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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):
March 21, 1997
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DYNATECH CORPORATION
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(Exact name of registrant as specified in its charter)
Massachusetts 0-7438 04-258582
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
3 New England Executive Park, Burlington, MA 01803
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508)272-6100
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Not Applicable
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(Former name or former address, if changed since last report)
Page 1 of 48 Pages
Exhibit Index is on Page 4
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Item 2. Acquisition or Disposition of Assets.
On March 21, 1997, Computerized Medical Systems, Inc. ("CMS"), an indirect,
wholly-owned subsidiary of Dynatech Corporation (the "Registrant"), sold
substantially all of its assets to CMSI Holdings Corp. (the "Buyer"), pursuant
to the terms of an Asset Purchase Agreement dated as of March 7, 1997 (the
"Asset Purchase Agreement"). The assets sold to the Buyer were used by CMS in
the development, marketing and supporting of computerized planning systems
serving the field of radiation oncology and were included in Discontinued
Operations of the Registrant.
The Registrant received (i) cash consideration of $33 million, (ii) Class A
Preferred Stock of the Buyer with an aggregate liquidation preference of $6.3
million, and (iii) warrants exercisable to purchase 4.5 percent of the common
stock of the Buyer, on a fully diluted basis measured as of March 21, 1997. The
Buyer also assumed certain liabilities of CMS. In connection with the
disposition, the Registrant agreed to guarantee up to $3 million of the payment
obligations of a subsidiary of the Buyer under a credit facility obtained by
such subsidiary. The terms of the Asset Purchase Agreement were determined on
the basis of arms'-length negotiations. Prior to the execution of the Asset
Purchase Agreement, neither the Registrant nor any of its affiliates had any
material relationship with the Buyer.
The purchase price is subject to adjustment upon completion of an audit of
the balance sheet of CMS as at March 21, 1997, as set forth in the Asset
Purchase Agreement.
Item 7. Financial Statements and Exhibits.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED: None.
(b) PRO FORMA FINANCIAL INFORMATION: The results of operations of CMS for
the fiscal year ended March 31, 1996 and the nine months ended December 31, 1996
are included in the Discontinued Operations of Dynatech Corporation, therefore
pro forma financial information is not included herein.
(c) EXHIBITS:
2. Asset Purchase Agreement, dated as of March 7, 1997, by and among
Dynatech Corporation, Dynatech USA, Inc., Computerized Medical
Systems, Inc., and CMSI Holdings Corp.
Page 2 of 48
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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.
Date: April 7, 1997 DYNATECH CORPORATION
By: /s/ Allan M. Kline
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Allan M. Kline
Vice President, Chief Financial
Officer and Treasurer
Page 3 of 48
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EXHIBIT INDEX
2. Asset Purchase Agreement, dated as of March 7, 1997, by and among Dynatech
Corporation, Dynatech USA, Inc., Computerized Medical Systems, Inc., and
CMSI Holdings Corp.
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EXHIBIT 2
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ASSET PURCHASE AGREEMENT
Dated as of March 7, 1997
among
DYNATECH CORPORATION,
DYNATECH USA, INC.
COMPUTERIZED MEDICAL SYSTEMS, INC.
AND
CMSI HOLDINGS CORP.
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<TABLE>
TABLE OF CONTENTS
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Page
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1. DEFINITIONS................................................................................. 1
1.1. Accounts Receivable.................................................................... 1
1.2. Acquired Assets........................................................................ 1
1.3. Acquired Contracts..................................................................... 1
1.4. Acquired Equipment..................................................................... 1
1.5. Acquired Inventory..................................................................... 1
1.6. Acquired Lease......................................................................... 2
1.7. Agreement.............................................................................. 2
1.8. Asset Purchase......................................................................... 2
1.9. Assumed Liabilities.................................................................... 2
1.10. Auditors............................................................................... 2
1.11. Bill of Sale........................................................................... 2
1.12. Books and Records...................................................................... 2
1.13. Business............................................................................... 2
1.14. Cash Amount............................................................................ 2
1.15. Certificate of Designation............................................................. 2
1.16. Claims................................................................................. 2
1.17. Closing................................................................................ 2
1.18. Closing Date........................................................................... 2
1.19. Closing Date Balance Sheet............................................................. 2
1.20. Commercial Efforts..................................................................... 2
1.21. Corporate Records...................................................................... 3
1.22. Disagreement Notice.................................................................... 3
1.23. Dynatech............................................................................... 3
1.24. Dynatech Corp.......................................................................... 3
1.25. Dynatech Plan.......................................................................... 3
1.26. Dynatech USA........................................................................... 3
1.27. ERISA.................................................................................. 3
1.28. Environmental Laws..................................................................... 3
1.29. Excluded Assets........................................................................ 3
1.30. Financing.............................................................................. 3
1.31. GAAP................................................................................... 3
1.32. Government Authority................................................................... 3
1.33. Guaranty............................................................................... 3
1.34. Hazardous Wastes....................................................................... 3
1.35. HSR Act................................................................................ 4
1.36. Indemnified Party...................................................................... 4
1.37. Indemnifying Party..................................................................... 4
1.38. Instrument of Assumption of Liabilities................................................ 4
1.39. Intellectual Property.................................................................. 4
1.40. Intercompany Receivable................................................................ 4
1.41. Internal Revenue Code.................................................................. 4
1.42. Lien................................................................................... 4
1.43. Losses................................................................................. 4
1.44. Minimum Net Asset Value................................................................ 4
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1.45. 1933 Act............................................................................... 4
1.46. Permits................................................................................ 4
1.47. Person................................................................................. 4
1.48. Personnel Records...................................................................... 4
1.49. Plan................................................................................... 4
1.50. Preferred Stock........................................................................ 5
1.51. Preferred Stock and Warrants........................................................... 5
1.52. Proceeding............................................................................. 5
1.53. Purchase Price......................................................................... 5
1.54. Purchaser.............................................................................. 5
1.55. Review Period.......................................................................... 5
1.56. Schedule of Closing Accounting Policies................................................ 5
1.57. Seller................................................................................. 5
1.58. Settlement Date........................................................................ 5
1.59. Software............................................................................... 5
1.60. Tax or Taxes........................................................................... 5
1.61. Tax Returns............................................................................ 5
1.62. Unassumed Liabilities.................................................................. 5
1.63. Warrants............................................................................... 5
1.64. Warranty Obligations................................................................... 5
2. PURCHASE AND SALE OF ASSETS................................................................. 6
2.1. Purchase and Sale of the Acquired Assets; Excluded Assets.............................. 6
2.2. Purchaser Not Successor to the Seller; Assumed Liabilities; Unassumed Liabilities...... 7
2.3. Consideration.......................................................................... 8
2.4. Post-Closing Adjustment to Cash Amount................................................. 9
2.5. Closing............................................................................... 10
2.6. Instruments of Conveyance and Transfer................................................ 10
2.7. Post-Closing Assurances............................................................... 10
2.8. Capital Expenditure Guarantee......................................................... 10
2.9. Dynatech Guarantee of Obligations of the Seller....................................... 11
2.10. Delivery of Records and Contracts; Access............................................. 11
2.11. Apportionment......................................................................... 12
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND DYNATECH.................................. 12
3.1. Organization, Standing and Power...................................................... 12
3.2. Authority; Binding Agreements......................................................... 12
3.3. Capitalization; Equity Interests...................................................... 12
3.4. Conflicts; Consents................................................................... 12
3.5. Financial Information................................................................. 13
3.6. Undisclosed Liabilities............................................................... 13
3.7. Absence of Changes.................................................................... 14
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3.8. Title to Property..................................................................... 15
3.9. Intellectual Property................................................................. 15
3.10. Insurance............................................................................. 16
3.10. Acquired Contracts, Other Agreements, Etc............................................. 16
3.12. Litigation............................................................................ 16
3.13. Compliance; Governmental Authorizations............................................... 17
3.14. Labor Relations; Employees............................................................ 17
3.15. Environmental Matters................................................................. 18
3.16. Accounts Receivable; Accounts Payable................................................. 18
3.17. Taxes................................................................................. 19
3.18. Disclosure............................................................................ 19
3.19. Brokers............................................................................... 20
3.20. Other Names and Business.............................................................. 20
3.21. Solvency.............................................................................. 20
3.22. Software.............................................................................. 20
3.22. Inventories........................................................................... 20
3.24. Assets Necessary to Business.......................................................... 20
3.25. No Interest in Properties............................................................. 20
3.26. Purchase for Investment............................................................... 21
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER............................................ 21
4.1. Organization, Standing and Power...................................................... 21
4.2. Authority; Binding Agreements; Issuance of Preferred Stock............................ 21
4.3. Conflicts; Consents................................................................... 21
4.4. Litigation............................................................................ 22
4.5. Broker's Fee.......................................................................... 22
4.6. Disclosure............................................................................ 22
5. COVENANTS.................................................................................. 22
5.1. Expenses; Sales Taxes................................................................. 22
5.2. Conduct of Business................................................................... 23
5.3. Further Assurances.................................................................... 23
5.4. No Shopping........................................................................... 23
5.5. Access and Information................................................................ 23
5.6. Right to Name......................................................................... 24
5.7. Publicity............................................................................. 24
5.8. Confidentiality; Non-Competition...................................................... 24
5.9. Bulk Sales............................................................................ 25
5.10. Allocation of Cash Amount............................................................. 25
5.11. Insurance............................................................................. 25
5.12. Employees............................................................................. 25
5.13. Severance Obligations................................................................. 25
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5.14. Covenants to Satisfy Conditions....................................................... 26
5.15. Financing............................................................................. 26
5.16. Release of Liens...................................................................... 26
5.17. Notification of Certain Matters....................................................... 26
5.18. Delivery of Audited Financial Statements.............................................. 26
5.19. HSR Act Notification.................................................................. 27
6. CONDITIONS PRECEDENT....................................................................... 27
6.1. Conditions to Each Party's Obligations................................................ 27
6.2. Conditions of Obligations of the Purchaser............................................ 27
6.3. Conditions of Obligations of the Seller and Dynatech.................................. 28
7. SURVIVAL AND INDEMNIFICATION............................................................... 29
7.1. Indemnification....................................................................... 29
7.2. Limitation on Remedies................................................................ 32
7.3. Survival.............................................................................. 32
8. MISCELLANEOUS.............................................................................. 33
8.1. Entire Agreement...................................................................... 33
8.1. Termination........................................................................... 33
8.3. Descriptive Headings; Certain Interpretations......................................... 33
8.4. Notices............................................................................... 34
8.5. Counterparts.......................................................................... 34
8.6. Benefits of Agreement................................................................. 34
8.7. Amendments and Waivers................................................................ 35
8.8. Assignment............................................................................ 35
8.9. Specific Performance.................................................................. 35
8.10. Post-Closing Merger or Dissolution of the Seller...................................... 35
8.11. Governing Law......................................................................... 35
8.12. Consent to Jurisdiction; Waiver of Jury Trial......................................... 35
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SCHEDULES
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Schedule 2.1(a)(xiii) Non-transferred Licenses and Permits
Schedule 2.1(b)(vii) Excluded Assets
Schedule 2.2(a) Assumed Liabilities
Schedule 2.2(c) Unassumed Liabilities
Schedule 3.4(a) Conflicts and Consents
Schedule 3.4(b) Consents
Schedule 3.5 Financial Statements
Schedule 3.6 Undisclosed Liabilities
Schedule 3.7 Absence of Changes
Schedule 3.8(a)(i) Title to Property
Schedule 3.8(a)(ii) Locations of Assets, Offices and Records
Schedule 3.8(b) Acquired Assets
Schedule 3.9(a)(i) Intellectual Property
Schedule 3.9(a)(ii) Defects in Title to Intellectual Property
Schedule 3.9(a)(iii) Infringements Upon Intellectual Property
Schedule 3.10 Insurance
Schedule 3.11(a) Excluded contracts
Schedule 3.11(b) Significant Agreements
Schedule 3.11(c) Required Consent
Schedule 3.12 Litigation
Schedule 3.13 Governmental Authorizations
Schedule 3.14(a)(i) Employees
Schedule 3.14(a)(ii) Unfair Labor Practice
Schedule 3.14(a)(iii) Employee Non-Competition
Schedule 3.14(b) Employee Plans
Schedule 3.14(f) Employee Benefits Obligations
Schedule 3.16(a)(i) Accounts Receivable; Prepaid Expenses
Schedule 3.16(a)(ii) Accounts Receivable Disputes
Schedule 3.17 Taxes
Schedule 3.20 Assumed Names
Schedule 3.22 Non-Owned Software
Schedule 3.23 Inventories
Schedule 3.24 Required Assets
Schedule 4.3(a) Conflicts and Consents
Schedule 4.3(b) Consents
SchedulE 5.10 Allocation of Purchase Price
Schedule 5.13 Severance Obligations
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EXHIBITS
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<S> <C>
Exhibit A Form of Bill of Sale and Assignment
Exhibit B Form of Instrument of Assumption of Liabilities
Exhibit C Form of Certificate of Designation
Exhibit D Form of Officer's Certificate of the Seller
Exhibit E-1 Form of Opinion of Hale and Dorr LLP, as counsel to Dynatech
Exhibit E-2 Form of Opinion of Hyman, Phelps & McNamera, as regulatory counsel to the
Seller
Exhibit E-3 Form of Opinion of Thompson & Coburn, as counsel to the Seller
Exhibit F Form of Officer's Certificate of the Purchaser
Exhibit G Form of Opinion of Howard, Darby & Levin, as counsel to the Purchaser
Exhibit H Schedule of Closing Accounting Policies
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "AGREEMENT"), dated as of March 7, 1997, is
by and among Dynatech Corporation, a Massachusetts corporation ("DYNATECH
CORP."), Dynatech USA, Inc., a Massachusetts corporation ("DYNATECH USA" and
together with Dynatech Corp., "DYNATECH"), Computerized Medical Systems, Inc., a
Missouri corporation (the "SELLER") and CMSI Holdings Corp., a Delaware
corporation (the "PURCHASER").
