Date. The Purchaser shall cause
there to be waived any pre-existing condition restrictions under
the Purchaser's medical and dental plans to the extent necessary
to provide immediate coverage under the Purchaser's medical and
dental plans to Transferred Employees (and their respective
covered dependents) who were previously covered under the
Seller's medical and dental plans.
(D) W-2 FORMS. As permitted by Revenue Procedure 84-77, the
Purchaser shall be responsible to provide the Transferred
Employees with a statement on Form W-2 covering calendar year
1996. The Seller shall provide the Purchaser with all records
concerning 1996 compensation and withholding, through the Closing
Date, for each Transferred Employee.
4.04 CORPORATE IDENTITY.
(a) CORION NAMES. The Seller acknowledges that, as of and following
the Closing, the Purchaser shall have the absolute and exclusive proprietary
right to all names, marks, trade names and trademarks incorporating "Corion" or
any derivative or variation thereof or any distinctive ▇▇▇▇ associated therewith
(collectively, "Corion Names") and to all corporate symbols or logos
incorporating "Corion" or any derivative or variation thereof or any distinctive
▇▇▇▇ associated therewith (collectively, "Corion Logos"), and that all rights
thereto and the goodwill
24
26
represented thereby and pertaining thereto are being transferred to the
Purchaser. From and after the Closing Date, the Seller will not use any Corion
Name or Corion Logo in or on any of its literature, sales materials or products
or otherwise in connection with the sale of any products or services.
(b) SELLER'S NAME CHANGE. As promptly as practicable following the
Closing Date, the Seller shall prepare and file with the Secretary of State of
the Commonwealth of Massachusetts all documents and instruments necessary to
change the Seller's corporate name to one bearing no resemblance to "Corion
Corporation".
4.05 RECORDS AND FILES; ACCESS.
(a) RECORDS AND FILES. For a period of seven years (or such longer
period as may be required by law or as may be reasonably requested by the
Purchaser as a result of audits, tax contests or pending disputes) from the
Closing Date, (i) the Seller shall not dispose of or destroy any of their
business records and files to the extent they relate primarily to the Business
without first offering to turn over possession thereof to the Purchaser, by
written notice at least 60 days prior to the proposed date of such disposition
or destruction; (ii) the Seller shall allow the Purchaser and its
representatives access to such records and files, during normal working hours at
its principal place of business or at any location where such records or files
are stored; and (iii) the Purchaser shall have the right, at its own expense, to
make copies of any such records and files; provided, however, that any such
access or copying shall be had or done in such manner so as not to unreasonably
interfere with normal conduct of the Seller's business. For a period of seven
years (or such longer period as may be required by law or as may be reasonably
requested by the Seller as a result of audits, tax contests or pending disputes)
from the Closing Date, (i) the Purchaser shall not dispose of or destroy any of
their business records or files to the extent they relate primarily to the
Business as conducted prior to the Closing Date without first offering to turn
over possession thereof to the Seller, by written notice at least 60 days prior
to the proposed date of such disposition or destruction; (ii) the Purchaser
shall allow the Seller and its representatives access to such records and files
during normal working hours at its principal place of business or at any
location where such records and files are stored; and (iii) the Seller shall
have the right, at its own expense, to make copies of any such records and
files; provided, however, that any such access or copying shall be had or done
in such manner so as not to unreasonably interfere with the normal conduct of
the Purchaser's business.
(b) ACCESS. The Seller and the Purchaser shall use their best efforts
to afford the other access to (i) in the case of the Seller, employees of the
Seller (if any) who remain employees of the Seller following the Closing Date
but are familiar with the Business and (ii) in the case of the Purchaser,
Transferred Employees, as such other shall reasonably request for its proper
corporate purposes, including, without limitation, the defense of legal
proceedings or the preparation and audit of tax returns. Such access may include
interviews or attendance at depositions or legal proceedings; provided, however,
that in any event all out-of-pocket expenses (excluding wage and salaries)
reasonably incurred by any party in connection with this Section 4.05(b) shall
be paid or promptly reimbursed by the party requesting such services.
25
27
(c) PERSONNEL. The Purchaser shall make available to the Seller the
services of the Transferred Employees to provide such assistance to the Seller
as may be reasonably required to permit the Seller to prepare its final tax
returns and financial statements, and to facilitate the Seller's orderly winding
up of its affairs.
