SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 19, 1996
Alden Electronics, Inc.
-----------------------
(Exact name of registrant as specified in its charter)
Massachusetts 1-7404 04-2156392
- ---------------------------- ---------------- -------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
40 Washington Street, Westborough, Massachusetts 01581
------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 508-366-8851
None
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events.
- ------- -------------
As previously disclosed, Alden Electronics, Inc. (the "Registrant") entered
into an Asset Purchase Agreement (the "Agreement") on December 19, 1996 to sell
substantially all of its assets (other than its real property and certain other
excluded assets) to Alden Electronics, Inc., a Delaware corporation (the
"Acquisition Company") (the "Transaction"). The purchase price for the assets is
$250,000 (the "Money Purchase Price") and assumption by the Acquisition Company
of substantially all of the liabilities and obligations of the Registrant
relating to the Registrant's business (other than certain excluded liabilities).
The Money Purchase Price will be paid $125,000 at closing and $125,000 by
execution and delivery of the Acquisition Company's promissory note payable in
twelve equal monthly installments, with interest.
As part of the Transaction, (i) the Acquisition Company and the Registrant
will enter into a Lease Agreement whereby the Acquisition Company will lease
from the Registrant a portion of the Registrant's real property located in
Westborough, Massachusetts for a period of twelve (12) months following the
closing at a rental rate of $10,000 per month, triple net; (ii) the Acquisition
Company will grant, pursuant to a Security Agreement, a security interest in all
of the assets of the Acquisition Company to secure the Acquisition Company's
obligations under the Agreement; (iii) the Acquisition Company will, during the
two (2) years following the closing, maintain certain specified levels of
minimum working capital; (iv) the Acquisition Company will cause Thomas T.
Gores, the principal of the Acquisition Company, to execute and deliver to the
Registrant a personal guaranty of certain obligations of the Acquisition Company
for a period of two (2) years and in an amount not to exceed $700,000; and (v)
the Acquisition Company will, from and after the closing for a period of 24
months, provide certain administrative services to the Registrant.
The closing of the Transaction is expected to occur on or before February
15, 1997, and is subject to the satisfaction of various conditions, including
without limitation, approval of the Transaction by the Class B Common
Stockholders of the Registrant.
The Registrant was notified by NASDAQ on January 6, 1997 that its Class A
Common Stock will be delisted from The NASDAQ Small Cap Market, effective with
the close of business on January 13, 1997.
Item 7. Financial Statements and Exhibits.
- ------- ----------------------------------
A listing of Exhibits filed as part of this Form 8-K is included on page 4
hereof.
-2-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALDEN ELECTRONICS, INC.
Date: January 9, 1997 By: /s/ Robert J. Wentworth
-----------------------
Robert J. Wentworth, President
and Chief Operating Officer
-3-
<PAGE>
List and Index of Exhibits
--------------------------
Filed with this
Item Form 8-K at
Numbers Description Page Indicated
- ------- ----------- --------------
10 Asset Purchase Agreement
dated December 19, 1996. 5
20 Information Statement
dated January 8, 1997
Furnished to Registrant's
Stockholders 44
-4-
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement") dated December 19, 1996, by and
between Alden Electronics, Inc., a Delaware corporation (the "Buyer"), and Alden
Electronics, Inc., a Massachusetts corporation (the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller and its Subsidiaries (as defined below) design,
assemble, sell and lease computer-based weather display systems, color weather
radar terminals, weather satellite ground receiving systems and a variety of
printers and supplies, and operate communication networks to facilitate the
delivery of meteorological and other data (the "Business"); and
WHEREAS, the parties hereto desire to provide for (i) the acquisition by
the Buyer and the sale by the Seller of substantially all of the assets of the
Seller and its Subsidiaries, other than the Seller's and its Subsidiaries' real
property and certain other assets described herein, used in connection with the
operation of the Business, and (ii) the assumption by Buyer of all of the
liabilities and contractual obligations of the Seller and its Subsidiaries
relating to the Seller's marine electronics division and the Business (other
than the Seller's liabilities to Fleet Bank, N.A. and certain other liabilities
described herein), all on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
SALE AND PURCHASE OF BUSINESS AND ASSETS
1.01 (a) Purchased Assets. Subject to the terms and conditions hereof, at
the closing provided for in Section 2.01 (the "Closing"), the Seller shall
assign, sell and transfer to the Buyer and the Buyer shall purchase for the
Purchase Price set forth in Section 1.02, all of the Seller's right, title and
interest in and to the Seller's business, properties, assets, goodwill, rights
and claims of whatever nature and kind, known or unknown, actual or contingent
and wherever located, owned by the Seller or used in the Business (other than
those assets specifically excluded from this sale pursuant to Section 1.01(b))
1
<PAGE>
(which assets shall herein sometimes be referred to as the "Assets") including,
without limitation, the following assets:
(i) all machinery, equipment, tools, vehicles, furniture, furnishings,
goods, and other tangible personal property;
(ii) the cash, cash equivalents, marketable securities and money
market funds of the Seller and its Subsidiaries (the "Seller's Cash"), except
the Seller's Excluded Cash (as defined in Section 12.01 below);
(iii) all prepaid items, unbilled costs and fees, and accounts, notes
and other receivables;
(iv) all supplies and inventories and office and other supplies;
(v) all rights under any contract, agreement, purchase order, lease,
permit or approval of any nature, or other document, commitment, arrangement,
undertaking, practice or authorization relating to the Business, including
without limitation, the Contracts (as defined in Section 4.10 below);
(vi) all rights under any patent, trademark, service mark, trade name
or copyright, whether registered or unregistered, and any applications therefor;
(vii) all technologies, methods, formulations, data bases, trade
secrets, know-how, inventions and other intellectual property used in the
Business;
(viii) the assets of the Subsidiaries and all capital stock owned in
other corporations (other than the Subsidiaries); and
(ix) all information, files, records, data, plans, contracts and
recorded knowledge, including customer and supplier lists, related to the
foregoing.
1.01(b) Excluded Assets. Notwithstanding the foregoing, the Assets shall
not include any of the following:
(i) the corporate seals, certificates of incorporation, minute books,
stock books, tax returns, books and records of account and all other records
having to do with the corporate organization of the Seller and its Subsidiaries;
(ii) the Seller's Excluded Cash;
2
<PAGE>
(iii) all the land, structures, leasehold improvements, fixtures and
other real property of the Seller and its Subsidiaries, and, to the extent
listed on Schedule 1.01(b), all tools, supplies, equipment and other tangible
property related to such real property;
(iv) the rights which accrue or will accrue to the Seller and/or its
Subsidiaries under this Agreement;
(v) the rights to any of the claims of the Seller and its Subsidiaries
for any federal, state, local, or foreign tax refunds;
(vi) the capital stock of the Subsidiaries; and
(vii) the assets, properties or rights set forth on Schedule 1.01(b).
