<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 2000
-------------------------------
Batteries Batteries, Inc.
-------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-27994 13-383-5420
- --------------------------------------------------------------------------------
(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
1840 County Line Road
Huntingdon Valley, PA 19006
- --------------------------------------------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
(800) 233-0013
-------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Building 1EB, Chimney Rock Road, Bound Brook, New Jersey 08805
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 27, 2000, Tauber Electronics, Inc., a California corporation and
wholly owned subsidiary of the Registrant ("Tauber"), consummated the sale of
substantially all of its assets (the "Sale") to Nexergy Tauber, Inc. ("NT"), a
California corporation and wholly owned subsidiary of Nexergy, Inc., an Ohio
corporation ("Nexergy"), pursuant to an Asset Purchase Agreement (the
"Agreement") among the Registrant, Tauber, Nexergy and NT. Pursuant to the
Agreement, the assets sold included inventory, accounts receivable and
equipment. As consideration for the Sale, Tauber received an initial cash
payment of $1,005,854 on February 1, 2000 and a note in the amount of $519,708
due in 2005 with interest payments to begin upon the closing of the transaction
and principal payments commencing during the first quarter of 2002. In addition,
NT assumed $705,669 of liabilities of Tauber. The proceeds from the Sale were
used to reduce a portion of the debt attributable to Tauber under the
Registrant's existing credit facilities. The nature and amount of consideration
paid in connection with the Sale was determined based on an arms length
determination of the value of the assets and liabilities being transferred. The
foregoing summary of the Sale is qualified in its entirety by reference to the
Agreement filed as Exhibit 2.1 to this report and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Pro Forma Financial Statements
The following pro forma condensed consolidated statements of income and
condensed consolidated balance sheet were prepared to illustrate the estimated
effects of the sale of substantially all of the assets of Tauber Electronics,
Inc, as if it had occurred on January 1, 1998 for statement of income purposes
and on September 30, 1999 for balance sheet purposes.
The pro forma adjustments are based on currently available information
and upon certain assumptions that management believes are reasonable under the
circumstances.
THE PRO FORMA FINANCIAL DATA DO NOT PURPORT TO REPRESENT WHAT THE
COMPANY'S RESULTS OF OPERATIONS WOULD ACTUALLY HAVE BEEN IF THE SALE IN FACT HAD
OCCURRED AT JANUARY 1, 1998 OR TO PROJECT THE COMPANY'S RESULTS OF OPERATIONS
FOR ANY FUTURE DATE OR PERIOD.
<PAGE>
BATTERIES BATTERIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
As Tauber for the
Reported Disposition Disposition
-------- ----------- -----------
<S> <C> <C> <C>
TOTAL ASSETS:
Current Assets:
Cash & cash equivalents $ 408 $ -- (C) $ 408
Accounts receivable 6,750 1,022 (A) 5,728
Inventories 8,728 2,207 (A) 6,521
Prepaid expenses & other current assets 386 27 (A) 359
Current deferred income taxes 211 -- (A) 211
-------- ------- --------
Total Current Assets 16,483 3,256 13,227
-------- ------- --------
Property and Equipment, net 1,529 102 (A) 1,427
Excess cost over acquired Net Assets Aquired 4,949 -- 4,949
Other Assets 463 (506)(B) 969
-------- ------- --------
Total Assets $ 23,424 $ 2,852 $ 20,572
======== ======= ========
LIABILITIES AND STOCKHOLDERS EQUITY:
Current portion of long-term debt $ 600 $ -- $ 600
Accounts Payable 3,721 1,595 (A) 2,126
Accrued Expenses 1,822 125 (A) 1,697
-------- ------- --------
Total Current Liabilities 6,143 1,720 4,423
-------- ------- --------
Long-Term Debt - Net 6,577 1,132 (D) 5,445
-------- ------- --------
Stockholders Equity:
Preferred Stock -- -- --
Common Stock 5 -- 5
Additional Paid in Capital 11,203 -- 11,203
Accumulated Deficit (504) -- (504)
-------- ------- --------
Total Stockholders' Equity 10,704 -- 10,704
-------- ------- --------
Total Liabilities & Equity $ 23,424 $ 2,852 $ 20,572
======== ======= ========
</TABLE>
NOTES TO PRO FORMA -
A. To remove the assets sold.
B. Represents the removal of the assets sold offset by the Note received for
$520 due 2005.
C. Cash was not acquired.
D. Represents the cash received of approximately $1,006 adjusted for the book
values as of September 30, 1999.
<PAGE>
BATTERIES BATTERIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(A) Pro Forma
As Tauber for the
Reported Disposition Disposition
-------- ----------- -----------
<S> <C> <C> <C>
Net Sales $ 51,454 $ 10,028 $ 41,426
Cost of Sales 35,420 8,508 $ 26,912
-------- -------- --------
Gross Profit 16,034 1,520 14,514
Selling, General, and Administrative Expenses 17,127 1,186 $ 15,941
Impairment of Excess Cost Over Net Assets Acquired 558 -- 558
-------- -------- --------
Income (Loss) from Operations (1,651) 334 (1,985)
Interest Expense, Net 790 122(B) 668
-------- -------- --------
Income (Loss) Before Income Taxes (2,441) 212 (2,653)
Provision (Benefit) For Income Taxes (379) 85(C) (464)
-------- -------- --------
Net Income (Loss) $ (2,062) $ 127 $ (2,189)
======== ======== ========
Basic and Diluted (Loss) Per Share $ (0.43) $ (0.46)
-------- --------
Basic Weighted Average Common Shares Outstanding 4,743 4,743
======== ========
Diluted Weighted Average Common Shares Outstanding 4,760 4,760
======== ========
</TABLE>
NOTES TO PRO FORMA STATEMENTS -
(A) Represents the results for Tauber for the period presented before any
corporate allocations.
(B) Reduction of interest expense represents the proceeds from the sale being
used to reduce outstanding debt, including a note receivable with an assumed
interest rate of 8.0%.
(C) Reflects the adjustment for income taxes using an estimated effective tax
rate of 40%.
<PAGE>
BATTERIES BATTERIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
(A) Pro Forma
As Tauber for the
Reported Disposition Disposition
-------- ----------- -----------
<S> <C> <C> <C>
Net Sales $34,478 6,892 $ 27,586
Cost of Sales 21,458 6,147 $ 15,311
------- ------ --------
Gross Profit 13,020 745 12,275
Selling, General and Administrative Expenses 11,484 1,243 $ 10,241
------- ------ --------
Income (Loss) from Operations 1,536 (498) 2,034
Interest Expense, Net 481 92(B) 389
------- ------ --------
Income (Loss) Before Income Taxes 1,055 (590) 1,645
Provision (Benefit) For Income Taxes 507 (236)(C) 743
------- ------ --------
Net Income (Loss) $ 548 $ (354) $ 902
======= ======= ========
Basic and Diluted Earnings Per Share $ 0.11 $ 0.18
------- --------
Basic Weighted Average Common Shares Outstanding 4,973 4,973
======= ========
Diluted Weighted Average Common Shares Outstanding 4,984 4,984
======= ========
</TABLE>
NOTES TO PRO FORMA STATEMENTS -
(A) Represents the results for Tauber for the period presented before any
corporate allocations.
(B) Reduction of interest expense represents the proceeds from the sale being
used to reduce outstanding debt, including a note receivable with an assumed
interest rate of 8.0%.
(C) Reflects the adjustment for income taxes using an estimated effective tax
rate of 40%.
<PAGE>
Exhibits.
2.1 Asset Purchase Agreement dated as of January 26, 2000, among
Batteries Batteries, Inc., Tauber Electronics, Inc., Nexergy, Inc.
and Nexergy Tauber, Inc.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Batteries Batteries, Inc.
(Registrant)
/s/ Stephen Rade
----------------------------------------
Date: February 11, 2000 By: Stephen Rade
Title: President and Chief Executive
Officer
3
<PAGE>
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into this ____
day of January, 2000, by and among, on the one hand, BATTERIES BATTERIES, INC.,
a Delaware corporation ("BBI"), and TAUBER ELECTRONICS, INC., a California
corporation and a wholly-owned subsidiary of BBI ("Tauber") (collectively with
BBI, the "Seller") and, on the other hand, NEXERGY, INC., an Ohio corporation
("Nexergy"), and NEXERGY TAUBER, INC., a California corporation and a
wholly-owned subsidiary of Nexergy ("Newco") (collectively with Nexergy, the
"Purchaser").
WHEREAS, Tauber is engaged in the business of assembling, distributing and
selling batteries, custom battery pack assemblies, and other miscellaneous
electronic components (the "Business");
WHEREAS, Tauber desires to sell to Newco substantially all of the assets of
Tauber as more fully described in Section 1.2 hereof, and Purchaser desires to
purchase and acquire such assets free and clear of all liens and encumbrances
for the consideration set forth herein, all upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, Seller and Purchaser hereby agree as
follows:
ARTICLE I.
PURCHASE AND SALE
1.1 AGREEMENT TO SELL. Tauber hereby grants, sells, conveys, assigns,
transfers and delivers to Purchaser, upon and subject to the terms and
conditions of this Agreement, all right, title and interest of Tauber in and to
all of the assets set forth in Section 1.2 (collectively, the "Assets"), free
and clear of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and encumbrances of any nature whatsoever except Permitted Liens
(as defined in Section 2.19) and those liabilities assumed pursuant to this
Agreement. Simultaneous with the execution and delivery hereof, Tauber has
executed and delivered to Purchaser a Bill of Sale and an Assignment and
Assumption Agreement, substantially in the forms attached hereto as Exhibits A
and B, respectively.
