ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into this 17th day of April,
2000, by and between EMCEE Holding Corp., a Delaware corporation
("Purchaser"), and Advanced Broadcast Systems, Inc., a Kentucky
corporation ("Seller").
RECITALS:
This Agreement sets forth the terms and conditions upon which Purchaser
is purchasing the assets (other than Excluded Assets, as hereinafter
defined) owned and/or used by Seller in the conduct of its business, and
Seller is selling to Purchaser such assets (other than Excluded Assets).
In consideration of the mutual agreements, covenants, representations and
warranties contained herein, and in reliance thereon, Purchaser and
Seller hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1"Accounts Receivable" shall mean as of any date any trade accounts
receivable, notes receivable, bid or performance deposits, employee
advances and other miscellaneous receivables associated with the Business
as of such date.
1.2"Accrued Expenses" shall mean as of any date accrued payroll and
benefits and other accrued expenses as would appear on a balance sheet of
the Business as of such date prepared in accordance with GAAP
consistently applied.
1.3"Affiliate" shall mean any company or other entity which controls, is
controlled by or is under common control with the designated Party. For
the purposes of the foregoing, ownership, directly or indirectly, of
twenty (20%) percent or more of the voting stock or other equity interest
shall be deemed to constitute control.
1.4"Agreement" shall mean this Asset Purchase Agreement.
1.5"Ancillary Agreements" shall mean, collectively, the documents,
instruments, statements, certificates and agreements described in Section
5.2.
1.6"Assumed Liabilities" shall have the meaning given to it in Section
4.2.
1.7"Balance Sheet" shall mean the balance sheet of the Business as of
November 30, 1999, referred to in Section 6.4.
1.8"Balance Sheet Date" shall mean November 30, 1999.
1.9"Books and Records" shall have the meaning given to it in Section
6.15.
1.10"Business" shall mean the business and operations of Seller as
presently conducted by Seller.
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1.11"Closing" shall mean the taking of the actions described in Article V
of this Agreement.
1.12"Closing Date" shall mean April 317, 2000, or such other date as the
Parties shall mutually agree.
1.13"Closing Inventory" shall mean all Inventory relating to the Business
on the Closing Date.
1.14"Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time, and any successor thereto. Any reference
herein to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future law.
1.15"Confidential Information" shall have the meaning given to such term
in Section 12.1.
1.16"EMCEE" shall have the meaning given to such term in Section 3.1.2.
1.17"Employee" shall mean any individual employed by Seller in the
conduct of the Business as listed on Schedule 1.17 (such Schedule being
subject to change between the date hereof and the Closing Date as a
result of employee changes in the ordinary course of business consistent
with past practices).
1.18"Employment Agreement" shall have the meaning given to such term in
Section 4.3.
1.19"Encumbrance" shall mean any right to, or interest in, property,
which subsists in a third-party and which constitutes a claim, lien,
charge or liability attached to and binding upon the property, including,
but not limited to, a mortgage, judgment lien, mechanic's lien, lease,
security interest, easement and right-of-way.
1.20"Environmental Law" shall mean any federal (including but not
limited to the Federal Water Pollution Control Act, 33 U.S.C. Sections
1251 et seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601
et seq., the Clean Air Act, 42 U.S.C Sections 7401 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Sections 9601 et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. Sections 1801 et seq., and the Federal
Insecticide Fungicide and Rodenticide Act, 7 U.S.C. Sections 136 et
seq.), state or local statute, ordinance, rule or regulation, any
judicial or administrative order or judgment (whether or not by consent),
any common law doctrine and any provision or condition of any permit,
license or other operating authorization relating to (i) the protection
of the environment or the public welfare from actual or potential
exposure (or the effects of exposure) to any actual or
potential release, discharge, disposal or emission (whether past or
present) of any Regulated Substance or (ii) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
any Regulated Substance.
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1.21"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
l.22"ERISA Plans" shall mean defined benefit pension plans and defined
contribution pension plans qualified under Section 401(a) of the Code.
1.23"Escrow Agreement" shall have the meaning given to such term in
Section 3.2.
1.24"Excluded Assets" shall mean those assets that are not included in
the sale contemplated hereby and as are further defined in Section 2.2.
1.25"GAAP" shall mean generally accepted accounting principles in the
United States of America.
1.26"Indemnified Liabilities" shall mean, collectively, Seller's
Indemnified
Liabilities and Purchaser's Indemnified Liabilities.
1.27"Indemnified Party" shall mean either a Seller Indemnified Party or a
Purchaser Indemnified Party, as the context so requires.
1.28"Inventory" shall mean the inventory of the Business, including raw
materials, supplies, work-in-process and finished goods.
1.29"Lease Agreement" shall have the meaning given to such term in
Section 4.2 (iv).
1.30"Losses" shall mean all losses, liabilities, costs, claims, fines,
penalties, damages, diminution in value, and expenses, including interest
and court costs, costs of investigation and reasonable fees and
disbursements of counsel and consultants.
1.31"Memorandum of Understanding" shall have the meaning given to such
term in Section 12.10.1(i).
1.32"Party" shall mean either Seller or Purchaser, individually, as the
context so requires, and the term "Parties" shall mean Seller and
Purchaser together.
1.33"Payables" as of any date shall mean any of the accounts payable
associated with the Business as of such date in accordance with GAAP
consistently applied.
1.34"Payroll Practice/Employee Arrangement" shall have the meaning given
to such term in Section 6.18.
1.35"Permits" shall have the meaning given to such term in Section 6. 11.
1.36"Person" shall mean any individual, corporation, company, limited or
general
partnership, trust or estate, joint venture, association or other entity.
1.37"Prepaid Expenses" as of any date shall mean payments made by Seller
with respect to the Business, which constitute prepaid expenses of the
<PAGE>
Business in accordance with GAAP consistently applied.
1.38"Proprietary Rights" shall have the meaning given to such term in
Section 6.9.1.
1.39"Purchase Price" shall have the meaning given to such term in Section
3.1.1.
1.40"Purchased Assets" shall have the meaning given to such term in
Section 2.1.
1.41"Purchaser" shall have the meaning given to such term in the preamble
of this
Agreement.
1.42"Purchaser Indemnified Party" shall have the meaning given to such
term in Section 14.2.
1.43"Real Property" shall mean the Real Property Leased.
1.44"Real Property Leased" shall mean the real property leased by Seller
in connection with the Business as more fully described in Schedule 1.44
hereto.
1.45"Regulated Substance" shall mean petroleum, petroleum hydrocarbons or
petroleum products and any other chemical, material, substance or waste
that is identified (by listing or characteristic) and regulated (or the
clean-up of which can be required) by any federal, state or local
statute, ordinance, rule or regulation intended to protect the
environment or the public health or welfare, including but not limited to
the statutes, ordinances, rules or regulations relating to clean air,
clean water, hazardous and solid waste disposal, safe
drinking water, endangered species, occupational safety and health, oil
spill prevention, groundwater protection, and toxic substances control.
1.46"Restricted Stock" shall have the meaning given to such term in
Section 3.1.2. Such Restricted Stock is stock which is not registered
under the Securities Act of 1933 or any state securities laws and is
subject to, among other applicable laws, rules and regulations, Rule 144
of the Securities and Exchange Commission.
1.47"Seller" shall have the meaning given to such term in the preamble of
this Agreement.
1.48"Seller General Liabilities" shall have the meaning given to such
term in Section 14.2.
1.49"Seller Indemnified Party" shall have the meaning given to such term
in Section 14.3.
1.50"Seller's Note" shall have the meaning given to such term in Section
4.2 (iii).
1.51"Taxes" shall mean all taxes, dues, charges, fees, levies or other
assessment imposed by any taxing authority, including, without
limitation, income, gross receipts, value added, excise, withholding,
<PAGE>
personal property, real estate, sale, use, ad valorem, license, lease,
service, severance, stamp, transfer, payroll, employment, customs,
duties, alternative, add-on minimum, estimated and franchise
taxes (including any interest, penalties or additions attributable to or
imposed on or with respect to any such assessment).
ARTICLE II
TRANSFER OF ASSETS AND PROPERTIES
2.lPurchased Assets. Subject to the terms and conditions of this
Agreement, Seller shall sell and convey to Purchaser, free and clear of
all Encumbrances whatsoever, and Purchaser shall purchase from Seller,
the Business as a going concern and all of Seller's right, title and
interest in and to the assets, properties and rights of every kind and
description, real, personal and mixed, tangible and intangible, wherever
situated constituting or used in the Business
(the "Purchased Assets") as the same shall exist on the Closing Date
(other than the Excluded Assets), including, without limitation, the
following:
2.1.1Real Property Leased. All of Seller's interest, as lessee, in the
Real Property Leased and all of Seller's right, title, claim and interest
in and to the Lease Agreement;
2.1.2Equipment, Machinery and Other Tangible Personal Property. All
machinery, equipment, leasehold improvements, trucks, automobiles,
supplies, office furniture and office equipment, computing and
telecommunications equipment and
other items of personal property that are owned by Seller in connection
with the Business, including those described in Schedule 2.1.2 hereto;
2.1.3Inventory. All Closing Inventory;
2.1.4Cash and Cash Equivalents. All right, title and interest of Seller
in and to all cash and cash equivalents on hand, in bank accounts or
being held by any other Person (including, without limitation, the
security deposit described in the Lease Agreement) on the Closing Date;
2.1.5Contracts Relating to the Business. All of the interest of Seller in
all contracts, leases of machinery, equipment and other personal
property, sale orders, purchase orders, guarantees, commitments,
instruments and all other agreements relating to the acquisition or
ownership by Seller of any of the Purchased Assets or the operation of
the Business, including those listed in Schedule 2.1.5 hereto (except the
Employment Contracts shown thereon which are Excluded Assets) and those
not required to be listed on Schedule 2.1.5 by reason
of the nature thereof and the amount of the commitment thereunder or
value thereof;
2.1.6Customer Lists, Sales and Marketing Materials. All customer lists,
sales data, catalogs, brochures, suppliers' names, mailing lists, art
work, photographs and advertising material that relate in any way to the
Business, whether in electronic form or otherwise;
2.1.7Permits, Licenses. All of Seller's interest in governmental permits,
<PAGE>
licenses, registrations, orders and approvals relating to the Business,
including those listed in Schedule 2.1.7 hereto, to the extent such
permits, licenses, registrations, orders and approvals are transferable
to Purchaser;
2.1.8Trade Secrets. All trade secrets, secret processes and procedures,
engineering, production, assembly, design, installation, other technical
drawings and specifications, working notes and memos, market studies,
consultants reports, technical and laboratory data, competitive samples,
engineering prototypes, and all similar property of any nature, tangible
or intangible, of Seller relating to the Business;
2.1.9Intellectual Property. All right, title and interest of Seller in
the patents, trademarks, trademark registrations, trade names, service
marks, copyrights and copyright registrations described in Schedule
2.1.9;
2.1.10 Property, Personnel and Accounting Records. All other records of
Seller relating to the Business, including property records and copies of
personnel records of Employees who become employees of Purchaser;
2.1.11 Goodwill. All right, title and interest of Seller in and to the
goodwill incident to the Business;
2.1.12 Name; Telephone and Facsimile Numbers; E-Mail Addresses. All
right, title and interest of Seller in and to Seller's name, telephone
and facsimile numbers of the Business, and Seller's E-mail addresses for
the Business;
2.1.13 Accounts Receivable. All Accounts Receivable existing at the
Closing Date;
2.1.14 Prepaid Expenses. All Prepaid Expenses of, or for the benefit of,
the Business at the Closing Date including those described in Schedule
2.1.14, to the extent the benefits thereof are transferable to Purchaser.