1.02 Purchase Price and Payment for the Assets.
(a) Purchase Price. The purchase price for the Assets (the "Purchase
Price") shall equal the sum of (i) $250,000 (the "Money Purchase Price"), and
(ii) the Assumed Liabilities (as defined in Section 1.04).
(b) Payment of Money Purchase Price. The Money Purchase Price due under
Section 1.02(a)(i) above shall be paid in the following manner:
(i) $25,000 as a deposit (the "Deposit") upon execution of this
Agreement which Deposit shall be held in escrow in an interest-bearing bank
account pending the Closing. If this Agreement is terminated by Seller pursuant
to Section 10.01(b) on account of the failure of any condition in Section 8.01,
Seller shall receive the Deposit and any interest accrued thereon and Buyer
shall forfeit any rights thereto. If this Agreement is terminated by Seller or
Buyer in accordance with Article 10 (other than Section 10.01(b)) for any other
reason prior to the Closing, Buyer shall receive a refund of the Deposit and any
interest accrued thereon;
(ii) At the Closing, $100,000 shall be paid by Buyer to Seller and the
Seller shall receive the Deposit (provided that any interest accrued thereon
shall be paid to Buyer);
(iii) $125,000 by the execution and delivery to Seller at the Closing
of Buyer's Promissory Note in the form of Exhibit A hereto (the "Note");
3
<PAGE>
(iv) The Money Purchase Price set forth in clauses (i) and (ii) above
shall be made in United States dollars by certified or bank cashier's check
payable in immediately available funds in Boston or, at Buyer's option, by wire
transfer of funds immediately available in Boston to such accounts as the Seller
shall designate in a written notice delivered to the Buyer. Payments on the Note
shall be made as set forth thereunder.
1.03 Allocation of Money Purchase Price. The Money Purchase Price shall
be allocated among the Assets acquired hereunder for federal income tax purposes
in the manner described in Schedule 1.03. Seller and Buyer agree that each will
report the federal, state and local income and other tax consequences of the
purchase and sale contemplated hereby in a manner consistent with such
allocation and that neither Buyer nor Seller shall take any position
inconsistent with such allocation on any federal or state tax return, any
proceeding before any taxing authority or otherwise.
1.04 Assumption of Liabilities. At the Closing, the Buyer shall assume
and agree to pay, perform and discharge, or cause to be paid, performed and
discharged, when due all of the obligations and liabilities of the Seller and
its Subsidiaries incurred in connection with the Seller's marine electronics
division and the Business (other than those obligations and liabilities excluded
from assumption pursuant to Section 1.05) (the "Assumed Liabilities"), including
without limitation:
(a) The Seller's and its Subsidiaries' liabilities and obligations for
accounts payable, accrued expenses and for sales commissions;
(b) The Seller's and its Subsidiaries' liabilities and obligations for
severance, wage and salary, vacation pay, and all other employee claims,
payments and benefits of whatever nature, including without limitation,
severance obligations to Messrs. Kraft, Alexanderson, Sviokla, Farrington and
Girouard;
(c) The Seller's and its Subsidiaries' liabilities and obligations to
be performed or discharged pursuant to purchase orders, contracts, agreements,
leases, permits, approvals, and other documents, commitments, arrangements,
undertakings, practices and authorizations included in the Assets;
(d) The Seller's and its Subsidiaries' liabilities and obligations for
payroll, sales and other taxes;
(e) The Seller's liabilities and obligations in connection with the
Seller's marine electronics division
4
<PAGE>
and under that certain Asset Purchase Agreement dated June 11, 1996 between
Seller and Northern Airborne Technology Inc.;
(f) The Seller's and its Subsidiaries' liabilities and obligations
with respect to Seller's and its Subsidiaries' product warranty obligations and
product liability claims; and
(g) Such other liabilities and obligations, if any, as are listed on
Schedule 1.04.
1.05 Excluded Liabilities. The Buyer shall not directly or indirectly
assume or be responsible for any of the following liabilities or obligations of
the Seller ("Excluded Liabilities"):
(a) any federal, state or local income tax (i) payable with respect to
the business of the Seller for any period prior to the Closing Date, or (ii)
incident to or arising as a consequence of the negotiation or consummation by
the Seller of this Agreement and the transactions contemplated hereby;
(b) Seller's obligations to Fleet Bank, NA whether pursuant to the
Facility Agreement described in Section 8.06 below or otherwise; and
(c) the fees and expenses of counsel, accountants and other experts
for the Seller incurred in connection with the transactions contemplated hereby.
ARTICLE II
CLOSING AND DELIVERIES
2.01 Closing. The Closing of the sale and purchase of the Assets and the
assumption of the Assumed Liabilities shall take place at the offices of Burns &
Levinson LLP, 125 Summer Street, Boston, Massachusetts at 10:00 a.m., as
promptly as practicable, and in any event within 5 days of the date on which the
conditions to Closing set forth in ARTICLES VII and VIII hereof have been
satisfied or waived, or at such other time and place as the Buyer and the Seller
mutually agree in writing. The date upon which the Closing occurs is hereinafter
referred to as the "Closing Date".
2.02 Deliveries of Seller at Closing. The Seller shall deliver or cause to
be delivered to Buyer at the Closing:
(a) General Bill of Sale in the form of Exhibit B hereto executed by
Seller covering all of the Assets to be transferred hereunder;
5
<PAGE>
(b) Assumption Agreement in the form of Exhibit C hereto executed by
Seller with respect to the Assumed Liabilities;
(c) Lease Agreement in the form of Exhibit D hereto executed by
Seller.
(d) Consent to Buyer's use as its corporate name of the name Alden
Electronics, Inc.
(e) The opinion of Burns & Levinson LLP, counsel to Seller, dated the
Closing Date, in the form of Exhibit E hereto.
(f) Security Agreement in the form of Exhibit F hereto executed by
Seller.
(g) Certificates of the Seller as described in Section 7.01 hereof.
(h) Certificates of legal existence and corporate good standing of the
Seller, issued by the Secretary of State of the Commonwealth of Massachusetts.
(i) Certificates of the vote of the Board of Directors and the
stockholders of the Seller authorizing, approving and directing the execution,
delivery and performance by the Seller of this Agreement and the transactions
contemplated hereby.
(j) Such other documents, instruments, votes and certificates as the
Buyer may reasonably request to carry out and effectuate the purposes and terms
of this Agreement and the transactions contemplated hereby.
2.03 Deliveries of Buyer at Closing. The Buyer shall deliver or cause to be
delivered to Seller at the Closing:
(a) The Money Purchase Price as required by Section 1.02(b).
(b) Assumption Agreement in the form of Exhibit C hereto executed by
Buyer with respect to the Assumed Liabilities.
(c) Lease Agreement in the form of Exhibit D hereto executed by Buyer.
(d) Security Agreement in the form of Exhibit F hereto executed by
Buyer.
6
<PAGE>
(e) Personal Guaranty of Thomas T. Gores in the form of Exhibit G
hereto executed by Mr. Gores.