1.2 INCLUDED ASSETS. The Assets shall consist of all of the assets,
properties and rights of Tauber, except as otherwise expressly set forth in
Section 1.3, including, without limitation, the following:
(a) Accounts. All accounts receivable of Tauber as listed in Schedule
1.2(a) and all other rights of Tauber to payment for goods sold or leased
or for services rendered that relate to the Business, including, without
limitation, those which are not evidenced by instruments or chattel paper,
whether or not they have been earned by performance or
1
<PAGE>
have been written off or reserved against as a bad debt or doubtful account
in any financial statements; together with all instruments and all
documents of title representing any of the foregoing, all rights in any
merchandise or goods which any of the same represent, and all rights,
title, security and guaranties in favor of Tauber with respect to any of
the foregoing (the "Accounts"). Notwithstanding the above, the Accounts
shall not include and shall specifically exclude: (i) all items designated
as "Collection Accounts" on the Tauber Financial Statements (defined
hereinafter); (ii) all accounts receivable from Aspen Electronics, Field
Works and I.E.P.D.; and (iii) all accounts receivable greater than ninety
(90) days past the due date from Elgar Sorrenson and Alaris Medical
Systems.
(b) Inventories. All of Tauber's inventories including, without
limitation, finished goods, work-in-process, raw materials, supply
inventories, and other inventories (the "Inventories"). The Inventories
include, without limitation, all of the items set forth on Schedule 1.2(b).
(c) Equipment. All of Tauber's equipment, machinery, apparatus, tools,
appliances, implements, spare parts, supplies and all other tangible
personal property of every kind and description (the "Equipment"). The
Equipment includes, without limitation, all of the items set forth on
Schedule 1.2(c).
(d) Scheduled Contracts. All right, title and interest of Tauber in, to
and under the contracts and agreements of the Business set forth on
Schedule 1.2(d) (the "Scheduled Contracts") and all rights (including
rights of refund and offset), privileges, deposits, claims, causes of
action and options relating or pertaining to the Scheduled Contracts.
(e) Backlog Orders. All of Tauber's backlog of orders for services or
products (the "Backlog Orders").
(f) Permits. All right, title and interest of Tauber in, to and under
all permits, authorizations, approvals, licenses and other rights under
federal, state, local or foreign statute, ordinance, regulation, order,
writ or injunction relating to the Business or any of the Assets (the
"Permits"). The Permits include, without limitation, all of the items set
forth on Schedule 1.2(f).
(g) Intangible Assets. All right, title and interest of Tauber in, to
and under all patents, trademarks, technology, know-how, data, copyrights,
trade names, service marks, licenses, software, covenants by others not to
compete, rights, privileges, claims, causes of action, options,
indemnities, rights of contribution and other similar rights relating or
pertaining to the Business or any of the Assets, and the right to recover
for infringement thereon (the "Intangible Assets").
(h) Books and Records. All of Tauber's books, records, papers and
instruments of whatever nature and wherever located that relate to the
Business or the Assets including, without limitation, blueprints,
specifications, building and machinery diagrams, copies of the accounting
and financial records, maintenance and production
2
<PAGE>
records, catalogues, brochures, advertising materials, price lists,
customer correspondence, mailing lists, and credit reports, sales records,
customer lists and other customer data, supplier lists and other supplier
data relating to the purchase of raw materials, parts or supplies (the
"Records").
(i) Prepaid Expenses and Current Assets. All right, title and interest
of Tauber in and to all prepaid expenses, bonds, deposits and financial
assurance requirements, and other current assets relating to any of the
Assets or the Business. The Prepaid Expenses and Current Assets include,
without limitation, all of the items set forth on Schedule 1.2(i).
(j) Name. All rights to use the name "Tauber Electronics".
(k) Goodwill. The goodwill and going concern value of Tauber. Purchaser
acknowledges that there is no Goodwill recorded on the Tauber Financial
Statements (defined hereinafter).
(l) Telephone Numbers. All the telephone and telecopy numbers currently
owned, held or listed by Tauber in connection with the operation of the
Business.
(m) Other Property. All other or additional privileges, rights,
interests, properties and assets of Tauber of every kind and description
and wherever located that are used or intended for use in connection with,
or that are necessary to the continued conduct of, the business of Tauber
as presently being conducted.
1.3 EXCLUDED ASSETS.
Notwithstanding the foregoing, the Assets shall not include any of the
following:
(a) the corporate seal, certificate of incorporation, minute books,
stock books, income and other tax records or returns, books of account or
other records having to do with the corporate organization of Tauber;
(b) the rights which accrue or will accrue to Seller under this
Agreement;
(c) the rights to any of Tauber's claims for any federal, state, local
or foreign tax refunds relating to any period prior to the Closing;
(d) all of Tauber's cash, cash-in bank and inter-company accounts; and
(e) those accounts specifically excluded from the Accounts described in
Section 1.2(a).
1.4 CONSIDERATION FOR ASSETS.
(a) Subject to the terms of this Agreement and in reliance on the
representations, warranties and covenants of Seller contained herein, and
as full consideration for the Assets, Purchaser hereby agrees to pay to
Tauber "book value" of
3
<PAGE>
the Assets net of Assumed Liabilities (as defined in Section 1.5) and
certain reserves identified on Schedule 1.4 attached hereto, subject to
adjustment as set forth below. The parties acknowledge that Schedule 1.4
shall serve to illustrate how the parties calculated the Preliminary
Purchase Price (defined below), which is subject to post-Closing
adjustments. Specifically, Purchaser hereby (i) pays to Tauber the sum of
$1,525,562 (the "Preliminary Purchase Price"), of which $1,005,854 is being
paid to Tauber (or, at the request of Tauber, to IBJ Whitehall Business
Credit Corporation on Tauber's behalf) by wire transfer of immediately
available funds, and the remaining $519,708 of which shall be paid pursuant
to the terms of a subordinated promissory note of Newco (the "Note")
substantially in the form of Exhibit C attached hereto, and (ii) assumes
the Assumed Liabilities (as defined in Section 1.5). Except as specifically
provided in Section 1.5, Purchaser shall not assume or be responsible for
any liabilities or obligations of Seller of any nature whatsoever. The debt
evidenced by the Note shall be secured pursuant to the Subordinated
Security Agreement (the "Security Agreement") substantially in the form of
Exhibit D attached hereto. The Preliminary Purchase Price shall be subject
to post-Closing adjustment as set forth below in this Section 1.4.
(b) Initial post-Closing adjustment:
(i) Within forty-five (45) days after the Closing, the Purchaser
shall prepare and deliver to the Seller a draft Revised Net Book Value
of the Assets as of the Closing along with backup materials and work
papers. The Purchaser will prepare the draft Revised Net Book Value of
the Assets in accordance with GAAP (except as noted in Section 2.5
herein) applied on a basis consistent with the preparation of the
Tauber Financial Statements (defined hereinafter), except that for
purposes of computing the Net Book Value, an amount of $650,000 will be
substituted for Seller's reserve to make the cost to market value
adjustment for this initial post-closing adjustment. In preparing the
draft Revised Net Book Value of the Assets, the Purchaser shall use the
same valuation methodologies used in calculating the Preliminary
Purchase Price as reflected in Schedule 1.4 hereof.
(ii) If the Seller has any objections to the draft Revised Net Book
Value of the Assets, Seller will deliver a detailed statement
describing its objections to the Purchaser within thirty (30) days
after receiving the draft Revised Net Book Value of the Assets. The
Purchaser and Seller shall use commercially reasonable efforts to
resolve any such objections themselves. The Purchaser shall revise the
draft Revised Net Book Value of the Assets as appropriate to reflect
the resolution of any objections thereto pursuant to this Section
1.4(b)(ii).
(iii) If the parties hereto do not obtain a final resolution of the
Revised Net Book Value of the Assets within thirty (30) days after the
Purchaser has received the statement of objections, the parties hereto
shall select an accounting firm mutually acceptable to them to resolve
any remaining objections. In resolving any remaining objections, the
accounting firm shall use the same valuation methodologies used in
calculating the Preliminary Purchase Price as
4
<PAGE>
reflected in Schedule 1.4 hereof including, without limitation,
assuming the accuracy of the $650,000.00 general reserve for the
Inventories. It is the intent of the parties hereto that no person
shall question the adequacy of this general reserve for Inventories
except as set forth in Section 1.4(c). If the Purchaser and the Seller
are unable to agree on the choice of an accounting firm, they will
select a nationally-recognized accounting firm by lot (after excluding
their respective regular outside accounting firms). The determination
of any accounting firm so selected will be set forth in writing and
will be conclusive and binding upon the parties hereto. In the event
the parties submit any unresolved objections to an accounting firm for
resolution as provided in this Section 1.4 (b)(iii), the Purchaser and
the Seller shall share responsibility for the fees and expenses of the
accounting firm as follows: (A) if the accounting firm resolves all of
the remaining objections in favor of the Purchaser, the Seller shall be
responsible for all of the fees and expenses of the accounting firm;
(B) if the accounting firm resolves all of the remaining objections in
favor of the Seller, the Purchaser shall be responsible for all of the
fees and expenses of the accounting firm; and (C) if the accounting
firm resolves some of the remaining objections in favor of the
Purchaser and the rest of the remaining objections in favor of the
Seller, then the Purchaser and Seller shall split equally the fees and
expenses of the accounting firm.
(iv) The Purchaser will make the work papers and back-up materials
used in preparing the draft Revised Net Book Value of the Assets
available to the Seller and their accountants and other representatives
at reasonable times and upon reasonable notice at any time during the
preparing by the Purchaser of the draft Net Book Value of the Assets,
the review by the Seller of the draft Net Book Value of the Assets, or
the resolution by the parties of any objections thereto.
(v) Once all the objections to the draft Net Book Value of the
Assets have been resolved pursuant to Section 1.4(b)(ii) or (b)(iii),
the Purchaser shall revise the draft Net Book Value of the Assets as
appropriate to reflect the resolution of the objections and such
revised calculation shall be the Final Net Book Value of the Assets.