2.1.15 Computer Software. All computer applications software, owned or
licensed, whether for general business usage (e.g., accounting, word
processing, graphics, spreadsheet analysis, etc.) or specific,
unique-to-the-business usage (e.g., order processing, process control,
shipping, etc.) and all computer operating, security or programming
software, owned or licensed by Seller; and 2.1.16 Other Intangible
Assets. All other assets (including all causes of action,
rights of action, contract rights and warranty and product liability
claims against third parties) relating to the Purchased Assets or the
Business.
2.2Excluded Assets. Notwithstanding Section 2.1, the following assets
(collectively, the "Excluded Assets") shall be excluded from this
Agreement, and shall not be assigned or transferred to Purchaser:
2.2.1Any insurance policies maintained by Seller with respect to the
Business;
<PAGE>
2.2.2The consideration paid to Seller pursuant to this Agreement;
2.2.3Assets constituting any pension or other funds for the benefit of
Employees;
2.2.4Seller's corporate minute books and stock books;
2.2.5Any contracts, agreements, commitments or undertakings of the Seller
with or for the benefit of any Employee or former employee of the Seller;
2.2.6The tangible personal property of certain stockholders and vendors
of the Seller set forth and identified on Schedule 2.2.6;
2.2.7Any claims and rights against third parties (including, without
limitation, insurance carriers), to the extent they relate to liabilities
or obligations that are not assumed by Purchaser hereunder (except to the
extent Purchaser shall have incurred costs and expenses with respect to
such claims and rights); and
2.2.8Claims for refunds of Taxes and other governmental charges to the
extent such refunds relate to periods ending on or prior to the Closing.
ARTICLE III
CONSIDERATION
3.1Consideration for Purchased Assets.
3.1.1The aggregate monetary consideration to be paid by Purchaser to
Seller for the Purchased Assets (the "Purchase Price") shall be Six
Hundred Thousand ($600,000.00), Four Hundred Thousand Dollars
($400,000.00) Dollars of which shall be in cash; and
3.1.2Two Hundred Thousand ($200,000.00) Dollars of which shall consist of
thirty-seven thousand one hundred twelve (37,112) shares of fully paid
and non-assessable restricted common stock (the "Restricted Stock") of
Purchaser's Affiliate, EMCEE Broadcast Products, Inc. ("EMCEE"), based on
the agreed upon per share value thereof of $5.389.
3.1.3As additional consideration, Purchaser also shall assume the Assumed
Liabilities.
3.2Payment of Consideration. Subject to the terms and conditions of this
Agreement, at the Closing, Purchaser shall deliver to Seller Four Hundred
Thousand ($400,000.00) Dollars in immediately available funds. The
Restricted Stock shall be delivered, free and clear of all Encumbrances,
to the Seller on April 3, 2001; provided, however, that if the value of
the Restricted Stock on April 3, 2001 is less than One Hundred Thousand
($100,000.00) Dollars, Seller shall have the right, exercisable only in
writing to Purchaser, to accept the sum of One Hundred Thousand
($100,000.00) Dollars in lieu of the Restricted Stock.
For purposes of the immediately preceding sentence, the value of the
Restricted Stock on April 3, 2001 shall be determined by calculating the
average of the median price of such stock at the close of each of the
five (5) trading days immediately preceding April 3, 2001, as quoted on
<PAGE>
the NASDAQ National Market. The
Restricted Stock and the One Hundred Thousand ($100,000.00) Dollars
aforementioned, together with a Stock Power executed in blank by the
Seller in favor of EMCEE in the event such One Hundred Thousand
($100,000.00) Dollars is accepted by the Seller in lieu of the Restricted
Stock, shall be held and kept pursuant to the terms and conditions of the
Escrow Agreement set forth on Exhibit 3.2 hereto (the "Escrow Agreement")
or such other escrow agreement as shall be acceptable to the escrow agent
named therein.
3.3Allocation of Purchase Price. The Parties agree that the Purchase
Price shall be allocated among the Purchased Assets as set forth on
Exhibit 3.3 hereto. Each Party agrees not to assert, in connection with
any tax return, tax audit or similar proceeding, any allocation of the
Purchase Price that differs from that set forth on Exhibit 3.3.
3.4Certain Taxes. Seller shall bear and be responsible for payment of, or
reimbursement to Purchaser for, all Taxes that are or may be imposed by
any government or political subdivision thereof and that are payable or
arise as a result of this Agreement, or any transfer pursuant to this
Agreement or any Ancillary Agreement, notwithstanding the Party upon
which such Taxes are actually imposed.
ARTICLE IV
ASSUMPTION OF LIABILITIES; EMPLOYEE MATTERS
4.1General Limitation on Assumption of Liabilities. Except as otherwise
provided in Sections 4.2 and 4.3 below, Seller shall transfer the
Purchased Assets to Purchaser free and clear of all Encumbrances, and
without any assumption of liabilities and obligations, and Purchaser
shall not, by virtue of its purchase of the Purchased Assets, assume or
become responsible for any liabilities or obligations of Seller or any
other Person. For purposes of this Article IV the phrase "liabilities and
obligations" shall include, without limitation, any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured.
4.2Assumed Liabilities and Obligations. On the Closing Date, Purchaser
shall acquire the Purchased Assets subject only to, and shall undertake,
assume, perform and otherwise pay, satisfy and discharge, and hold Seller
harmless from the following liabilities and obligations, excluding any
liabilities and obligations to Affiliates of Seller (collectively, the
"Assumed Liabilities"):
(i)all obligations of Seller accruing subsequent to the Closing Date
under the contracts, leases, agreements, orders, guarantees and
commitments contemplated by Section 2.1.5, including, without limitation,
those set forth in Schedule 2.1.5, provided that the rights thereunder
have been duly and effectively assigned to Purchaser;
(ii)all obligations of Seller accruing after the Closing Date under the
permits and licenses described in Section 2.1.7, provided that the rights
thereunder have been duly and effectively assigned to Purchaser;
<PAGE>
(iii)the Payables and Accrued Expenses reflected on the books of seller
at the Closing Date; provided, however, that in no event shall Purchaser
assume Payables and Accrued Expenses exceeding, in the aggregate, Two
Hundred Thousand ($200,000.00) Dollars, exclusive of the amounts then
owing under a certain Promissory Note from Seller to Purchaser dated
February 14, 2000 in the original principal sum not to exceed Two Hundred
Thousand ($200,000.00) Dollars ("Seller's Note"); and
(iv)All obligations of Seller accruing after the Closing Date under the
Lease Agreement for the Real Property Leased, dated the first day of
December, 1998, between the Seller, as tenant, and William Urban
Hillenbrand and Connie S. Hillenbrand, as partners of Hillenbrand Bros.
Farm (a general partnership), as landlords (the "Lease Agreement").
4.3Offer of Employment. Purchaser shall offer employment on and as of the
Closing Date, on an at-will basis, to all Employees actively at work in
substantially similar jobs, at substantially the same base salaries or
wages and benefits as were paid or provided by Seller immediately prior
to the Closing Date. Notwithstanding the foregoing, as a condition
precedent to such employment for Donald Adams, Wayne McMahon and Carl
Jacobson, and as a condition precedent to the Purchaser's obligations to
consummate the transactions contemplated hereby,
each such individual must execute an Employment Agreement in form and
content as set forth on Exhibit 4.3 hereto (the "Employment Agreement").
4.4Vacation Liability. Purchaser shall assume liability for the vacation
entitlement that each Employee who becomes an employee of Purchaser has
accrued as of the Closing Date. Purchaser shall pay each such Employee's
wages or salary during his or her vacation entitlement from Purchaser,
when taken.
4.5Other Employee Benefits. Seller agrees that, with respect to claims
for workers' compensation and all claims under Seller's employee benefit
programs by persons working for the Business arising out of events
occurring prior to the Closing, whether reported or unreported as of the
Closing and whether insured or uninsured (including, but not limited to,
workers' compensation, life insurance, medical and disability programs),
Seller shall, at its own expense, honor or cause its insurance carriers
to honor such claims in accordance with the terms
and conditions of such programs or applicable workers' compensation
statutes. Without limiting the scope of the preceding sentence, Seller
shall be responsible for any and all claims and liabilities arising out
of or relating to (i) its employment of the Employees, (ii) the
termination by Seller of such the employment of any such Employee and
(iii) the provision of any employee benefits to such Employees (and their
beneficiaries and eligible dependents) attributable to their employment
with, or their participation in any plans or programs maintained or
contributed to by, Seller or any of its Affiliates.
4.6WARN Act. Not applicable.
<PAGE>
ARTICLE V
CLOSING
5.1Time; Location. Subject to the conditions contained herein, the
Closing shall
be held on the Closing Date at 9:30 o'clock A.M., local time, at the
offices of
George G. Gardner, Esquire, 7415 Burlington Pike, Suite B, Florence,
Kentucky
41042, or such other time or place as the Parties shall mutually agree in
writing.