(f) The opinion of Riordan & McKinzie, counsel to Buyer, dated the
Closing Date, in the form of Exhibit H hereto.
(g) Certificate of the vote of the Board of Directors of the Buyer
authorizing, approving and directing the execution, delivery and performance by
the Buyer of this Agreement and the transactions contemplated hereby.
(h) Certificates of the Buyer as described in Section 8.01 hereof.
(i) Certificates of legal existence and corporate good standing of the
Buyer, issued by those jurisdictions in which the Buyer is incorporated and
where the conduct of its business requires its qualification as a foreign
corporation.
(j) Such other documents, instruments, votes and certificates as the
Seller may reasonably request to carry out and effectuate the purposes and terms
of this Agreement and the transactions contemplated hereby.
2.04 Further Assurances. At any time and from time to time after the
Closing Date, at the request of Buyer and without further consideration, the
Seller will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation as may be reasonably necessary in order
to more effectively transfer, convey and assign to Buyer and to confirm Buyer's
title to the Assets.
ARTICLE III
ANCILLARY MATTERS
3.01 Lease Agreement. At the Closing, Buyer and Seller shall enter into the
Lease Agreement in the form of Exhibit D hereto whereby Buyer will lease from
Seller approximately 30,000 square feet of Seller's real property located at 40
Washington Street, Westborough, Massachusetts (the "Seller's Facility") for a
period of twelve (12) months following the Closing, at a rental rate of $10,000
per month, triple net.
3.02 Security Agreement. At the Closing, Buyer shall grant a senior
security interest in all the assets of the Buyer, including without limitation
the Assets described hereunder, to secure the Buyer's obligations hereunder, and
shall execute and deliver to Seller at Closing the Security Agreement in the
form of Exhibit F attached hereto.
7
<PAGE>
3.03 Tax Lien Waiver. Seller represents and warrants to Buyer that it has
applied for a tax lien waiver from the Massachusetts Department of Revenue
pursuant to Massachusetts General Laws, Chapter 62C, Section 52. Seller agrees
to diligently pursue and use its best efforts to obtain such tax lien waiver as
promptly as possible, and to deliver same to Buyer upon issuance thereof by the
Massachusetts Department of Revenue.
3.04 Intentionally Left Blank.
3.05 Maintenance of Minimum Working Capital; Capital Reporting. (a) From
and after the Closing, the Buyer shall maintain Working Capital of at least
$300,000 until the first anniversary of the Closing Date, and thereafter, the
Buyer shall maintain at least $150,000 of Working Capital until the second
anniversary of the Closing Date; provided, however, no such minimum Working
Capital shall be required if the Assumed Liabilities are less than $700,000, as
certified to the Seller in writing by the President or Treasurer of the Buyer.
For purposes of this Section 3.05, "Working Capital" shall mean the current
assets of the Buyer less the current liabilities of the Buyer, determined in
accordance with GAAP, consistently applied.
If Buyer is in default of this Section 3.05(a) as of the last day of any
calendar month, Buyer shall notify Seller ("Buyer's Notice") within thirty (30)
days of the end of the month in which such default occurs. Unless Buyer
certifies to Seller in the manner hereinabove provided that Buyer is in
compliance with this Section 3.05(a), Buyer shall cause Thomas T. Gores or his
nominee, upon written demand of Seller, to contribute equity, or debt
subordinated to the interests of Seller, into Buyer in order to comply with the
requirements of this Section 3.05(a) within ninety (90) days of Buyer's Notice,
but no later than one hundred twenty (120) days following the end of the month
in which such default occurs.
(b) As soon as practicable, and in any event within 30 days after the
end of each fiscal quarter of Buyer (other than the fourth quarter of any fiscal
year of the Buyer), Buyer will deliver to Seller, balance sheets of the Buyer as
at the end of such fiscal quarter and as at the end of the previous fiscal
quarter, and related statements of income, cash flows and shareholders' equity
of the Buyer for such fiscal quarter and for the period from the beginning of
the current fiscal year of the Buyer to the end of such fiscal quarter, all in
reasonable detail, prepared in accordance with GAAP, consistently applied,
certified by the president or treasurer of the Buyer as fairly presenting the
financial condition and results of operations of the Buyer in accordance with
GAAP, consistently applied.
8
<PAGE>
As soon as practicable, and in any event within 75 days after the end of
each fiscal year of Buyer, Buyer will deliver to Seller, reviewed balance sheets
of the Buyer as at the end of such year, and related statements of income, cash
flows and shareholders' equity for such year, all in reasonable detail, prepared
in accordance with GAAP consistently applied, accompanied by an unqualified
opinion by independent certified public accountants of recognized standing.
(Such quarterly and annual financial statements being referred to as the
"Financial Statements").
The obligation to furnish Financial Statements shall cease with respect to
any quarter and fiscal year of the Buyer commencing after the second anniversary
of the Closing Date.
3.06 Personal Guaranty. At the Closing, Buyer shall cause Thomas T. Gores
to execute and deliver to Seller a personal guaranty of the "Guarantied
Obligations" (as defined in Section 12.01 below), in the form of Exhibit G
hereto.
3.07 Administrative Services. From and after the Closing for a period of 24
months, Buyer shall make available, without charge and during normal business
hours, from time to time not to exceed 40 hours per month, the services of
Robert J. Wentworth, or such other personnel of Buyer acceptable to Seller, to
assist Seller in the winding up of its business, including without limitation
the sale of Seller's real estate holdings, accounting and bookkeeping
transactions, filing of tax returns and other statutory documents and
certificates, and other activities associated with the liquidation of the Seller
and the winding up of the affairs of Seller.
3.08 Notice of Offer For Real Property. After the Closing, Seller will
notify Buyer of any written offer by a third party and received by Seller within
one year after the Closing Date, to acquire all or part of the Seller's real
property. Nothing in this Section 3.08 shall be construed to be a grant of an
option to purchase or the grant of a right of first refusal.
3.09 Sales, Use and Property Taxes. Seller will pay all sales and use taxes
arising from the transfer of the Assets and will pay its portion, prorated as of
the Closing, of state and local personal property taxes of the Business.
9
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer that the following
statements contained in this Article IV are correct and complete in all material
respects as of the date of this Agreement, except as set forth in the disclosure
schedule accompanying this Agreement (the "Disclosure Schedule"):
4.01 Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in corporate good standing under the laws of the
Commonwealth of Massachusetts, and each of the Seller and its Subsidiaries has
the requisite corporate power and lawful authority to own, lease and operate its
assets, properties and business and to carry on its business as it is now being
conducted.
4.02 Subsidiaries; Investments. Except for the Subsidiaries and except as
set forth in the Disclosure Schedule, the Seller does not, directly or
indirectly, own or control, or have any investment or other indirect interest in
any corporation, partnership, joint venture, business trust or other entity and
the Seller has not agreed to share profits, losses, costs or liabilities or to
guaranty the obligations of any person or entity.