WHEREAS, the Seller is a wholly-owned subsidiary of Dynatech USA, which is
a wholly-owned subsidiary of Dynatech Corp. and the Seller is engaged in the
development, marketing and supporting of computerized planning systems serving
the field of radiation oncology (the "BUSINESS"); and
WHEREAS, the Purchaser desires to purchase from the Seller, and the Seller
desires to sell to the Purchaser, the Acquired Assets (as hereinafter defined)
upon the terms and subject to the conditions set forth herein (the "ASSET
PURCHASE").
NOW, THEREFORE, in consideration of the mutual benefits to be derived from
this Agreement and the respective representations, warranties, covenants,
agreements and conditions hereinafter set forth and other good and valuable
consideration, the parties agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
1.1. "ACCOUNTS RECEIVABLE" means all accounts, notes and other
receivables and rights to receive payment from any Person that related to, or
arise out of, the Business, other than Intercompany Receivables.
1.2. "ACQUIRED ASSETS" has the meaning specified in Section 2.1.
1.3. "ACQUIRED CONTRACTS" means all license agreements, leases of
personal property, open purchase orders for raw materials, supplies, parts or
services, unfilled orders for the manufacture and sale of products and all other
contracts, agreements, arrangements or commitments to which the Seller is a
party which are in effect on the Closing Date and which relate to the purchase
or sale of goods or services by the Seller, except as disclosed in SCHEDULE
3.11(a).
1.4. "ACQUIRED EQUIPMENT" means all apparatus, computers and other
electronic data processing equipment, fixtures, machinery, equipment, furniture,
office equipment, vehicles, tools and other fixed assets and tangible personal
property used in or related to the Business.
1.5. "ACQUIRED INVENTORY" means all inventories, including, without
limitation, raw materials, supplies, spare parts, replacement and component
parts, work-in-process and finished products that are owned, utilized or
manufactured by the Seller.
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1.6. "ACQUIRED LEASE" has the meaning specified in Section 3.8.
1.7. "AGREEMENT" has the meaning specified in the first recital
paragraph of the Agreement.
1.8. "ASSET PURCHASE" has the meaning specified in the third recital
paragraph of the Agreement.
1.9. "ASSUMED LIABILITIES" has the meaning specified in Section 2.2.
1.10. "AUDITORS" has the meaning specified in Section 2.4.
1.11. "BILL OF SALE" means the Bill of Sale and Assignment
substantially in the form of Exhibit A.
1.12. "BOOKS AND RECORDS" means all books, records and other
information, whether in written or electronic form, in any way pertaining to the
Business, including, without limitation, all customer lists, price listing,
account histories, correspondence with customer and customer files, computer
software and data files, sales literature, sales information and all other
commercial information, all license records, correspondence with regulatory
authorities, databases, employee handbooks, cost information, sales and pricing
data, quality records and reports, financial statements, budgets, projections,
ledgers, journals, deeds, titles, policies, manuals, contracts, permits, agency
lists, retrieval programs, environmental studies or plans, surveys, reports,
plans, product catalogs, product literature, advertising materials, promotional
materials, legal files and other documents which are used in or relate to the
Business, but not including the Seller's corporate seals, corporate franchise,
articles of incorporation (or comparable charter document), by-laws, stock
record books, corporate record books containing minutes of meetings of directors
and stockholders and such other records as have to do exclusively with the
Seller's organization or stock capitalization (collectively, the "CORPORATE
RECORDS") and selected personnel records of the Seller (the "PERSONNEL
RECORDS"), PROVIDED, that the Seller shall provide to the Purchaser copies of
any Corporate Records and Personnel Records as may be requested by the Purchaser
from time to time.
1.13. "BUSINESS" has the meaning specified in the second recital
paragraph of the Agreement.
1.14. "CASH AMOUNT" has the meaning specified in Section 2.3.
1.15. "CERTIFICATE OF DESIGNATION" has the meaning specified in Section
2.3.
1.16. "CLAIMS" means all rights, demands, claims, actions and causes of
action (whether for personal injuries or property, consequential or other
damages of any kind).
1.17. "CLOSING" has the meaning specified in Section 2.5.
1.18. "CLOSING DATE" has the meaning specified in Section 2.5.
1.19. "CLOSING DATE BALANCE SHEET" has the meaning set forth in Section
2.4.
1.20. "COMMERCIAL EFFORTS" shall mean such good faith efforts as shall
not require the performing party (i) to do any act that is unreasonable under
the circumstances, (ii) to
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make any capital contribution not expressly contemplated hereunder, (iii) to
amend or waive any rights under this Agreement, or (iv) to incur or expend any
funds other than reasonable out-of- pocket expenses incurred in satisfying its
obligation hereunder, including the fees, expenses and disbursements of
accountants, counsel and other professionals.
1.21. "CORPORATE RECORDS" has the meaning specified in Section 1.12.
1.22. "DISAGREEMENT NOTICE" has the meaning specified in Section 2.4.
1.23. "DYNATECH" has the meaning specified in the first recital
paragraph of the Agreement.
1.24. "DYNATECH CORP." has the meaning specified in the first recital
paragraph of the Agreement.
1.25. "DYNATECH PLAN" has the meaning specified in Section 3.14.
1.26. "DYNATECH USA" has the meaning specified in the first recital
paragraph of the Agreement.
1.27. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.28. "ENVIRONMENTAL LAWS" shall mean (i) all laws governing,
regulating or pertaining to environmental matters as in effect on or prior to
the Closing Date, and the regulations promulgated thereunder, and any
environmental statutes or regulations of, and treaties or conventions entered
into by, non-domestic jurisdictions that are applicable to the Business or any
prior property or disposal site, as these laws, regulations, statutes, treaties
and conventions have been amended or supplemented on or prior to the Closing
Date; and (ii) any permits, licenses, approvals, plans, rules, regulations or
ordinances adopted pursuant to the preceding laws, in each case to the extent
applicable to the Business and the real property that is the subject of the
Acquired Lease.
1.29. "EXCLUDED ASSETS" has the meaning specified in Section 2.1.
1.30. "FINANCING" has the meaning specified in Section 5.15.
1.31. "GAAP" means generally accepted accounting principles
consistently applied in accordance with the Seller's past practice.
1.32. "GOVERNMENT AUTHORITY" shall mean any government or state (or any
subdivision thereof), whether domestic, foreign or multinational (including
European Community), or any agency, authority, bureau, commission, department or
similar body or instrumentality thereof, or any governmental court or tribunal.
1.33. "GUARANTY" has the meaning specified in Section 2.8.
1.34. "HAZARDOUS WASTES" shall mean any toxic or hazardous material or
substances, including asbestos, contaminants, chemicals, flammable explosives,
radioactive material and any substances defined as, or included in the
definition of, "hazardous substances", "hazardous wastes", "hazardous
materials", "toxic substances" or otherwise regulated under any Environmental
Law.
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1.35. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
1.36. "INDEMNIFIED PARTY" has the meaning specified in Section 7.1.
1.37. "INDEMNIFYING PARTY" has the meaning specified in Section 7.1.
1.38. "INSTRUMENT OF ASSUMPTION OF LIABILITIES" means the Instrument of
Assumption of Liabilities substantially in the form of EXHIBIT B.
1.39. "INTELLECTUAL PROPERTY" means all domestic and foreign patents,
copyrights, trade names (including, without limitation, all the Seller's right,
title and interest in and to the names "Computerized Medical Systems, Inc.",
"CMS", "Modulex", "Focus", "DynaScan", and any derivative thereof), trademarks,
service marks, trade dress, open records of invention and registrations and
applications for any of the foregoing (together with the goodwill associated
with such patents, copyrights, trade names, trademarks, service marks and open
records of invention), trade secrets, inventions, technology, Software,
know-how, innovations, other proprietary information, in each case whether
registered or unregistered, and licenses from third persons granting the right
to use any of the foregoing and all other intellectual property rights and the
right to do business under the Seller's corporate name in each place where such
business is conducted. "Intellectual Property" specifically excludes all right,
title and interest in and to the names "Dynatech" or "Dynatech Corporation" or
any derivative thereof.
1.40. "INTERCOMPANY RECEIVABLE" shall mean any right to payment owed to
the Seller by Dynatech Corp. or any subsidiary thereof which is not evidenced by
an instrument.
1.41. "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
as amended.
1.42. "LIEN" shall mean any mortgage, pledge, security interest, lien,
charge, encumbrance, equity, claim, option, tenancy, right or restriction on
transfer of any nature whatsoever.
1.43. "LOSSES" has the meaning specified in Section 7.1.
1.44. "MINIMUM NET ASSET VALUE", as of any date, has the meaning
specified in the SCHEDULE of Closing Accounting Policies.
1.45. "1933 ACT" has the meaning specified in Section 3.26.
1.46. "PERMITS" means any permit, approval, authorization, license,
variance or permission required by a Government Authority under any applicable
Environmental Law.
1.47. "PERSON" shall mean any individual, corporation, partnership,
joint venture, trust, unincorporated organization, association, other form of
business or legal entity or Government Authority.
1.48. "PERSONNEL RECORDS" has the meaning specified in Section 1.12.
1.49. "PLAN" means a pension, retirement, savings, deferred
compensation, and profit-sharing plan and each stock option, stock appreciation,
stock purchase, performance share, bonus or other incentive plan, severance
plan, health, group insurance or other welfare plan, or
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other similar plan and any "employee benefit plan" within the meaning of Section
3(3) of ERISA, under which the Seller has any current or future obligation or
liability in respect of the Business or under which any employee or former
employee (or beneficiary of any employee or former employee) of the Seller in
respect of the Business has or may have any current or future right to benefits
(the term "Plan" shall include each such contract, agreement, policy or
understanding).
1.50. "PREFERRED STOCK" has the meaning specified in Section 2.3.
1.51. "PREFERRED STOCK AND WARRANTS" has the meaning specified in
Section 2.3.
1.52. "PROCEEDING" has the meaning specified in Section 8.12.
1.53. "PURCHASE PRICE" has the meaning specified in Section 2.3.
1.54. "PURCHASER" has the meaning specified in the first recital
paragraph of the Agreement.
1.55. "REVIEW PERIOD" has the meaning specified in Section 2.4.
1.56. "SCHEDULE OF CLOSING ACCOUNTING POLICIES" means the SCHEDULE of
Closing Accounting Policies substantially in the form of EXHIBIT H.
1.57. "SELLER" has the meaning specified in the first recital paragraph
of the Agreement.
1.58. "SETTLEMENT DATE" has the meaning specified in Section 2.4.
1.59. "SOFTWARE" means the expression of an organized set of
instructions in a natural or coded language which is contained on a physical
media of any nature and which may be used with a computer to make such computer
operate in a particular manner and for a certain purpose, including, without
limitation, all computer programs or applications together with all user
documentation, research and development data, systems documentation and
instructions relating to such computer programs or applications
1.60. "TAX" or "TAXES" means all taxes, charges, fees, levies,
penalties or other assessments imposed by any United States Federal, state,
local or foreign taxing authority, including, without limitation, income, gross
receipts, excise, property, ad valorem, sales, use (or similar taxes), transfer,
franchise, payroll, withholding, social security, business license fees or other
taxes, including any interest, penalties or additions thereto.
1.61. "TAX RETURNS" means any return, report, document, statement or
form required to be filed (whether on a consolidated, combined, separate or
unitary basis) with respect to any Tax (including any schedules required to be
attached thereto), including, without limitation, information returns, claims
for refund, amended returns and declarations of estimated Tax.
1.62. "UNASSUMED LIABILITIES" has the meaning specified in Section 2.2.
1.63. "WARRANTS" has the meaning specified in Section 2.3.
1.64. "WARRANTY OBLIGATIONS" means all warranty obligations incurred in
the sale or transfer of products by the Seller prior to the Closing pursuant to
the standard warranty terms of such sale or transfer (the content of such terms
are attached to Schedule 2.2(a) in the form of
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the standard maintenance agreement and the standard software support agreement)
or non- standard warranty terms of such sale or transfer described in Schedule
2.2(a) (a specific list of which is attached to Schedule 2.2(a) which sets forth
the entire substance of all variations from standard warranty terms in
parenthesis next to each third party that has been granted non-standard
warranty).
2. PURCHASE AND SALE OF ASSETS
2.1. Purchase and Sale of the Acquired Assets; Excluded Assets.
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(a) Upon the terms and subject to the conditions set forth in
this Agreement and except as otherwise provided in Section 2.1(b), on
the Closing Date, the Seller shall sell, transfer, convey, assign and
deliver to the Purchaser, and the Purchaser shall purchase from the
Seller, all of the Seller's right, title and interest in and to all of
the properties, assets and other rights of every kind, type and
description, tangible and intangible, real, personal and mixed
(excluding the Excluded Assets) owned or leased by, licensed to or
otherwise held by, the Seller on the Closing Date (collectively, the
"ACQUIRED ASSETS"). The Acquired Assets shall include, without
limitation, the following:
(i) the Acquired Lease;
(ii) all Books and Records;
(iii) all Accounts Receivable;
(iv) all Acquired Contracts;
(v) all Acquired Equipment;
(vi) all Acquired Inventory;
(vii) all Intellectual Property;
(viii) all Software;
(ix) to the extent transferable, all letters of credit and
performance bonds pursuant to which the Seller or any subsidiary
thereof is the beneficiary;
(x) all written technical information, data,
specifications, research and development information, engineering
drawings and operating and maintenance manuals;
(xi) all lists of the Seller's distributors, agents,
representatives, suppliers and subcontractors, together with all
contracts and agreements with the foregoing to which the Seller
is a party which are in effect on the Closing Date;
(xii) all prepaid expenses (except prepaid taxes and
insurance), credits, advance payments, deposits, deferred charges
and other current and non-current assets owed by the Seller on
the Closing Date for periods after the Closing Date;
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<PAGE> 14
(xiii) except as specifically set forth in Schedule
2.1(a)(xiii), all licenses, Permits, approvals and authorizations
relating to the Seller or any of the Acquired Assets which have
been issued by any Government Authority; and
(xiv) all of the goodwill and going concern value owned by
the Seller on the Closing Date which is related to the Business.