4.06 PROPRIETARY INFORMATION; CONFIDENTIALITY.
(a) At all times subsequent to the Signing Date, the Seller shall hold
in confidence all knowledge and information of a secret or confidential nature
with respect to the Business ("Proprietary Business Information") and shall not
disclose, publish or make use of the same without the consent of the Purchaser.
(b) At all times subsequent to the Signing Date, the Seller shall hold
in confidence all knowledge and information of a secret or confidential nature
supplied to it by the Purchaser for its evaluation of the transactions
contemplated by this Agreement (such information, excluding the Proprietary
Business Information, which shall be governed by Section 4.06(a), the
"Evaluation Information").
(c) The obligations of the Seller under this Section 4.06 shall not
apply to any Proprietary Business Information or Evaluation Information which:
(i) shall have become public knowledge other than by breach of
this Agreement by the Seller or any of its Affiliates;
(ii) is required to be disclosed by legal process or by any
applicable law, rule or regulation of any governmental or regulatory body or
stock exchange;
(iii) becomes available to the Seller from a source other than
the Purchaser or its representatives or agents;
(iv) was known by the Seller prior to its receipt from the Seller
or from its representatives or agents;
(v) has been or is subsequently developed independently by the
Seller; or
(vi) is disclosed more than five years after the date of this
Agreement.
4.07 NO SOLICITATION OR HIRING OF FORMER EMPLOYEES. For a period of three
years after the Closing Date, neither the Seller nor an entity controlled by the
Seller shall, without the prior written consent of the Purchaser, solicit any
Transferred Employee to terminate his or her employment with the Purchaser or to
become an employee of the Seller or any such entity.
26
28
4.08 NONCOMPETITION AGREEMENT.
(a) UNDERTAKING. For a period of three years after the Closing Date,
neither the Seller nor an entity controlled by the Seller shall, directly or
indirectly, develop, manufacture, market, sell or resell, anywhere in the world,
any product which competes with any product manufactured, sold or developed by
the Business as of the Closing Date.
(b) INTERPRETATION AND REMEDIES. The parties hereto agree that the
duration and geographic scope of the noncompetition provision set forth in this
Section 4.08 are reasonable. In the event that any court of competent
jurisdiction determines that the duration or the geographic scope, or both, are
unreasonable and that such provision is to that extent unenforceable, the
parties hereto agree that the provision shall remain in full force and effect
for the greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that this noncompetition provision shall be
deemed to be a series of separate covenants, one for each and every county of
each and every state of the United States of America and each and every
political subdivision of each and every country outside the United States of
America where this provision is intended to be effective. The Seller agrees that
damages are an inadequate remedy for any breach of this provision and that the
Purchaser shall, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of this noncompetition provision.
4.09 COOPERATION IN LITIGATION. Except to the extent the Seller liquidates
following the Closing, each party hereto will fully cooperate with the other
party in the defense or prosecution of any litigation or proceeding which may be
instituted hereafter against or by such party relating to or arising out of the
conduct of the Business prior to or after the Closing Date (other than
litigation arising out of the transactions contemplated by this Agreement). The
party requesting such cooperation shall pay the out-of-pocket expenses
(including legal fees and disbursements) of the party providing such cooperation
and of its officers, directors, employees and agents reasonably incurred in
connection with providing such cooperation, but shall not be responsible to
reimburse the party providing such cooperation for such party's time spent in
such cooperation or the salaries or costs of fringe benefits or similar expenses
paid by the party providing such cooperation to its officers, directors,
employees and agents while assisting in the defense or prosecution of any such
litigation or proceeding.
4.10 REMOVAL OF ASSETS; CONDITION OF PREMISES WHEN SURRENDERED.
(a) REMOVAL OF ASSETS. Within two weeks following the Closing Date,
the Purchaser shall have removed the Assets from the Premises. For each day
thereafter on which any Assets remain on the Premises (unless there is a good
faith dispute as to whether any items remaining on the Premises constitute a
part of the Assets), the Purchaser shall pay to the Seller liquidated damages of
$716.22 per day. Except as set forth in Section 4.10(b), the Seller agrees that
such
27
29
liquidated damages shall be the total amount of damages to which Seller shall be
entitled as a result of such Assets remaining on the Premises.