4.03 Authority Relative to this Agreement. Subject to the requisite
approval of its voting stockholders, the Seller has the full legal right and
power and corporate authority to enter into, execute and deliver this Agreement
and each other agreement entered or to be entered into in connection herewith
(the "Related Agreements") to which such Seller is or is to be a party and to
perform fully the Seller's obligations hereunder and thereunder. This Agreement
has been, and each Related Agreement will be, duly executed and delivered by the
Seller and this Agreement constitutes, and each Related Agreement will
constitute, a valid and binding obligation of the Seller enforceable against the
Seller in accordance with its respective terms, except as such enforceability
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
from time to time in effect, and the availability of equitable remedies
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
4.04 Absence of Conflicts. The execution and delivery of this Agreement and
the Related Agreements, the consummation of the transactions contemplated hereby
and thereby and compliance
10
<PAGE>
with the provisions hereof and thereof, will not: (a) violate, conflict with or
result in a breach of any provision of or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination or modification of, or accelerate or modify the
performance required by, or result in a creation of any Lien (as such term is
defined in Section 12.01) upon any of the Assets or the Business under, any of
the terms, conditions or provisions of (i) the charter documents or by-laws of
the Seller, or (ii) except as set forth in the Disclosure Schedule, any Contract
(as such term is defined in Section 4.10 hereof); or (b) to the Seller's
knowledge, violate any judgment, ruling, order, writ, injunction, award, decree,
statute, law, ordinance, code, rule or regulation of any court or foreign,
federal, state, county or local government or any other governmental, regulatory
or administrative agency or authority which is applicable to the Seller or any
of the Assets, or the Business.
4.05 Governmental Approvals. The Seller has all Permits which are material
to the operation of the Business as presently conducted. No notice of any
violations has been received by the Seller in respect of any Permit and no
proceeding is pending, or to the Seller's knowledge threatened, to revoke or
limit any Permit.
4.06 Financial Statements. The consolidated balance sheet of the Seller as
at March 31, 1996 and the related statements of operations and retained earnings
and cash flows for the year then ended, including the notes thereto, audited by
Ernst & Young LLP, independent certified public accountants, have heretofore
been delivered to the Buyer. The unaudited consolidated balance sheet of the
Seller (the "Balance Sheet") as at September 30, 1996 (the "Balance Sheet Date")
and the related unaudited statements of operations and retained earnings and
cash flows for the six-month period ended on the Balance Sheet Date are set
forth in Section 4.06 of the Disclosure Schedule (the "Interim Financial
Statements"). The financial statements described in the preceding sentences
fairly present the financial position of the Seller as at their respective dates
and the results of such operations and the changes in retained earnings and cash
flows of the Seller for the respective periods then ended, and in accordance
with GAAP consistently applied, subject, in the case of the Interim Financial
Statements, to: (i) recurring year-end adjustments normal in nature and amount
and the absence of notes, and (ii) management's best estimates of accruals and
adjustments applied on a basis consistent with management's past preparation of
interim financial statements. Since the Balance Sheet Date, the Seller has not
assumed or incurred any liabilities or
11
<PAGE>
obligations relating to the Business, except liabilities or obligations assumed
or incurred in the ordinary course of business and consistent with prior
practices.
4.07 Tax Matters. (a) All Tax Returns (as that term is defined in Section
12.01) or extensions relating thereto required to be filed by the Seller have
been filed on a timely basis, when initially due or when due upon grant of an
extension, with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed and all tax returns were
true and correct in all material respects when filed; (b) all Taxes (as that
term is defined in Section 12.01) due from the Seller have been fully and timely
paid, when initially due or when due upon grant of an extension, except to the
extent not yet due and payable; and (c) there are no Liens (as that term is
defined in Section 12.01) existing, pending or to the knowledge of the Seller
threatened with respect to the Seller relating to any Taxes, except any lien
which may arise under Chapter 62C, Section 51 of the Massachusetts General Laws.
4.08 Compliance with Law. To the Seller's knowledge, the Seller is not in
violation of any judgment, ruling, order, writ, injunction, award, decree,
statute, law, ordinance, code, rule or regulation applicable to the Assets or
the Business.
4.08A The Assets. The Assets include all of the Seller's rights,
properties, assets, claims, contracts and businesses of every kind, character
and description, whether tangible or intangible, whether accrued, contingent or
otherwise, and wherever located, which are used in or are necessary for the
conduct of the Business as it is being conducted, other than real property and
assets excluded under Section 1.01(b) above. The tangible Assets are in good
operating condition and repair, subject to normal wear and maintenance, are
useable in the regular and ordinary course of business and, to the Seller's
knowledge, conform to all laws, ordinances, codes, rules, regulations and
authorizations applicable to their use and operation. Except as set forth in the
Disclosure Schedule, (i) the Seller owns and has good title to the Assets, and
(ii) no person other than the Seller owns any equipment or other tangible assets
or property situated on the premises of the Business or necessary to the
operation of the Business.
4.08B Environmental Matters. Seller has been and currently is in compliance
in all material respects with all Environmental Laws, as hereinafter defined (i)
at all properties of Seller (the "Seller's Facility") and (ii) in connection
with all operations of Seller conducted at Seller's Facility. For purposes of
this Agreement, the term "Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42.
U.S.C. ss.9601, et seq.; the Hazardous
12
<PAGE>
Materials Transportation Act, 49 U.S.C. ss.1801, et. seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. ss.6901, et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. ss.1251, et deq.; the Safe Drinking Water Act,
42 U.S.C. ss.300f, et seq.; Toxic Substances Control Act, 15 U.S.C. ss.2601, et
seq.; Occupational Safety and Health Act, 29 U.S.C. ss.651, et seq.; Clean Air
Act, 42 U.S.C. 7401, et seq.; and comparable provisions of applicable state,
county and city laws, ordinances and regulations.
4.08C Product Warranties. Section 4.08C of the Disclosure Schedule
describes the standard forms of express warranties given by Seller with respect
to products sold in the Business. No claims for breach of product warranty to
customers, whether or not attributable to Seller's form of warranty relating to
the products and services manufactured or provided by the Business, have been
filed against Seller and remain pending except as set forth in Section 4.08C of
the Disclosure Schedule. Except as set forth in Section 4.08C of the Disclosure
Schedule, to Seller's knowledge, no events have occurred since the Balance Sheet
Date or facts exist as of the date hereof which would result in a material
increase in product warranty expenses or claims.
4.09 Litigation. To the Seller's knowledge, there are no outstanding
judgments, rulings, orders, writs, injunctions, awards or decrees of any court
or any foreign, federal, state, county or local government or any other
governmental, regulatory or administrative agency or authority or arbitral
tribunal against or involving the Seller or the Assets. Except as set forth in
the Disclosure Schedule, the Seller is not a party to, nor to the Seller's
knowledge is the Seller threatened with, any litigation or judicial,
governmental, regulatory, administrative or arbitration proceeding.