(b) Notwithstanding anything to the contrary herein, all of the
Seller's right, title and interest in all of the following properties,
assets and other rights (the "EXCLUDED ASSETS") shall be excluded from
the Acquired Assets:
(i) all the Seller's cash, certificates of deposit, cash
equivalents and Intercompany Receivables;
(ii) all Claims which the Seller may have against any
Person with respect to or which are related to any Retained
Liabilities or Excluded Assets.
(iii) all insurance policies;
(iv) the Corporate Records;
(v) the Personnel Records;
(vi) assets and property disposed of since the date hereof
in the ordinary course of business; and
(vii) anything set forth on SCHEDULE 2.1(b)(vii).
2.2. PURCHASER NOT SUCCESSOR TO THE SELLER; ASSUMED LIABILITIES;
UNASSUMED LIABILITIES.
(a) Upon the terms and subject to the conditions of this
Agreement and in further consideration of the Asset Purchase, at the
Closing the Purchaser shall assume and shall agree to pay and perform
only the liabilities and obligations of the Seller existing as of the
Closing Date that relate to or arise out of the Business and are
specifically set forth in SCHEDULE 2.2(a) and which shall include all
Warranty Obligations (the "ASSUMED LIABILITIES").
(b) The Purchaser shall not be the successor to the Seller and
the Purchaser does not assume and shall not become liable to pay,
perform or discharge any other obligation or liability whatsoever of
the Seller (such liabilities being, collectively, the "UNASSUMED
LIABILITIES").
(c) By way of illustration, Unassumed Liabilities include, and
the Purchaser expressly is not assuming any of, the following
liabilities, whether accrued or fixed, absolute or contingent, known
or unknown, determined or determinable and whenever arising (unless
any such liability is included in the Assumed Liabilities set forth on
SCHEDULE 2.2(a)):
(i) any liabilities and obligations of the Seller for
Taxes, except as set forth in Section 5.1 hereof;
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<PAGE> 15
(ii) any claims, demands, liabilities or obligations of
any nature whatsoever (including claims, demands, liabilities or
obligations in respect of Taxes, advances or loans, environmental
matters, occupational safety, workers' compensation, grievance
proceedings or actual or threatened litigation, suits, claims,
demands or governmental proceedings) which arose or were incurred
on or before the Closing, or which are based on events occurring
or conditions existing on or before the Closing, or which are
based on products sold, agreements in force or services performed
by the Seller on or before the Closing, except as set forth in
SCHEDULE 2.2(a);
(iii) any liabilities and obligations of the Seller under
this Agreement, any bill of sale or related instrument issued in
connection with this Agreement or otherwise in connection with
the transactions contemplated by this Agreement;
(iv) any liabilities of the Seller not associated with the
Business or the Acquired Assets;
(v) any liabilities of the Seller to present or former
employees (or their beneficiaries), consultants or agents for any
compensation, accrued vacation, sick pay or overtime, pension
contribution or other benefits accrued or otherwise payable
except as set forth in Section 5.13 or on SCHEDULE 2.2(a), and
any liabilities or obligations to present or former shareholders;
and
(vi) any liabilities and obligations of the Seller set
forth on SCHEDULE 2.2(c) and liabilities under any contract or
agreement that is not an Acquired Contract.
2.3. CONSIDERATION. Subject to the terms and conditions hereof, at the
Closing, the Purchaser shall:
(a) pay to the Seller, by wire transfer of immediately available
funds on the Closing Date to an account of the Seller or Dynatech
Corp. designated to the Purchaser, thirty-three million dollars
($33,000,000) (the "CASH AMOUNT"), as the same may be adjusted as
provided in Section 2.4 (the Cash Amount plus $6,300,000 is referred
to herein as the "PURCHASE PRICE");
(b) deliver, upon the order of the Seller, to Dynatech Corp. (i)
6,300 shares of Class A Preferred Stock of the Purchaser, which shall
have an aggregate liquidation preference of six million three hundred
thousand dollars ($6,300,000), created pursuant to a certificate of
designation (the "CERTIFICATE OF DESIGNATION") in substantially the
form of EXHIBIT C hereto (the "PREFERRED STOCK") and (ii) warrants
exercisable for four and one-half (4.5%) percent of the common stock
of the Purchaser, on a fully diluted basis measured as of the Closing
date based upon the shares, warrants, convertible securities and
options issued or granted, as the case may be, at such time (the
"WARRANTS", and together with the Preferred Stock, the "PREFERRED
STOCK AND WARRANTS"); and
(c) assume the Assumed Liabilities pursuant to an Instrument of
Assumption of Liabilities in substantially the form of EXHIBIT B
hereto.
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<PAGE> 16
2.4. Post-Closing Adjustment to Cash Amount.
--------------------------------------
(a) Within 60 days of the Closing Date, the Purchaser shall
cause Ernst & Young LLP or, if they are unwilling to act as
contemplated by this Section 2.4(a), another independent accounting
firm of national standing mutually agreed upon by the Seller and the
Purchaser (the "AUDITORS"), to prepare and deliver to each of the
Seller, Dynatech Corp. and the Purchaser, the balance sheet of the
Seller as of the Closing Date (the "CLOSING DATE BALANCE SHEET") and a
statement setting forth the amount of the Minimum Net Asset Value,
prepared in accordance with the Schedule of Closing Accounting
Policies.
(b) If either the Seller or the Purchaser disputes the amount of
the Minimum Net Asset Value and the aggregate amount by which the
calculation of Minimum Net Asset Value by the disputing party differs
from the Minimum Net Asset Value set forth in the statement prepared
by the Auditors exceeds $100,000, the Seller (or Dynatech on behalf of
the Seller) or the Purchaser, shall so notify the non-disputing party
in writing within 10 days (the "REVIEW PERIOD"), which notice shall
include a brief description of the basis of its disagreement
("DISAGREEMENT NOTICE"). If no party receives a Disagreement Notice,
on or prior to the expiration of the Review Period, the parties shall
be deemed to have approved the Closing Date Balance Sheet and the
calculation of the amount of the Minimum Net Asset Value.
(c) If Dynatech or the Seller, on one hand, or the Purchaser, on
the other hand, receives a Disagreement Notice, the parties shall, in
good faith, attempt to resolve the disagreement within 10 days after
the non-disputing party's receipt of the Disagreement Notice. If the
parties cannot resolve the disagreement within such time period, the
parties promptly shall refer such disagreement for resolution to
Deloitte & Touche LLP ("D&T"), or if D&T is unable to serve or
declines to act, or if at the time of such referral D&T is not
independent of each of the parties, such other firm of independent
accountants of recognized national standing as mutually selected by
the parties (D&T or such other firm being referred to herein as the
"DECIDING ACCOUNTANT"). The Deciding Accountant shall determine the
calculation and amount of the Minimum Net Asset Value within 30 days
and such determinations shall be conclusive and binding upon the
parties hereto. Each party shall furnish to the Deciding Accountant,
at its own cost and expense, such documents and information as the
Deciding Accountant may request, and each party may also furnish to
the Deciding Accountant such other information and documents as it
deems relevant, in all cases with copies (where it would not be
unreasonably costly or burdensome to provide copies) or notification
(with reasonable rights of access) being given to the other parties.
The fees and expenses payable to the Deciding Accountant shall be born
one-half by the Seller and Dynatech Corp. and one-half by Buyer.
(d) On the later of (i) the ninetieth (90th) day following the
Closing Date or (ii) the first Business Day immediately following the
determination of any disagreement between the parties by the Deciding
Accountant (in each case, the "SETTLEMENT DATE"), the Seller shall pay
to the Purchaser in immediately available funds, the excess, if any,
of (i) four million dollars ($4,000,000) over (ii) the Minimum Net
Asset Value as of the Closing Date, as determined by the Auditors or
the Deciding Accountant, as the case may be, by certified or official
bank check or wire transfer on the Settlement Date.
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<PAGE> 17
(e) Dynatech Corp. hereby absolutely and unconditionally
guarantees to the Purchaser the due and punctual payment of the
Seller's obligation to make payment to the Purchaser if any payment
becomes due to the Purchaser under the provisions of paragraphs (b) of
Section 2.4, irrespective of the legality, validity or enforceability
of such obligation. Dynatech Corp. hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Seller, any right to require
a proceeding first against the Seller, protest, notice and all demands
whatsoever and covenants that this guarantee will not be discharged
except by complete performance of this obligation should it become
due.
2.5. CLOSING. The closing (the "CLOSING") of the transactions
contemplated by this Agreement shall take place at the offices of Howard, Darby
& Levin, 1330 Avenue of the Americas, New York, New York at 10:00 a.m. (New York
City time) on later of (i) Monday, March 17, 1997, and (ii) the expiration or
termination of any waiting period applicable to the parties hereto or any Person
providing any portion of the Financing having filed any notification required to
be filed by such party pursuant to the HSR Act (the "CLOSING DATE"), or at such
other place or on such other date as the parties shall mutually agree.
2.6. INSTRUMENTS OF CONVEYANCE AND TRANSFER. At the Closing, in
addition to the Bill of Sale, the Seller shall deliver to the Purchaser bills of
sale, endorsements, assignments and other instruments of transfer, conveyance
and assignment (each in a form satisfactory to the Seller and the Purchaser) as
shall be reasonably requested by the Purchaser to transfer, convey and assign
the Acquired Assets to the Purchaser.
2.7. POST-CLOSING ASSURANCES. Subject to Section 2.10 hereof, the
Seller shall, at any time and from time to time after the Closing Date, upon the
request of the Purchaser, do, execute, acknowledge, deliver and file, or cause
to be done, executed, acknowledged, delivered or filed, all such further acts,
deeds, transfers, conveyances, assignments or assurances as may be reasonably
requested by the Purchaser for the better transferring, conveying, assigning and
assuring to the Purchaser, or for the aiding and assisting in the reducing to
possession by the Purchaser of, any of the Acquired Assets. In connection with
the foregoing, from and after the Closing Date, the Purchaser shall have the
right and authority to endorse, without recourse, the name of the Seller on any
check or similar negotiable instrument received by the Purchaser constituting
Acquired Assets transferred, conveyed and assigned to the Purchaser hereunder.
The Purchaser shall, at any time and from time to time after the Closing Date,
upon the request of the Seller or Dynatech, do, execute, acknowledge, deliver
and file, or cause to be done, executed, acknowledged, delivered and filed, all
such further acts, deeds, transfers, conveyances, assignments or assurances as
may be reasonably requested by the Seller or Dynatech for the better
transferring, conveying, assigning and assuring to the Purchaser any of the
Assumed Liabilities.
2.8. CAPITAL EXPENDITURE GUARANTEE. To facilitate the Purchaser's
acquisition of the Acquired Assets, Dynatech agrees to fully and unconditionally
guarantee the Purchaser's payment obligations under a credit facility obtained
by the Purchaser, at or within six months after the Closing, with a commercial
bank reasonably acceptable to Dynatech, in the principal amount of $3,000,000.
Such credit facility will be used to fund the Purchaser's capital expenditures
during the first three years after the Closing Date. Dynatech's obligation shall
be pursuant to a guaranty agreement (the "GUARANTY") with a duration of seven
years from the Closing Date. The terms of the credit facility shall be such
commercially reasonable terms as the Purchaser and the bank may negotiate.
Amortization shall begin immediately after maturity of the Purchaser's senior
secured bank debt unless the providers thereof otherwise agree. The Guaranty
shall be in such form as the financing bank shall reasonably request.
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<PAGE> 18
2.9. DYNATECH GUARANTEE OF OBLIGATIONS OF THE SELLER. Dynatech hereby
unconditionally guarantees the due and punctual performance of any and all
obligations or liabilities of the Seller to the Purchaser in connection with,
relating to or arising under this Agreement or any transaction contemplated in
or by this Agreement. Upon the failure by the Seller to duly and punctually
perform any such obligations or liabilities, Dynatech shall immediately, upon
demand, perform or cause to be performed such obligations and liabilities in
accordance with the terms of this Agreement. Dynatech understands, agrees and
confirms that the Purchaser may enforce the obligations of Dynatech under this
Section 2.9 without proceeding against the Seller or any other obligor. The
obligations of Dynatech under this Section 2.9 shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by (a) any extension, renewal,
settlement, compromise, waiver or release in respect of any obligation of the
Seller, or any release of, surrender of or foreclosure upon any collateral
securing any obligation of the Seller, in each case, by operation of law or
otherwise, (b) any modification or amendment of or supplement to this Agreement
or any document in respect thereof, (c) any invalidity or enforceability
relating to or against the Seller for any reason of any obligation under this
Agreement or any document in respect thereof, or any provision of applicable law
or regulation purporting to prohibit the payment by the Seller of any obligation
under this Agreement, (d) bankruptcy or insolvency of the Seller, or (e) any
other act or omission to act or delay of any kind by the Seller, the Purchaser
or any Person or any other circumstance whatsoever which might, but for the
provisions of this Section 2.9, constitute a legal or equitable discharge of
obligations of Dynatech hereunder.
2.10. Delivery of Records and Contracts; Access.
-----------------------------------------
(a) At the time of the Closing, subject to subsection (b) below,
the Seller shall deliver or cause to be delivered to the Purchaser all
of the Seller's leases, contracts, commitments, agreements and rights
which are included in the Acquired Assets, with such assignments
thereof and consents to assignments as are necessary to assure the
Purchaser of the full benefit of the same. The Seller shall also
deliver to the Purchaser at the time of the Closing all of the
Seller's business records, books, and other data relating to its
assets, business and operations (except Corporate Records and other
property of the Seller excluded under Section 2.1(b)), and the Seller
shall take all requisite steps to put the Purchaser in actual
possession and operating control of the assets of the Seller. For a
period of six (6) years after Closing, or such longer period as may be
reasonably requested by Dynatech, upon written request of Dynatech,
the Purchaser or any successor thereto shall make or cause to be made
available to Dynatech, as the case may be, (i) all Books and Records
included in the Acquired Assets that are needed by the Seller or any
successors or assigns and permit Dynatech and its agents to inspect
and copy such Books and Records and (ii) assistance in arranging
discussions with officers, employees and agents of the Purchaser and
its parent or affiliate companies on matters which relate to the
Business as previously conducted by the Seller and the same as
continued by the Purchaser, provided that all such inspection or
assistance shall be at reasonable times as may be mutually agreed upon
by the Purchaser and Dynatech and shall be at Dynatech's sole cost and
expense.