The Preliminary Purchase Price shall be adjusted as follows: (A) if the
Final Net Book Value of the Assets exceeds the Preliminary Purchase
Price, then Purchaser shall execute and deliver to Tauber a revised
Promissory Note in the amount of the original Note plus the amount the
Final Net Book Value of the Assets exceeds the Preliminary Purchase
Price. The Purchaser shall execute and deliver this revised Promissory
Note simultaneously upon receiving the original Note as canceled by
Tauber; (B) if the Final Net Book Value of the Assets is less than the
Preliminary Purchase Price, then Purchaser shall be permitted to
execute and deliver to Tauber a revised Promissory Note in the amount
of the original Note minus the amount the Final Net Book Value of the
Assets is less than the Preliminary Purchase Price. In this case,
Tauber shall cancel the original Note and return the same to the
Purchaser, and simultaneously the Purchaser shall execute and deliver
to Tauber the revised Promissory Note in the lesser amount.
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(c) Final post-Closing Adjustment:
(i) Purchaser agrees to evaluate the adequacy of the $650,000.00
general reserve for the Inventories (the "Inventories General
Reserve"). Consequently, within forty-five (45) days after the first
anniversary of the Closing, the Purchaser shall prepare and deliver to
the Seller its assessment of the adequacy of the Inventories General
Reserve (the "Adequacy Assessment") along with backup materials and
work papers.
(ii) If the Seller has any objections to the Purchaser's Adequacy
Assessment, Seller will deliver a detailed statement describing its
objections to the Purchaser within thirty (30) days after receiving the
Adequacy Assessment. The Purchaser and Seller shall use commercially
reasonable efforts to resolve any such objections themselves. The
Purchaser shall revise the Adequacy Assessment as appropriate to
reflect the resolution of any objections thereto pursuant to this
Section 1.4(c)(ii).
(iii) If the parties hereto do not obtain a final resolution of the
Adequacy Assessment within thirty (30) days after the Purchaser has
received the statement of objections, the parties hereto shall select
an accounting firm mutually acceptable to them to resolve any remaining
objections. If the Purchaser and the Seller are unable to agree on the
choice of an accounting firm, they will select a nationally-recognized
accounting firm by lot (after excluding their respective regular
outside accounting firms). The determination of any accounting firm so
selected will be set forth in writing and will be conclusive and
binding upon the parties hereto. In the event the parties submit any
unresolved objections to an accounting firm for resolution as provided
in this Section 1.4 (c)(iii), the Purchaser and the Seller shall share
responsibility for the fees and expenses of the accounting firm as
follows: (A) if the accounting firm resolves all of the remaining
objections in favor of the Purchaser, the Seller shall be responsible
for all of the fees and expenses of the accounting firm; (B) if the
accounting firm resolves all of the remaining objections in favor of
the Seller, the Purchaser shall be responsible for all of the fees and
expenses of the accounting firm; and (C) if the accounting firm
resolves some of the remaining objections in favor of the Purchaser and
the rest of the remaining objections in favor of the Seller, then the
Purchaser and Seller shall split equally the fees and expenses of the
accounting firm.
(iv) The Purchaser will make the Inventories, work papers and
back-up materials used in preparing the Adequacy Assessment available
to the Seller and their accountants and other representatives at
reasonable times and upon reasonable notice at any time during the
preparing by the Purchaser of the Adequacy Assessment, the review by
the Seller of the Adequacy Assessment, or the resolution by the parties
of any objections thereto.
(v) Once all the objections to the Adequacy Assessment have been
resolved pursuant to Section 1.4(c)(ii) or (c)(iii), the Purchaser
shall revise the
6
<PAGE>
Adequacy Assessment as appropriate to reflect the resolution of the
objections and such revised calculation shall be the Final Adequacy
Assessment. If the Final Adequacy Assessment is less than the original
$650,000.00 Inventories General Reserve, then Purchaser shall execute
and deliver to Tauber a revised Note in the amount of the original Note
plus the amount the original $650,000.00 Inventories General Reserve
exceeds the Final Adequacy Assessment. The Purchaser shall execute and
deliver this revised Note simultaneously upon receiving the original
Note as canceled by Tauber. There shall be no post-Closing adjustment
if the Final Adequacy Assessment exceeds the original $650,000.00
Inventories General Reserve.
1.5 ASSUMPTION OF CERTAIN LIABILITIES. Purchaser hereby assumes and agrees
to pay, discharge or perform, as appropriate (subject to the limitations of
Section 5.1(a)), only the accounts payable of Tauber set forth on Schedule
1.5(a), the other operating liabilities of Tauber set forth on Schedule 1.5(b)
and the Scheduled Contracts (collectively, the "Assumed Liabilities").
Simultaneous with the execution and delivery hereof, Newco has executed and
delivered to Tauber an Assignment and Assumption Agreement, substantially in the
form attached hereto as Exhibit B.
1.6 EXCLUSION OF CERTAIN LIABILITIES.
Except for the Assumed Liabilities, Newco does not assume or agree to pay,
perform or discharge, and shall not be responsible for, and the Assumed
Liabilities do not include, any other liabilities or obligations of Seller of
any nature whatsoever, whether accrued, absolute, contingent or otherwise,
including, without limitation, liabilities or obligations based on, arising out
of or in connection with:
(a) any liability or obligation of Seller, its Affiliates or the
Business not expressly included as an Assumed Liability pursuant to Section
1.5;
(b) any product liability, tort liability, warranty claim, or similar
claim for injury to person or property, regardless of when made or
asserted, of any nature whatsoever, relating to the operation of the
Business prior to the Closing;
(c) except as set forth on Schedule 1.5, any taxes (i) payable with
respect to the business, assets, properties, production or operations of
Seller or the Business or any member of any affiliated group of which
either is a member for any tax period or portion thereof prior to the
Closing or (ii) incident to or arising as a consequence of the negotiation
or consummation by Seller or any member of any affiliated group of which
Seller is a member of this Agreement and the transactions contemplated
hereby;
(d) any liability or obligation under or in connection with the assets
excluded from the Assets under Section 1.3;
(e) any liability or obligation arising prior to the Closing to any
employees, agents or independent contractors of Seller, whether or not
employed by Newco after the
7
<PAGE>
Closing, or under any Benefit Plan (as defined in Section 2.10) or any
liability or obligation of any nature related thereto;
(f) any obligations of Seller or the Business arising or incurred in
connection with any loan agreements or related instruments;
(g) any liability or obligation of Seller arising or incurred in
connection with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby and fees and expenses of
counsel, accountants and other experts;
(h) any litigation, proceeding (whether regulatory or otherwise) or any
contingent liability of any nature whatsoever relating to the operation of
Tauber prior to the Closing including, without limitation, the claims
brought against Tauber by Aspen Electronics;
(i) any collective bargaining or similar agreement of Seller; or
(j) expect for those obligations set forth in the Sub-Sublease
Agreement entered into between Newco and Battery Network, Inc. (a
wholly-owned subsidiary of BBI), any liability or obligation under or in
connection with the lease or the sublease of the real property known as 955
Borra Place, Escondido, California.
Notwithstanding this Section 1.6, Newco shall be liable and responsible for
all payments, performance or other obligations arising under the Assumed
Liabilities.
1.7 ALLOCATION OF PURCHASE PRICE. Tauber and Purchaser shall jointly agree
on and prepare IRS Form 8594 pursuant to Temporary Treasury Regulations Section
1.1060-1T to report the allocation of the Purchase Price and Assumed Liabilities
among the Assets. Tauber and Purchaser each hereby covenant and agree that they
will not take a position on any tax return before any governmental agency
charged with the collection of any taxes or in any judicial proceeding that is
in any way inconsistent with the terms of this Section 1.7.
1.8 LEGAL OPINION. Simultaneous with the execution hereof, Ballard Spahr
Andrews & Ingersoll, LLP, legal counsel to the Seller, has executed and
delivered to Purchaser a legal opinion substantially in the form of Exhibit E
attached hereto. Simultaneous with the execution hereof, Higgs, Fletcher & Mack
LLP, legal counsel to the Seller, has executed and delivered to Purchaser a
legal opinion substantially in the form of Exhibit F attached hereto.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER
Tauber, BBI (where expressly stated) and/or Seller (where expressly stated)
make the representations and warranties set forth in this Article II to
Purchaser. Tauber or Seller (where expressly stated) has delivered to Purchaser
the schedules to this Agreement referred to in this Article II on the date
hereof and such schedules have been reviewed and accepted by Purchaser.
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2.1 ORGANIZATION AND QUALIFICATION. Tauber is a duly organized corporation,
validly existing and in good standing under the laws of the State of California.
Tauber has all requisite corporate power and authority to carry on the Business
as now being conducted and to own, lease and operate the properties and assets
of the Business, as now owned, leased and operated. Tauber is not qualified or
registered to do business in any state or jurisdiction other than the State of
California. The nature of the businesses and activities of Tauber, as currently
conducted, do not require Tauber to be qualified to do business in any foreign
jurisdiction in which it is not already qualified, except where the failure to
so qualify would not have a Material Adverse Effect on the Business. Tauber does
not own any interests in any Subsidiaries (as defined in Section 7.13). BBI is a
duly organized corporation, validly existing and in good standing under the laws
of the State of Delaware.
2.2 AUTHORITY RELATIVE TO THE AGREEMENT. BBI and Tauber have full corporate
power and authority, and no further corporate proceedings on the part of either
BBI or Tauber are necessary, to execute and deliver this Agreement and any other
agreements contemplated hereby (collectively, the "Other Agreements"), to
consummate the transactions contemplated hereby or thereby, and to perform any
obligations or duties under this Agreement and the Other Agreements. This
Agreement and the Other Agreements and transactions contemplated hereby and
thereby have been duly and validly authorized by the board of directors of BBI,
and by the board of directors and stockholders of Tauber. This Agreement has
been, and when executed, the Other Agreements, will be, duly and validly
executed and delivered by BBI and Tauber and this Agreement constitutes, and
when executed, the Other Agreements will constitute, valid and binding
obligations of BBI and Tauber enforceable against BBI and Tauber in accordance
with their terms.