5.2Documents. At the Closing, Seller shall execute and deliver the
following
instruments of transfer and assignment:
5.2.1Duly executed Assignment of Lease Agreement substantially in the
form of
Exhibit 5.2.1 hereto, assigning and transferring the Lease Agreement and
good and
marketable leasehold title to the Real Property Leased, and a Memorandum
of
Lease, in recordable form and in form and content reasonably acceptable
to the
Purchaser, to provide constructive notice of Purchaser's rights under the
Lease
Agreement on and after the Closing Date;
5.2.2A Bill of Sale and an Assignment and Assumption Agreement, both
substantially in the form of Exhibit 5.2.2 hereto, transferring to
Purchaser good
and indefeasible title to all of the tangible personal property included
in the
Purchased Assets, subject only to the Assumed Liabilities, and assigning
to
Purchaser all of Seller's right, title and interest in each of the
contracts,
licenses and other agreements included in the Purchased Assets, together
with all
consents of third parties that Seller must obtain in order to make each
such
assignment effective as to such third parties;
5.2.3An Assignment of Rights in Business Name and Business Telephone
Number,
Business Facsimile Numbers and E-Mail Address substantially in the form
of
Exhibit 5.2.3 hereto, transferring to Purchaser good and indefeasible
title to
Seller's name and the Business telephone and facsimile numbers and E-mail
addresses;
<PAGE>
5.2.4Certificates of title to all vehicles included in the Purchased
Assets with
assignments to Purchaser; and
5.2.5Such additional instruments of conveyance and transfer as Purchaser
may
reasonably require in order to more effectively vest in it, and put it in
possession of, the Purchased Assets.
5.3Reasonable Steps. Prior to the Closing Date, Seller shall take such
reasonable
steps as may be necessary or appropriate so that on the Closing Date,
Purchaser
shall be placed in actual possession and control of all of the Purchased
Assets.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
6.1Organization, Good Standing and Power. Seller is a corporation duly
organized,
validly existing an in good standing under the laws of Kentucky, is duly
authorized to conduct business in all foreign jurisdictions in which it
currently
conducts business, and has all requisite corporate power and authority to
execute
and deliver this Agreement and the Ancillary Agreements, to consummate
the
transactions contemplated hereby and thereby and to perform all the terms
and
conditions hereof and thereof to be performed by it.
6.2Authorization of Agreement and Enforceability. Seller has taken all
necessary
corporate action to authorize the execution and delivery of this
Agreement and
the Ancillary Agreements, the performance by it of all terms and
conditions
hereof and thereof to be performed by it and the consummation of the
transactions
contemplated hereby and thereby. This Agreement constitutes, and the
Ancillary
Agreements to which Seller is a party, upon Seller's execution and
delivery
thereof, will constitute, the legal, valid and binding obligations of
Seller,
enforceable in accordance with their terms except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium or
other
similar laws presently or hereafter in effect relating to or affecting
the
enforcement of creditors' rights generally and by general principles of
equity
(regardless of whether enforcement is considered in a proceeding in
<PAGE>
equity or at law).
6.3No Violation; Consents. The execution, delivery and performance by
Seller of this Agreement and the Ancillary Agreements, and the
consummation of the
transactions contemplated hereby and thereby will not (with or without
the giving
of notice or the lapse of time, or both) (i) violate any provision of the
Articles of Incorporation or bylaws of Seller, (ii) violate, or, except
as required by the Permits referred to in Section 6.11 hereof (as
disclosed on Schedule 2.1.7), require any consent, authorization or
approval of, or exemption by, or filing under any provision of any law,
statute, rule or regulation to which Seller, the Business or the
Purchased Assets are subject, (iii) violate any judgment, order, writ or
decree of any court applicable to Seller, the Business or the Purchased
Assets, (iv) except for such consents or approvals as are required by the
contracts referred to in Section 6.10 hereof, conflict with,
result in a breach of, constitute a default under, or accelerate or
permit the acceleration of the performance required by, or require any
consent, authorization or approval under any agreement, contract,
commitment, lease or other instrument, document or undertaking to which
Seller is a party or any of the Purchased Assets is bound or (v) result
in the creation or imposition of any Encumbrance upon the Purchased
Assets.
6.4Financial Statements. Seller has delivered to Purchaser true and
complete copies of the Seller prepared balance sheet of the Business at
November 30, 1999, and true and complete copies of the balance sheets of
the Business at December 31, 1998, 1997 and 1996 and the related
statements of income and cash flows,
reviewed by Morris & Dressler, independent public accountants. The
foregoing
financial statements have been prepared from the books and records of
Seller in
accordance with GAAP consistently applied throughout the periods involved
except
as may be noted therein. Such financial statements, including the related
notes,
are true and correct and fairly present the financial position of the
Business
at the dates indicated and the results of operations and cash flows of
the
Business for the periods then ended in accordance with GAAP. References
in this
Agreement to the "Balance Sheet" shall mean the balance sheet of the
Business as
of November 30, 1999 referred to above, and references in this Agreement
to the
"Balance Sheet Date" shall be deemed to refer to November 30, 1999.
6.5Accounts Receivable. All Accounts Receivable as set forth on the
Balance Sheet
(i) have or will have arisen only in the ordinary course of business
consistent
with past practice for goods actually sold and delivered or services
<PAGE> actually performed and (ii) are or will be collectible in full at
the recorded amounts thereof (subject to no defenses, set offs or
counterclaims) in the ordinary course of business (without resort to
litigation or assignment to a collection agency) no later than thirty
(30) days after the Closing Date, net of any
allowance for bad debts reflected on the Balance Sheet.
6.6Inventory. The Inventory as set forth on the Balance Sheet was, and
the Closing Inventory will be, acquired and maintained in accordance with
regular business practices of the Business, consists(and, as to the
Closing Inventory, will consist) of new and unused items of a quality and
quantity useable or saleable in the ordinary course of business
consistent with past practice, and
is (and, as to the Closing Inventory, will be) valued in accordance with
GAAP
consistently applied and with respect to Inventory intended for sale, was
(and,
as to the Closing Inventory, will be) saleable at prices at least equal
to the
value thereof on the books of Seller.
6.7Absence of Certain Changes or Events. Except as set forth in Schedule
6.7 hereto, since November 30, 1999, in connection with the Business,
Seller has not:
6.7.1Amended in any respect or terminated the Lease Agreement or any
contract or other document described in Section 2.1.5, other than in the
ordinary course of business consistent with past practice;
6.7.2Suffered the occurrence of any events that, individually or in the
aggregate, have had, or could reasonably be expected to have, a material
adverse effect on the Purchased Assets or the financial position or
results of operations of the Business;
6.7.3Incurred any damage or destruction having a material adverse effect
on the Purchased Assets or the results of operations of the Business by
fire, storm, or similar casualty, whether or not covered by insurance;
6.7.4Sold, transferred, replaced or leased any of the Purchased Assets or
provided any Inventory or services at a discount, except for transactions
in the ordinary course of business consistent with past practice;
6.7.5Waived or released any material rights with respect to the Purchased
Assets or the Business;
6.7.6Transferred or granted any rights to any Proprietary Rights;
6.7.7Entered into any transaction or made any commitments (for capital
expenditures or otherwise) other than in the ordinary course of business
consistent with past practice;
6.7.8Changed its methods of accounting;
6.7.9Increased the compensation or benefits of Employees; or
6.7.10 Materially altered its conduct in its relations with suppliers or
customers.
<PAGE>
6.8Title to Properties; Absence of Liens and Encumbrances. Seller owns
and will transfer to Purchaser at the Closing good, marketable and
indefeasible title to
all of the Purchased Assets, including without limitation the properties
and assets reflected on the Balance Sheet (except as disclosed in
Schedule 6.8 or except as sold or otherwise disposed of by Seller after
the Balance Sheet Date in the ordinary course of business consistent with
past practice), free and clear of all Encumbrances. The Lease Agreement
covering the Real Property Leased is in full force and effect and
constitutes the legal, valid and binding obligation of
the lessor thereunder, enforceable in accordance with its terms, except
to the extent that enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereinafter in effect
relating to or affecting the enforcement of creditors' rights generally
and by general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). All buildings,
structures, improvements and fixtures located on the
Real Property are located wholly within the boundaries thereof and do not
encroach upon the property of any other Person.
6.9Proprietary Rights.
6.9.1Schedule 2.1.9 hereto sets forth a correct and complete list of all
patents, logos, trademarks, trade names, service marks, copyrights and
applications or registrations therefor used in and material to the
Business, and Schedule 6.9 sets forth a correct list of all inventions,
intellectual property and trade secret assets used in and material to the
Business (collectively, the "Proprietary Rights").
6.9.2Except as disclosed in Schedule 6.9: (i) Seller owns or possesses
adequate licenses or other valid right to use (without the making of any
payment to others or the obligation or grant rights to others in
exchange) all the Proprietary Rights; (ii) the Proprietary Rights
included in the Purchased Assets constitute
all such rights necessary to conduct the Business in accordance with past
practice and are being conveyed to Purchaser together with the other
Purchased Assets; (iii) the validity of the Proprietary Rights and the
rights therein of Seller have not been questioned in any litigation to
which Seller is a party, nor, to Seller's knowledge, is any such
litigation threatened; and (iv) the conduct of the Business does not
conflict with patent rights, licenses, trademark
rights, trade name rights, copyrights or other intellectual property
rights of others.
6.9.3Except as disclosed in Schedule 6.9 hereto, Seller does not have
knowledge that any material use of any Proprietary Rights owned by Seller
has heretofore been, or is now being, made by any Person other than
Seller, and Seller has no knowledge of any infringement of any
Proprietary Rights owned or licensed by Seller. No present or former
director, officer, employee or consultant of Seller or any Affiliate of
Seller has any interest in any of the Proprietary Rights.
6.10Contracts and Commitments. Except as listed and described on Schedule
2.1.5 hereto, Seller is not with respect to the Purchased Assets or the
Business a party to any written or oral:
<PAGE>
(i)agreement, contract or commitment for the future purchase of, or
payment for,
supplies or products, or for the performance of services by another
party,
involving in any one case $2,500 or more;
(ii)agreement, contract or commitment to sell or supply products or to
perform
services, involving in any one case $2,500 or more;
(iii)agreement, contract or commitment continuing over a period of more
than six
months from the date hereof or exceeding $2,500 in value;
(iv)representative, sales agency, dealer or distributor agreement,
contract or
commitment;
(v)lease under which Seller is either lessor or lessee other than the
Lease Agreement;
(vi)note, debenture, bond, conditional sale agreement, equipment trust
agreement, letter of credit agreement, loan agreement or other contract
or commitment for
the borrowing or lending of money (including without limitation loans to
or from employees) or guarantee, pledge or undertaking of the
indebtedness of any other Person;
(vii)agreement, contract or commitment for any charitable or political
contribution;
(viii)agreement, contract or commitment providing or relating in any way
to a product warranty (limited or full);
(ix)agreement, contract or commitment limiting or restraining Seller or
any successor or assign from engaging or competing in any lines of
business with any
Person;
(x)license, franchise, distributorship or other agreement, including
those that relate in whole or in part to any patent, trademark, trade
name, service mark or copyright or to any ideas, technical assistance or
other know-how of or used by the Business; or
(xi)any other material agreement, contract or commitment not made in the
ordinary course of business consistent with past practice.