(b) CONDITION OF PREMISES. The Premises shall be left by the Purchaser
in broom-clean condition in the same repair as exists on the Closing Date, with
all utilities stubbed or tied off in a safe and secure manner, damage by
casualty which is not the fault of the Purchaser or taking excepted. The
Purchaser hereby agrees to repair promptly any and all damage caused by the
removal of the Assets from the Premises. Any Assets not so removed shall be
deemed abandoned and may be removed and disposed of by the Seller in such manner
as the Seller shall determine, and Purchaser shall pay the costs and expenses
incurred by Seller in effecting such removal and disposition.
4.11 PRECLOSING COVENANTS. The Seller and Purchaser agree as follows with
respect to the period of time between the Signing Date and the Closing Date:
(a) GENERAL. Each of the Seller and the Purchaser will use its best
efforts to take all actions and do all things necessary, proper or advisable in
order to consummate and make effective the transactions contemplated by this
Agreement.
(b) OPERATION OF BUSINESS. The Seller will not engage in any practice,
take any action, or enter into any transaction other than in the ordinary course
of business consistent with its past custom and practice, except as otherwise
authorized in writing by the Purchaser. Except with respect to any act of force
majeure, the Seller will keep its business and property substantially intact,
including its present operations, equipment, working conditions, and
relationships with licensors, suppliers, customers, and employees.
(c) FULL ACCESS. The Seller will permit representatives of the
Purchaser to have full access at all reasonable times, and in a manner so as not
to interfere with the normal business operations of the Seller, to all premises,
properties, personnel, books, records, contracts, and documents of or pertaining
to the Seller. The Purchaser will treat as confidential and hold as such any
information concerning the Business which it receives from the Seller.
(d) PURCHASER'S APPROVAL OF CERTAIN TRANSACTIONS. Except as may be
otherwise required under this Agreement, from the date hereof to the Closing,
the Seller will not do any of the following without the prior approval of the
Purchaser:
(i) Incur or permit the incurrence of any obligation or other
liability in excess of $35,000;
(ii) Enter into any Material Contract (as defined in Section
2.12);
(iii) Voluntarily permit to be incurred any encumbrance of the
Assets, other than encumbrances existing on the date hereof;
28
30
(iv) Increase the rate of compensation by more than 5 percent for
any of the employees, or otherwise enter into or alter any employment,
consulting, or service agreement affecting the Business;
(v) Enter into any agreement for, or consummate, any sale, lease,
abandonment or other disposition of any Assets other than the
Inventories; or
(vi) Enter into any transaction other than in the ordinary course
of business.
(e) ADVANCE OF FUNDS BY PURCHASER. If requested by the Seller, but
only to the extent the Business consumes cash, the Purchaser will advance cash
to the Seller on an interest-free basis to fund the Seller's operations between
the Signing Date and the Closing Date. The amount of such advance will be due
and payable by the Seller to the Purchaser on the earlier of the Closing Date or
six months after the termination, for any reason, of this Agreement.
4.12 POSTCLOSING COVENANTS. It is understood and agreed by the parties
that, if the Seller is liquidated in connection with the winding up of its
affairs prior to the fulfillment of all of its or the Purchaser's obligations
hereunder, the Seller shall, prior to such liquidation, designate one its
shareholders to be the sole representative of the Seller in all matters
pertaining hereto, with full power of attorney to act on behalf of the other
shareholders. Seller shall notify the Purchaser promptly of such designation.
ARTICLE V
INDEMNIFICATION
5.01 INDEMNIFICATION BY THE SELLER. Subject to the provisions of Section
5.02, the Purchaser, upon demand, shall be indemnified by the Seller for the
full amount of all Damages (as defined in Section 5.05 below) suffered by the
Purchaser as a direct or indirect result of:
(i) the inaccuracy of any representation or warranty made by the
Seller in or pursuant to this Agreement;
(ii) any failure by the Seller to perform any obligation or
comply with any covenant or agreement specified herein or in any other document
executed at the Closing;
(iii) any claim asserted with respect to the Excluded Liabilities
and any other liabilities, obligations or claims that are not Assumed
Liabilities;
(iv) the failure of the Seller to obtain the protections afforded
by compliance with the notification and other requirements of the bulk sales
laws in force in the jurisdictions in which such laws may be applicable to
either the Seller or the transactions contemplated by this Agreement; and
29
31
(v) any liability of any kind, arising directly or indirectly out
of a default under, or a breach of, any contract or commitment of any kind by
the Seller prior to the Closing (it being understood that the cost of fulfilling
warranty obligations of the Business arising prior to the Closing shall not be
deemed to be such a liability).