2.3 NO VIOLATION. Neither the execution, delivery, nor performance by
Seller of this Agreement and the Other Agreements, nor the consummation by
Seller of the transactions contemplated hereby or thereby, will (i) violate
(with or without the giving of notice or the passage of time), any law, order,
writ, judgment, injunction, award, decree, rule, statute, ordinance or
regulation applicable to BBI or Tauber, (ii) be in conflict with, result in a
breach or termination of any provision of, cause the acceleration of the
maturity of any debt or obligation pursuant to, constitute a default (or give
rise to any right of termination, cancellation or acceleration) under, or result
in the creation of any security interest, lien, charge or other encumbrance,
other than Permitted Liens, upon the Assets pursuant to any terms, conditions or
provisions of any note, license, instrument, indenture, mortgage, deed of trust
or other agreement or understanding or any other restriction of any kind or
character, to which BBI or Tauber is a party or by which any of the Assets is
subject or bound, or (iii) conflict with, or result in any violation or breach
of or default under, the Articles of Incorporation or Bylaws or any agreement,
document or instrument to which BBI or Tauber is a party or by which any of the
Assets is subject or bound. The corporate existence, business organization,
assets, licenses, permits, authorizations and contracts (including, without
limitation, distribution agreements) of Tauber will not be terminated or
impaired by reason of the execution, delivery or performance by Tauber of this
Agreement or consummation by Tauber of the transactions contemplated hereby,
assuming the receipt of required stockholder approval.
2.4 CONSENTS AND APPROVALS. No prior consent, approval or authorization of,
or declaration, filing or registration with any party, including any government
entity or agency,
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domestic or foreign, is required of Seller in connection with the execution,
delivery and performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby, except where the failure to obtain any such
consent, approval or authorization of, or declaration, filing or registration
with any party would not have a Material Adverse Effect on Tauber.
2.5 FINANCIAL STATEMENTS. Seller has provided Purchaser with a true and
complete copy of the statements of income for the years ended December 31, 1997
and December 31, 1998, which were included in the audited consolidated
statements of income for BBI for the years then ended. Seller has provided
Purchaser with a true and complete copy of the unaudited balance sheet of Tauber
as of November 30, 1999, and the related statement of income for the period then
ended. All of the foregoing financial statements are collectively referred to as
the "Tauber Financial Statements". The Tauber Financial Statements fairly
present the financial position of Tauber as of the dates thereof and the results
of operations for the periods then ended, in conformity with generally accepted
accounting principles ("GAAP") applied on a basis consistent with prior periods
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments and the fact that they do not contain all of the footnote
disclosures required by GAAP), except the Tauber Financial Statements do not
include (i) any management fees charged by BBI to Tauber, (ii) any provision for
income tax expense or benefits and the related liabilities and receivables, and
(iii) any corporate overhead items recorded on the BBI financial statements
which would not have a material impact upon the Business, the Assets or the
Assumed Liabilities. The accounting records underlying the Tauber Financial
Statements accurately and fairly reflect in all material respects the
transactions of Tauber. Tauber does not have any liabilities or obligations of a
type which should be included in or reflected on the Tauber Financial Statements
if prepared in accordance with GAAP, whether related to tax or non-tax matters,
accrued or contingent, due or not yet due, liquidated or unliquidated, or
otherwise, except the Tauber Financial Statements do not include (i) any
management fees charged by BBI to Tauber, (ii) any provision for income tax
expense or benefits and the related liabilities and receivables, and (iii) any
corporate overhead items recorded on the BBI financial statements which would
not have a material impact upon the Business, the Assets or the Assumed
Liabilities.
2.6 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth on
Schedule 2.6, since November 30, 1999, Tauber has not, directly or indirectly:
(a) entered into any agreement, commitment or transaction involving a
sale, assignment or transfer of Assets, or any additions to or reductions
from the Assets in excess of 10% of the value of the Assets, other than in
the ordinary course of business;
(b) incurred, assumed or become subject to, whether directly or by way
of any guarantee or otherwise, any obligations or liabilities (absolute,
accrued, contingent or otherwise) in excess of 10% of the value of the
Assets, other than in the ordinary course of business;
(c) permitted or allowed any of the Assets to be subject to any
mortgage, pledge, lien, security interest, encumbrance, restriction or
charge of any kind (other than Permitted Liens);
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(d) canceled any debts, waived any claims or rights, or sold,
transferred, or otherwise disposed of in excess of 10% of the Assets, other
than in the ordinary course of business;
(e) disposed of or permitted to lapse any rights to the use of any
trademark, service mark, trade name or copyright, or disposed of or
disclosed to any person other than its employees or agents, any trade
secret not theretofore a matter of public knowledge, other than in the
ordinary course of business;
(f) granted any increase in compensation or paid or agreed to pay or
accrue any bonus, percentage compensation, service award, severance payment
or like benefit to or for the credit of any director, officer, employee or
agent, or entered into any employment or consulting contract or other
agreement with any director, officer, employee or agent, or adopted,
amended or terminated any pension, employee welfare, retirement, stock
purchase, stock option, stock appreciation rights, termination, severance,
income protection, golden parachutes, savings or profit-sharing plan
(including trust agreements and insurance contracts embodying such plans),
any deferred compensation, or collective bargaining agreement, any group
insurance contract or any other incentive, welfare or employee benefit plan
or agreement maintained by Seller of any kind or nature, for the directors,
employees or former employees of Tauber;
(g) acquired any capital stock or other equity securities or acquired
any equity or ownership interest in any person;
(h) made any change in any accounting methods, principles or practices;
(i) suffered any change that has had or is reasonably likely to have a
Material Adverse Effect;
(j) except in the ordinary course of business, made any transfers to
any Affiliate;
(k) except for the transactions contemplated by this Agreement, entered
into any material transaction, or entered into, modified or amended any
material contract or commitment; or
(l) agreed, whether in writing or otherwise, to take any action the
performance of which would change the representations contained in this
Section 2.6 in the future.
2.7 REAL PROPERTY. The Assets do not include any owned real property.
2.8 LITIGATION. Except as set forth on Schedule 2.8, there are no actions,
suits, claims, investigations, reviews or other proceedings pending or, to
Tauber's knowledge, threatened, against Tauber or involving any of the
properties or assets of Tauber, at law or in equity or before or by any foreign,
federal, state, municipal, or other governmental court, department, commission,
board, bureau, agency, or other instrumentality or person or any board of
arbitration
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or similar entity (a "Proceeding"). Seller will notify Purchaser immediately in
writing of any Proceedings initiated against Seller which relate to or affect
Tauber.
2.9 TAX MATTERS. To Seller's knowledge, Tauber has duly filed all tax
returns that it was required to file (the "Filed Returns"). To Seller's
knowledge, all such Filed Returns were correct and complete in all respects.
Tauber has paid all franchise, property, sales, employment, or other taxes
required to be paid with respect to the periods covered by the Filed Returns.
Since the date that BBI acquired Tauber, no claim has ever been made by an
authority in a jurisdiction where Tauber does not file tax returns that it is or
may be subject to taxation by that jurisdiction. To Seller's knowledge, there
are no security interests on any of the assets of Tauber that arose in
connection with any failure (or alleged failure) to pay any tax. With respect to
the periods for which returns have not yet been filed, to Seller's knowledge the
amount reflected on Schedule 1.5(b) hereof accurately reflect the liabilities
for all property, sales, or employment taxes. Tauber has withheld from amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party, and paid over to the proper governmental authorities, all
amounts required to be so withheld and paid over.
2.10 EMPLOYEE BENEFIT PLANS. With respect to all Benefit Plans (as defined
below) sponsored or maintained by Tauber, or under which Tauber is obligated,
the following are true and correct:
(a) Schedule 2.10(a) lists each deferred compensation plan, bonus and
incentive arrangement, stock option plan, restricted stock arrangement, and
any other employee benefit program, plan or arrangement including, without
limitation, an "employee welfare benefit plan" (as defined in Section 3(1)
of ERISA) ("Welfare Benefit Plans") and each "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) ("Pension Benefit Plans")
(collectively, the "Benefit Plans").
(b) True and complete copies of each Benefit Plan, related trust
agreements or annuity contracts (or any other funding instruments),
management agreement or any other contract, summary plan descriptions and
other written communications to employees concerning the extent of benefits
provided under a Benefit Plan, the most recent determination letter issued
by the IRS with respect to each Pension Benefit Plan, and for the three
most recent years the Form 5500 and attached schedules filed with any
governmental agency for each Benefit Plan, have been furnished to
Purchaser.
(c) The only Benefit Plan that is a Pension Benefit Plan consists of a
profit-sharing plan, which does not provide for elective deferrals under
Section 401(k) of the Tax Code. Tauber maintains no other pension plan or
defined benefit pension plan.
(d) No Welfare Benefit Plan provides for continuing benefits or
coverage for any participant, beneficiary or former employee or such
person's dependents after such participant's or former employee's
termination of employment except as may be required by Section 4980B of the
Tax Code and Sections 601-608 of ERISA.
(e) There are no claims or liabilities pending with respect to, or
under, any Benefit Plan other than routine claims for plan benefits, no
events or circumstances exist
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that could lead to any claims or liabilities with respect to any Benefit
Plan, and there are no disputes or litigation pending or threatened with
respect to any such plans.
2.11 EMPLOYMENT MATTERS. Except as set forth on Schedule 2.11, Tauber is
not a party to any oral or written contracts or agreements granting benefits or
rights to its employees or consultants, or any collective bargaining agreement
or to any conciliation agreement with the Department of Labor, the Equal
Employment Opportunity Commission or any federal, state or local agency which
requires equal employment opportunities or affirmative action in employment.
There are no unfair labor practice complaints pending against Tauber before the
National Labor Relations Board and no similar claims pending before any similar
state, local or foreign agency. Except as set forth on Schedule 2.11, to
Tauber's knowledge there is no activity or proceeding of any labor organization
(or representative thereof) or employee group to organize any employees of
Tauber, nor any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, by or with respect to any such employees. To Tauber's knowledge, Tauber
is in compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and Tauber is not engaged in any unfair labor practice.