4.10 Contracts and Other Agreements. Section 4.10 of the Disclosure
Schedule sets forth a list of all of the following contracts and other
agreements ("Contracts") to which the Seller is a party or by or to which any of
the Assets or the Business is bound or subject: (i) contracts with any current
or former officer, director, employee, consultant or shareholder; (ii) contracts
with any labor union or association representing any employee; (iii) contracts
involving annual payments under any such contract of at least $50,000 for the
sale of materials, supplies, equipment, merchandise or services; (iv) contracts
involving annual payments under any such contract of at least $50,000 for the
purchase or acquisition of materials, supplies, equipment, merchandise or
services; (v) patent, trademark, service mark, trade name, copyright and
franchise licenses, royalty agreements or similar contracts, which are material
to the Business; (vi) distributorship, representative, management,
13
<PAGE>
marketing or agency contracts, which are material to the Business; (vii)
contracts for the grant to any person of any preferential rights to purchase any
of the Assets or the Business; (viii) joint venture contracts; (ix) contracts
under which the Seller has guaranteed the obligations of any person; (x)
contracts limiting the freedom of the Seller to engage in any line of business
or in any geographic area; (xi) contracts relating to the acquisition by the
Seller of any operating business or the capital stock of any person; (xii)
leases of personal property involving annual payments of at least $50,000 and
(xiii) any other contract or agreement, whether or not made in the ordinary
course of business, that is material to the Business. All of the Contracts are
valid and binding obligations of Seller, and, to the knowledge of Seller, the
other parties thereto, and are enforceable in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law). The Seller is not (with or without the
lapse of time or the giving of notice, or both) in material breach of or in
material default under any of the Contracts. To the knowledge of Seller, no
other party to any of the Contracts is (with or without the lapse of time or the
giving of notice, or both) in material breach of or in material default under
such Contract, or has given written notice that it intends to terminate prior to
its expiration date, or alter in any manner materially adverse to the Seller,
its performance under such Contract.
4.11 Accounts and Notes Receivable. All of the accounts and notes
receivable of the Business which are reflected on the Balance Sheet and all
accounts receivable of the Business which have arisen since the Balance Sheet
Date (except such accounts receivable as have been collected since the Balance
Sheet Date) are valid claims, and, to the knowledge of Seller, are not subject
to any counterclaim or set-off in a cumulative amount in excess of the allowance
for collection losses reflected on the Balance Sheet.
4.12 Inventory Valuation. The inventories of raw materials, work in
process, and finished goods (collectively called inventories) shown on the
Balance Sheet consist of items of a quality and quantity usable and salable in
the ordinary course of business by Seller, except for obsolete and slow-moving
items and items of below standard quality. All items included in the inventories
are the property of Seller, except for sales made in the ordinary course of
business since the date of the Balance Sheet. For each of these sales, either
the purchaser has made full payment or the purchaser's liability to make payment
is
14
<PAGE>
reflected in the books of Seller. No items included in the inventories are held
by Seller on consignment from others. The inventories shown on the Balance Sheet
are valued at the lower of cost (determined on a first-in, first-out basis) or
market and on a basis consistent with that of prior years.
4.13 Intangible Property. Section 4.13 of the Disclosure Schedule sets
forth a list of all patents, trademarks, service marks, trade names, copyrights,
franchises, all applications for any of the foregoing, and all permits, grants
and licenses or other rights running to or from the Seller relating to any of
the foregoing, which are material to the operation of the Business (the
"Intellectual Property"). To the Seller's knowledge, except as set forth in the
Disclosure Schedule, the rights of the Seller in the Intellectual Property are
free and clear of any Liens. The Seller has not received notice of any adversely
held patent, trademark, service mark, trade name, copyright or franchise of any
other person or notice of any claim of any other person relating to any of the
Intellectual Property. The patents and applications for patents listed in
Section 4.13 of the Disclosure Schedule are in full force and effect. Except as
set forth in Section 4.13 of the Disclosure Schedule, there have been since
January 1, 1991 no interference actions or other judicial, arbitration, or other
adversary proceedings concerning the patents or applications for patents listed
in Section 4.13 of the Disclosure Schedule. Each patent application is awaiting
action by its respective patent office except as otherwise indicated in Section
4.13 of the Disclosure Schedule. Except as set forth in Section 4.13 of the
Disclosure Schedule, neither Seller nor any Subsidiary is a party to any
license, agreement, or arrangement, whether as licensee, licensor, or otherwise,
with respect to any patent, application for patent, invention, design, model,
process, trade secret, or formula.
4.14 Liens. The Seller owns outright and has good title to the Assets in
each case, free and clear of any Lien, except with respect to: (i) Liens
securing Taxes, assessments, governmental, regulatory or administrative charges
or levies, or the claims of materialmen, carriers, landlords and like persons,
which are not yet due and payable; (ii) liens securing the indebtedness of
Seller to Fleet Bank, NA, (iii) liens arising at the Closing by reason of
Chapter 62C, Section 51 unless a waiver of lien certificate is issued by the
Massachusetts Department of Revenue prior thereto; (iv) liens arising as a
result of the parties' non-compliance with the Bulk Transfers Law of the
Commonwealth of Massachusetts; and (v) liens as set forth in the Disclosure
Schedule.
4.15 Suppliers and Customers. Except with respect to the Seller's marine
electronics business, Section 4.15 of the
15
<PAGE>
Disclosure Schedule sets forth a correct and current list of the ten customers
to whom the Seller and its Subsidiaries (on a consolidated basis) made the most
sales in fiscal 1996, and the ten suppliers from whom the Seller and its
Subsidiaries (on a consolidated basis) made the most purchases during such
period. Except as set forth in Section 4.15 of the Disclosure Schedule, no such
supplier or customer has canceled or otherwise terminated or, to the Seller's
knowledge, threatened to cancel or terminate its relationship with the Seller or
such Subsidiary. Except as set forth in Section 4.15 of the Disclosure Schedule,
there are no sole source suppliers for any of Seller's purchased parts or
sub-assemblies in respect of the Business. Section 4.15 of the Disclosure
Schedule also sets forth with respect to the Business, a list of all tooling and
castings owned by Seller which are material to the Business, as well as where
such is located and whether there is any restriction on Seller taking possession
of or relocating same.
4.16 Employee Benefit Plans.
(a) Section 4.16 of the Disclosure Schedule lists all Employee Benefit
Plans (as such term is defined in Section 12.01 hereof) of the Seller to which
the Seller is obligated to contribute. All of such Employee Benefit Plans have
been operated in material compliance with their terms, and comply in all
material respects with ERISA, the Code, and such other statutes, laws,
ordinances, codes, rules and regulations, as applicable. The Seller has made all
contributions which it was required to make for each Employee Benefit Plan under
the terms of such plan and applicable law, and all benefit payments due and
payable to plan participants under each Employee Benefit Plan have been made or
are being appropriately processed.