The Purchaser shall give the Seller prompt written notice of any claim,
action or proceeding by a third party which is reasonably likely to result in a
claim for indemnification under this Section 5.01. Unless such claim, action or
proceeding is one which, if adversely determined, would have a materially
adverse impact (in the reasonable judgment of Purchaser) on the Purchaser's
liability in another proceeding, goodwill or reputation or on the future conduct
by the Purchaser of its business or on its Tax or accounting positions, the
Seller shall have the right, at its expense, to defend, contest, protest or
otherwise control the resolution of any such claim, action or proceeding. In
such case, the Seller shall keep the Purchaser apprised of material developments
with respect to any such claim, action or proceeding, and the Purchaser shall
have the right to consult with the Seller and to participate therein, subject to
the Seller's right of control thereof, at Purchaser's expense and with counsel
selected by the Purchaser. If the Seller shall notify the Purchaser (which
notification shall be in writing) that the Seller has elected to assume any such
defense, contest or protest, the Seller shall not be liable to the Purchaser
hereunder for any legal or other expense subsequently incurred by the Purchaser
in connection therewith.
5.02 LIMITATION OF SELLER'S LIABILITY. The right of the Purchaser to be
indemnified pursuant to Section 5.01(i):
(i) shall not apply until the sum of the Damages suffered by the
Purchaser on a cumulative basis equals or exceeds $55,000, provided that if and
when such Damages on a cumulative basis equal or exceed $55,000, the Purchaser
shall be entitled to recover 100% of the Damages suffered;
(ii) shall apply to claims based solely on representations and
warranties in Article II only if asserted by the Purchaser before the expiration
of the survival period set forth in Section 6.01.
In no event shall the Seller be liable to the Purchaser pursuant to this
Article V for Damages in excess of $2,225,000 (including the $350,000 placed
into escrow pursuant to the Escrow Agreement).
5.03 INDEMNIFICATION BY THE PURCHASER. Subject to the provisions of Section
5.04, the Seller, upon demand, shall be indemnified by the Purchaser for the
full amount of all Damages suffered by the Seller as a direct or indirect result
of:
(i) the inaccuracy of any representation or warranty made by the
Purchaser in or pursuant to this Agreement;
30
32
(ii) any failure by the Purchaser to perform any obligation or
comply with any covenant or agreement of the Purchaser specified herein or in
any other document executed at the Closing; and
(iii) any claim asserted with respect to the Assumed Liabilities.
The Seller shall give the Purchaser prompt written notice of any claim,
action or proceeding by a third party which is reasonably likely to result in a
claim for indemnification under this Section 5.03. Unless such claim, action or
proceeding is one which, if adversely determined, would have a materially
adverse impact (in the reasonable judgment of Seller) on the Seller's liability
in another proceeding, goodwill or reputation or on the future conduct by the
Seller of its business or on its Tax or accounting positions, the Purchaser
shall have the right, at its expense, to defend, contest, protest or otherwise
control the resolution of any such claim, action or proceeding. In such case,
the Purchaser shall keep the Seller and the Shareholders apprised of material
developments with respect to any such claim, action or proceeding and the Seller
shall have the right to consult with the Purchaser and to participate therein,
subject to the Purchaser's right of control thereof, at its expense and with
counsel selected by it. If the Purchaser shall notify the Seller that the
Purchaser has elected to assume any such defense, contest or protest, the
Purchaser shall not be liable to the Seller hereunder for any legal or other
expense subsequently incurred by the Seller in connection therewith.