2.12 LEASES, CONTRACTS AND AGREEMENTS. The Scheduled Contracts set forth on
Schedule 1.2 (d) are all the leases, subleases, licenses, agreements and
understandings to which Tauber is a party or by which Tauber is bound which
obligate or may be reasonably expected to obligate Tauber. Tauber has made
available to Purchaser true and correct copies of all Scheduled Contracts. All
of the Scheduled Contracts are legal, valid and binding obligations of the
parties to the Scheduled Contracts enforceable in accordance with their terms.
All rent and other payments by Tauber under the Scheduled Contracts are current.
Except where it would not have a Material Adverse Effect, there are no existing
defaults by Tauber under the Scheduled Contracts and no termination, condition
or other event has occurred which (whether with or without notice, lapse of time
or the happening or occurrence of any other event) would constitute a default.
To Tauber's knowledge, no other party is in default under any Scheduled
Contract, except where such default would not have a Material Adverse Effect.
2.13 RELATED TRANSACTIONS. Except as set forth on Schedule 2.13, there are
no material contracts, agreements, understandings, instruments, commitments,
extensions of credit, tax sharing or allocation agreements or other contractual
agreements of any kind between and among Tauber and any of its Affiliates.
2.14 COMPLIANCE WITH LAWS.Tauber is not in default in any material respect
with respect to or in violation of (i) any judgment, order, writ, injunction or
decree of any court or (ii) any statute, law, ordinance, rule, order or
regulation of any governmental department, commission, board, bureau, agency or
instrumentality, federal, state or local, in either case which is related to the
Assets or the Assumed Liabilities; and the consummation of the transactions
contemplated by this Agreement or the Other Agreements will not constitute such
a default or violation as to Tauber.
2.15 INSURANCE. Schedule 2.15 lists all policies or binders of insurance
held by or on behalf of Tauber, specifying with respect to each policy the
insurer, the amount of coverage, the type of insurance, the risks insured, the
expiration date, the policy number, and any pending
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claims thereunder which relate to the Assets or the Assumed Liabilities. Except
where it would not have a Material Adverse Effect, there is no default with
respect to any such policy or binder, nor has there been any failure to give any
notice or present any claim under any such policy or binder in a timely fashion
or in the manner or detail required by the policy or binder. There is no notice
of non-renewal or cancellation with respect to, or disallowance of any claim
under, any such policy or binder that has been received by Tauber.
2.16 PATENTS, TRADEMARKS AND COPYRIGHTS. Except as set forth on Schedule
2.16, Tauber does not require the use of any patent, patent application,
invention, process, trademark (whether registered or unregistered), trademark
application, trade name, service mark, copyright, software or any material trade
secret for the conduct of its business. Tauber owns the entire right, title and
interest in, to and under, or has a valid license to use the items set forth on
Schedule 2.16. To Tauber's knowledge, Tauber has not infringed upon or
unlawfully or wrongfully used any intellectual property rights owned or claimed
by another person. Tauber has not received any notice of any claim of
infringement or any other claim or proceeding with respect to any of such
matters.
2.17 ENVIRONMENTAL COMPLIANCE.
To Seller's knowledge:
(a) Tauber and any Property and all operations of Tauber are in
compliance and have been in compliance with all applicable Environmental
Laws (as defined in Section 7.13) since the date BBI acquired Tauber,
except where such non-compliance would not have a Material Adverse Effect
on Tauber. Since the date BBI acquired Tauber, Tauber has obtained and is
in compliance with all permits, licenses and other authorizations required
under any Environmental Law. Since the date BBI acquired Tauber, there has
been no event, condition or circumstance that may materially interfere with
the conduct of the Business in the manner now conducted relating to
Tauber's compliance with Environmental Laws or which constitutes a
violation thereof or which could result in an Environmental Claim relating
to the Business;
(b) There is no Property that is, or since the date BBI acquired Tauber
has been, subject to an Environmental Claim (as defined in Section 7.13);
(c) There are no Environmental Claims pending or threatened against
Tauber;
(d) Neither any Property nor Tauber is subject to investigation or
pending or threatened litigation by federal, state or local officials,
regulatory agencies or private parties as a result of any on site
management, remediation, treatment, storage, release or disposal of
Polluting Substances or exposure to any Polluting Substances since the date
BBI acquired Tauber.
For purposes of this Section 2.17 only, the term "To Seller's knowledge"
shall mean to the actual knowledge of Seller's current officers without any
investigation. Likewise, for purposes of this Section 2.17 only, the term
"Property" shall mean that real or personal property
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which Seller leased, operated, owned or exercised any authority or control over
in any manner which is or has been utilized in the operation of the Business
only since BBI acquired Tauber.
2.18 REGULATORY ACTIONS. Except as set forth on Schedule 2.18, there are no
actions or proceedings pending or, to Seller's knowledge, threatened against
Tauber by or before any government, any state or political subdivision thereof,
or any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government. Except as set forth on
Schedule 2.18, Tauber is not subject to a formal or informal agreement,
memorandum of understanding, enforcement action with or any type of financial
assistance by any regulatory authority having jurisdiction over such entity.
2.19 TITLE TO PROPERTIES; ENCUMBRANCES. Except for (i) liens for current
real or personal property taxes not yet due and payable, and (ii) liens that are
immaterial in character, amount and extent, and which do not detract from the
value or interfere with the present or proposed use of the properties they
affect (collectively, "Permitted Liens"), Tauber has unencumbered, good, legal,
and marketable title to all its properties and assets, real and personal,
including, without limitation, all of the Assets, except for those Assets
disposed of for fair market value in the ordinary course of business since
November 30, 1999. Tauber owns all furniture, equipment, and other property used
to transact its business as it is currently conducted. The personal property
identified on Schedule 1.2(c) lists each item at a value which fairly represents
the original cost thereon less accumulated depreciation through the Closing.
Simultaneous with the execution and delivery hereof, Tauber has delivered to
Purchaser a "payoff letter" or other evidence that upon Closing the IBJ
Whitehall Business Credit Corporation lien on the Assets will be terminated.
2.20 PERMITS AND LICENSES. Tauber has all permits, licenses, certificates
and authorities from governmental agencies required to conduct its business as
it is now being conducted except where the failure to maintain such permits,
licenses, certificates or authorities from governmental agencies would not have
a Material Adverse Effect on Tauber, and the consummation of the transactions
contemplated by this Agreement will not constitute a violation of any permit,
license, certificate or authority from a governmental agency. Tauber is the
legal and beneficial owner of the Permits, and Tauber has good, valid and
indefeasible title to the Permits, free and clear of all security interests,
liens, encumbrances, options, calls, pledges, trusts, and other agreements,
covenants, restrictions, reservations, adverse claims and other burdens of any
type whatsoever, except for Permitted Liens. Such Permits are in full force and
effect unimpaired by any act or omission of Tauber, or its employees or agents,
have not been suspended or revoked, except for those Permits currently being
renewed by Tauber which are so indicated on Schedule 1.2(f). Tauber has made all
necessary filings with or notifications to relevant state and federal
authorities in connection with the Permits.
2.21 ACCOUNTS RECEIVABLE. The accounts receivable included in the Assets
are bona fide accounts receivable created in the ordinary course of business.
Tauber does not know of any facts or circumstances that are likely to result in
any increase in the uncollectibility of such accounts receivable in excess of
Ten Thousand Dollars ($10,000.00).
2.22 INVENTORY. The inventory included in the Assets consists of cells,
components and other raw materials, work-in-process, and finished goods. Such
inventory as recorded on
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Schedule 1.2(b) is valued in accordance with GAAP at the lower of average cost
or market value (Purchaser acknowledges that Seller provides a reserve account
to adjust inventory to market value based on their best judgment). Seller does
not know of any facts or circumstances that are likely to result in any
write-down of such inventory in excess of Six Hundred Fifty Thousand Dollars
($650,000.00).
2.23 CUSTOMERS AND SUPPLIERS. Tauber has used its reasonable business
efforts to maintain, and currently maintains, good working relationships with
all of its customers. Schedule 2.23 sets forth a list of the ten largest dollar
volume customers of products and services sold by Tauber for the year ended
December 31, 1998 and the first nine months of 1999, and the dollar volume of
sales to the customers for such periods. None of such customers has given Tauber
notice terminating, canceling or threatening to terminate or cancel any contract
or relationship with Tauber. Schedule 2.23 also contains a list of the ten
largest dollar volume suppliers of products and services purchased by Tauber for
the year ended December 31, 1998 and the first nine months of 1999, and the
dollar volume of purchases from the suppliers for such periods.
2.24 REPRESENTATIONS NOT MISLEADING. No representation or warranty by
Seller, BBI or Tauber in this Agreement, nor any statement, summary, exhibit or
schedule furnished to Purchaser by Seller, BBI or Tauber under and pursuant to,
or in anticipation of this Agreement, contains or will contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained herein or therein not misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the representations and warranties set forth in this
Article III to Seller:
3.1 ORGANIZATION AND AUTHORITY. Nexergy is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Ohio, and
has all requisite corporate power and authority to conduct its business as now
conducted, to own, lease and operate its properties and assets as now owned,
leased or operated and to enter into and carry out its obligations under this
Agreement. Newco is a corporation duly organized, validly existing, and in good
standing under the laws of the State of California, and has all requisite
corporate power and authority to conduct its business as now conducted, to own,
lease and operate its properties and assets as now owned, leased or operated and
to enter into and carry out its obligations under this Agreement.
3.2 AUTHORITY RELATIVE TO AGREEMENT. Nexergy and Newco have full corporate
power and authority, and no further corporate proceedings are necessary, to
execute and deliver this Agreement and the Other Agreements and to consummate
the transactions contemplated hereby and thereby, which have been duly and
validly authorized by the Board of Directors of Nexergy and Newco. This
Agreement has been, and when executed the Other Agreements will be, duly and
validly executed and delivered by Nexergy and Newco and this Agreement
constitutes, and when executed the Other Agreements will constitute, valid and
binding obligations of Nexergy and Newco enforceable against Nexergy and Newco
in accordance with their terms, subject to
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the effect of bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors' rights generally and general equitable
principles.