(b) If an attempted sale, conveyance, assignment, transfer or
delivery of any contracts, claims, leases, commitments, franchises,
privileges, permits, consents, certificates, licenses or any other
assets, rights or benefits to be sold, conveyed, assigned, transferred
and delivered to the Purchaser which are included in the Acquired
Assets (collectively, the "Rights") would be ineffective without the
consent of any other Person, and such consent has not been obtained on
or before the Closing Date, this Agreement shall not constitute an
assignment or an attempted assignment of such Right if such
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<PAGE> 19
assignment or attempted assignment would constitute a breach thereof
or be unlawful. In such case, the Seller shall use Commercial Efforts
to obtain, as soon as practicable, the consent of each such or other
Person in all cases in which such consent is required, and the Seller
and the Purchaser will cooperate in any reasonable arrangement
designed to enable the Seller to perform its obligation hereunder, and
to provide for the assumption by the Purchaser of the benefits, risks
and burdens of any such agreement.
2.11. APPORTIONMENT. Prepaid premiums on insurance if assigned as
herein provided, water and sewer use charges and recording fees, if any,
incurred in connection with the transfer of the Acquired Assets contemplated
hereby, and real property taxes for the then current tax period, shall be
apportioned and adjusted as of the Closing Date and the net amount thereof shall
be added to or deducted from, as the case may be, the Cash Amount.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND DYNATECH
The Seller and Dynatech jointly and severally hereby represent and warrant
to, and agree with, the Purchaser as follows:
3.1. ORGANIZATION, STANDING AND POWER. The Seller (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Missouri and (ii) has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Seller is duly qualified to do business and is in good
standing and is duly licensed, authorized or qualified to transact business in
each jurisdiction in which such qualification, license or authorization is
necessary because of property owned, leased or operated by it or because of the
nature of its business as now being conducted, except when the failure to be so
qualified would not have a material adverse effect on the Acquired Assets, the
Business or the financial condition of the Seller.
3.2. AUTHORITY; BINDING AGREEMENTS. The execution and delivery of this
Agreement and the Bill of Sale and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action of the Seller. The Seller has all requisite corporate
power and authority to enter into this Agreement and the Bill of Sale and to
consummate the transactions contemplated hereby and thereby and has duly
executed and delivered this Agreement. The Agreement is and, upon execution and
delivery, the Bill of Sale will be, the valid and binding obligations of the
Seller enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws.
3.3. CAPITALIZATION; EQUITY INTERESTS. Dynatech USA owns of record and
beneficially all of the capital stock and other securities of the Seller free
and clear of any liens or encumbrances. Dynatech Corp. owns of record and
beneficially all of the capital stock and other securities of the Dynatech USA
free and clear of any liens or encumbrances. The Seller has no subsidiaries and
does not own or hold any equity or other security interests in any other Person.
3.4. CONFLICTS; CONSENTS.
(a) Neither the execution and delivery of this Agreement or the
Bill of Sale, the consummation of the transactions contemplated hereby
or thereby nor compliance by the Seller or Dynatech with any of the
provisions hereof or thereof will (i)
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<PAGE> 20
conflict with or result in a breach of any provision of the charter,
by-laws or other constituent documents of the Seller, (ii) conflict
with or result in a default (or give rise to any right of termination,
cancellation or acceleration) under, or give rise to the creation or
imposition of any security interest or lien upon any properties or
assets of the Seller or Dynatech pursuant to, any of the provisions of
any note, lease, mortgage, license, permit, agreement or other
obligation to which the Seller or Dynatech is a party, or by which the
Seller or Dynatech, or any of the Seller's or Dynatech's properties or
assets, may be bound or affected, except for such conflict, breach or
default as to which waivers or consents shall be obtained by the
Seller before the Closing (which waivers or consents are set forth in
SCHEDULE 3.4(a)) unless the Purchaser in its sole discretion,
expressly waives in writing the Seller's obligation hereunder to
obtain the same, (iii) violate, in any material respect, any law,
regulation, order or decree applicable to the Seller or Dynatech or
any of the Seller's or Dynatech's properties or assets or (iv) result
in the creation or imposition of any material security interest or
other encumbrance upon any property or assets used or held in
connection with the Business.
(b) SCHEDULE 3.4(b) contains a list of all registrations,
filings, applications, notices, transfers, consents, approvals,
orders, qualifications, waivers and other actions of any kind required
of any Person or Government Authority or private agencies in
connection with the execution, delivery and performance of this
Agreement or the Bill of Sale by the Seller or Dynatech, as
applicable, or the consummation of the transactions contemplated
hereby or thereby.
3.5. FINANCIAL INFORMATION. The Purchaser has received the following
financial statements, copies of which are attached hereto as SCHEDULE 3.5:
(a) unaudited income statements of the Seller for the fiscal
year ending on March 31, 1996 and nine months ending December 31, 1996
("Financial Statements"); and
(b) an unaudited balance sheet of the Seller (i) as of March 31,
1996 and (ii) as of December 31, 1996 (the December 31, 1996 balance
sheet shall be referred to as the "Base Balance Sheet").
Such financial statements have been prepared in accordance with the standard
accounting policy of Dynatech Corp. for its consolidated operations, which
policy conforms with generally accepted accounting principles, applied
consistently during the periods covered thereby and present fairly in all
material respects the financial condition of the Seller at the dates of such
statements and the results of its operations for the periods covered thereby;
PROVIDED, HOWEVER, that none of the financial statements have footnotes required
under generally accepted accounting principles and the March 31, 1996 balance
sheet is subject to normally recurring year-end adjustments.
3.6. UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 3.6, as
of the date of each balance sheet attached hereto as SCHEDULE 3.5, there were
not, and there are not, any obligations or liabilities (whether absolute,
accrued, contingent, fixed or unfixed, liquidated or unliquidated, secured or
unsecured or otherwise, and whether due or to become due) of the Seller other
than (i) as shown on the face of the balance sheets attached hereto as SCHEDULE
3.5 or (ii) as are not required to be, in accordance with GAAP, shown on the
face of such balance sheets and were incurred in the ordinary course of business
and are not material. All reserves established by the Seller for the Business
are reflected on the balance sheets attached hereto as SCHEDULE 3.5 and are
adequate and there are no loss contingencies that are required to be accrued by
Statement of
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<PAGE> 21
Financial Accounting Standard No. 5 of the Financial Accounting Standards Board
which are not provided for on such balance sheets.
3.7. ABSENCE OF CHANGES. Except as set forth in SCHEDULE 3.7, since
December 31, 1996, the Business has been operated in the ordinary course
consistent with past practice and, except as set forth in SCHEDULE 3.7, there
has not been:
(a) any material adverse change in the condition (financial or
otherwise), assets, liabilities, operations, customer contracts,
billings, revenues, earnings, business or, to the knowledge of the
officers of the Seller or Dynatech, prospects of the Seller or the
Business;
(b) any obligations or liabilities incurred in an aggregate
amount exceeding $100,000 (whether absolute, accrued, contingent or
otherwise, and whether due or to become due), other than obligations
under customer contracts incurred in the ordinary course of business
and consistent with past practice;
(c) any sale, assignment, pledge, encumbrance, transfer or other
disposition of any asset used by the Seller or in the Business in an
aggregate amount exceeding $50,000, except in the ordinary course of
business consistent with past practice;
(d) any creation of any claims or other encumbrances on any
property of the Seller in an aggregate amount exceeding $50,000, other
than accounts payable to trade creditors in the ordinary course of
business, or any default by the Seller in the payment of any
obligation for borrowed money;
(e) other than in the ordinary course of business, any increase
in (or agreement to increase) the compensation of employees of the
Seller (including any increase pursuant to any bonus, pension,
profit-sharing or other benefit or compensation plan, policy or
arrangement or commitment), or any increase in any such compensation
or bonus payable to any officer, shareholder, director, consultant or
agent of any such company having an annual salary or remuneration in
excess of $50,000;
(f) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting any asset or property of the
Seller or the business, financial condition or results of operations
of the Business;
(g) any amendment, modification or termination of any existing,
or entering into any new contract, agreement, plan, lease, license or
permit all or any of which is material to the business or results of
operations of the Business; or
(h) any change or modification of any of the licenses or permits
of the Seller that is material to the business, financial condition or
results of operations of the Business, or any change in the nature of
the business, methods of accounting or accounting practice, or manner
of conducting business all or any of which has had or is expected by
the officers of the Seller or Dynatech to have a material adverse
effect on the business, financial condition, results of operations,
prospects, assets, licenses or permits of the Seller or the Business.
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<PAGE> 22
3.8. Title to Property.
-----------------
(a) Except as set forth in SCHEDULE 3.8(a)(i), the Seller has,
and will have as of the Closing Date, good and marketable title to, or
a valid and binding leasehold interest in, as applicable, all of the
Acquired Assets, free and clear of all mortgages, Liens, pledges,
charges, options or other title defects or encumbrances of any kind.
The tangible property included in the Acquired Assets is in good
operating condition and repair, subject to ordinary wear and tear.
SCHEDULE 3.8(a)(ii) sets forth a list of each jurisdiction in which
(i) any Acquired Assets are located, (ii) the Seller maintains any
offices or (iii) the Seller stores or maintains any of its Books and
Records.
(b) SCHEDULE 3.8(b) sets forth a list of the Acquired Lease and
all personal property with a capitalized value of over $1,000 held for
use or used in connection with the Business. The Acquired Lease means
the lease for 1195 Corporate Lake Drive and 1187 Corporate Lake Drive,
each located in the city of Creve Coeur, County of St. Louis, Missouri
63132 (the "ACQUIRED LEASE"). With respect to property leased by the
Seller in connection with the Business, including, without limitation,
the Acquired Lease, (i) the Seller is the owner and holder of all the
leasehold interests and estates purported to be granted by such
leases, (ii) all leases to which the Seller is a party are in full
force and effect and constitute valid and binding obligations of the
Seller and, to the knowledge of the Seller, of the other parties
thereto, enforceable in accordance with their terms, (iii) there is no
pending or, to the knowledge of the Seller, threatened proceeding
against the Seller that might interfere with the quiet enjoyment of
the lessee under any such lease, and (iv) the Seller has made
available to the Purchaser true and correct copies of all leases
referred to in SCHEDULE 3.8(b). There exists no default, or any event
which upon notice or the passage of time, or both, would give rise to
any default, in the performance by the Seller or, to the knowledge of
the Seller, the lessor under any lease. The Seller has not, and to the
knowledge of the Seller, no other Person has, granted any oral or
written right to anyone other than the Seller to lease, sublease or
otherwise occupy any of the properties described in SCHEDULE 3.8(b)
through the end of the applicable lease periods.
(c) The Seller does not own, and has not previously owned, any
real property or interest in real property, other than as a tenant
pursuant to the Acquired Lease or any other lease of real property
that expired prior to the date hereof.
3.9. INTELLECTUAL PROPERTY. SCHEDULE 3.9(a)(i) contains a true and
complete list of the patents, patent applications, trademarks (registered or
unregistered) and service marks (and any applications or registrations
therefor), trade names, trade dress, open records of invention, Software,
corporate names, copyrights, copyright registrations and other Intellectual
Property of the Seller that currently exists in written form or any physical
medium, in each case, that is (i) owned, filed and used by the Seller, (ii)
licensed by the Seller or used by the Seller in operating the Business and (iii)
licensed by the Seller for use by others. With respect to registered trademarks,
SCHEDULE 3.9(a)(i) sets forth a list of all jurisdictions in which such
trademarks are registered or applied for and all registration and application
numbers. Except as set forth in SCHEDULE 3.9(a)(ii), the Seller owns or licenses
all Intellectual Property used in the Business, free and clear of liens or
claims of others. Except as set forth in SCHEDULE 3.9(a)(iii), there is no
pending or, to the knowledge of the Seller, threatened claim or litigation
against the Seller contesting its right exclusively to use any Intellectual
Property. To the knowledge of the Seller, no Person is infringing the rights of
the Seller in any Intellectual Property. Except as set forth in SCHEDULE
3.9(a)(iii), to the knowledge of the Seller, no use by the Seller of any
Intellectual Property and no product or service sold or used by the Seller
violates or infringes any intellectual
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<PAGE> 23
property right owned or held by any other Person. The Seller owns or holds
adequate licenses or other rights to use the Intellectual Property necessary to
conduct the Business as currently conducted.
3.10. INSURANCE. A summary of insurance coverage of the Seller or of
Dynatech for the benefit of the Seller is contained in SCHEDULE 3.10. All
policies providing such coverage are nontransferable.
3.11. Acquired Contracts, Other Agreements, Etc.
-----------------------------------------
(a) The Seller has furnished to the Purchaser true and correct
copies of all written, and a list of all material oral, Acquired
Contracts. Except as set forth in SCHEDULE 2.2(a), there will not be,
at Closing, any Assumed Liabilities. Except as disclosed in SCHEDULE
3.11(a), the Purchaser will assume all the Acquired Contracts.