(b) True, complete and accurate copies of the documents setting forth
the terms of each Employee Benefit Plan listed in Section 4.16 of the Disclosure
Schedule, including, without limitation, plans, agreements, amendments, trusts
and all related contracts and other agreements have been delivered to Buyer.
4.17 Employees. Section 4.17 of the Disclosure Schedule sets forth a list
of all of the Seller's officers and employees, together with the titles or
positions of each, and their respective length of service and base salary and
other forms of compensation. The Seller does not know of any activity or
proceedings of any labor union (or representatives thereof) to organize any
employees of the Seller, or of any strikes, slowdowns, work stoppages, lockouts
or threats thereof, by or with respect to any of such employees. During the
one-year period immediately preceding the date of this Agreement, there
16
<PAGE>
has been no significant labor trouble involving employees of the Seller nor are
there any pending union representation questions involving such employees.
During the one year period immediately preceding the date of this Agreement, the
Seller has not effectuated (i) a "plant closing" or a "mass layoff" (as defined
in the Worker Adjustment and Retraining Notification Act (the "WARN Act")), nor
has the Seller been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law.
4.18 Insurance. Section 4.18 of the Disclosure Schedule sets forth a list
of all policies or binders of fire, liability, workmen's compensation,
vehicular, health, life, disability or other insurance held by or on behalf of
the Seller, specifying the insurer and policy number and, to the Seller's
knowledge, claims pending under any such policies. Such policies and binders are
in full force and effect and insure against risks and liabilities customary for
the business in which the Seller is engaged. The Seller is not in default with
respect to any material provision contained in any such policy or binder. The
Seller has not received a notice of cancellation or nonrenewal of any such
policy or binder.
4.19 Operations of the Seller. Except as set forth in the Disclosure
Schedule, since the Balance Sheet Date, the Seller has not:
(a) amended its Articles of Organization or by-laws (or other
organizational documents) or merged with or into or consolidated with any other
person, subdivided or in any way reclassified any shares of its capital stock or
changed or agreed to change in any manner the rights of its outstanding capital
stock or the character of its business;
(b) issued, sold, purchased or redeemed, or entered into any contracts
or other agreements to issue, sell, purchase or redeem, any shares of its
capital stock;
(c) entered into or amended any employment agreement; entered into any
contract or other agreement with any labor union or association representing any
employee; or adopted, entered into or amended any Employee Benefit Plan;
(d) declared, set aside or paid any dividends or declared, set aside
or made any distributions of any kind to its shareholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any shares of
its capital stock;
17
<PAGE>
(e) adopted a plan of liquidation or resolutions providing for the
liquidation, dissolution, merger, consolidation or other reorganization of the
Seller;
(f) made any change in its accounting methods, principles or practices
or made any change in depreciation or amortization policies or rates adopted by
it, except insofar as may have been required by a change in GAAP;
(g) made any material wage or salary increase or bonus, or increase in
any other direct or indirect compensation, for or to any of its officers,
directors, employees, consultants or agents or any accrual for or contract or
other agreement to make or pay the same, other than to persons other than its
officers, directors or shareholders made in the ordinary course of business in a
manner consistent with past practice;
(h) made any loan or advance to any of its officers, directors,
employees, consultants, agents or other representatives (other than travel
advances made in the ordinary course of business in a manner consistent with
past practice) or made any other loan or advance;
(i) made any payment or commitment to pay severance or termination pay
to any of its officers, directors, employees, consultants, agents or other
representatives other than severance payments to employees terminable at will
consistent with the Company's normal policies;
(j) made capital expenditures in excess of $50,000 in the aggregate;
(k) incurred or assumed any debt, obligation or liability except
normal trade or business obligations incurred in the ordinary course of
business, or assumed, guaranteed, endorsed or otherwise as an accommodation
became responsible for, liabilities of any other person or created, assumed or
incurred any lien or encumbrance on any of the Assets, or agreed to do any of
the foregoing;
(l) except for tangible personal property acquired in the ordinary
course of business in a manner consistent with past practice, made any
acquisition of all or any part of the assets, properties, capital stock or
business of any other person or agreed to do so;
(m) except in the ordinary course of business, amended, terminated or
entered into any material contract or other material agreement or amended,
terminated or entered into
18
<PAGE>
any other material transaction; or agreed to do any of the foregoing;
(n) sold, assigned, leased, exchanged or otherwise transferred or
disposed of any of the Assets other than in the ordinary course of business;
(o) waived or released any right or claim of Seller or any Subsidiary,
except in the ordinary course of business; or
(p) suffered the destruction, damage, or loss of any Asset (insured or
uninsured) that materially and adversely affects the financial condition,
business, or prospects of Seller.
4.20 Full Disclosure. All documents and other papers delivered by or on
behalf of the Seller in connection with this Agreement and the transactions
contemplated hereby are true, complete and accurate in all material respects.
The information furnished by or on behalf of the Seller to the Buyer in
connection with this Agreement and the transactions contemplated hereby does not
contain any untrue statement of a material fact and does not omit to state a
material fact required to be stated therein or necessary to make the statements
made, in the context in which made, not false or misleading.
4.21 No Broker. No broker, finder, agent or similar intermediary has acted
for or on behalf of the Seller in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection herewith based on any contract or other agreement with
the Seller or any action taken by the Seller.
4.22 General Qualifications. For purposes of this Article IV, all
references to the phrase "to the Seller's knowledge" or the like, shall mean the
actual knowledge of Robert J. Wentworth and information described in the books,
records and files of the Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the following
statements contained in this Article V are correct and complete in all material
respects as of the date of this Agreement:
5.01 Organization. The Buyer is a corporation duly organized, validly
existing and in corporate good standing under
19
<PAGE>
the laws of the State of Delaware, and has the requisite corporate power and
lawful authority to own, lease and operate its assets, properties and business
and to carry on its business as it is now being conducted.
5.02 Authority Relative to this Agreement. The Buyer has the requisite
corporate power and authority to enter into, execute and deliver this Agreement
and the Related Agreements to which Buyer is or is to be a party and to perform
fully its obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Related Agreements and the consummation by the Buyer of
the transactions contemplated hereby and thereby have been duly authorized by
the Board of Directors of the Buyer and no other corporate proceedings on the
part of the Buyer are necessary to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby and
thereby. This Agreement has been, and each Related Agreement will be, duly
executed and delivered by the Buyer and this Agreement constitutes, and each
Related Agreement will constitute, the valid and binding obligations of the
Buyer enforceable against the Buyer in accordance with their respective terms,
except as limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting the enforcement of creditor's rights
generally from time to time in effect, and the availability of equitable
remedies (regardless of whether enforceability is considered in a proceeding at
law or in equity).