3.3 NO VIOLATION. Neither the execution, delivery nor performance of this
Agreement, in its entirety, nor the consummation of all of the transactions
contemplated hereby, will (i) violate (with or without the giving of notice or
the passage of time) any law, order, writ, judgment, injunction, award, decree,
rule, statute, ordinance or regulation applicable to Nexergy and Newco; or (ii)
be in conflict with, result in a breach or termination of any provision of,
cause the acceleration of the maturity of any debt or obligation pursuant to,
constitute a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any security interest, lien,
charge or other encumbrance upon any property or assets of Nexergy and Newco
pursuant to any terms, conditions or provisions of any note, license,
instrument, indenture, mortgage, deed of trust or other agreement or
understanding or any other restriction of any kind or character, to which
Nexergy and Newco are parties or by which any of their assets or properties are
subject or bound.
3.4 CONSENTS AND APPROVALS. No prior consent, approval or authorization of,
or declaration, filing or registration with any party, including any government
entity or agency, domestic or foreign, is required of Purchaser in connection
with the execution, delivery and performance by Purchaser of this Agreement and
the consummation of the transactions contemplated hereby.
3.5 REPRESENTATIONS NOT MISLEADING. No representation or warranty by
Purchaser, Nexergy or Newco in this Agreement, nor any statement, summary,
exhibit or schedule furnished to Seller by Purchaser, Nexergy or Newco under and
pursuant to, or in anticipation of this Agreement, contains or will contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained herein or therein not misleading.
ARTICLE IV.
ADDITIONAL AGREEMENTS
4.1 ASSIGNMENTS. Seller will introduce Purchaser to all Tauber's suppliers
and customers, and take any necessary actions to provide for the assignment of
the Scheduled Contracts.
4.2 SELLER NONCOMPETE.
(a) Seller acknowledges that Seller is familiar with the following, any
and all of which constitute confidential information of Tauber
(collectively the "Confidential Information"): (i) any and all trade
secrets of Tauber; and (ii) any and all information concerning the business
and affairs of Tauber (which includes historical financial statements,
financial projections and budgets, historical and projected sales, capital
spending budgets and plans, product pricing, and customer names and lists),
however documented. Further, Seller acknowledges that: (i) the business of
Tauber is national in scope; (ii) Tauber's products and services are
marketed throughout the United States; (iii) Tauber competes with other
businesses that are or could be located in any part of the United States;
(iv) Purchaser has required that Seller make the covenants set forth in
this
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Section of the Agreement as a condition to the Purchaser's purchase of the
Assets; (v) the provisions of this Section are reasonable and necessary to
protect and preserve the Business; and (vi) the Business would be
irreparably damaged if Seller were to breach the covenants set forth in
this Section.
(b) Seller acknowledges and agrees that all Confidential Information
known or obtained by Seller is the property of Tauber. Therefore, Seller
agrees that it will not, at any time, disclose or use for its own account
or for the benefit of any third party any Confidential Information unless
and to the extent that the Confidential Information is or becomes generally
known to, and available for use by, the public other than as a result of
Seller's fault or the fault of any other person bound by a duty of
confidentiality to Tauber.
(c) As an inducement for Purchaser to purchase the Assets, and as
additional consideration for the monies to be paid under this Agreement,
Seller agrees that: for a period of one (1) year after the date hereof: (i)
Seller will not, directly or indirectly, engage or invest in, own, manage,
operate, finance, control, or participate in the ownership, management,
operation, financing, or control of, be employed by, associated with, or in
any manner connected with, any business whose products or activities
compete in whole or in part with the products or activities of Tauber;
provided, however, that Purchaser acknowledges that BBI and/or its
Subsidiaries is engaged in the sale of cellular, mobile radio, professional
video, dry cell, sealed lead acid, medical and computer batteries, and
cellular and computer components and accessories to after-market customers
(the "BBI Wireless Business"), and that this noncompetition covenant shall
not be interpreted to prohibit BBI and/or its Subsidiaries from continuing
to engage in the BBI Wireless Business. Seller agrees that this covenant is
reasonable with respect to its duration, geographical area, and scope; (ii)
Seller will not, directly or indirectly, either for itself or any other
person, (w) induce or attempt to induce any employee of Purchaser to leave
the employ of Purchaser, (x) in any way interfere with the relationship
between Purchaser and any employee of Purchaser, (y) employ, or otherwise
engage as an employee, independent contractor, or otherwise, any employee
of Purchaser, or (z) induce or attempt to induce any customer, supplier,
licensee, or business relation of Tauber to cease doing business with
Purchaser, or in any way interfere with the relationship between any
customer, supplier, licensee, or business relationship of Purchaser; (iii)
Seller will not, directly or indirectly, either for itself or any other
person, solicit the business of any person known to Seller to be a customer
of Purchaser, whether or not Seller had personal contact with such person,
with respect to products or activities which compete in whole or in part
with the products or activities of Purchaser. In the event of a breach by
Seller of any covenant set forth in Section 4.2(c) of this Agreement, the
term of such covenant will be extended by the period of the duration of
such breach.
(d) No party hereto will, at any time during or after the one year
period, disparage any other party hereto, or any of their respective
shareholders, directors, officers, employees, or agents.
(e) If Seller breaches the covenants set forth in Sections 4.2(b) or
(c) of this Agreement, Purchaser shall provide Seller notice (in the manner
provided for herein) of the breach and an opportunity to cure such breach.
If the breach set forth in the notice
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has not been cured within thirty (30) days after the notice, Purchaser will
be entitled to the following remedies: (i) damages from Seller; and (ii) in
addition to its right to damages and any other rights it may have, to
obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 4.2(b) and (c) of this Agreement, it being agreed that money
damages alone would be inadequate to compensate the Purchaser and would be
an inadequate remedy for such breach. The rights and remedies of the
parties hereunder are cumulative and not alternative.
4.3 PURCHASER NONCOMPETE.
(a) Purchaser acknowledges that: (i) the BBI Wireless Business is
national in scope; (ii) BBI's Wireless Business products services are
marketed throughout the United States; (iii) BBI's Wireless Business
competes with other businesses that are or could be located in any part of
the United States; (iv) BBI has required that Purchaser make the covenants
set forth in this Section of the Agreement as a condition to the Seller's
sale of the Assets; (v) the provisions of this Section are reasonable and
necessary to protect and preserve BBI's Wireless Business; and (vi) BBI's
Wireless Business would be irreparably damaged if Purchaser were to breach
the covenants set forth in this Section.
(b) As an inducement for Seller to sell the Assets, Purchaser agrees
that: for a period of one (1) year after the date hereof: (i) Purchaser
will not, directly or indirectly, engage or invest in, own, manage,
operate, finance, control, or participate in the ownership, management,
operation, financing, or control of or be employed by, associated with, or
in any manner connected with, any business whose products or activities
compete in whole or in part with the products or activities of BBI's
Wireless Business. Purchaser agrees that this covenant is reasonable with
respect to its duration, geographical area and scope; (ii) Purchaser will
not, directly or indirectly, either for itself or any other person, (w)
induce or attempt to induce any employee of BBI to leave the employ of BBI,
(x) in any way interfere with the relationship between BBI and any employee
of BBI, (y) employ, or otherwise engage as an employee, independent
contractor, or otherwise, any employee of BBI, or (z) induce or attempt to
induce any customer, supplier, licensee, or business relation of BBI to
cease doing business with BBI, or in any way interfere with the
relationship between any customer, supplier, licensee or business
relationship of BBI; (iii) Purchaser will not, directly or indirectly,
either for itself or for any other person, solicit the business of any
person known to Purchaser to be a customer of BBI with respect to products
or activities which compete in whole or in part with the products or
activities of BBI's Wireless Business. In the event of a breach by
Purchaser of any covenant set forth in Section 4.3(b) of this Agreement,
the term of such covenant will be extended by the period of the duration of
such breach.
(c) If Purchaser breaches the covenants set forth in Section 4.3(b) of
this Agreement, BBI shall provide Purchaser notice (in the manner provided
for herein) of the breach and an opportunity to cure such breach. If the
breach set forth in the notice has not been cured within thirty (30) days
after the notice, BBI will be entitled to the following remedies: (i)
damages from Purchaser; and (ii) in addition to its right to damages and
any other rights it may have, to obtain injunctive or other equitable
relief to
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restrain any breach or threatened breach or otherwise to specifically
enforce the provisions of Section 4.3(b) of this Agreement, it being agreed
that money damages alone would be inadequate to compensate BBI and would be
an inadequate remedy for such breach the rights and remedies of the parties
hereunder are accumulated and not alternative.
4.4 WARN AND COBRA. Seller shall be responsible for providing and
discharging any and all notifications, benefits and liabilities to Tauber
employees, former Tauber employees and government agencies required by the
Worker Adjustment and Retraining Notification Act or any other similar federal
or state law. For all Tauber employees who are not employed by Purchaser on the
Closing and all "qualified beneficiaries" of such employees, Seller shall be
responsible for the health care continuation coverage under any health care
plans sponsored by Tauber with respect to the health care continuation coverage
requirements under ERISA or any other similar federal or state law.
4.5 OTHER RELATED DOCUMENTS. Simultaneous with the execution and delivery
hereof, Newco shall have entered into the following agreements: a Sub-Sublease
Agreement with Battery Network, Inc.; an Employee and Resource Sharing Agreement
with Battery Network, Inc.; and, a Noncompetition Agreement with Thomas L.
Gruber, an individual and consultant to Tauber.
4.6 CUSTOMER RETURNS.
Within seven (7) business days of receiving a returned product or request
for credit in connection with any sales made by Tauber prior to Closing, Newco
will notify Seller of said customer returns and/or requests for credit. Newco
agrees not to accept any return from a customer, or adjust the amount owed by
said customer, prior to notifying the Seller of the return and/or request for
credit. Within seven (7) business days of being so notified, Seller shall advise
Newco of its decision whether or not to recognize the validity of the return
and/or request for credit. If Seller recognizes the validity of the return
and/or the request for credit, then Seller shall promptly pay to Newco the
amount of the credit less the value of the product returned to Newco. If Seller
determines that the return and/or request for credit is invalid, then Seller
shall so notify Newco, and Newco shall be free to pursue any and all remedies
against Seller hereunder. The terms of this Section 4.6 in no way modify or
limit Seller's indemnification obligations under this Agreement.