5.04 LIMITATION OF PURCHASER'S LIABILITY. The right of the Seller to be
indemnified pursuant to Section 5.03(i):
(i) shall not apply until the sum of the Damages suffered by the
Seller on a cumulative basis equals or exceeds $55,000 provided that, if and
when such Damages on a cumulative basis equal or exceed $55,000, the Seller
shall be entitled to recover 100% of the Damages suffered; and
(ii) shall apply to claims based solely on representations and
warranties in Article III only if asserted by the Seller and the Shareholders
before the expiration of the survival period set forth in Section 6.01.
In no event shall the Purchaser be liable to the Seller pursuant to this
Article V for Damages in excess of $2,225,000.
5.05 DEFINITION OF "DAMAGES". For purposes of this Article V, the term
"Damages" shall be determined and computed by reference to the effect of the
compensable event on the party or parties entitled thereto, and shall be deemed
to include (i) all losses, liabilities, expenses or costs incurred by such party
or parties, including, without limitation, amounts paid in settlement, interest,
court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and (ii) interest at a rate
per annum equal to that announced from time to time by First National Bank of
Boston as its "base rate" (or the legal rate of interest, if lower) from the
date 90 days after written notice of any such claim for indemnification is given
to the party from whom indemnification may be sought, or if an
31
33
unliquidated claim, from such later date as the claim is liquidated, to the date
full indemnification is made therefor.
5.06 SOLE REMEDY. The sole remedy of the Purchaser for any and all claims
of the nature described in Section 5.01, and the sole remedy of the Seller for
any and all claims of the nature described in Section 5.03, shall be the
indemnities and the limitations thereon set forth in this Article V; PROVIDED,
HOWEVER, that the provisions of this Section 5.06 shall not in any way effect
the validity of the Personal Guarantees.
ARTICLE V(A)
CONDITIONS
5A.01 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligation of the
Purchaser to consummate the transactions to be performed by and in connection
with the Closing is subject to satisfaction of the following conditions (any and
all of which may be waived by the Purchaser):
(a) The representations and warranties set forth in Article II, (other
than those set forth in ▇▇▇▇▇▇▇ ▇.▇▇, ▇.▇▇ (▇), (▇), (▇), (▇) and (m), 2.08,
2.12, 2.14, 2.15, 2.17 (first sentence), 2.18, 2.19, 2.20 and 2.22), shall be
true and correct at and as of the Closing Date, and Purchaser shall have
received from Seller a certificate dated the Closing Date and executed by an
officer of Seller certifying that such representations and warranties are true
and correct as of the Closing Date;
(b) The Seller shall have performed and complied with all of its
covenants hereunder through the Closing;
(c) No action, suit, or proceeding shall be pending before any court
or administrative agency of any federal, state, or local jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would prevent
the consummation of the transactions contemplated by this Agreement, or would
affect adversely the right of the Purchaser to acquire the Assets; and
(d) The Seller shall have delivered to the Purchaser the documents and
instruments described in Section 1.04(b)(i).
5A.02 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of the Seller
to consummate the transactions to be performed by and in connection with the
Closing is subject to satisfaction of the following conditions (any and all of
which may be waived by the Seller):
32
34
(a) The representations and warranties set forth in Article III shall
be true and correct at and as of the Closing Date, and Seller shall have
received from Purchaser a certificate dated the Closing Date and executed by an
officer of Purchaser certifying that such representations and warranties are
true and correct as of the Closing Date;
(b) The Purchaser shall have performed and complied with all of its
covenants hereunder through the Closing;
(c) No action, suit, or proceeding shall be pending before any court
or administrative agency of any federal, state, or local jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would prevent
the consummation of the transactions contemplated by this Agreement, or would
affect adversely the right of the Seller to acquire the Assets; and
(d) The Purchaser shall have delivered to the Seller the documents and
instruments described in Section 1.04(b)(ii).
ARTICLE VI
MISCELLANEOUS
6.01 SURVIVAL OF REPRESENTATIONS. All representations and warranties set
forth in Article II with respect to the Seller and in Article III with respect
to the Purchaser shall survive the Closing for a period of eighteen months after
the Closing, except for those in Sections 2.01, 2.02, 2.03, 2.11, 2.14, 2.18(b),
2.24, 3.01, 3.02, 3.03 and 3.06, which shall survive the Closing until 90 days
after such time as claims with respect thereto shall be barred by the applicable
statutes of limitation. No investigation by or on behalf of the parties hereto,
whether before or after the Closing, shall be deemed to alter or limit any of
the representations or warranties referred to in the preceding sentence or shall
be used as a basis for any defense to any claim made with respect thereto.