Except as may be disclosed on Schedule 2.1.5 hereto, (i) each of the
agreements, contracts, commitments, leases and other instruments,
documents and undertakings listed on Schedule 2.1.5 is valid and
enforceable in accordance with its terms,
the parties thereto are in compliance with the provisions thereof, no
party is in default in the performance, observance or fulfillment of any
material obligation, covenant or condition contained therein, and no
<PAGE>
event has occurred that with or without the giving of notice or lapse of
time, or both, would constitute a default thereunder; (ii) no such
agreement, contract, commitment, lease or other instrument, document or
undertaking, in the reasonable opinion of Seller, contains any
contractual requirement with which there is a reasonable
likelihood Seller or any other party thereto will be unable to comply;
(iii) no advance payments have been received by Seller by or on behalf of
any party to any of the agreements, contracts, commitments, leases and
other instruments listed on Schedule 2.1.5 for services to be rendered or
products to be delivered to such
party after the Closing Date; and (iv) no consent or approval of any
party to any agreement, contract, commitment, lease or other instrument,
document
or undertaking listed on Schedule 2.1.5 is required for the execution of
this
Agreement or the consummation of the transactions contemplated hereby.
6.11Permits, Licenses. Seller has all permits, licenses, registrations,
orders and approvals of federal, state or local government or regulatory
bodies that are required to operate the Business (including without
limitation those required under any Environmental Law) (collectively, the
"Permits") and, except as described in Schedule 6.11, Seller is in
compliance with the terms and conditions of the
Permits. Schedule 2.1.7 hereto sets forth a correct and complete list of
all Permits, each one of which is in full force and effect. To Seller's,
knowledge, no suspension or cancellation of any of the Permits is
threatened and no cause exists for such suspension or cancellation. Any
Permits that cannot be transferred or require consent or approval for the
transfer thereof are specifically identified on Schedule 2.1.7 hereto as
nontransferable or requiring such consent or approval.
6.12Compliance with Laws. Except as described in Schedule 6.12 hereto,
Seller has
at all times conducted, and is presently conducting, the Business so as
to comply
with all laws, statutes, ordinances, rules and regulations applicable to
the
conduct or operation of the Business or the ownership or use of the
Purchased
Assets.
6.13Legal Proceedings. Except as described in Schedule 6.13 hereto, there
is no
claim, action, suit, proceeding, investigation or inquiry pending before
any
federal, state or other court or governmental or administrative agency
or, to
<PAGE>
Seller's knowledge, threatened against Seller with respect to the
Business or any
of the Purchased Assets, or relating to the transactions contemplated by
this Agreement, nor does Seller know of any basis for any such claim,
action, suit, proceeding, investigation, or inquiry. Except as set forth
on Schedule 6.13 hereto, none of the matters set forth thereon will have
a material adverse effect on the Business. Except as set forth on
<PAGE>
Schedule 6.13 hereto, Seller is not a party to or subject to the
provisions of any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental, regulatory or
administrative official, body or authority that relates to the Purchased
Assets or the Business or that might affect the transactions contemplated
by this Agreement.
6.14Absence of Undisclosed Liabilities. Except as set forth in Schedule
6.14, Seller has no liabilities or obligations (as defined in Section
4.1) relating to the Business except (i) those liabilities and
obligations set forth on the Balance Sheet and not heretofore paid or
discharged; (ii) those liabilities and
obligations arising in the ordinary course of business consistent with
past practice under any agreement, contract or commitment specifically
disclosed on Schedule 2.1.5 hereto or not required to be disclosed
because of the term or amount involved; and (iii) those liabilities and
obligations incurred in the ordinary course of business consistent with
past practice since the Balance Sheet
Date.
6.15Books and Records. All books of account and other financial records
of Seller directly relating to the Business (the "Books and Records") are
complete and correct and have been made available to Purchaser. All of
the Books and Records have been prepared and maintained in accordance
with good business practices and, where applicable, in conformity with
GAAP (except as otherwise stated therein)
and in compliance in all material respects with applicable laws,
regulations and other requirements.
6.16Employees. Schedule 1.17 sets forth a true and correct list of all
individuals employed by Seller in the conduct of the Business and their
present position and rate of compensation and service credited for
purposes of vesting and eligibility under each Payroll Practice/Employee
Arrangement.
6.17Labor Disputes. Except as described in Schedule 6.17 hereto, from the
Seller's inception, there have been no discrimination complaints nor any
other kind of employment or labor related disputes against Seller in
connection with the Business pending before or, to Seller's knowledge,
threatened before any federal, state or local court or agency, and, to
Seller's knowledge, no material dispute respecting minimum wage or
overtime claims or other conditions or terms of employment exists. The
Business has not experienced any material labor
disputes or any material work stoppage due to labor disagreements. With
respect to the Business and except to the extent set forth in Schedule
6.17: there is no
unfair labor practice charge or complaint against Seller pending or, to
Seller's
knowledge, threatened, before the National Labor Relations Board; (ii)
there is
no labor strike, slowdown or stoppage pending or, to Seller's knowledge,
threatened against or affecting Seller; and (iii) no question concerning
representation has been raised or, to Seller's knowledge, is threatened
respecting the Employees.
<PAGE>
6.18Payroll Practice/Employee Arrangements.
6.18.1 Schedule 6.18 contains a complete list of each employee benefit
plan
subject to ERISA, and/or holiday, vacation or other bonus practice or any
other
employee pay practice, arrangement, agreement or commitment (the "Payroll
Practice/Employee Arrangement") and maintained by or with respect to
which Seller
has any liability or obligation, whether actual or contingent, with
respect to
Employees or their respective beneficiaries.
6.18.2 Seller has not taken any action that may result in Purchaser, or
subsidiary, being a party to, or bound by, any ERISA Plan, and Purchaser
shall have no liability under, or be subject to any liability on account
of, any ERISA Plan or Payroll Practice/Employee Arrangement following the
consummation of the transactions contemplated hereby.
6.18.3 No ERISA Plan or other employee arrangement has provided for the
payment of retiree benefits by Purchaser.
6.19No Finder. Seller has not taken any action that would give to any
Person a
right to a finder's fee or any type of brokerage commission in relation
to, or
in connection with, the transactions contemplated by this Agreement.
6.20Interest in Business. Seller has not granted, and there is not
outstanding,
any option, right, agreement or other obligation pursuant to which any
Person
could claim a right to acquire in any way all or any part of, or interest
in, the
Business.
6.21Condition of Assets. All buildings, structures, improvements,
equipment that
are part of the Purchased Assets are structurally sound and, together
with all
other tangible personal property constituting the Purchased Assets, are
in good
operating condition and repair and are usable in the conduct of the
Business
consistent with past practice and conform to all applicable laws and
regulations
relating to their construction, use and operation.
6.22Affiliate Transactions. Schedule 6.22 hereto sets forth a summary of
all
purchases of goods or services by Affiliates of Seller for the three
years ended
December 31, 1999. Except as set forth in Schedule 6.22 hereto, Seller
and its Affiliates provide no services or products to the Business.
<PAGE>
6.23Environmental Matters.
6.23.1 Except as set forth in Schedule 6.23 hereto, Seller has not
received any
notice relating to the Business or the Real Property alleging any
violation of
any Environmental Law or any written request for information from any
governmental agency or other Person pursuant to any Environmental Law,
and Seller
is, with respect to the Business and the Real Property, in compliance
with all
applicable Environmental Laws;
6.23.2 Except as set forth in Schedule 6.23 hereto, there are no
Regulated
Substances released by Seller or, to Seller's knowledge, any other Person
on or
beneath the Real Property in quantities or concentrations that could give
rise
to obligations, responsibilities or liabilities of Seller or Purchaser
under any
Environmental Law;
6.23.3 Except as set forth in Schedule 6.23 hereto, Seller has not
received any
notice or order from any governmental agency or private or public entity
in
connection with the Business advising it that Seller is responsible for
or
potentially responsible for remediation or paying for the cost of
investigation
or remediation of any Regulated Substance, and Seller has not entered
into any
agreements pertaining thereto;
6.23.4 Except as set forth in Schedule 6.23 hereto, to Seller's
knowledge, the
Real Property does not contain any: (i) underground storage tanks; (ii)
underground injection wells; (iii) septic tanks in which process
wastewater or
any Regulated Substances have been disposed; (iv) asbestos; (v) equipment
using
PCBs; or (vi) drums buried in the ground; and
6.23.5 Schedule 6.23 hereto identifies all environmental studies,
analyses or
reports in the possession of Seller or its Affiliates relating to the
Real
Property, and true and complete copies thereof have been delivered to
Purchaser.
6.24Insurance. Schedule 6.24 sets forth a complete list of all insurance
policies maintained by Seller or its Affiliates with respect to the
Business for the past five years. Schedule 6.24 also sets forth a true
and correct summary of the loss
<PAGE>
experience for the past five years under each such policy.
6.25No Significant Items Excluded. Except for Excluded Assets, there are
no assets or properties of Seller or agreements, contract or commitments
to which Seller is a party not disclosed herein that relate to the
Business or the operations thereof.
6.26Completeness and Accuracy. All information set forth on any Schedule
hereto
is, and all information furnished by Seller pursuant to Section 8.1.9
hereof will
be, true, correct and complete. No representation or warranty of Seller
contained
in this Agreement contains or will contain any untrue statement of
material fact,
or omits or will omit to state any material fact necessary to make the
statements
made therein, in light of the circumstances under which they were made,
not
misleading. All contracts, permits and other documents and instruments
furnished
or made available to Purchaser by Seller are or will be true, complete
and
accurate originals or copies of originals and include all amendments,
supplements, waivers and modifications thereto. There is no fact,
development or
threatened development (excluding general economic factors affecting
business in
general) that Seller has not disclosed to Purchaser in this Agreement or
the
Schedules hereto that materially adversely affects or, so far as Seller
can now
foresee, may materially adversely affect, the Business, the Purchased
Assets, or
the prospects or condition (financial or otherwise) of the Business.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
7.1Organization, Good Standing, Power. Purchaser is a corporation duly
organized,
validly existing and in good standing under the laws of Delaware, is duly
authorized to conduct business in all foreign jurisdictions in which it
currently
conducts business, and has all requisite corporate power and authority to
own and
lease the Purchased Assets and to carry on the Business and to execute
and
deliver this Agreement and the Ancillary Agreements to which Purchaser is
a
party, to consummate the transactions contemplated hereby and thereby and
to perform all the terms and conditions hereof and thereof to be
performed by it.
<PAGE>
7.2Authorization of Agreement and Enforceability. Purchaser has taken all
necessary corporate action to authorize the execution and delivery of
this
Agreement and the Ancillary Agreements to which Purchaser is a party, the
performance by it of all terms and conditions hereof and thereof to be
performed
by it and the consummation of the transactions contemplated hereby and
thereby.