(b) Except as disclosed in SCHEDULE 3.11(b), as of the date
hereof, the Seller is not a party to any (i) employment or consulting
agreement having a remaining term of at least one year and requiring
payments of base salary in excess of $150,000 per year, (ii)
distributor or manufacturer's representative contract which is not
terminable on twelve months' (or less) notice, (iii) lease of real or
personal property with an annual base rental obligation of more than
$100,000, or a total remaining rental obligation of more than
$500,000, (iv) material joint venture or partnership agreement, (v)
technology license agreement which requires royalty payments in excess
of $100,000 per year, or (vi) other contract, agreement or
arrangement, entered into other than in the ordinary course of
business, requiring future payment or payments in excess of $100,000
per year. With respect to all Acquired Contracts, except as disclosed
on said SCHEDULE 3.11(a), such contracts are, to the Seller's
knowledge, valid and binding and the Seller is not, as of the date
hereof, in material breach thereof or material default thereunder and
there does not exist under any provision thereof, to the Seller's
knowledge, as of the date hereof, any event that, with the giving of
notice or the lapse of time or both, would constitute such a breach or
default, except for such failures to be valid and binding and such
breaches, defaults and events as to which requisite waivers or
consents have been or are obtained or which would not, individually or
in the aggregate, have a material adverse effect on the Business.
(c) SCHEDULE 3.11(c) contains a list of each Acquired Contract
that requires the consent or approval of a third party in connection
with the assignment to the Purchaser of the Seller's right, title and
interest in and to such Acquired Contract.
3.12. Litigation. Except as set forth in SCHEDULE 3.12, there have not
been for the five years prior to the Closing Date, nor are there, any material
suits, actions, claims, investigations or legal or administrative or arbitration
proceedings in respect of the Seller, the Business or the Acquired Assets, or to
the knowledge of the Seller or Dynatech, in respect of the Seller's employees,
pending or, to the knowledge of the Seller or Dynatech, threatened, whether at
law or in equity, or before or by any Government Authority. Except as set forth
in SCHEDULE 3.12, there have not been for the five years prior to the Closing
Date, nor are there, any judgments, decrees, injunctions or orders of any court,
Government Authority or arbitrator or against the Seller, or any of its assets,
relating to or affecting the Business or the Acquired Assets. With respect to
matters disclosed on SCHEDULE 3.12, the Seller shall indemnify the Purchaser
from any judgments, awards, costs, damages, penalties or fines arising out of
such matters. No condemnation proceeding has been commenced or, to the Seller's
knowledge, is threatened to be commenced, against any of the Acquired Assets.
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<PAGE> 24
3.13. COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. The Seller has complied
in all material respects and is in compliance in all material respects with all
Federal, state, local and foreign laws, ordinances, regulations, interpretations
and orders (including, without limitation, those relating to design and
manufacture of medical devices, environmental pollution and protection and
occupational safety and health) applicable to the Business. The Seller has all
Federal, state, local and foreign governmental registrations, licenses and
permits necessary to conduct the Business as presently being conducted which
registrations, licenses and permits are set forth in SCHEDULE 3.13. Such
registrations, licenses and permits are in full force and effect, no violations
are or have been recorded in respect of any thereof, no proceeding is pending,
or, to the knowledge of the Seller, threatened, to revoke or limit any thereof,
and the Seller does not know of any basis for any such proceeding.
3.14. Labor Relations; Employees.
--------------------------
(a) SCHEDULE 3.14(a)(i) contains (i) a list of all of the
Seller's employees, setting forth the name, job status, salary and
date of hire of each such employee and (ii) a summary of vacation
policy and benefits provided to the Seller's employees. Within the
last five years, the Seller has not experienced any labor disputes
with, or any work stoppages by, a group of employees due to labor
disagreements and, to the knowledge of the Seller, there is no such
dispute or work stoppage threatened against the Seller. Except as set
forth on SCHEDULE 3.14(a)(ii), there is no unfair labor practice
charge or complaint against the Seller, either pending or, to the
knowledge of the Seller, threatened. Except as set forth on SCHEDULE
3.14(a)(iii), to the Seller's knowledge, no employee of the Seller is
a party to any non-competition clause, provision or agreement with any
third party which would prevent the employee from working for the
Purchaser and there exists no dispute, actual or threatened, involving
the Seller or any of its employees in respect of such a
non-competition clause, provision or agreement. The Seller is not
currently, and has not ever been, a party to any collective bargaining
agreement with any labor union or association representing any
employees of the Seller.
(b) SCHEDULE 3.14(b) contains a list of each Plan. The Seller
has delivered to the Purchaser true and complete copies of (i) each
Plan (or a summary of each Plan in the case of each Plan instituted by
Dynatech Corp. the benefits of which inure to any employee of the
Seller (a "DYNATECH PLAN")), (ii) the summary plan description for
each Plan and (iii) the latest annual report, if any, which has been
filed with the Internal Revenue Service for each Plan.
(c) No Plan is subject to the provisions of Section 412 of the
Internal Revenue Code of or Part 3 of Subtitle B of Title I of ERISA.
No Plan is subject to Title IV of ERISA.
(d) There are no actions, claims, lawsuits or arbitrations
(other than routine claims for benefits) pending, or, to the knowledge
of the Seller or Dynatech, threatened, with respect to any Plan or the
assets of any Plan, and neither the Seller nor Dynatech has knowledge
of any facts which could give rise to any such actions, claims,
lawsuits or arbitrations (other than routine claims for benefits).
(e) Except as described in the Plans delivered to the Purchaser,
no Plan provides or is required to provide, now or in the future,
health, medical, dental, accident, disability, death or survivor
benefits to or in respect of any Person beyond termination of
employment, except to the extent required under any state insurance
law or under Part 6 of Subtitle B of Title I of ERISA and under
Section 4980(B) of the Internal Revenue
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<PAGE> 25
Code. No Plan covers any individual other than an employee of the
Seller, other than dependents of employees under health and child care
policies listed in SCHEDULE 3.14(b) and delivered to the Purchaser,
except the Dynatech Plans. No Dynatech Plan covers any individual
other than an employee of Dynatech Corp. or any subsidiary or
affiliate thereof, other than dependents of employees under health and
child care policies.
(f) Except as set forth on SCHEDULE 3.14(f), the consummation of
the transactions contemplated by this Agreement will not (i) entitle
any employee of the Seller to severance pay or termination benefits
for which the Purchaser or any of its affiliates may become liable,
other than as set forth in Section 5.13 hereof, (ii) increase the
amount of compensation due to any such employee or former employee for
which the Purchaser or any of its affiliates may become liable or
(iii) obligate the Purchaser or any of its affiliates to pay or
otherwise be liable for any compensation, vacation days, pension
contribution or other benefits to any employee, consultant or agent of
the Seller for periods before the Closing Date or for personnel whom
the Purchaser does not actually employ, except as set forth on
SCHEDULE 2.2(a).
3.15. Environmental Matters.
---------------------
(a) The Business is in substantial compliance with all
applicable Federal, state, regional, foreign and local laws, statutes,
ordinances, judgments, rulings and regulations relating to any matters
of pollution or of environmental regulation or control or protection
of the environment.
(b) To the knowledge of the Seller, all real property that is
the subject of the Acquired Lease and all improvements, structures,
equipment, fixtures or activities thereon, are in compliance with all
applicable Environmental Laws.
(c) All Permits necessary to operate the Business as currently
conducted have been obtained by the Seller, the Seller is in
compliance with the terms and conditions thereof and all such Permits
are valid and in good standing.
(d) There is no pending or, to the knowledge of the Seller or
Dynatech, threatened civil or criminal litigation, written notice of
violation or formal administrative proceeding relating to the
Environmental Laws involving the Business.
(e) The Seller has not (i) placed, held, located, released,
transported or disposed of any Hazardous Wastes on or under any
property on which the Seller has conducted the Business, other than in
compliance with Environmental Laws, except for immaterial amounts of
copier fluid or other office supplies used in a typical office
environment, or (ii) received any written notice (A) of any violation
of any Environmental Law or any other law, statute, rule or regulation
regarding Hazardous Wastes on or under any of such properties, (B) of
the institution or pendency of any suit, action, claim, proceeding or
investigation by any Government Authority of any such violation or (C)
requiring the removal of Hazardous Waste from any of such properties.
3.16. Accounts Receivable; Accounts Payable.
-------------------------------------
(a) SCHEDULE 3.16(a)(i) contains a complete list of all Accounts
Receivable and prepaid expenses of the Seller as of December 31, 1996.
None of the Accounts Receivable are for services rendered after 11:59
p.m., New York time, on the Closing Date. Except as set forth in
SCHEDULE 3.16(a)(ii), to the Seller's knowledge, no
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<PAGE> 26
customer has disputed its payment obligations on account of any of the
Accounts Receivable which, in the case of any individual customer,
equals or exceeds $10,000 or, in the aggregate for all customers,
equals or exceeds $100,000. The Seller shall, and as to the extent
requested by the Purchaser, use Commercial Efforts to assist the
Purchaser to collect the Accounts Receivable.
(b) Since December 31, 1996, no Accounts Receivable have been
sold, transferred or otherwise disposed of by the Seller, except in
the ordinary course of business. All of the Accounts Receivable
included in the Acquired Assets have arisen in connection with bona
fide sales and deliveries of goods, performance of services, licensing
of intellectual property or other bona fide business transactions in
the ordinary course of business, consistent with past practices. All
reserves reflected in the financial information set forth in SCHEDULE
3.5 against doubtful accounts of valid counterclaims or setoffs by,
rebates, discounts and allowances to, and returns from, customers were
established in a manner consistent with the collection experience of
the Business in prior years. To the knowledge of the Seller, each of
such Accounts Receivable constitutes a legal, valid and binding
account or other receivable, and none such Accounts Receivable is
subject to any known defenses, assignments, restrictions,
counterclaims or setoffs by, any rebates, discounts or allowances to,
or any returns from, or any warranty claims of any customer. Since
December 31, 1996, the Seller has not provided any products or
services at discounted rates or free of charge to any customer as a
rebate, discount or advance to any customer to collect or to
accelerate the collection of any such Accounts Receivable. Except as
set forth in SCHEDULE 3.16(a)(ii), there are no account debtors owing
on any of the Accounts Receivable that are included in the Acquired
Assets that are (i) delinquent in payment by more than 30 days or (ii)
who have refused or, to the knowledge of the Seller, threatened to
refuse to pay any such Accounts Receivable.
(c) The accounts payable included in the Assumed Liabilities
arose from bona fide transactions in the ordinary course of business,
and all such accounts payable have either (i) been paid, (ii) are not
yet due and payable under procedures for payment of accounts payable
by the Seller, or (iii) are being contested by the Seller in good
faith, each case with such exceptions as do not have a material
adverse effect on the Business or the Acquired Assets.
3.17. TAXES. The Seller has timely filed with the appropriate
Government Authority all Tax Returns which are required to be filed, and has
duly paid to the appropriate Government Authority all Taxes which are required
to be paid, including, without limitation, all Taxes withheld from employees'
wages and all other Taxes due or claimed to be due by any Governmental
Authority. Such Tax Returns properly reflect the Taxes payable for the periods
covered thereby. All such taxes due for all taxable periods ending on or prior
to the Closing Date have been, or will be, timely paid by the Seller. The Seller
is registered to do business in the States and localities set forth in SCHEDULE
3.17. The Seller has not received any notice of deficiency or assessment from
any Federal, State, local or foreign taxing authority with respect to
liabilities for Taxes which has not been fully paid or finally settled, and
there are no existing or prior facts, circumstances or conditions that would
form the basis for such a notice of deficiency or assessment. The Seller has not
waived the statute of limitations on the right of any Governmental Authority to
assess any additional Taxes or to contest the items reported on any such Tax
Returns. The Seller has provided the Purchaser with true and complete copies of
all Tax Returns filed by the Seller for each of the past three taxable years.
3.18. DISCLOSURE. No representation or warranty by the Seller contained
in this Agreement or the Schedules hereto, and no written information provided
by or on behalf of the
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<PAGE> 27
Seller pursuant to the second sentence of Section 5.5(b) or any provision of
Section 5.18 hereof contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading. No written information provided by
or on behalf of the Seller which describes or consists of regulatory
applications or filings of the Seller contains or will contain, to the knowledge
of the officers of the Seller, any untrue statement of a material fact, or omits
or will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements therein not
misleading.
3.19. BROKERS. Neither the Seller nor Dynatech has incurred or become
liable for any broker's commission or finder's fee relating to or in connection
with the transactions contemplated by this Agreement, except for amounts payable
to The Bridgeford Group which shall be paid by the Seller and/or Dynatech.
3.20. OTHER NAMES AND BUSINESS. Except as set forth in SCHEDULE 3.20,
during the past five years, except for the names "Computerized Medical Systems,
Inc." and "CMS", the Seller has had no fictitious names, assumed names, "doing
business as" names or other names under which it has done or is doing business.
3.21. SOLVENCY. The Seller is not, and after consummation of the
transaction contemplated hereby, (a) will not be "insolvent" (as such term is
defined in SS. 101(32)(A) of the Federal Bankruptcy Code), (b) is able to pay
and is paying its debts as they mature, and (c) does not, and after consummation
of the transactions contemplated hereby will not, have unreasonably small
capital for the business in which it is engaged or for any business or
transaction in which it is about to engage.
3.22. SOFTWARE. On the Closing Date, the Purchaser shall acquire from
the Seller all the Seller's right, title and interest in and to all items of
Software, which are owned by the Seller or used or held for use by the Seller in
connection with the Business, except for any license to non-owned Software
which, by its terms, may not be assigned or otherwise transferred by the Seller
to the Purchaser and which is specified in SCHEDULE 3.22.
3.23. INVENTORIES. The inventories reflected on the balance sheets
attached hereto as SCHEDULE 3.5, or thereafter acquired by the Seller, consist
primarily of those things described in SCHEDULE 3.23 hereto at the amount
reflected on the balance sheets attached hereto as SCHEDULE 3.5, in the case of
inventories reflected thereon, or, in the case of such inventories acquired
after the date of the most recent balance sheet attached hereto as SCHEDULE 3.5,
at the amount reflected on the Books and Records of the Seller.
3.24. ASSETS NECESSARY TO BUSINESS. The Acquired Assets constitute all
of the assets, properties, licenses and other agreements that are presently
being used, except for the Excluded Assets, to carry on the Business and
operations of the Business as presently conducted. Except as set forth in
SCHEDULE 3.24, the Acquired Assets constitute all of the assets, properties,
licenses and other agreements necessary for the Purchaser to carry on the
Business and operations of the Business as presently conducted.