5.03 Absence of Conflicts. The execution and delivery of this Agreement and
the Related Agreements, the consummation of the transactions contemplated hereby
and thereby and compliance with the provisions hereof and thereof, will not: (a)
violate, conflict with or result in a breach of any provision of or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or modification of, or
accelerate or modify the performance required by, or result in a creation of any
Lien upon any of the assets, properties or businesses of the Buyer under, any of
the terms, conditions or provisions of (i) the charter documents or by-laws of
the Buyer, or (ii) any contract or other agreement to which the Buyer or any of
its assets, properties or businesses may be subject; or (b) violate any
judgment, ruling, order, writ, injunction, award, decree, statute, law,
ordinance, code, rule or regulation of any court or any foreign, federal, state,
county or local government or any other governmental, regulatory or
administrative agency or authority which is applicable to the Buyer or any of
its assets, properties or businesses.
20
<PAGE>
5.04 No Broker. No broker, finder, agent or similar intermediary has acted
for or on behalf of the Buyer in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, or similar fee or other
commission in connection therewith based on any contract or other agreement with
the Buyer or any action taken by the Buyer.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.01 Conduct of Business. From the date hereof through the Closing Date,
the Seller shall conduct its business in the ordinary course in a manner
consistent with past practice and, without the prior written consent of the
Buyer, shall not undertake any of the actions specified in Section 4.19.
6.02 Insurance. From the date hereof through the Closing Date, the Seller
shall maintain in force (including necessary renewals thereof) the insurance
policies listed on Schedule 4.18, except to the extent that they may be replaced
with equivalent policies appropriate to insure the assets, properties and
business of the Seller to the same extent as currently insured.
6.03 Litigation. The Seller shall promptly notify the Buyer of any suits,
actions, claims, proceedings or investigations which after the date of this
Agreement are commenced against the Seller or against any officer, director,
employee or consultant with respect to the affairs of the Seller or the
transactions contemplated by this Agreement.
6.04 Continued Effectiveness of Representations and Warranties;
Satisfaction of Conditions. The Seller shall use all reasonable efforts to: (i)
preserve its business organization intact; (ii) keep available the services of
its present officers, employees, consultants and agents; (iii) maintain its
present suppliers, customers, licensors, licensees, contractors and others with
which it has advantageous business relationships and preserve its goodwill; and
(iv) conduct its business in such a manner so that the representations and
warranties contained in ARTICLE IV hereof shall continue to be true, complete
and accurate on and as of the Closing Date with the same force and effect as if
made on and as of the Closing Date and to satisfy each of the conditions set
forth in Section 7.01 hereof. The Buyer shall use all reasonable efforts to
cause the representations and warranties contained in ARTICLE V hereof to
continue to be true, complete and accurate on and as of the Closing Date with
the same force and effect as if made on and as of the Closing Date and to
satisfy each of the conditions set forth in Section 8.01 hereof.
21
<PAGE>
6.05 Advice of Changes. The Seller shall give prompt written notice to the
Buyer of: (i) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause any representation or warranty of the Seller
contained in this Agreement, if made on or as of the date of such event or as of
the Closing Date, to be untrue or inaccurate in any material respect; (ii) any
event of which it has knowledge which will result in the failure to satisfy the
conditions specified in ARTICLE VII hereof; (iii) any notice of, or other
communication relating to, a default (or event which, with notice or lapse of
time or both, would constitute a default), received by the Seller subsequent to
the date hereof and prior to the Closing Date, under any Contract; (iv) any
notice or other communication from any person alleging that the consent of such
person is or may be required in connection with the transactions contemplated
hereby; (vi) any notice or other communication from any foreign, federal, state,
county or local government or any other governmental, regulatory or
administrative agency or authority in connection with the transactions
contemplated hereby; or (vii) any adverse change material to the Business. The
Buyer shall give prompt written notice to the Seller of the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty of the Buyer contained in this Agreement,
if made on or as of the date of such event or as of the Closing Date, to be
untrue or inaccurate; provided, however, that no such notification shall affect
the representations and warranties of the Buyer or the conditions to the
obligations of the Buyer hereunder.
6.06 Corporate Examinations and Investigations; Management Assistance.
Prior to the Closing Date, the Seller and the Seller's officers, directors,
employees, consultants and agents shall afford the Buyer and its officers,
employees, consultants, agents, counsel, accountants and other representatives,
reasonable access to all of the properties, books and records, and contracts and
other agreements, documents and other papers of the Seller and furnish to the
Buyer copies of all such contracts and other agreements and documents and other
papers, and copies, extracts and summaries thereof, and information with respect
to the affairs of the Seller as the Buyer may from time to time reasonably
request, and will cause the officers, employees, agents and consultants of the
Seller to keep the officers of the Buyer informed as to the affairs of the
Seller as required by the terms of this Agreement, and to arrange for meetings
with management of the Seller from time to time during normal business hours
upon reasonable prior notice by the Buyer. If this Agreement shall terminate,
the Buyer shall, and shall cause its officers, directors, employees, agents,
consultants, representatives, counsel and accountants, to continue to treat
22
<PAGE>
such information as confidential and, if such information is in documentary
form, return such information and all copies thereof to the Seller promptly upon
the Seller's request. All such information shall remain subject to the
Confidentiality and Non-Disclosure Agreement executed by Buyer and dated June
14, 1996, the provisions of which shall remain in full force and effect.
In addition, prior to the Closing Date, Buyer and its officers, employees,
agents and representatives, at the expense of Buyer, shall at all times be
permitted by Seller to observe the operations and management of the Business and
to advise and consult with the Seller as to such operation and management of the
Business, provided, however, that Buyer shall not be entitled to direct the
management or operation of the Business, such control to be maintained by Seller
subject to the terms of this Agreement. Neither Buyer, nor its officers,
employees, agents or representatives shall have the authority to enter into any
agreements or incur any liabilities or obligations on behalf of the Seller.
6.07 Further Assurances. In addition to the actions, contracts and other
agreements and documents and other papers specifically required to be taken or
delivered pursuant to this Agreement, each of the parties hereto shall execute
such contracts and other agreements and documents and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
6.08 Public Announcements. Except for disclosures as may be required by law
or the rules and regulations of the Securities and Exchange Commission, any
stock exchange or NASDAQ, neither Seller nor Buyer shall make any news release
or other public disclosure pertaining to this Agreement or the transactions
contemplated hereby without the prior approval of the other party as to both
form and content.
6.09 No Shop. Until the earlier of February 15, 1997 or the date the
transaction contemplated herein has been terminated pursuant to the terms
hereof, Seller shall not, except in respect to Seller's real property, (i) enter
into any agreement concerning the sale of the capital stock of Seller, any sale
of any of the assets of Seller outside of the ordinary course of the Business,
or any merger or other business combination of the Seller with any other person
or entity, and (ii) except as required by fiduciary duties of the Seller's
Directors upon advice of Seller's legal counsel, negotiate with or furnish
information to any prospective purchaser of all or substantially all of the
capital stock of Seller or all or substantially all of
23
<PAGE>
the assets of the Seller, for the purpose of facilitating any such sale, merger
or combination.