This Agreement constitutes, and the Ancillary Agreements, upon
Purchaser's
execution and delivery thereof, will constitute, the legal, valid and
binding
obligations of Purchaser, enforceable in accordance with their terms
except to
the extent that enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws presently or hereafter in effect
relating to
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is considered in
a
proceeding in equity or at law).
7.3No Violations; Consents. The execution, delivery and performance by
Purchaser of this Agreement and the Ancillary Agreements to which
Purchaser is a party and the consummation of the transactions
contemplated hereby and thereby will not
(with or without the giving of notice or the lapse of time, or both) (i)
violate any provision of the charter or bylaws of Purchaser, (ii) violate
or require any consent, authorization or approval of, or exemption by, or
filing under any provision of any law, statute, rule or regulation to
which Purchaser is subject,(iii) violate any judgment, order, writ or
decree of any court applicable to
Purchaser, (iv) conflict with, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or
approval under any agreement, contract, commitment, lease or other
instrument, document or undertaking to which Purchaser is a party or any
of its assets is bound or (v) result in the creation or
imposition of any Encumbrance upon its assets.
7.4Legal Proceedings. There is no claim, action, suit, proceeding,
investigation or inquiry pending before any federal, state or other court
or governmental or administrative agency or, to Purchaser's knowledge,
threatened against Purchaser or any of Purchaser's properties, assets,
operations or businesses that might prevent or delay the consummation of
the transactions contemplated hereby.
7.5No Finder. Purchaser has not taken any action which would give to any
Person a right to a finder's fee or any type of brokerage commission in
relation to, or in connection with, the transactions contemplated by this
Agreement.
<PAGE>
ARTICLE VIII
COVENANTS OF SELLER PRIOR TO CLOSING DATE
8.1Required Actions. Between the date of this Agreement and the Closing
Date, Seller covenants that it will, in its conduct of the Business,
except as otherwise agreed by Purchaser in writing.
8.1.1Access to Information. Give to Purchaser and its counsel,
accountants, consultants and other representatives, at their sole expense
and risk, reasonable access, during normal business hours, to such of the
properties, books, accounts, contracts and records of Seller as are
relevant to the Purchased Assets and the Business, and furnish or
otherwise make available to Purchaser all such information concerning the
Purchased Assets and the Business as Purchaser may
reasonably request, provided that the confidentiality of any data or
information so acquired shall be maintained as confidential by Purchaser
and its representatives in accordance with Section 9.1.1;
8.1.2Conduct of Business. Operate the Business only in the usual, regular
and ordinary manner as such Business was conducted prior to the date
hereof and, to the extent consistent with such operation, use its best
efforts until the Closing Date to (i) preserve and keep intact the
Business, (ii) keep available the services of the Employees and (iii)
preserve its relationships with customers,
suppliers and others having business dealings with Seller in connection
with the Business;
8.1.3Maintenance of Properties. Maintain the Purchased Assets, whether
owned or leased, in good repair, order and condition in accordance with
manufacturers' instructions and Seller's past practices, reasonable wear
and tear excepted;
8.1.4Maintenance of Books and Records. Maintain the Books and Records in
the usual, regular and ordinary manner, on a basis consistent with past
practice;
8.1.5Compliance with Applicable Law. Comply with all laws applicable to
the Purchased Assets and to the conduct of the Business;
8.1.6Performance of Obligations. Perform all the material obligations of
Seller relating to the Purchased Assets and the Business in accordance
with the past practices of Seller;
8.1.7Notice of Material Damage. Give to Purchaser prompt written notice
of any material damage by fire or other casualty upon the Purchased
Assets or the
Business;
8.1.8Advise of Changes. Advise Purchaser promptly in writing of any fact
that, if known at the Closing Date, would have been required to be set
forth or disclosed in or pursuant to this Agreement, or which would
result in the breach in any material respect by Seller of any of its
representations, warranties, covenants or agreements hereunder;
<PAGE>
8.1.9Update Schedules. Promptly disclose to Purchaser any information
contained in the representations and warranties of Seller contained in
Article VI or in the Schedules to this Agreement which is no longer
complete or correct (including furnishing updated financial statements);
provided that no such disclosure shall be deemed to modify, amend or
supplement Seller's representations and warranties;
8.1.10 Pay Employees to Closing Date. Pay all wages, salaries and other
sums due Employees through the close of business on the day prior to the
Closing Date;
8.1.11 Termination. Terminate the employment of all Employees as of the
Closing Date; and
8.1.12 Compliance with Agreement. Not undertake any course of action
inconsistent with satisfaction of the conditions applicable to it set
forth in this Agreement, and use all reasonable efforts to do all such
acts and take all such measures as may be reasonably necessary to comply
with the representations, agreements, conditions and other provisions of
this Agreement.
8.2Prohibited Actions. Between the date of this Agreement and the Closing
Date, in its conduct of the Business, Seller shall not, except as
otherwise agreed by Purchaser in writing:
8.2.1Sale of Purchased Assets. Sell, transfer, assign, lease, encumber or
otherwise dispose of any of the Purchased Assets other than in the
ordinary course of business consistent with past practices;
8.2.2Business Changes. Change in any material respect the character of
the Business;
8.2.3Incurrence of Material Obligations. Incur any material fixed or
contingent obligation or enter into any material agreement, commitment or
other transaction or arrangement that is not in the ordinary course of
business consistent with past practices;
8.2.4Incurrence of Liens. Subject any of the Purchased Assets to any
lien, security interest or other Encumbrance;
8.2.5Change in Employee Compensation and Benefits. Increase the rate of
compensation paid, or pay any bonus, to anyone connected with the
Business, except for those increase or bonuses planned, in the ordinary
course of business
consistent with past practices, or establish or adopt any new pension or
profit-sharing plan, deferred compensation agreement or employee benefit
arrangement of any kind whatsoever covering or affecting Employees;
8.2.6Publicity; Advertisement. Except as required by law, publicize,
advertise
or announce to any third party, except as required pursuant to this
Agreement to obtain the consent of such third party, the entering into of
this Agreement, the terms of this Agreement or the transactions
contemplated hereby;
<PAGE>
8.2.7No Release. Except in the ordinary course of business consistent
with past practices, cancel, release or relinquish any material debts of
or claims against others held by Seller with respect to the Business or
waive any material rights relating to the Business; and
8.2.8No Termination or Modification. Terminate or materially modify any
material lease, contract, governmental license, permit or other
authorization or agreement
affecting the Business or the Purchased Assets or the operation thereof.
ARTICLE IX
COVENANTS OF PURCHASER PRIOR TO CLOSING DATE
9.1Required Actions. Between the date of this Agreement and the Closing
Date,
Purchaser shall, except as otherwise agreed by Seller in writing:
9.1.1Confidentiality. Not publish or disclose and not authorize or permit
any of
its officers, employees, directors, agents or representatives or any
third party
to publish or disclose any trade secrets or other Confidential
Information or any
data or business or financial books, records or other information of or
pertaining to Seller, which have been furnished to Purchaser by Seller or
to
which Purchaser, or any of its officers, employees, directors, agents,
attorneys
or accountants, or any financial institution have had access during any
investigation made in connection with this Agreement and which is not
otherwise
available to Purchaser, except as required by law;
9.1.2Advise of Changes. Advise Seller promptly in writing of any fact
that, if
known at the Closing Date, would have been required to be set forth or
disclosed
in or pursuant to this Agreement, or which would result in the breach by
Purchaser of any of its representations, warranties, covenants or
agreements
hereunder;
9.1.3Compliance with Agreement. Not undertake any course of action
inconsistent
with satisfaction of the conditions applicable to it set forth in this
Agreement,
and Purchaser shall use its best efforts to do all such acts and take all
such
measures as may be reasonably necessary to comply with the
representations,
agreements, conditions and other provisions of this Agreement; and
9.1.4Publicity; Advertisement. Except as required by law, including, but
not limited to, the laws, rules and regulations of the Securities and
<PAGE>
Exchange Commission, not publicize, advertise or announce to any third
party the entering
into of this Agreement, the terms of this Agreement or the transactions
contemplated hereby.
9.2Investigation. Prior to the Closing, Purchaser shall use reasonable
efforts
to conduct its investigation of the Business in such a manner as to
prevent
disruption of relations with the employees, customers and suppliers of
Seller.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder are subject to the fulfillment at
or prior
to the Closing of each of the following conditions:
10.1Accuracy of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement shall have been true in
all
material respects on the date hereof and shall be true in all material
respects
on and as of the Closing Date with the same force and effect as though
made on
and as of the Closing Date.
10.2Performance of Agreement. Seller shall have performed in all material
respects all obligations and agreements and complied in all material
respects
with all covenants and conditions contained in this Agreement to be
performed or
complied with by it at or prior to the Closing Date.
10.3Seller's Certificate. Purchaser shall have received a certificate
from
Seller, dated as of the Closing Date, reasonably satisfactory in form and
substance to Purchaser and its counsel, certifying as to the matters
specified
in Section 10.1 and Section 10.2 hereof. The matters set forth in such
certificate shall constitute representations and warranties of Seller
hereunder.
10.4Secretary's Certificate. Purchaser shall have received a certificate,
dated
the Closing Date, of the Secretary or any Assistant Secretary of Seller
with
respect to the incumbency and specimen signature of each officer or
representative of Seller executing this Agreement, the certificate
referred to
in Section 10.3 and the Ancillary Agreements to which Seller is a party.
10.5Injunction. On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or any order of any nature in effect issued
by a court of competent jurisdiction directing that the transactions
<PAGE>
provided for herein, or any of them, not be consummated as herein
provided and no suit, action, investigation, inquiry or other legal or
administrative proceeding by any governmental body or other Person shall
have been instituted or threatened which the questions of validity or
legality of the transactions contemplated hereby or
which if successfully asserted might otherwise have a material adverse
effect on the conduct of the Business or impose any additional material
financial obligation on, or require the surrender of any material right
by, Purchaser.
10.6Actions and Proceedings. All corporate actions, proceedings,
instruments and
documents required to carry out the transactions contemplated by this
Agreement
or incidental thereto and all other related legal matters shall be
reasonably
satisfactory to counsel for Purchaser, and such counsel shall have been
furnished
with such certified copies of such corporate actions and proceedings and
such
other instruments and documents as it shall have reasonably requested.
10.7Consents. Any third-party and governmental consents, approvals or
authorizations necessary for the conveyance of the Purchased Assets or
valid
consummation of the transactions contemplated hereby shall have been
obtained.