6.02 SCOPE, AMENDMENT AND WAIVER. This Agreement (including the Exhibits
hereto and the Disclosure Statement) and other agreements executed
contemporaneously herewith represent the entire understanding of the parties
with respect to the subject matters thereof and any previous agreements or
understandings between the parties regarding the subject matters thereof
(including, without limitation, the Letter of Intent among the parties dated
June 29, 1995 and any confidentiality agreements executed by the parties prior
to the date hereof) are merged into and superseded by this Agreement and such
other agreements. Without limiting the generality of the foregoing, any previous
confidentiality agreement between the Seller and the Purchaser is hereby
expressly terminated. This Agreement cannot be modified, amended or changed, nor
may compliance with any provision hereof be waived, except by an instrument in
writing executed by the party against whom enforcement of such modification,
amendment, change or waiver is sought. Any waiver by a party of the breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any other breach of such provision or
33
35
of any breach of any other provision of this Agreement. The failure of a party
to insist upon strict compliance with any provision of this Agreement at any
time shall not deprive such party of the right to insist upon strict compliance
with such provision at any other time or of the right to insist upon strict
compliance with any other provision hereof at any time.
6.03 COMMUNICATIONS. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given or made and received
(i) upon delivery, if personally delivered, (ii) on the day actually received,
if sent by facsimile transmission (with delivery confirmed), or (iii) one
business day after being sent, if sent by overnight courier (with delivery
confirmed), to the parties at the following addresses:
(a) if to the Seller, to:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇ (please telephone first)
and
▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Hill & ▇▇▇▇▇▇
One International Place
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Purchaser, to:
Thermo Vision Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
34
36
with a copy to:
Thermo Electron Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or addresses as may hereafter be furnished by any party
to the other parties hereto.
6.04 GOVERNING LAW. This Agreement shall be governed by the law of the
Commonwealth of Massachusetts applicable to agreements made and to be performed
wholly within such jurisdiction, without regard to the conflicts of laws
provisions thereof. The party or parties prevailing in any suit, action or
proceeding arising out of or relating to this Agreement shall be entitled to the
payment in full by the opposing party or parties thereto of all of the costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
or parties in bringing or defending such suit, action or proceeding.
6.05 JURISDICTION AND VENUE. Any legal suit, action, or proceeding arising
out of or relating in any way to this Agreement, any other agreement or
instrument contemplated herein or the transactions contemplated hereby,
including but not limited to actions seeking specific performance of the terms
of this Agreement, actions for indemnity, actions seeking declaratory relief
regarding the terms of this Agreement or actions for breach of this Agreement,
shall be institute exclusively in the United States District Court for the
Eastern District of Massachusetts, United States of America, or if such court
shall not have subject matter jurisdiction over such action, a court of general
jurisdiction of the Commonwealth of Massachusetts located in the City of Boston.
Each party hereby waives any objection whatsoever that it may have now or
hereafter to the laying of the venue of any such suit, action or proceeding
exclusively in such courts, and irrevocably submits to the exclusive
jurisdiction thereof in any such suit, action or proceeding.
6.06 PARTIES IN INTEREST. Except as hereinafter contemplated, this
Agreement and the respective rights and obligations of the parties hereunder may
not be assigned by any party without the prior written consent of all of the
other parties. Notwithstanding the foregoing, nothing herein contained shall
prohibit the assignment by the Purchaser of certain or all of its rights
hereunder to one or more Affiliates of the Purchaser, nor shall any assignment
by operation of law in connection with the merger, consolidation or dissolution
of any party hereto be prohibited. Subject to the foregoing, this Agreement
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
35
37
6.07 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.08 HEADINGS. The headings of the Articles, Sections and Subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
6.09 NO THIRD PARTY BENEFICIARY RIGHTS. This Agreement is not intended to
and shall not be construed to give any person or entity other than the parties
signatory hereto any interest or rights (including, without limitation, any
third party beneficiary rights) with respect to or in connection with any
agreement or provision contained herein or contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CORION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: President
THERMO VISION CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: President
36