4.7 RECORD RETENTION.
Purchaser agrees to preserve all records and computer files relating to
Tauber actually received from Seller at Closing (the "Preserved Records") for a
period of six (6) years following the Closing; provided, however, that Purchaser
will retain indefinitely any Preserved Records relating to taxes. Purchaser
further agrees to provide, as promptly as practical, copies of all Preserved
Records upon Seller's written request therefor and at Seller's cost.
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ARTICLE V.
INDEMNIFICATION
5.1 GENERAL INDEMNIFICATION OBLIGATION OF SELLER. From and after the date
hereof, Seller will reimburse, indemnify and hold harmless Purchaser, its
officers, directors, agents, employees and controlling persons and their
successors and assigns (each, an "Indemnified Purchaser Party") against and in
respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered directly or indirectly by any Indemnified
Purchaser Party, that result from, relate to or arise out of:
(i) any and all excluded liabilities described in Section 1.6;
(ii) any and all actions, suits, claims, Environmental Claims, or
legal, administrative, arbitration, governmental or other proceedings
or investigations against or incurred by any Indemnified Purchaser
Party that relate to Seller or the Business (x) to the extent such
actions, suits, claims, Environmental Claims, proceedings or
investigations relate, directly or indirectly, in whole or in part to
events, conditions, operations, facts or circumstances which occurred
or existed prior to the Closing, or (y) which result from or arise out
of in whole or in part any action or inaction prior to the Closing of
Seller or any director, officer, employee, agent or representative of
Seller or the Business;
(iii) any misrepresentation, breach of warranty or nonfulfillment
of any agreement or covenant on the part of Seller under this
Agreement, or from any misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished to
Purchaser pursuant to this Agreement;
(iv) the failure of the parties to comply with the bulk sales laws
or any other similar laws in any applicable jurisdiction in respect of
the transactions contemplated hereby;
(v) federal, state and local sales, documentary and other transfer
taxes, if any, due as a result of the purchase, sale and transfer of
the Assets in accordance with this Agreement and any other taxes
attributable to or arising out of the excluded liabilities; or
(vi) any liens on the Assets except for Permitted Liens (as defined
in Section 2.19); and
(b) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable legal fees and expenses and
costs of investigation) incident to any of the foregoing or to the
enforcement of this Section 5.1.
Tauber and BBI shall be jointly and severally liable for any and all
indemnification obligations under this Section 5.1. BBI acknowledges that this
means, among other things, that
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BBI may have indemnification obligations for the misrepresentation, breach of
warranty or non-fulfillment of any agreement or covenant on the part of Tauber
under this Agreement.
5.2 GENERAL INDEMNIFICATION OBLIGATION OF PURCHASER. From and after the
date hereof, Purchaser will reimburse, indemnify and hold harmless Seller, its
officers, directors, agents, employees and controlling persons and their
successors or assigns (each, an "Indemnified Seller Party") against and in
respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered directly or indirectly by any Indemnified
Seller Party that result from, relate to or arise out of:
(i) the Assumed Liabilities;
(ii) any misrepresentation, breach of warranty or non-fulfillment
of any agreement or covenant on the part of Purchaser under this
Agreement, or from any misrepresentation in or omission from any
certificate, schedule, statement, document or instrument furnished to
Seller pursuant to this Agreement; or
(iii) any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other proceedings or investigations
against any Indemnified Seller Party that relate to Purchaser or the
Business (x) to the extent that such actions, suits, claims,
proceedings or investigations relate solely to events, conditions,
operations, facts or circumstances which occurred wholly after the
Closing or (y) which result from or arise solely out of any action or
inaction wholly after the Closing of Purchaser or any director,
officer, employee, agent, or representative of Purchaser, and in each
case of clause (x) and (y) to the extent solely attributable to the
negligence of Purchaser; and
(b) any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs and other expenses
(including, without limitation, reasonable legal fees and expenses and
costs of investigation) incident to any of the foregoing or to the
enforcement of this Section 5.2.
5.3 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS. If any proceeding shall be
brought or asserted under this Article against an indemnified party or any
successor thereto (the "Indemnified Person") in respect of which indemnity may
be sought under this Article from an indemnifying person or any successor
thereto (the "Indemnifying Person"), the Indemnified Person shall give prompt
written notice of such proceeding to the Indemnifying Person, who shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to the Indemnified Person and the payment of all expenses; provided, that any
delay or failure so to notify the Indemnifying Person shall relieve the
Indemnifying Person of its obligations hereunder only to the extent, if at all,
that it is prejudiced by reason of such delay or failure. In no event shall any
Indemnified Person be required to make any expenditure or bring any cause of
action to enforce the Indemnifying Person's obligations and liability under and
pursuant to the indemnifications set forth in this Article. The Indemnified
Person shall have the right to employ
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separate counsel in any of the foregoing proceedings and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Person unless the Indemnified Person shall in good
faith determine that there exists actual or potential conflicts of interest
which make representation by the same counsel inappropriate. The Indemnified
Person's right to participate in the defense or response to any proceeding
should not be deemed to limit or otherwise modify its obligations under this
Article. Except as set forth in the immediately following sentence, the
Indemnified Person shall not, without the Indemnifying Person's prior written
consent, settle or compromise any proceeding or consent to the entry of any
judgment. In the event that the Indemnifying Person, within ten (10) business
days after notice of any such proceeding, fails to assume the defense thereof,
the Indemnified Person shall have the right to undertake the defense, compromise
or settlement of such proceeding for the account of the Indemnifying Person,
subject to the right of the Indemnifying Person to assume the defense of such
proceeding with counsel reasonably satisfactory to the Indemnified Person at any
time prior to the settlement, compromise or final determination thereof.
Anything in this Article to the contrary notwithstanding, the Indemnifying
Person shall not, without the Indemnified Person's prior written consent, settle
or compromise any proceeding or consent to the entry of any judgment with
respect to any proceeding for anything other than money damages paid by the
Indemnifying Person. The Indemnifying Person may, without the Indemnified
Person's prior written consent, settle or compromise any such proceeding or
consent to entry of any judgment with respect to any such proceeding that
requires solely the payment of money damages by the Indemnifying Person and that
includes as an unconditional term thereof the release by the claimant or the
plaintiff of the Indemnified Person from all liability in respect of such
proceeding. As a condition to asserting any rights under this Article, each of
the Indemnified Purchaser Parties must appoint Purchaser, and each of the
Indemnified Seller Parties must appoint Seller, as the case may be, as their
sole agents for all matters relating to any claim under this Article.
5.4 PAYMENT; INTEREST. The Indemnifying Party shall make any payment
required to be made under this Article in cash and on demand. Any payments
required to be paid by an Indemnifying Party under this Article which are not
paid within five business days of receipt by the Indemnifying Party of the
Indemnified Party's demand therefor shall thereafter be deemed delinquent, and
the Indemnifying Party shall pay to the Indemnified Party immediately upon
demand interest at the rate of 12% per annum, not to exceed the maximum
nonusurious rate allowed by applicable law, from the date such payment becomes
delinquent to the date of payment of such delinquent sums.
5.5 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The respective
representations, warranties, agreements, covenants and indemnities of the
parties set forth herein shall survive the Closing but shall expire and be
terminated on the second anniversary of the Closing (except for (i) the
representations and warranties set forth in Sections 2.2 and 2.19 hereof, and
the covenants set forth in Section 4.6 hereof which shall survive indefinitely,
and (ii) the representations and warranties set forth in Sections 2.9, 2.10 and
2.17 hereof which shall expire 60 days after the applicable statute of
limitation), provided, however, that in the case of all representations,
warranties, agreements, covenants and indemnities, there shall be no such
termination with respect to any such representation, warranty, agreement,
covenant or indemnity as to which a claim has been asserted and which the
Indemnifying Party has received notice prior to the expiration of the relevant
survival period until the resolution of such claim.
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Notwithstanding any investigation or audit conducted before or after the
Closing, each party shall be entitled to rely upon the representations and
warranties set forth herein and therein.
ARTICLE VI.
POST CLOSING MATTERS
6.1 EMPLOYEES
Immediately prior to Closing, Tauber shall terminate the employment of
those Tauber employees identified on Exhibit G (the "Terminated Employees").
Seller shall not, directly or indirectly, (re)hire the Terminated Employees
(assuming said Terminated Employees are hired by Newco within 90 days of
Closing). Seller shall recommend to the Terminated Employees that they consider
favorably any offer of employment made to them by Newco. Notwithstanding this
Section 6.1, nothing in this Agreement shall be construed to mean that Newco has
an obligation to offer employment to any former Tauber employees including,
without limitation, the Terminated Employees. Furthermore, the parties hereto
agree that Purchaser is not assuming any employment-related obligations or
liabilities with respect to any former Tauber employees including, without
limitation, the Terminated Employees, it being understood that the only
obligations and liabilities being assumed by Purchaser are the Assumed
Liabilities as defined in Section 1.5 hereof.
6.2 EMPLOYEE BENEFITS. Tauber's employees who are employed by Purchaser
immediately after the Closing shall receive credit for each full year of
continuous service that each such employee was employed by Tauber under the
vacation and sick policies or arrangements of Purchaser that are applicable to
similarly situated Purchaser employees. No portion of the assets or liabilities
of any plan, fund, program or arrangement, written or unwritten, heretofore
sponsored or maintained by Seller or a Controlled Entity with respect to
employee benefits or Benefit Plans (and no amount attributable to any such plan,
fund, program or arrangement) shall be transferred to Purchaser, and Purchaser
shall not be required to continue any such plan, fund, program or arrangement
after the Closing. The amounts payable on account of all employee benefit
arrangements and Benefit Plans shall be determined by Seller. Except as
specifically set forth on Schedule 1.5(b), Purchaser shall not be liable for any
benefits or liabilities under any Benefit Plan or any claim for insurance,
reimbursement or other benefits payable to employees of Seller or a Controlled
Entity.