10.8Arrangements with Employees. Substantially all of the Employees shall
have
accepted employment with Purchaser effective on the Closing Date. In
addition,
Purchaser shall have received evidence from Seller, which is acceptable
in all
respects to Purchaser's legal counsel, that all contracts, agreements,
commitments and undertakings of the Seller with or for the benefit of any
Employee or former employee of the Seller have expired or have otherwise
been
terminated without, in either case, any liability to the Purchaser.
10.9Opinion of Counsel. Purchaser shall have received the favorable
opinion of
George G. Gardner, Esquire, counsel for Seller, satisfactory to Purchaser
and its counsel as to the matters set forth in Sections 6.1, 6.2 and 6.3
hereof and to such other matters reasonably required by the Purchaser,
including, but not limited to, that Seller has complied with any and all
laws relating to bulk transfers in connection with the transactions
contemplated hereby (or that such bulk transfer laws are inapplicable to
the transactions contemplated hereby) and that the Seller's use and the
Purchaser's contemplated use of the Real Property
is and shall be in compliance with all applicable zoning, subdivision and
land use laws and ordinances.
10.10Title Insurance. Purchaser shall have received a title insurance
policy issued by a reputable title insurance company selected by
<PAGE>
Purchaser at regular rates insuring its leasehold title to the Real
Property as good and marketable and free of all Encumbrances.
10.11 Environmental Site Assessment. Purchaser shall have received the
results of an environmental site assessment which confirms in all
respects the Seller's representations and warranties herein with respect
to environmental matters.
10.12Employment Agreements. Each of the Employees specified in Section
4.3 hereof shall have executed and delivered their respective Employment
Agreement to the Purchaser.
10.13Escrow Agreement. The Escrow Agreement shall have been duly executed
by all parties thereto and the money, certificates and other documents
described therein shall have been duly deposited as required therein.
10.14Ancillary Documents. All of the Ancillary Documents shall have been
duly executed and delivered by the parties thereto.
10.15Compliance with Bulk Transfer Laws. Evidence satisfactory to
Purchaser's counsel that Seller has complied with any and all laws
relating to bulk transfers in connection with the transactions
contemplated hereby.
10.16Removal of Section 2.2.6 Excluded Assets. Seller shall have removed
from the
Real Property and returned all of the tangible personal property
described in
Section 2.2.6 to the owners thereof and evidence to Purchaser's legal
counsel
that Purchaser has no liability therefor.
10.17Name Change. Seller shall have changed its name to a name which, in
the
reasonable opinion of Purchaser, is not the same as or similar to
Seller's
present name, and Purchaser shall have determined that it is able to
change its
name to Seller's current name in Delaware and Kentucky.
10.18Susan Jacobson. Seller shall provide Purchaser's legal counsel with
evidence
satisfactory to such legal counsel in all respects that Seller has
appropriately
terminated Susan Jacobson from its medical benefits plan and that
Purchaser has
no liability therefor.
ARTICLE XI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller are subject to the fulfillment at or prior to
the Closing of each of the following conditions:
<PAGE>
11.1Accuracy of Representations and Warranties. The representations and
warranties of Purchaser contained in this agreement shall have been true
in all material respects on the date hereof and shall be true in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date.
11.2Performance of Agreement. Purchaser shall have performed in all
material respects all obligations and agreements and complied in all
material respects with all covenants and conditions contained in this
Agreement to be performed or complied with by it at or prior to the
Closing Date.
11.3Purchaser's Certificate. Seller shall have received a certificate
from Purchaser, dated as of the Date, reasonably satisfactory in form and
substance to Seller and its counsel, certifying as to the fulfillment of
all matters specified in Section 11.1 and Section 11.2 hereof. The
matters set forth in such certificate shall constitute representations
and warranties of Purchaser hereunder.
11.4Secretary's Certificate. Seller shall have received a certificate,
dated the Closing Date, of the Secretary or any Assistant Secretary of
Purchaser with respect to the incumbency and specimen signature each
officer or representative of Purchaser executing this Agreement, the
certificate referred to in Section 11.3 and the Ancillary Agreements to
which Purchaser is a party.
11.5Injunction. On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or any order of any nature in effect issued
by a court of competent jurisdiction directing that the transactions
provided for herein, or any of them, not be consummated as herein
provided.
11.6Actions or Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the transactions
contemplated by this Agreement or incidental thereto and all other
related legal matters shall be reasonably satisfactory to counsel for
Seller, and such counsel shall have been furnished
with such certified copies of such corporate actions and proceedings and
such other instruments and documents as it shall have reasonably
requested.
11.7Consents. Any third-party and governmental consents, approvals or
authorizations necessary for the conveyance of the Purchased Assets or
the valid consummation of the transactions contemplated hereby shall have
been obtained.
11.8Opinion of Counsel. Seller shall have received the favorable opinion
of Laputka, Bayless, Ecker & Cohn, P.C., counsel for Purchaser,
satisfactory to Seller and its counsel as to the matters set forth in
Sections 7.1, 7.2 and 7.3 hereof and to such other matters reasonably
required by Seller.
11.9Escrow Agreement. The Escrow Agreement shall have been duly executed
by all parties thereto and the money, certificates and other documents
described therein shall have been duly deposited as required therein.
<PAGE>
11.10Ancillary Documents. All of the Ancillary Documents shall have been
duly executed and delivered by the parties thereto.
ARTICLE XII
OBLIGATIONS AFTER THE CLOSING DATE
12.1Confidentiality. Seller hereby covenants and agrees that, except as
may be required by law, rule or regulation or court order, unless this
Agreement is terminated, it will not at any time reveal, divulge or make
known to any Person (other than Purchaser or its agents or Affiliates)
any information that relates to this Agreement, the transactions
contemplated hereby or the Business (whether
now possessed by Seller or furnished by Purchaser after the Closing
Date), including, but not limited to, customer lists or other customer
information, trade secrets or formulae, marketing plans or proposals,
financial information or any data, written material, records or documents
used by or relating to the Business that are of a confidential nature
(collectively, the "Confidential Information").
12.2Covenant Not to Interfere. Seller covenants and agrees that for a
period of five years after the Closing Date, Seller will not solicit for
employment by Seller or any Affiliate any Person tho is an employee of
the Business as of the Closing Date.
12.3Noncompetition. For a period of three years following the Closing
Date, Seller will not, directly or indirectly, unless acting in
accordance with Purchaser's written consent, own, manage, operate,
finance or participate in the ownership, management, operation or
financing of or permit its name to be used by or in connection with any
business or enterprise engaged in the providing or sale of the services
and/or products provided or sold by the Seller in connection
with the Business in the United States of America. Seller acknowledges
that the provisions of this Section are reasonable and necessary to
protect the interests of Purchaser, that any violation of this Section
will result in an irreparable injury to Purchaser and that damages at law
would not be reasonable or adequate compensation to Purchaser for
violation of this Section and that in addition to any other available
remedies, Purchaser shall be entitled to have the provisions of this
Section specifically enforced by preliminary and permanent injunctive
relief without the necessity of proving actual damages or posting a bond
or other security and to an equitable accounting of all earnings, profits
and other benefits arising out of any violation of this Section. In the
event that the provisions of this Section shall ever be deemed to exceed
the time, geographic, product or other limitations permitted by
applicable law, then the provisions shall be deemed reformed to the
maximum extent permitted by applicable law.
12.4Transition of Employees. From and after the Closing Date, Purchaser
and Seller shall cooperate to ensure an orderly transition of the
Employees who accept employment with Purchaser.
12.5Administrative Assistance by Seller. Except as otherwise agreed,
without cost to Purchaser Seller shall provide such accounting, data
processing and other support services to Purchaser as are reasonably
required in connection with the transfer of the Business to Purchaser for
a period of not more than sixty (60) days following the Closing Date and
<PAGE>
thereafter for an additional period of up to one hundred twenty (120)
days at a reasonable cost to be negotiated. Seller shall
cooperate with Purchaser's auditors in connection with the preparation of
any report or filing required in connection with the transactions
contemplated hereby, such cooperation to be provided by Seller at no cost
to Purchaser.
12.6Further Assurances of Seller. From and after the Closing Date, Seller
shall, at the request of Purchaser, execute, acknowledge and deliver to
Purchaser, without further consideration, all such further assignments,
conveyances, endorsements, deeds, special powers of attorney, consents
and other documents,and take such other action, as Purchaser may
reasonably request (i) to transfer
to and vest in Purchaser, and protect is rights, title and interest in,
all the Purchased Assets and (ii) otherwise to consummate the
transactions contemplated by this Agreement. In addition, from and after
the Closing Date, Seller shall afford Purchaser and its attorneys,
accountants and other representatives access,
during normal business hours, to any books and records relating to the
Business that Seller may retain as may reasonably be required in
connection with the preparation of financial information or tax returns
of Purchaser.
12.7Further Assurances of Purchaser. For a period of seven (7) years from
and after the Closing Date, Purchaser shall afford to Seller and its
attorneys, accountants and other representatives access, during normal
business hours, to such books and records relating to the Business as may
reasonably be required in connection with the preparation of financial
information for periods concluding on or prior to the Closing Date.
Purchaser shall cooperate in all reasonable respects with Seller with
respect to its former interest in the Business and in
connection with financial account closing and reporting and claims and
litigation asserted by or against third parties, including, but not
limited to, making employees available at reasonable times to assist
with, or provide information in connection with financial account closing
and reporting and claims and litigation, provided, that Seller reimburses
Purchaser for its reasonable out-of-pocket expenses (including costs of
employees so assisting) in connection therewith.
12.8Retention of and Access to Records: Cooperation. For a period of not
less than seven (7) years after the Closing Date, Purchaser shall
preserve and retain the corporate, accounting, legal, auditing and other
books and records of the Business (including but not limited to, any
governmental or non-governmental actions, suits, proceedings or
investigations arising out of the conduct of the
business and operations of the Business prior to the Closing Date);
provided, however, that such 7-year period shall be extended in the event
that any action, suit, proceedings or investigation has been commenced or
is pending or threatened
at the termination of such 7-year period and such extension shall
continue until any such action, suit, proceeding or investigation has
been settled through
judgement or otherwise or is no longer pending or threatened.
Notwithstanding the foregoing, Purchaser may discard or destroy any of
such books and records prior to the end of such 7-year period or period
of extension, if applicable, if it has given Seller sixty (60) days'
<PAGE>
prior written notice of its intent to do so and
Seller has not taken possession of such books and records, at its
expense, within such 60-day period. Notwithstanding anything to the
contrary in this Section 12.8, Seller shall retain all tax records of the
Business prepared prior to the Closing Date. Purchaser shall provide
reasonable access to Seller to review any records that Purchaser retains
and to make copies thereof and shall cooperate fully with Seller
(including, without limitation, making available employees to assist
Seller at reasonable rates to be agreed by the Parties) in preparation
and documentation of all necessary financial statements, tax returns and
reports or the resolution of any tax audits, claims, litigation or
disputes concerning Seller's tax liabilities or the Assumed Liabilities.