3.25. NO INTEREST IN PROPERTIES. To the Seller's knowledge, no
director, officer or employee of the Seller or Dynatech directly or indirectly
owns any interest in any of the Acquired Assets and, to the Seller's knowledge,
no director, officer or employee of the Seller (or member of such Person's
immediate family) owns any interest in (other than passive investments of less
than 5% of the equity ownership of a publicly traded enterprise), controls or is
an employee,
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<PAGE> 28
officer, director or agent of, or consultant to, any other entity which is a
competitor, supplier, customer, lessor or lessee of the Seller.
3.26. PURCHASE FOR INVESTMENT. The Seller and Dynatech each
acknowledges that the Preferred Stock and Warrants will not be registered under
the Securities Act of 1933, as amended (the "1933 ACT") or any state blue sky or
securities laws. Each of the Seller and Dynatech is acquiring the Preferred
Stock and Warrants for its own account for investment and not with a view to any
distribution thereof and will not sell or otherwise transfer the Preferred Stock
or Warrants unless, if the Purchaser so requests, it delivers to the Purchaser
an opinion of counsel, in form and substance reasonably satisfactory to the
Purchaser, to the effect that such transfer is exempt from the registration
requirements of the 1933 Act and applicable state blue sky or securities laws.
The Seller and Dynatech each acknowledges that a legend to such effect may be
placed on the Preferred Stock and Warrants. Each of the Seller and Dynatech is
an "accredited investor" within the meaning of Rule 501(a) of Regulation D
promulgated under the 1933 Act.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to, and agrees with, the Seller and
Dynatech as follows:
4.1. ORGANIZATION, STANDING AND POWER. The Purchaser (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. The Purchaser is duly qualified to do business and is in
good standing and is duly licensed, authorized or qualified to transact business
in each jurisdiction in which such qualification, license or authorization is
necessary because of property owned, leased or operated by it or because of the
nature of its business as now being conducted, except where the failure to be so
qualified would not have a material adverse effect on the financial condition of
the Purchaser.
4.2. AUTHORITY; BINDING AGREEMENTS; ISSUANCE OF PREFERRED STOCK. The
execution and delivery of this Agreement and the Instrument of Assumption of
Liabilities and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
of the Purchaser. The Purchaser has all requisite corporate power and authority
to enter into this Agreement and the Instrument of Assumption of Liabilities and
to consummate the transactions contemplated hereby and thereby and has duly
executed and delivered this Agreement. This Agreement is, and, upon execution
and delivery, the Instrument of Assumption of Liabilities will be, the valid and
binding obligation of the Purchaser enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws. The shares of Preferred Stock to be issued pursuant to
Section 2.3 hereof will, when issued and delivered hereunder against delivery of
the executed Bill of Sale in accordance with the provisions hereof, be duly
authorized, validly issued, fully paid and non-assessable.
4.3. Conflicts; Consents.
-------------------
(a) Neither the execution and delivery of this Agreement or the
Instrument of Assumption of Liabilities, the consummation of the
transactions contemplated hereby or thereby nor compliance by the
Purchaser with any of the provisions hereof or thereof will (i)
conflict with or result in a breach of any provision of
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<PAGE> 29
the charter, by-laws or other constituent documents of the Purchaser,
(ii) conflict with or result in a default (or give rise to any right
of termination, cancellation or acceleration) under any of the
provisions of any note, lease, mortgage, license, permit, agreement or
other obligation to which the Purchaser is a party, or by which the
Purchaser, or any of the Purchaser's properties or assets, may be
bound or affected, except for such conflict, breach or default as to
which waivers or consents shall be obtained by the Purchaser before
the Closing (which waivers or consents are set forth in SCHEDULE
4.3(a)) unless the Seller or Dynatech, in the discretion of either,
expressly waives in writing the Purchaser's obligation hereunder to
obtain the same, (iii) violate any law, regulation, order or decree
applicable to the Purchaser or any of the Purchaser's properties or
assets, or (iv) other than in connection with the Financing, result in
the creation of any security interest or other encumbrance upon any
property of assets of the Purchaser.
(b) SCHEDULE 4.3(b) contains a list of all registrations,
filings, applications, notices, transfers, consents, approvals,
orders, qualifications, waivers and other actions of any kind required
of any Person or Government Authority or private agencies in
connection with the execution, delivery and performance of this
Agreement or the Instrument of Assumption of Liabilities by the
Purchaser, or the consummation of the transactions contemplated hereby
and thereby.
4.4. LITIGATION. There is no litigation or, to the knowledge of the
Purchaser, governmental or administrative proceeding or investigation pending
against the Purchaser or, to the knowledge of the Purchaser, threatened against
the Purchaser, which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
4.5. BROKER'S FEE. The Purchaser has not incurred or become liable for
any broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this agreement, except for amounts payable to
Larkspur Capital Corporation which shall be the sole responsibility of the
Purchaser.
4.6. DISCLOSURE. No representation or warranty by the Purchaser
contained in this Agreement or the Schedules hereto contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements contained herein not misleading or
necessary in order fully and fairly to provide the information required to be
provided by this Agreement or the Schedules hereto.
5. COVENANTS
5.1. EXPENSES; SALES TAXES. Except as otherwise provided in this
Agreement, each party hereto shall bear its own expenses incurred in connection
with the transactions contemplated hereby. The Seller shall pay the cost of all
income, single business, sales, transfer, use, gross receipts, registration and
similar taxes arising out of or in connection with the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that the Purchaser shall reimburse the
Seller at the Closing an amount equal to the sum of (a) any apportioned prepaid
real estate taxes paid by the Seller with respect to any period of time after
the Closing Date remaining in such taxable period and (b) one-half of any
transfer taxes due as a result of the Asset Purchase.
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5.2. Conduct of Business.
-------------------
(a) From the date hereof until the Closing Date, except as
otherwise consented to by the Purchaser in writing, the Seller shall
operate the Business only in the ordinary course of business
consistent with past practice.
(b) Without limiting the generality of the foregoing, neither
the Seller nor Dynatech, without prior written consent of the
Purchaser shall, directly or indirectly, cause or permit any state of
affairs, action or omission described in clauses (a) through (h) of
Section 3.7.
5.3. FURTHER ASSURANCES. Each of the parties hereto agrees to use all
Commercial Efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations, to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as practicable and to ensure
that the conditions set forth in Article 6 hereof are satisfied, insofar as such
matters are within the control of any of them. In case at any time after the
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement or to ensure the proper assignment and delivery of
the Acquired Assets to the Purchaser and the assumption of the Assumed
Liabilities by the Purchaser, each of the parties to this Agreement shall take
or cause to be taken all such necessary action, including, the execution and
delivery of such further instruments and documents, as may be reasonably
requested by any party for such purposes or otherwise to complete or perfect the
transactions contemplated hereby. The Seller shall promptly pay or cause to be
paid to the Purchaser any amounts received by it after the Closing which
constitute Acquired Assets.
5.4. NO SHOPPING. From the date hereof until the earlier of (i) the
Closing Date and (ii) the date this Agreement is terminated in accordance with
Section 8.2, neither the Seller nor any partner, director, officer or
shareholder of the Seller will, directly or indirectly, solicit or initiate,
enter into or conduct, discussions concerning, or exchange information
(including by way of furnishing information concerning the Business) or enter
into any negotiations concerning, or respond to any inquiries or solicit,
receive, entertain or agree to any proposals for, the acquisition of the assets
of, or any substantial part thereof, or a merger involving, the Seller or the
transfer of all or a substantial part of the capital stock or partnership
interest of the Seller to any Person other than the Purchaser. In addition,
during such time period, the Seller and Dynatech shall not authorize, direct or
knowingly permit any employee or agent to do any of the foregoing.
5.5. Access and Information.
----------------------
(a) From the date hereof until the first to occur of the Closing
Date and the termination of this Agreement, the Seller shall permit
the Purchaser and its representatives to visit and inspect the
business, operations and properties of the Seller relating to the
Business and shall provide to the Purchaser such information regarding
the same as the Purchaser deems necessary or desirable in connection
with the transactions contemplated hereby. Such rights shall include,
without limitation, access to the directors, officers, employees,
agents and representatives (including legal counsel and independent
accountants) of the Seller relating to the Business and to the
properties, books, records and commitments of the Seller relating to
the Business. All information disclosed to the Purchaser or its
representatives during their investigations shall be subject to the
Confidentiality Agreement executed by Finisterre Capital Partners on
July 23, 1996.
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<PAGE> 31
(b) The Seller shall furnish the Purchaser and its
representatives with such financial (including data with respect to
billing and accounts receivable), operating and other data and
information, and copies of documents with respect to the Business or
any of the transactions contemplated hereby, as the Purchaser shall
from time to time reasonably request. The Seller shall provide to the
Purchaser unaudited balance sheets of the Seller as of the end of each
month during the period from January 1, 1997 through the end of the
last complete month prior to the month in which the Closing occurs and
the related statements of income for each of the months then ended.
The Seller shall certify that all such financial statements were
prepared in accordance with the Seller's usual historical practice and
that, in the case of audited financial statements, such audited
financial statements are prepared in accordance with GAAP.
(c) Such rights may be exercised upon reasonable notice and at
reasonable places and times. The exercise of such rights shall not in
any way affect or diminish (or release the Seller or Dynatech from
liability in connection with), any of the representations or
warranties hereunder. Without limiting the foregoing, during such
period, the Seller shall keep the Purchaser informed as to the
business and operations of the Business and shall consult with the
Purchaser with respect thereto as appropriate.
5.6. RIGHT TO NAME. The Seller and Dynatech agree to (i) cause the
Seller, immediately after the Closing (and in any case, not more than 10 days
after the Closing), to change the name of the Seller to a name which does not
include Computerized Medical Systems, Inc. or CMS, a similar name or any other
name reasonably objected to by the Purchaser and (ii) provide, at the Closing,
the form of director and shareholder consents authorizing the Seller to effect
such name change. The Seller shall provide copies of all documents evidencing
the change of name to the Purchaser within 20 days of the Closing.
5.7. PUBLICITY. The parties hereto agree that they will advise and
confer with each other prior to the issuance of any reports, statements or
releases pertaining to this Agreement or the transactions contemplated hereby
and that no such reports shall be issued prior to the Closing, except those
required by law. For those reports required by law, the party not required to
issue the report shall have the opportunity to review any report issued by any
other party hereto before such report is issued, to the extent practicable. For
the first press release or other issuance after the Closing, each of the parties
agree to obtain the written consent of the other party or parties, which consent
will not be unreasonably withheld before issuing such press release or issuance.
5.8. Confidentiality; Non-Competition.
--------------------------------
(a) Until Closing, the parties each agree that all financial or
technical information about the Purchaser or the Seller, or other
information of a confidential or proprietary nature, disclosed to the
other at any time in connection with the proposed transaction shall be
kept confidential by the party receiving such information and shall
not be disclosed to any Person or used by the receiving party (other
than to its agents or employees or in connection with the transactions
contemplated by this Agreement) except (i) with the prior written
consent of the disclosing party; (ii) as may be required by law; (iii)
such information which may have been acquired or obtained by such
party (other than through disclosure by the other party in connection
with the transactions contemplated by this Agreement); or (iv) such
information which is or becomes generally available to the public
other than as a result of a violation of this provision. All parties
shall be bound by the terms of this Section for a period of three
years after Closing; in the case of the Purchaser only with respect to
information that is not a part of the Acquired Assets.
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(b) The Seller and Dynatech each hereby acknowledge and
recognize such parties' possession of confidential or proprietary
information and the highly competitive nature of the Business and
accordingly agree that, in consideration of the premises contained
herein, such parties will not, from and after the date of this
Agreement for a period of three years after the date of this
Agreement, for any reason whatsoever, (i) directly or indirectly
engage in the United States in any business competitive with the
Business, whether such engagement shall be as an employer, officer,
director, owner, employee, partner or other agent or participant,
PROVIDED, HOWEVER, that any director of Dynatech Corp. that is not
employed by Dynatech Corp. shall be permitted to own, invest in, be
employed by or be an agent of a business competitive with the
Business, (ii) assist others in engaging in any business competitive
with the Business in a manner described in the foregoing clause (i),
(iii) solicit or attempt to solicit any current or potential customers
of the Business or (iv) induce employees of the Business to terminate
their employment with the Purchaser.
(c) In the event of a breach or threatened breach by any party
of the provisions of this Section, the Purchaser shall be entitled to
an injunction restraining such party from such breach. Nothing
contained herein shall be construed as prohibiting the Purchaser from
pursuing any other remedies available at law or equity for such breach
or threatened breach of this Agreement.
5.9. BULK SALES. Subject to Sections 7.1(a)(iv) and 7.1(b)(iv), each
of the Purchaser and the Seller waives compliance with all bulk sales laws
applicable to the transactions contemplated by this Agreement.
5.10. ALLOCATION OF CASH AMOUNT. The parties agree to allocate the Cash
Amount (net of any deduction pursuant to Section 2.4) as set forth in SCHEDULE
5.10. The parties agree to be bound for all purposes by such allocation and to
execute and file an Internal Revenue Service Form 8594 and any required exhibits
thereto (or other form required pursuant to Section 1060 of the Internal Revenue
Service Code or other applicable Tax laws) consistent therewith.
5.11. INSURANCE. Dynatech and the Seller shall, until the Closing Date,
maintain in effect all insurance on the Acquired Assets or and all insurance in
connection with the Business.
5.12. EMPLOYEES. On the Closing Date, the Purchaser shall (a) offer
employment on an "at will" basis, at the same hourly rates, to all of the hourly
employees of the Seller actively employed as of the Closing Date and (b) offer
employment on an "at will" basis, at the same salary to all of the salaried
employees of the Seller actively employed as of the Closing Date.