6.3 THIRD PARTY CONSENTS. To the extent that Seller's rights under any
agreement, contract, commitment, lease, authorization or other Asset to be
assigned to Purchaser hereunder may not be assigned without the consent of
another person which has not been obtained, this Agreement shall not constitute
an agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and Seller, at its expense, shall use
commercially reasonable efforts to obtain any such required consent(s) as
promptly as possible. Purchaser shall cooperate with Seller in the obtaining of
any such consents. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Purchaser's rights under the
Asset in question so that Purchaser would not in effect acquire the benefit of
all such rights, Seller, to the maximum extent permitted by law and the Asset,
shall act after the Closing as Purchaser's agents in order to obtain for it the
benefits thereunder and shall
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cooperate, to the maximum extent permitted by law, with Purchaser in any other
reasonable arrangement designed to provide such benefits to Purchaser.
6.4 MAINTENANCE OF BOOKS AND RECORDS. Purchaser and Seller shall preserve
until the sixth anniversary of the Closing all records possessed or to be
possessed by such party relating to any of the assets, liabilities or business
of Tauber prior to the Closing. After the Closing, where there is a legitimate
purpose, such party shall provide the other parties with access, upon prior
reasonable written request specifying the need therefor, during regular business
hours, to (i) the officers and employees of such party and (ii) the books of
account and records of such party, but, in each case, only to the extent
relating to the assets, liabilities or business of Tauber prior to the Closing,
and the other parties and their representatives shall have the right to make
copies of such books and records; provided, however, that the foregoing right of
access shall not be exercisable in such a manner as to interfere unreasonably
with the normal operations and business of such party; and further, provided,
that, as to so much of such information as constitutes trade secrets or
confidential business information of such party, the requesting party and its
officers, directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its affiliates or its officers, directors or representatives.
6.5 PAYMENTS RECEIVED. Seller and Purchaser each agree that after the
Closing they will hold and will promptly transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash) or
other property that they may receive on or after the Closing which properly
belongs to the other party, including, without limitation, any progress payments
or payments on account which are Assets, and will account to the other for all
such receipts. From and after the Closing, Purchaser shall have the right and
authority to endorse without recourse the name of Tauber on any check or any
other evidences of indebtedness properly received by Purchaser on account of the
Business and the Assets transferred to Purchaser.
6.6 INQUIRIES AND FURTHER ASSURANCES. From and after the Closing, Seller
will promptly refer all inquiries with respect to ownership of the Assets or the
Business to Purchaser. In addition, Seller will execute such documents and
financing statements as Purchaser may request from time to time to evidence
transfer of the Assets and the Business to Purchaser.
ARTICLE VII.
MISCELLANEOUS
7.1 EXPENSES. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such costs and expenses; provided, however, that Seller agrees to pay to
Purchaser the amount of Nine Thousand Two Hundred Sixty Three and 63/100 Dollars
($9,263.63) to reimburse Purchaser for KPMG's fees related to the inventory
observation from November 30 through December 2, 1999, and the airfare, lodging
and meal expenses of Messrs. Glandon and Stanton incurred during their trip to
Tauber's facility for the inventory observation.
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7.2 BROKERS AND FINDERS. All negotiations on behalf of Purchaser and Seller
relating to this Agreement and the transactions contemplated hereby have been
carried on by the parties hereto and their respective agents directly without
the intervention of any other person in such manner as to give rise to any claim
against Purchaser or Seller for financial advisory fees, brokerage or commission
fees, finder's fees or other like payment in connection with the consummation of
the transactions contemplated hereby.
7.3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof
(including, without limitation, the letter of intent dated December 17, 1999),
and (b) shall not be assigned by operation of law or otherwise. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties.
7.4 FURTHER ASSURANCES. Seller from time to time after the Closing, at
Purchaser's request, will execute, acknowledge and deliver to Purchaser such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
assurances as Purchaser may reasonably require in order to vest more effectively
in Purchaser or to put Purchaser more fully in possession of, any of the Assets,
or to better enable Purchaser to complete, perform or discharge any of the
Assumed Liabilities or obligations assumed by Purchaser at the Closing pursuant
to Section 1.5. Each of the parties hereto will cooperate with the other and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
7.5 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.
7.6 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
7.7 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by telecopy, or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties as
follows:
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if to Purchaser:
Nexergy, Inc.
1909 Arlingate Lane
Columbus, Ohio 43218
Attention: Philip J. Glandon
Telecopy No. (614) 351-2204
with a copy to:
T. Robert Brownlee
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215
Telecopy No. (614) 227-2390
if to Seller:
Batteries Batteries, Inc.
1840 County Line Road
Huntington Valley, Pennsylvania 19006
Attention: Stephen Rade, CEO
Telecopy No. (____) _____ - _________
with a copy to:
Justin P. Klein
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, Pennsylvania 19103
Telecopy No. (215) 864-8999
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
7.8 GOVERNING LAW; VENUE. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
7.9 DESCRIPTIVE HEADINGS. The descriptive headings are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
7.10 PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARY. This Agreement shall
be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement,
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express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
7.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
7.12 INCORPORATION BY REFERENCE. Any and all schedules, exhibits, annexes,
statements, reports, certificates or other documents or instruments referred to
herein or attached hereto are incorporated herein by reference hereto as though
fully set forth at the point referred to in the Agreement.
7.13 CERTAIN DEFINITIONS.
(a) "Affiliate" as used in this Agreement means, with respect to any
person, (i) any person that, directly or indirectly, controls, is
controlled by, or is under common control with, such person in question and
(ii) any officer, director or stockholder of such person in question, or
member of the immediate family of such officer, director or stockholder.
For the purposes of the definition of Affiliate, "control" (including, with
correlative meaning, the terms "controlled by" and "under common control
with") as used with respect to any person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such person, whether through the ownership
of voting securities or by contract or otherwise.
(b) "Closing" shall mean the day and year first above written.
(c) "disposal" or "disposed" shall have the meaning specified in any
applicable Environmental Law.
(d) "Environmental Claim(s)" means all claims, notices, actions, causes
of action (arising under common law, contract or statute), suits,
judgments, demands and governmental investigations relating to compliance
with Environmental Laws or the handling, presence or release of Polluting
Substances.
(e) "Environmental Law(s)" shall mean laws, including, without
limitation, federal, state or local laws, common law, ordinances, rules,
regulations, interpretations and orders of courts or administrative
agencies or authorities relating to pollution, contamination, preservation,
protection or cleanup of the environment (including, without limitation,
ambient air, surface water, ground water, land surface, natural resources
and subsurface strata), including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"); the Superfund Amendments and Reauthorization Act of 1986, as
amended; the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"); Hazardous and Solid Waste Amendments of 1984, as amended; the
Hazardous Materials Transportation Act, as
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amended; the Toxic Substances Control Act, as amended; the Clean Air Act,
as amended by the Clean Air Act Amendments of 1990; the Clean Water Act, as
amended; the Oil Pollution Act of 1990, as amended; the Safe Drinking Water
Act, as amended; the Occupational Safety and Health Act, as amended; the
Interstate Commerce Act, as amended; the Motor Carrier Safety Act, as
amended; and the Motor Carrier Act, as amended; and other laws relating to
pollution, contamination, preservation, protection or cleanup of the
environment; exposure of persons or property to Polluting Substances; and
the manufacture, processing, distribution, use, treatment, handling,
storage, disposal or transportation of Polluting Substances. Any specific
references to an Environmental Law shall include any amendments to it
promulgated from time to time.
(f) Seller shall be deemed to have "knowledge" of or to have "known" a
particular fact or other matter if any officer of Seller has, or at any
time had, actual knowledge of such fact or other matter, or after
reasonable investigation, should have had such knowledge.
(g) "Material Adverse Effect" shall mean any material adverse change in
the assets, liabilities, business, results of operations or prospects of
the Business taken as a whole measured against the assets, liabilities,
business results of operations or prospects of the Business as of November
30, 1999.
(h) "Polluting Substances" shall mean (i) any material, waste or
substance designated, classified, regulated or included within the
statutory and/or regulatory definitions of "hazardous substances,"
"hazardous waste," "extremely hazardous substance," "hazardous chemical,"
"pollutant," "regulated substance," "contaminant," "hazardous material," or
"toxic substance" under any Environmental Law; (ii) any material, waste or
substance which is petroleum, oil or a fraction thereof; (iii) radioactive
material (including naturally occurring radioactive materials); (iv) solid
waste, as defined under RCRA, that poses an imminent and substantial
endangerment to health or the environment; and (v) such other substances,
materials, or wastes that become classified or regulated as hazardous or
toxic under any federal, state or local law or regulation from time to
time.
(i) "Property" includes any property (whether real or personal) which
Seller currently or in the past has leased, operated, owned or exercised
any authority or control over in any manner which is or has been utilized
in the operation of the Business. To the extent any representations in
Section 2.17 of this Agreement apply to property not currently leased,
operated, owned, or over which Seller does not currently exercise authority
or control, such representations shall be deemed to be made to the
knowledge of Seller.
(j) "release" or "releases" as used in Section 2.17 shall have the
meaning specified in any applicable Environmental Law.
(k) "Subsidiary" shall mean, when used with reference to an entity, any
corporation, a majority of the outstanding voting securities of which are
owned directly or indirectly by such entity or any partnership, joint
venture or other enterprise in which such entity has, directly or
indirectly, any equity interest.
29
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
TAUBER ELECTRONICS, INC.
By: /s/ Ronald Badke
-------------------------------------
Ronald Badke
Secretary and Treasurer
BATTERIES BATTERIES, INC.
By: /s/ Ronald Badke
-------------------------------------
Ronald Badke
Secretary and Treasurer
NEXERGY-TAUBER, INC.
By: /s/ Philip J. Glandon
-------------------------------------
Philip J. Glandon
President
NEXERGY, INC.
By: /s/ Philip J. Glandon
-------------------------------------
Philip J. Glandon
President
30