12.9Accounts Receivable Payment. In the event that either Party hereto at
any time receives any funds from any third party that are properly
payable to the other Party hereto, the Party receiving such funds shall
promptly remit such funds to the Party entitled to such funds.
12.10Contingent Additional Consideration.
12.10.1 As contingent additional consideration for the Purchased Assets,
for the Purchaser's fiscal year 2001 (April 1, 2000 through March 31,
2001), and during that time only, the Purchaser shall establish, and the
Employees specifically named in Section 4.3 hereof (Donald Adams, Wayne
McMahon and Carl Jacobson) shall
have the right to participate in a sales and profit incentive plan in
accordance
with the following:
(i)If, at the end of the Purchaser's fiscal year 2001, the Purchaser's
gross sales, as determined in accordance with GAAP, equal Two Million
($2,000,000.00)Dollars, each such Employee will receive his proportionate
share (Donald Adams: 40%, Wayne McMahon: 30%, Carl Jacobson: 30%) of the
$100,000.00 sales incentive award described in the Memorandum of
Understanding between the Parties first
dated January 26, 2000 (the "MEMORANDUM OF UNDERSTANDING"), sixty (60%)
percent of which shall be payable in cash and the remaining forty (40%)
percent paid in EMCEE Restricted Stock, based on the fair market value
thereof determined by calculating the average of the median price of such
stock at the close of each of the five (5) trading days immediately
preceding March 31, 2001. If the
Purchaser's gross sales are less than Two Million ($2,000,000.00) Dollars
but more than One Million ($1,000,000.00) Dollars during such time, the
aforementioned sales incentive award shall be reduced prorata. Such
Employees shall be entitled to no sales incentive award if the
Purchaser's gross sales for fiscal year 2001 do not exceed One Million
($1,000,000.00) Dollars. If the Purchaser's gross sales in fy 2001 exceed
Two Million ($2,000,000.00) Dollars, the aforementioned sales incentive
award shall increase prorata (calculated based
on a 50% increase in the sales incentive award per each $1,000,000.00 in
gross sales which exceed the $2,000,000.00 fy 2001 target gross sales
figure), provided that the Purchaser's pre-tax profit in fy 2001
(determined in accordance with (GAAP) equals or exceeds seven and
one-half (7.5%) percent of gross sales.
(ii)In addition to the foregoing, if, at the end of the Purchaser's fy
2001, the Purchaser's pre-tax profit, as determined in accordance with
<PAGE>
GAAP, equals or exceeds Two Hundred Thousand ($200,000.00) Dollars, each
such Employee will receive his proportionate share (Donald Adams: 40%,
Wayne McMahon: 30%, Carl
Jacobson: 30%) of the $100,000.00 profit incentive award described in the
Memorandum of Understanding, sixty (60%) percent of which shall be
payable in
cash and the remaining forty (40%) percent which shall be paid in EMCEE
Restricted Stock, based on the fair market value thereof determined by
calculating the average of the median price of such stock at the close of
each
of the five (5) trading days immediately preceding March 31, 2001. If the
Purchaser's pre-tax profit in fy 2001 is less than Two Hundred Thousand
($200,000.00) Dollars but greater than Fifty Thousand ($50,000.00)
Dollars, the
aforementioned profit incentive award shall be reduced prorata. Such
Employees
shall be entitled to no profit incentive award if the Purchaser's pre-tax
profit
in fy 2001 is Fifty Thousand ($50,000.00) Dollars or less.
12.10.2 The Purchaser shall determine the amount, if any, of the sales
incentive
award and/or profit incentive award due the Employees named above in
accordance
with this Section 12.10. The Purchaser's determination of such amounts
shall be
deemed conclusive and correct for all purposes absent manifest error.
12.10.3 If an Employee's employment with the Purchaser shall end for any
reason
prior to March 31, 2001, he shall forfeit a portion of his proportionate
share
of any sales incentive or profit incentive award otherwise payable, which
forfeited portion shall be determined by dividing the number of days of
the
Purchaser's fy 2001 during which the Employee was not employed by the
Purchaser
by 365, and then multiplying the quotient of that equation (expressed as
a
percentage) by the Employee's proportionate share of the award. Such
forfeited
portion shall be forfeited for all purposes and shall not be available or
subject
to distribution among any of the other Employees named above.
12.10.4 Sales and profit incentive plan award payments due hereunder, if
any,
will be made within one hundred twenty (120) days after the end of the
Purchaser's fy 2001.
<PAGE>
ARTICLE XIII
TERMINATION
13.1Termination of Agreement. This Agreement may be terminated:
(i)by the mutual consent of Seller and Purchaser;
(ii)by Seller or Purchaser if the Closing has not taken place on or
before April
17, 2000; provided, however, that no Party then in breach of any of its
obligations hereunder shall have the right to terminate;
(iii)by Purchaser upon notice to Seller if any of the conditions set
forth in
Article X hereof have not been satisfied by on or before the Closing
Date; and
(iv)by Seller upon notice to Purchaser if any or the conditions set forth
in
Article XI hereof have not been satisfied by on or before the Closing
Date.
13.2Return of Documents. If this Agreement is terminated for any reason
pursuant
to this Article XIII, each Party shall return to the other Party all
documents
and copies thereof which shall have been furnished to it by such other
Party or,
with the agreement of the other Party, shall destroy all such documents
and
copies thereof and certify in writing to the other Party any such
destruction.
The obligations of Purchaser under Section 9.1.1 hereof shall survive
termination
of this Agreement.
13.3Remedies. If this Agreement is terminated by Seller or Purchaser as
permitted
under Section 13.1 and not as a result of a breach of a representation or
warranty or the failure of any Party to perform its obligations
hereunder, such
termination shall be without liability of any Party. If a Party
terminates this
Agreement as a result of a breach of a representation or warranty by the
other
Party or the failure of the other Party to perform its obligations
hereunder, the
non-breaching Party, in addition to any other legal remedies that may be
available, shall be entitled to reimbursement from the breaching Party
for all
expenses incurred by the non-breaching Party in connection with this
Agreement
and the transactions contemplated hereby, including, without limitation,
attorneys' fees and accountants' fees.
<PAGE>
ARTICLE XIV
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION
14.1Survival of Representations and Warranties. All representations,
warranties,
covenants, agreements, undertakings, and indemnities set forth in this
Agreement
shall survive the Closing Date. Any Party's right to indemnification or
other
remedies based upon the representations and warranties, covenants,
agreements and
undertakings of the other Party will not be affected by any
investigation,
knowledge or waiver of any condition by such Party. Any investigation by
such
Party shall be for its own protection only and shall not affect or impair
any
right or remedy hereunder.
14.2Indemnification by Seller. "Seller General Liabilities" shall mean
all
Losses resulting from, arising out of, or incurred by Purchaser or any of
its
Affiliates, or any of their respective successors or assigns and their
respective
directors, officers and employees (each a "Purchaser Indemnified Party")
after
the Closing Date in connection with (i) any breach of any of the
representations
or warranties made by Seller in this Agreement, (ii) any default by
Seller in
respect of performance of any of the covenants or agreements of Seller in
this
Agreement or (iii) any attempt (whether or not successful) by any Person
to cause
or require Purchaser to pay any liability of, or claim against, Seller of
any
kind in respect of the operation of the Business prior to the Closing
Date, to
the extent not specifically assumed or subject to an indemnity by
Purchaser under
the terms of this Agreement. Subject to the further provisions of this
Article
XIV, Seller covenants and agrees with Purchaser that Seller shall pay and
shall indemnify all Purchaser Indemnified Parties and hold them harmless
from, against
and in respect of, any and all Seller General Liabilities.
14.3Indemnification by Purchaser. "Purchaser General Liabilities" shall
mean all
Losses resulting from, arising out of, or incurred by any of Seller or
its Affiliates, or any of their respective successors or assigns and
their respective directors, officers and employees (each a "Seller
Indemnified Party") after the Closing Date in connection with (i) any
breach of any of the representations or warranties made by Purchaser in
<PAGE>
this Agreement, (ii) any default by Purchaser in
respect of any of the covenants or agreements of Purchaser in this
Agreement,
(iii) any attempt (whether or not successful) by any Person to cause or
require
Seller to pay or discharge any Assumed Liability or any liability of, or
claim
against, Purchaser of any kind in respect of the operation of the
Business on or
after the Closing Date to the extent not specifically subject to an
indemnity by
Seller under the terms of this Agreement. Purchaser covenants and agrees
with
Seller that Purchaser shall pay and shall indemnify all Seller
Indemnified
Parties and hold them harmless from, against and in respect of, any and
all
Purchaser General Liabilities.
14.4Procedures for Indemnification.
14.4.1 Each Indemnified Party shall promptly give notice hereunder to the
indemnifying Party after becoming aware of any claim as to which recovery
may be
sought against the indemnifying Party because of the indemnity in this
Article
XIV, and, if such indemnity shall arise from the claim of a third party,
shall
permit the indemnifying Party to assume the defense of any such claim and
any
litigation or other proceeding resulting from such claim; provided, that
any
Indemnified Party may, in any event, at its own expense, monitor and
participate
in, but not control, the defense of any such claim or litigation.
Notwithstanding
the foregoing, the right to indemnification hereunder shall not be
affected by
any failure of an Indemnified Party to give such notice (or by delay by
an
Indemnified Party in giving such notice) unless, and then only to the
extent
that, the rights and remedies of the indemnifying Party shall have been
prejudiced as a result of the failure to give, or delay in giving, such
notice.
The notice required hereunder shall specify the basis for the claim for
indemnification to the extent ascertainable at the time of the notice.
Failure
by an indemnifying Party to notify an Indemnified Party of its election
to defend
any such claim or action by a third party within thirty (30) days after
notice
thereof shall have been given to the indemnifying Party shall be deemed a
waiver
by the indemnifying Party of its right to defend such claim or action.
Nothing
<PAGE>
herein shall be deemed to prevent an Indemnified Party from making a
contingent
claim for indemnification hereunder, provided the Indemnified Party has
reasonable grounds to believe that the claim or demand for
indemnification will
be made and sets forth the estimated amount of such claim to the extent
then
ascertainable.