5.13. Salary Continuation Obligations.
-------------------------------
(a) Effective as of the Closing Date, the Seller shall terminate
or cause to be terminated the employment of all Persons employed by
the Seller as of the Closing Date.
(b) As to each employee terminated by the Seller under this
Section effective at or after the Closing, the Purchaser shall offer
employment as contemplated by Section 5.12.
(c) With respect to each such employee who does not accept the
Purchaser's offer of employment described in clause (b) of this
Section, the Seller shall be liable for and pay all valid claims of
any such employee relating to such termination of
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employment, including, without limitation, all salary continuation
obligations and any other similar obligations of the Seller or
Dynatech arising by virtue of an employee's employment by the Seller
and shall indemnify and hold harmless the Purchaser for any failure to
pay such salary continuation obligations or similar claims.
(d) With respect to each such employee who does accept the
Purchaser's offer of employment and is terminated by the Purchaser
within twelve months after the Closing Date (other than for good cause
shown), the Purchaser agrees to pay to such employees an amount equal
to the salary continuation obligations described in SCHEDULE 5.13, and
to indemnify and hold harmless the Seller and Dynatech against any and
all valid claims against the Seller or Dynatech by any employee
terminated by the Purchaser pursuant to this Section for any salary
continuation obligations; PROVIDED, HOWEVER, that such the Purchaser
shall indemnify the Seller and Dynatech only to the extent of the
salary continuation obligations of the Seller and Dynatech which are
described on SCHEDULE 5.13 in effect as of the Closing Date and the
Purchaser's liability for such claims shall under no circumstances
exceed the amount set forth in each agreement or plan relating to
salary continuation obligations described on SCHEDULE 5.13 that has
been provided to the Purchaser.
5.14. COVENANTS TO SATISFY CONDITIONS. Upon the terms and subject to
the conditions set forth herein, the Seller shall use Commercial Efforts to
ensure that the conditions set forth in Article 6 hereof are satisfied, insofar
as such matters are within the control of the Seller, and the Purchaser shall
use Commercial Efforts to ensure that the conditions set forth in Article 6
hereof are satisfied, insofar as such matters are within the control of the
Purchaser.
5.15. FINANCING. The Purchaser shall use Commercial Efforts to obtain
debt and equity financing sufficient to pay the Cash Amount on terms entirely
satisfactory to the Purchaser (the "FINANCING").
5.16. RELEASE OF LIENS. At or prior to the Closing, the Seller will
deliver to the Purchaser, and cause to be filed or recorded, such releases,
termination statements and other documents and instruments as are sufficient to
eliminate and extinguish all Liens on any of the Acquired Assets so that, at
Closing, the Purchaser will receive title to such Acquired Assets free and clear
of any such Liens. Notwithstanding anything in this Agreement to the contrary,
if, at the Closing, any of the Acquired Assets is not so delivered free and
clear of all Liens, the Purchaser shall have the option in its sole discretion
to pay an amount sufficient to extinguish any or all of such Liens directly to
the holder or holders of such Liens, and to consummate transaction contemplated
hereby. The full amounts, including any such accrued interest and penalties on
any indebtedness or obligations secured by such Liens, that are paid by the
Purchaser to the holder or holders of such Liens shall be deducted from the Cash
Amount.
5.17. NOTIFICATION OF CERTAIN MATTERS. From the date hereof through the
Closing Date, the Seller and the Purchaser each shall give prompt written notice
to the other after either of them has obtained knowledge of the occurrence, or
failure of occurrence, of any event, which occurrence or failure to occur has
caused or would cause or be reasonably likely to cause a breach of their
respective representations, warranties, covenants and agreements contained in
this Agreement or any condition to be satisfied on the part of the Seller or
Dynatech at the Closing not to be able to be satisfied.
5.18. DELIVERY OF AUDITED FINANCIAL STATEMENTS. The Seller shall
prepare and deliver to the Purchaser audited financial statements of the
Business as of March 31, 1995, March 31, 1996 and December 31, 1996, prepared in
accordance with GAAP, together with the opinion
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thereon of Coopers & Lybrand LLP, on or before the Closing Date, at the expense
of the Purchaser. In the event that the transactions contemplated in this
Agreement are not completed and either (i) the Seller sells all or substantially
all the Acquired Assets to a party other than the Purchaser or (ii) Dynatech
sells the capital stock of the Seller, in each case, within 12 months of the
termination of this Agreement, the Seller shall pay to the Purchaser promptly an
amount equal to the cost of the audit conducted pursuant to this Section.
5.19. HSR ACT NOTIFICATION. Each of the parties hereto will file, or
cause to be filed, as promptly as possible, with the United States Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
any notification required to be filed by such party pursuant to the HSR Act.
6. CONDITIONS PRECEDENT
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of the Seller, Dynatech and the Purchaser to consummate the
transactions contemplated by this Agreement shall be subject to each of the
following conditions:
(a) None of the Seller, Dynatech nor the Purchaser shall be
subject to any order, judgment, decree or injunction of a court of
competent jurisdiction or Government Authority nor any applicable law
or regulation or executive order which prevents consummation of the
transactions contemplated hereby, and
(b) All filings required by the HSR Act shall have been made and
all waiting periods thereunder with respect to the transactions
contemplated by this Agreement shall have expired or been terminated.
(c) The allocation of the Cash Amount shall have been agreed
upon by the Purchaser and the Seller (or Dynatech on behalf of the
Seller) in accordance with SCHEDULE 5.10.
6.2. CONDITIONS OF OBLIGATIONS OF THE PURCHASER. The obligations of
the Purchaser to perform this Agreement are subject to the satisfaction of the
following conditions on or prior to the Closing Date unless waived by the
Purchaser:
(a) AUTHORIZATION. All actions necessary to authorize the
execution, delivery and performance of this Agreement and the Bill of
Sale and the consummation of the transactions contemplated hereby and
thereby shall have been duly and validly taken by the Seller, and the
Seller shall have full corporate power and authority to enter into and
deliver such agreements and to consummate the transactions
contemplated hereby and thereby.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller and Dynatech contained herein shall be true
and correct in all material respects as of the date hereof and as of
the Closing Date as if made on and as of the Closing Date, and the
Seller and Dynatech shall have performed and complied with all
covenants and agreements required to be performed or complied with on
or prior to the Closing Date. As of the Closing Date, there shall have
been no material adverse change in the condition (financial or
otherwise), assets, liabilities, operations, customer contracts,
billings, revenues, earnings, business or prospects of the Seller or
the Business.
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(c) CERTIFICATES. The Purchaser shall have received a
certificate, dated the Closing Date, substantially in the form of
EXHIBIT D, signed by an authorized officer of the Seller certifying to
the fulfillment of the conditions set forth in clauses (a) and (b) of
Section 6.2 and as to such other matters as are reasonably requested
by the Purchaser, all in form and substance reasonably satisfactory to
the Purchaser.
(d) CONSENTS AND APPROVALS. The Purchaser shall have received
the duly executed and delivered consent, in form and substance
reasonably satisfactory to the Purchaser, to the sale, assignment
(including, without limitation, the collateral assignment in
connection with the Financing) or transfer of (i) each of the leases
referred to in SCHEDULE 3.11(c), (ii) each of the licenses referred to
in SCHEDULE 3.11(c), and (iii) each of the other contracts or
agreements referred to in SCHEDULE 3.11(c).
(e) BILL OF SALE. The Seller shall have delivered to the
Purchaser (i) the Bill of Sale conveying the personal property
included in the Acquired Assets and (ii) the Assignment.
(f) OPINIONS OF COUNSEL. The Purchaser shall have received an
opinion of (i) Hale and Dorr LLP, counsel to Dynatech, (ii) Hyman,
Phelps & McNamara, regulatory counsel to the Seller and (iii) Thompson
& Coburn, counsel to the Seller, each dated the Closing Date, in the
form of Exhibit E-1, Exhibit E-2 and Exhibit E-3, respectively, and
otherwise entirely satisfactory.
(g) FINANCING. The Purchaser shall have obtained the Financing
on terms entirely satisfactory to the Purchaser.
(h) EMPLOYMENT AGREEMENT. Douglas Sprague, Vincent O'Connell,
C.B. Stone, Denise Chomicki, Mike Parsons, Jan Digman and David
Reissig shall each have executed and delivered to the Purchaser valid
and legally binding employment agreements in form and substance
satisfactory to the Purchaser, at a base salary and cash bonus
compensation comparable to their existing base salaries and cash bonus
compensation arrangements with the Seller and providing for an equity
compensation incentive arrangement of the kind typically provided in
leveraged buyout transactions where senior management continues its
positions.
(i) OTHER DOCUMENTS. The Purchaser shall have received such
other documents, opinions, certificates or instruments as it may
reasonably request and as are necessary in connection with the
Closing.
6.3. CONDITIONS OF OBLIGATIONS OF THE SELLER AND DYNATECH. The
obligations of the Seller and Dynatech to perform this Agreement are subject to
the satisfaction of the following conditions on or prior to the Closing Date
unless waived by the Seller (on behalf of the Seller or Dynatech) or Dynatech
(on behalf of Dynatech or the Seller):
(a) AUTHORIZATION. All actions necessary to authorize the
execution, delivery and performance of this Agreement and Instrument
of Assumption of Liabilities and the consummation of the transactions
contemplated hereby and thereby shall have been duly and validly taken
by the Purchaser, and the Purchaser shall have full power and
authority to enter into and deliver such agreements and to consummate
transactions contemplated hereby and thereby, as appropriate.
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(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained herein shall be true and correct
in all material respects as of the date hereof and as of the Closing
Date as if made on and as of the Closing Date, and the Purchaser shall
have performed and complied with all covenants and agreements required
to be performed or complied with on or prior to the Closing Date.
(c) CERTIFICATE. The Seller shall have received a certificate,
dated the Closing Date, substantially in the form of EXHIBIT F, signed
by an authorized officer of the Purchaser confirming the matters set
forth in clauses (a) and (b) of Section 6.3 and such other matters as
reasonably requested by the Seller, in form and substance reasonably
satisfactory to the Seller.
(d) INSTRUMENT OF ASSUMPTION OF LIABILITIES. The Purchaser shall
have delivered to the Seller the Instrument of Assumption of
Liabilities assuming the liabilities pursuant to this Agreement.
(e) PREFERRED STOCK AND WARRANTS. The Purchaser shall have
delivered to the Seller certificates evidencing the shares of the
Preferred Stock and the Warrants.
(f) OPINION OF COUNSEL. The Seller and Dynatech shall have
received an opinion of Howard, Darby & Levin, counsel to the
Purchaser, dated the Closing Date, in the form of EXHIBIT G and
otherwise entirely satisfactory.
7. SURVIVAL AND INDEMNIFICATION
7.1. Indemnification.
---------------
(a) The Seller and Dynatech hereby jointly and severally agree
to pay and to indemnify and hold harmless the Purchaser, its
affiliates and its directors, officers, employees and other agents and
representatives from and against any and all liabilities, judgments,
claims, settlements, losses, damages, fees, liens, taxes, penalties,
obligations and expenses (collectively, "LOSSES") incurred or suffered
by any such Person arising from, by reason of or in connection with:
(i) any misrepresentation or breach of any
representation, warranty, covenant or agreement of the Seller or
Dynatech contained in this Agreement, the Bill of Sale or the
Schedules hereto;
(ii) any and all Taxes of any kind related to the Business
for any and all periods ending on or before the Closing Date;
(iii) other than the Assumed Liabilities, any and all
liabilities, claims and other losses relating to the operation of
the Business or of the Seller before the Closing Date;
(iv) the failure of the Seller to comply with any bulk
sales laws or any state or local Tax laws applicable to the
transactions contemplated by this Agreement;
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(v) any claims asserted or threatened to be asserted by
any third party in connection with, on account of, or in any
manner relating to any defects or errors in the design,
manufacture or production of any product sold by the Seller prior
to the Closing Date (other than Warranty Obligations);
(vi) any claims under checks issued by the Seller prior to
the Closing Date that remain uncashed or have expired as of the
Closing Date; and
(vii) any and all actions, suits, proceedings, demands,
judgments, costs and reasonable legal and other expenses
(including, without limitation, any legal fees incurred in the
collection of such legal fees) incident to any of the matters
referred to in subsections (i) through (vi) of this Section
7.1(a).
(b) The Purchaser agrees to pay, indemnify and hold harmless the
Seller, Dynatech, their affiliates and their respective partners,
directors, officers, employees and other agents and representatives,
from and against any and all liabilities, judgments, claims,
settlements, losses, damages, fees, liens, taxes, penalties,
obligations and expenses incurred or suffered by any such Person
arising from, by reason of or in connection with:
(i) any misrepresentation or breach of any
representation, warranty, covenant or agreement of the Purchaser
contained in this Agreement or the Schedules hereto; or
(ii) any and all Taxes of any kind related to the Business
for all periods after the Closing Date;
(iii) any failure by the Purchaser to perform and discharge
any of the Assumed Liabilities as set forth in this Agreement,
including, without limitation, any liability arising out of or
due to the failure of the Purchaser to perform and discharge any
agreement assigned to and assumed by the Purchaser under this
Agreement;
(iv) the failure of the Purchaser to comply with any bulk
sales laws or any state or local Tax laws applicable to the
transactions contemplated by this Agreement; and
(v) any and all actions, suits, proceedings, demands,
judgments, costs and reasonable legal and other expenses incident
to any of the matters referred to in subsections (i) through (iv)
of this Section 7.1(b).
(c) In case any claim or litigation which might give rise to any
obligation of a party under the indemnity and reimbursement provisions
of this Agreement (each an "INDEMNIFYING PARTY") shall come to the
attention of the party seeking indemnification hereunder (the
"INDEMNIFIED PARTY"), the Indemnified Party shall notify in writing
promptly the Indemnifying Party of the existence and amount thereof.