14.4.2 The indemnifying Party shall not, in the defense of such claim or
any
litigation resulting therefrom, consent to entry of any judgment (other
than a
judgment of dismissal on the merits without costs) or enter into any
settlement,
except with the written consent, which consent shall not be unreasonably
withheld, of the Indemnified Party, which does not include as an
unconditional
term thereof the giving by the claimant or the plaintiff to the
Indemnified Party
a release from all liability in respect of such claim or litigation.
14.4.3 If the indemnifying Party shall not assume the defense of any such
claim
by a third party, or litigation resulting therefrom, after receipt of
notice from
the Indemnified Party, the Indemnified Party may defend against such
claim or
litigation in such manner as it deems appropriate.
14.4.4 If an indemnifying Party shall not, within thirty (30) days after
its
receipt of the notice required by Section 14.4.1 hereof, advise the
Indemnified
Party that the indemnifying Party denies the right of the Indemnified
Party to
indemnity in respect of the claim, then the amount of such claim shall be
deemed to be finally determined between the Parties hereto. If the
indemnifying Party
shall notify the Indemnified Party that it disputes any claim made by the
Indemnified Party, then the Parties hereto shall endeavor to settle and
compromise such claim, and if unable to agree on any settlement or
compromise,
such claim for indemnification shall be settled by appropriate
litigation, and
any liability established by reason of such settlement, compromise or
litigation
shall be deemed to be finally determined. Any claim that is finally
determined
in the manner set forth above shall be paid promptly by the indemnifying
Party
in cash.
14.5Payment of Indemnification Obligations. Each Party shall pay promptly
to any Indemnified Party the amount of all damages, losses, deficiencies,
liabilities, costs, expenses, claims and other obligations to which the
<PAGE> foregoing indemnity relates.
14.6Interest on Unpaid Obligations. If all or part of any indemnification
obligation under this Agreement is not paid when due, the indemnifying
Party shall pay the Indemnified Party interest on the unpaid amount of
such obligation for each day from the date the amount became due until it
is paid in full, payable on demand, at the rate equal to the lower of (i)
the maximum rate permitted by law or (ii) five percent (5%) per annum
plus the "Prime Rate" as announced from time to time by First Union Bank,
N.A., (or in the absence of such
announced "Prime Rate", the "Prime Rate" as published from time to time
in The Wall Street Journal).
14.7Other Remedies. The indemnification rights of any Indemnified Party
under this Article XIV are independent of and in addition to such rights
and remedies as such Indemnified Party may have at law, in equity or
otherwise for any misrepresentation, breach of warranty or failure to
fulfill any covenant or agreement under or in connection with this
Agreement on the part of any Party, none of which rights or remedies
shall be affected or diminished hereby.
ARTICLE XV
GENERAL
15.1Expenses. Except as otherwise provided in this Agreement, and whether
or not
the transactions herein contemplated shall be consummated, Purchaser and
Seller
shall pay their own fees, expenses and disbursements, including the fees
and
expenses of their respective counsel, accountants and other experts, in
connection with the subject matter of this Agreement and all other costs
and
expenses incurred in performing and complying with all conditions to be
performed
under this Agreement.
15.2Publicity. All notices to third parties and all other publicity
concerning
the transactions contemplated by this Agreement shall be jointly planned
and
coordinated by and between Purchaser and Seller, except any such notices
which
Purchaser is required to give under any of the rules or regulations of
the
Securities and Exchange Commission. Except as may be required by law, no
Party
shall act unilaterally in this regard without the prior written approval
of the
other Party, such approval not to be unreasonably withheld.
15.3Waivers. The waiver by either Party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach.
<PAGE>
15.4Binding Effect; Benefits. This Agreement shall inure to the benefit
of the
Parties hereto, and shall be binding upon the Parties hereto and their
respective
successors and assigns. Nothing in this Agreement, express or implied, is
intended to confer on any Person other than the Parties hereto, or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
15.5Bulk Transfers Laws. Seller hereby covenants and agrees to comply
with any and all laws relating to bulk transfers with respect to the
transactions contemplated hereby, and Purchaser will, upon request,
provide Seller with its reasonable cooperation in connection therewith.
15.6Notices. All notices, requests, demands, elections and other
communications
which either Party to this Agreement may desire or be required to give
hereunder
shall be in writing and shall be deemed to have been duly given if
delivered
personally, by a reputable commercial courier service (such as FedEx or
U.P.S.),
by mailing the same by registered or certified first class mail, postage
prepaid,
return receipt requested, or by telecopying with receipt confirmation
(followed
by a first class mailing of the same) to the Party to whom the same is so
given
or made. Such notice, request, demand, waiver, election or other
communication
will be deemed to have been given as of the date so delivered or
electronically
transmitted or seven (7) days after mailing thereof.
15.6.1 If to Seller, to:
Advanced Broadcast Systems, Inc.
5825 Bullitsville Road
Burlington, KY 41005
With a copy to:
George G. Gardner, Esquire
7415 Burlington Pike, Suite B
Florence, KY 41042
15.6.2 If to Purchaser, to:
EMCEE Holding Corp.
c/o EMCEE Broadcast Products, Inc.
P.O. Box 68
White Haven, PA 18661-0068
<PAGE>
With a copy to:
Robert S. Sensky, Esquire and Martin D. Cohn, Esquire
LAPUTKA, BAYLESS, ECKER & COHN, P.C.
2 East Broad Street, 6th Floor
Hazleton, PA 18201
or to such other address as such Party
shall have specified by notice to the other
Party hereto.
15.7Entire Agreement. This Agreement (including the Exhibits and
Schedules
hereto) and the documents delivered pursuant hereto constitute the entire
agreement and understanding between the Parties hereto as to the matters
set
forth herein and supersede and revoke all prior agreements and
understandings,
oral and written, between the Parties hereto or otherwise with respect to
the
subject matter hereof. No change, amendment, termination or attempted
waiver of
any of the provisions hereof shall be binding upon any Party unless set
forth in
an instrument in writing signed by the Party to be bound or their
respective
successors in interest.
15.8Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
15.9Headings. The article, section and other headings contained in this
Agreement are for reference purposes only and shall not be deemed to be a
part of this Agreement or to affect the meaning or interpretation of this
Agreement.
15.10Construction. Within this Agreement, the singular shall include the
plural
and the plural shall include the singular, and any gender shall include
all other
genders, all as the meaning and the context of this Agreement shall
require.
15.11Governing Law and Choice of Forum. The validity and interpretation
of this Agreement shall be construed in accordance with, and governed by
the internal laws of the Commonwealth of Pennsylvania. All claims,
disputes or causes of action relating to or arising out of this
Agreement shall be brought, heard and resolved solely and exclusively by
and in a federal or state court situated in Luzerne County, Pennsylvania.
Each of the parties hereto agrees to submit to the
jurisdiction of such courts and that such jurisdiction shall be proper
for all purposes of this Agreement.
<PAGE>
15.12Cooperation. The Parties hereto shall cooperate fully at their own
expense, except as otherwise provided in this Agreement, with each other
and their respective counsel and accountants in connection with all steps
to be taken as part of their obligations under this Agreement.
15.13Severability. If any term, covenant, condition or provision of this
Agreement or the application thereof to any circumstance shall be invalid
or unenforceable to any extent, the remaining terms, covenants,
conditions and provisions of this Agreement shall not be affected thereby
and each remaining term, covenant, condition and provision of this
Agreement shall be valid and
shall be enforceable to the fullest extent permitted by law. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only as broad as is enforceable.
15.14Attorneys Fees. If a dispute arises among the Parties as a result of
which an action is commenced to interpret or enforce any of the terms of
this Agreement, the losing Party shall pay to the prevailing Party
reasonable out-of-pocket attorneys' fees, costs and expenses incurred in
connection with the
prosecution or defense of such action.
15.15Successors and Assigns. The covenants, agreements and conditions
contained
herein or granted hereby shall be binding upon and shall inure to the
benefit of
Purchaser and Seller, and each of their respective successors and
permitted
assigns. Neither Seller nor Purchaser shall assign, or otherwise transfer
any
interest in this Agreement to any other Person except for a Person which
is an
Affiliate of Purchaser or a purchaser of the Purchased Assets from
Purchaser.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed
in their
respective names by an officer thereof duly authorized as of the date
first above
written.
ATTEST: EMCEE HOLDING CORP.
/s/ Robert S. Sensky BY: /s/ Allan J. Harding
Corporate Secretary NAME: Allan J. Harding
(SEAL) TITLE: President
ATTEST: ADVANCED BROADCAST SYSTEMS, INC.
/s/ Hilda A. Adams BY: /s/Donald Adams
Corporate Secretary NAME: Donald Adams
(SEAL) TITLE: President
<PAGE> ENDORSEMENT
THE UNDERSIGNED, for value received, and intending to be legally bound
hereby, unconditionally and irrevocably guarantee and agree, jointly and
severally, to act as surety for the performance by Advanced Broadcast
Systems, Inc. ("ABS") of all of its covenants, agreements, undertakings,
obligations to satisfy conditions, and indemnities set forth in an Asset
Purchase Agreement of even date herewith (the "Asset Purchase Agreement")
between ABS and EMCEE Holding Corp. ("EMCEE"). Any claim, suit, action,
proceeding, right or remedy founded upon or made under or with respect to
this instrument may be pursued against any or all of the undersigned
without EMCEE having previously pursued or exhausted any or all of its
claims, suits, actions, proceedings, rights or remedies against ABS or
any other person, and any extension by EMCEE of the time for payment or
performance of any obligation or liability of ABS hereby guaranteed by
the undersigned shall not release the undersigned from his guaranty
thereof, nor shall it impair any claim, suit, action, proceeding, right
or remedy for the enforcement thereof by EMCEE, its successors and
assigns.
The monetary liability of the undersigned under this instrument is
unlimited. This instrument shall remain in full force and effect for a
period of five years from the date hereof. After such 5-year period, this
instrument shall
automatically expire; provided, however, that such expiration shall not
release or discharge the undersigned from any liability or otherwise
limit or alter the undersigned's liability with respect to any claim
arising or made by EMCEE hereunder prior to such expiration.
IN WITNESS WHEREOF, this instrument, which is intended by the undersigned
to be a contract of suretyship and which shall continue in full force and
effect until revoked by EMCEE in writing, has been duly executed and
delivered on this 17th day of April, 2000.
WITNESS: DONALD ADAMS
_________________________ /s/ Donald Adams
WITNESS: HILDA ADAMS
_________________________ /s/ Hilda Adams
WITNESS: WAYNE MCMAHON
_________________________ /s/ Wayne McMahon
WITNESS: CARL JACOBSON
_________________________ /s Carl Jacobson
EXHIBITS AND SCHEDULES NOT INCLUDED
BUT AVAILABLE UPON REQUEST