Failure to give such notice shall not prejudice the rights of the
Indemnified Party, except to the extent that the Indemnifying Party
shall have been materially prejudiced by such failure. The
Indemnifying Party shall be entitled to participate in and, if (i) the
claim is for payment of money and the Indemnifying Party has the
financial resources to pay all such amounts reasonably claimed and
(ii) the Indemnifying Party admits in writing pursuant to an
instrument satisfactory to the Indemnified Party that this indemnity
fully covers the claim or litigation, the Indemnifying Party shall be
entitled to direct the defense of any claim at its expense, but such
defense shall be conducted by legal counsel reasonably satisfactory to
the Indemnified Party. The Indemnifying Party shall not compromise and
settle any such claim
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or litigation without the prior consent of the Indemnified Party which
consent shall not be unreasonably withheld provided, however, that the
Indemnified Party shall not be obliged under any circumstances to
consent to a compromise or settlement that (i) provides for relief
other than the payment of money and (ii) may have a material adverse
effect upon the Business or the Acquired Assets, as determined by the
Indemnified Party in its reasonable discretion.
(d) Notwithstanding anything in this Article 7 (other than
Section 7.1(h)), the parties shall have no liability for indemnity
hereunder with respect to a breach of representation or warranty
until, and only to the extent that, the aggregate amount of all claims
and losses entitled to such indemnification exceeds one and one-half
percent (1 1/2%) of the Purchase Price, as the same may be adjusted as
provided in Section 2.4.
(e) Subject to Section 7.1(h), neither the Seller nor Dynatech
shall be obligated to provide indemnification against Losses incurred
or suffered by any Person arising from, by reason of, or in connection
with breaches of representations or warranties contained in Sections
3.4(a)(iii), 3.4(b) or 3.13 in an aggregate amount in excess of the
Cash Amount, as the same may be adjusted as provided in Section 2.4.
(f) Subject to Section 7.1(h), neither the Seller nor Dynatech
shall be obligated to provide indemnification against Losses incurred
or suffered by any Person arising from, by reason of, or in connection
with breaches of representations or warranties contained in Section
3.15 in an aggregate amount in excess of the Purchase Price, as the
same may be adjusted as provided in Section 2.4, and, in the event
that the aggregate amount of such Losses with respect to which
indemnification is sought exceeds the Cash Amount, as the same may be
adjusted as provided in Section 2.4, the obligation of the Seller and
Dynatech to provide indemnification for any such excess amount may
only be satisfied by the Purchaser's exercise of its right of Special
Optional Redemption (as defined in the Certificate of Designation) for
shares of Preferred Stock having an aggregate liquidation preference
plus accrued and unpaid dividends of an amount equal to the lesser of
(x) such excess amount and (y) the aggregate liquidation preference
plus accrued and unpaid dividends of all Preferred Stock outstanding,
plus, in each case the aggregate Special Optional Redemption Price (as
defined in the Certificate of Designation) paid (subject to any
provision of the Certificate of Designation that permits the exercise
of the Special Optional Redemption in a greater amount due to
rounding).
(g) Subject to Section 7.1(h), neither the Seller nor Dynatech
shall be obligated to provide indemnification against Losses incurred
or suffered by any Person arising from, by reason of, or in connection
with breaches of representations or warranties other than those
contained in Sections 3.4(a)(iii), 3.4(b) or 3.13 and 3.15 in an
aggregate amount in excess of sixty percent (60%) of the Purchase
Price, as the same may be adjusted as provided in Section 2.4, and, in
the event that the aggregate amount of such Losses with respect to
which indemnification is sought exceeds sixty percent (60%) of the
Cash Amount, as the same may be adjusted as provided in Section 2.4,
the obligation of the Seller and Dynatech to provide indemnification
for any such excess amount may only be satisfied by the Purchaser's
exercise of its right of Special Optional Redemption for shares of
Preferred Stock having an aggregate liquidation preference plus
accrued and unpaid
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dividends of an amount equal to the least of (x) such excess amount,
(y) $3,780,000.00 and (z) the aggregate liquidation preference plus
accrued and unpaid dividends of all such Preferred Stock outstanding,
plus, in each case, the aggregate Special Optional Redemption Price
paid (subject to any provision of the Certificate of Designation that
permits the exercise of the Special Optional Redemption in a greater
amount due to rounding).
(h) The limitations on liability set forth in Sections 7.1(d),
(e), (f) and (g) shall not apply (i) in the event of fraud,
intentional misrepresentation or intentional breach or (ii) or in the
case of a breach or violation of any representation or warranty set
forth in Sections 3.8 and 3.17.
7.2. LIMITATION ON REMEDIES. It is specifically understood and agreed
that in the event of a misrepresentation or breach of warranty set forth in
Article 3 or 4 (other than in the case of fraud, intentional misrepresentation
or intentional breach) is discovered by the Purchaser, the Seller or Dynatech
after the Closing, such party's remedies shall be limited solely to the
indemnification set forth in this Article 7 of the Agreement. Except with
respect to the remedy for breach of the representations and warranties set forth
in Articles 3 and 4 (other than in the case of fraud, intentional
misrepresentation or intentional breach), nothing contained in this Article 7
shall be deemed an election of remedies under this Agreement or limit in any way
the liability of any party under any other agreement to which such party is a
party relating to this Agreement or the transactions contemplated by this
Agreement.
7.3. SURVIVAL. The representations, warranties, covenants and
agreements of the parties hereto contained herein shall survive the Closing and
shall continue until terminated in accordance with applicable law, except that
the representations and warranties of the parties provided in Articles 3 and 4
shall survive as follows:
(a) Section 3.15 (and the Schedules related thereto) shall
survive until the stated final maturity of the junior most debt
borrowed in connection with the Financing, but in any case not to
exceed seven (7) years after the Closing Date;
(b) Section 3.17 (and the Schedules related thereto) shall
survive until the expiration of the statute of limitations with
respect to Tax Returns of the Seller for the periods referred to in
such Section;
(c) Sections 3.4(a)(iii), 3.4(b), 3.9 and 3.13 (and, in each
case, the Schedules related thereto) shall survive until the
expiration of the second anniversary of the Closing Date;
(d) Section 3.8 (and the Schedules related thereto) shall
survive until the expiration of the applicable statute of limitations
with respect to any fraud committed in connection with any of the
transactions contemplated by this Agreement; and
(e) all other representations and warranties contained in
Articles 3 and 4 (and, in each case, the Schedules related thereto)
shall survive until the expiration of the first anniversary of the
Closing Date.
If prior to any of the foregoing dates, the Seller or Dynatech shall have been
notified of a claim for indemnity hereunder and such claim shall not have been
finally resolved or disposed of at such date, any representation or warranty
that is the basis for such claim shall continue to survive and shall remain a
basis for indemnity until such claim is finally resolved or disposed of.
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8. MISCELLANEOUS
8.1. ENTIRE AGREEMENT. This Agreement and the schedules and exhibits
contain the entire agreement among the parties with respect to the transactions
contemplated by this Agreement and supersede all prior agreements or
understandings among the parties.
8.1. Termination.
-----------
(a) This Agreement shall terminate on the earlier to occur of
any of the following events:
(i) the mutual written agreement of the Purchaser and the
Seller;
(ii) if the Closing shall not have occurred prior to 11:59
P.M. on March 31, 1997;
(iii) by written notice of the Purchaser to the Seller and
Dynatech given prior to the Closing, if the Seller or Dynatech
shall have materially breached any of their representations,
warranties or agreements contained herein and such breach has not
been waived by the Purchaser or cured by the Seller or Dynatech
within 15 days after written notice by the Purchaser of such
breach; or
(iv) by written notice of the Seller or Dynatech to the
Purchaser given prior to the Closing, if the Purchaser shall have
materially breached any of its agreements contained herein and
such breach has not been waived by the Seller or Dynatech or
cured by the Purchaser within 15 days after written notice by the
Seller of such breach.
(b) Nothing in this Section shall relieve any party of any
liability for a breach of this Agreement prior to the termination
hereof. Except as aforesaid, upon the termination of this Agreement,
all rights and obligations of the parties under this Agreement shall
terminate, except their obligations under Sections 5.1, 5.7, 5.8(a)
and Article 7.
8.3. Descriptive Headings; Certain Interpretations.
---------------------------------------------
(a) Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
(b) Whenever any party makes any representation, warranty or
other statement to such party's knowledge, such party will be deemed
to have made due inquiry into the subject matter of such
representation, warranty or other statement.
(c) Except as otherwise expressly provided in this Agreement,
the following rules of interpretation apply to this Agreement: (i) the
singular includes the plural and the plural includes the singular;
(ii) "or" is not exclusive and "include" and "including" are not
limiting; (iii) a reference to any agreement or other contract
includes permitted supplements and amendments; (iv) a reference to a
law includes any amendment or modification to such law and any rules
or regulations issued thereunder; (v) a reference to a Person includes
its permitted successors and assigns; (vi) a reference to generally
accepted accounting principles refers to United States generally
accepted accounting
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principles; and (vii) a reference in this Agreement to an Article,
Section, Exhibit or Schedule is to the Article, Section, Exhibit or
Schedule of this Agreement.
8.4. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing and sufficient if delivered personally or
sent by registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Purchaser, to:
President
CMSI Holdings Corp.
4900 West Dry Creek Road
Healdsburg, CA 95448
Telecopy: 707-433-4349
with a copy to:
Lawrence A. Darby, III, Esq.
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Telecopy: 212-841-1010
If to the Seller or Dynatech to:
Dynatech Corporation
3 New England Executive Park
Burlington, Massachusetts 01803
Attn.: Vice President, Business Development
Telecopy: 617-229-8850
with a copy to:
Peter B. Tarr, Esq.
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopy: 617-526-5000
or to such other address or telecopy number as the party to whom notice is to be
given may have furnished to the other party in writing in accordance herewith.
Each such notice, request or communication shall be effective when received or,
if given by mail, when delivered at the address specified in this Section or on
the fifth business day following the date on which such communication is posted,
whichever occurs first.
8.5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.6. BENEFITS OF AGREEMENT. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. This Agreement is for the sole
benefit of the parties hereto and not for the benefit of
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any third party, except that any party providing financing for the transactions
contemplated by this Agreement may rely on the representations, warranties and
agreements of the Seller, Dynatech and the Purchaser.
8.7. AMENDMENTS AND WAIVERS. No modification, amendment or waiver, of
any provision of, or consent required by, this Agreement, nor any consent to any
departure here from, shall be effective unless it is in writing and signed by
the parties hereto. Such modification, amendment, waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
8.8. ASSIGNMENT. At any time at or after the Closing, (a) the
Purchaser may assign its rights hereunder (i) as collateral security to any
Persons providing financing for the consummation hereof or (ii) to any
affiliate; PROVIDED, THAT, no such assignment by the Purchaser shall release it
from any of its obligations or liabilities hereunder and (b) the Seller may
assign its rights hereunder to Dynatech Corp. Except as expressly provided
above, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party. Any attempted assignment in violation of the
preceding sentence shall be void ab initio and the assignee shall obtain no
rights by reason thereof. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement does not and is not
intended to confer upon any other Person except the parties hereto and their
respective successors and assigns any rights, remedies, obligations or
liabilities hereunder.
8.9. SPECIFIC PERFORMANCE. The Seller, the Purchaser and Dynatech each
acknowledge that, in view of the uniqueness of the Business, the Purchaser would
not have an adequate remedy at law for money damages in event that this
Agreement were not performed in accordance with its terms, and therefore
agreement that the Purchaser shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which its may be entitled, at
law or in equity.
8.10. POST-CLOSING MERGER OR DISSOLUTION OF THE SELLER. For the
avoidance of doubt, the Purchaser consents to (i) the merger into Dynatech
Corp., or any subsidiary thereof, of the Seller after the Closing Date or (ii)
the dissolution of the Seller after the Closing Date, provided, in each case,
that (x) Dynatech Corp. assumes all liabilities of the Seller hereunder and (y)
Section 3.21 hereof would not thereby be breached or violated by the Seller or
Dynatech.
8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
8.12. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. IN RELATION TO ANY
ACTION, CLAIM, SUIT OR OTHER PROCEEDING ARISING OUT OF, RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR THE BREACH, TERMINATION OR VALIDITY HEREOF OR THEREOF (A
"PROCEEDING"), EACH OF THE SELLER, DYNATECH AND THE PURCHASER HEREBY
UNCONDITIONALLY AND IRREVOCABLY, RESPECTIVELY (i) SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK (OR ANY FEDERAL COURT SITTING IN THE STATE
OF NEW YORK) FOR SUCH
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<PAGE> 43
PROCEEDINGS (AND AGREES NOT TO COMMENCE ANY PROCEEDING EXCEPT IN ANY SUCH
COURT), AND (ii) WAIVES AND AGREES NOT TO ASSERT, AS A DEFENSE IN ANY
PROCEEDING, THAT IT IS NOT SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR
THAT SUCH PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN ANY SUCH
COURT, OR THAT THIS AGREEMENT OR ANY OF SUCH DOCUMENTS OR AGREEMENTS MAY NOT BE
ENFORCED IN OR BY ANY SUCH COURT, OR THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM
EXECUTION, OR IN THE CASE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF SUCH
PROCEEDING IS IMPROPER OR THAT SUCH PROCEEDING SHOULD BE TRANSFERRED OR REMOVED
TO ANY OTHER STATE OR FEDERAL JUDICIAL FORUM FOR ANY REASON. EACH OF THE SELLER,
DYNATECH AND THE PURCHASER HEREBY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN ANY
PROCEEDING.
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<PAGE> 44
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed and delivered as of the day and year first above written.
DYNATECH CORPORATION
By: /s/ Roger C. Cady
-----------------------------------
Name: Roger C. Cady
Title: Vice-President
DYNATECH USA, INC.
By: /s/ Roger C. Cady
-----------------------------------
Name: Roger C. Cady
Title: Vice-President
COMPUTERIZED MEDICAL SYSTEMS, INC.
By: /s/ Roger C. Cady
-----------------------------------
Name: Roger C. Cady
Title: Vice-President
CMSI HOLDINGS CORP.
By: /s/ Douglas E. Rogers
-----------------------------------
Name: Douglas E. Rogers
Title: President
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