6.10 Hart-Scott-Rodino Act. Each of the Seller and Buyer will file any
Notification and Report Forms and related material that it may be required to
file with the Federal Trade Commission and Antitrust Division of the United
States Department of Justice under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, will use its reasonable efforts to obtain an early
termination of the applicable waiting period, and will make any further filings
pursuant thereto that may be necessary, proper, or advisable.
6.11 Unassigned Contracts. If, with respect to any Contract, a required
consent or novation is not obtained (such Contract is hereinafter referred to as
an "Unassigned Contract"), Seller shall keep in effect and use reasonable
efforts to give Buyer the benefit of the Unassigned Contract to the same extent
as if it had been assigned or novated to the extent not prohibited by the
Unassigned Contract, and Buyer shall perform and be responsible for Seller's
obligations and liabilities under the Unassigned Contract. From and after the
Closing, Seller shall not be liable for any damages or the payment of any monies
on account of the failure to obtain a consent for an assignment or a novation
with respect to any Unassigned Contract. Buyer shall be entitled to receive,
accept and retain any payments to which Seller would otherwise be entitled for
Buyer's performance under any Unassigned Contract after the Closing. Nothing in
this Agreement shall be construed as an attempt to assign any agreement or other
instrument that is by its terms nonassignable without the consent of the other
party. Any and all amounts paid to Seller relating to Buyer's performance under
any Unassigned Contract shall be promptly remitted to Buyer.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE BUYER TO CLOSE
The obligation of the Buyer to enter into and complete the Closing is
subject, at its option, to the fulfillment on or prior to the Closing Date of
the following conditions, any one or more of which may be waived by it in its
sole discretion:
7.01 Representations and Covenants. The representations and warranties of
the Seller contained in this Agreement shall be true, complete and accurate on
and as of the date of this Agreement and, subject to amendment by Seller for
events occurring after the date of this Agreement, on and as of the Closing Date
with the same force and effect as though made on and as of the Closing Date. On
the Closing Date, Seller shall execute and deliver a certificate to Buyer
certifying to
24
<PAGE>
the validity of the foregoing, which certificate shall set forth any changes to
any schedules necessary to make same true, accurate and complete as of the
Closing Date. The Seller shall have performed and complied with all covenants
and agreements required by this Agreement to be performed or complied with by
the Seller on or prior to Closing Date. On the Closing Date, Seller shall
execute and deliver a certificate to Buyer attesting to the foregoing.
7.02 Governmental Permits and Approvals. Any and all Permits necessary for
the consummation of the transactions contemplated hereby shall have been
obtained.
7.03 Legal Proceedings. No suit, action, claim, proceeding or investigation
shall have been instituted or threatened by or before any court or any foreign,
federal, state, county or local government or any other governmental, regulatory
or administrative agency or authority seeking to restrain, prohibit or
invalidate the sale of the Assets to the Buyer hereunder or the consummation of
the transactions contemplated hereby or to seek damages in connection with such
transactions.
7.04 Third Party Consents. Seller shall have obtained all consents,
waivers, licenses, variances, exemptions, franchises, permits, approvals and
authorizations from parties to Contracts identified on Schedule 7.04 (including
any amendments and modifications thereto) with the Seller which may be required
in connection with the performance by the Seller of its obligations under this
Agreement or to assure such Contracts continue in full force and effect after
the consummation of the transactions contemplated hereby (without any breach by
the Seller and without giving any contracting party the right to terminate or
modify any such Contract).
7.05 Release by Fleet Bank, N.A. The Seller shall have received the release
by Fleet Bank, N.A. of its security interest in all the Assets.
7.06 Approval of Counsel to Buyer. All actions, proceedings, consents,
instruments and documents required to be delivered by, or at the behest or
direction of the Seller hereunder or incident to its performance hereunder,
shall be reasonably satisfactory in form and structure to Buyer and its counsel.
7.07 No Material Adverse Change. There shall have been no material adverse
change in the Business since the date of this Agreement.
25
<PAGE>
7.08 Minimum Working Capital. The Seller's Adjusted Working Capital (as
defined in Section 12.01 below), determined as of the fifth business day
immediately prior to the Closing Date, shall be at least $600,000.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF THE SELLER TO CLOSE
The obligation of the Seller to enter into and complete the Closing is
subject, at the option of the Seller, to the fulfillment on or prior to the
Closing Date of the following conditions, any one or more of which may be waived
by the Seller in its sole discretion:
8.01 Representations and Covenants. The representations and warranties of
the Buyer contained in this Agreement shall be true, complete and accurate on
and as of the date of this Agreement and on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date. On the
Closing Date, Buyer shall execute and deliver to Seller a certificate to Seller
certifying to the validity of the foregoing. The Buyer shall have performed and
complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. On the Closing
Date, Buyer shall execute and deliver to Seller a certificate attesting to the
foregoing.
8.02 Governmental Permits and Approvals. Any and all Permits necessary for
the consummation of the transactions contemplated hereby shall have been
obtained.
8.03 Legal Proceedings. No suit, action, claim, proceeding or investigation
shall have been instituted or threatened before any court or any foreign,
federal, state, county, or local government or any other governmental,
regulatory or administrative agency or authority seeking to restrain, prohibit
or invalidate the sale of the Assets to the Buyer hereunder or the consummation
of the transactions contemplated hereby or to seek damages in connection with
such transactions.
8.04 Fairness Opinion. The Seller shall have received the favorable opinion
of O'Conor, Wright Wyman, Inc., investment advisers to the Seller, in form and
substance acceptable to Seller.
8.05 Third Party Consents. The Seller shall have obtained all consents,
waivers, licenses, variances, exemptions, franchises, permits, approvals and
authorizations from parties to
26
<PAGE>
Contracts identified on Schedule 7.04 (including any amendments and
modifications thereto) with the Seller which may be required in connection with
the performance by the Seller of its obligations under this Agreement or to
assure such Contracts continue in full force and effect after the consummation
of the transactions contemplated hereby (without any breach by the Seller and
without giving any contracting party the right to terminate or modify any such
Contract).
8.06 Consent of Fleet Bank, NA. The Seller shall have received the consent
of Fleet Bank, NA under a certain Loan Agreement dated August 5, 1994, as
amended, among the Seller, its Subsidiaries and Fleet Bank, NA as successor to
Shawmut Bank, N.A. (the "Facility Agreement"), and the release of its security
interest in all the Assets.
8.07 Dissenting Stockholders. Stockholders of the Seller who file a written
objection to the transaction contemplated hereby in accordance with Section 86
of Chapter 156B of the Massachusetts General Laws, shall not hold, directly or
indirectly, more than 5% of the aggregate number of shares of capital stock of
Seller, on a fully diluted and converted basis, outstanding as of the record
date for the Special Meeting of Stockholders of Seller at which the transaction
contemplated hereby is approved.
8.08 Approval of Counsel to Seller. All actions, proceedings, consents,
instruments and documents required to be delivered by, or at the behest or
direction of the Buyer hereunder or incident to its performance hereunder, shall
be reasonably satisfactory in form and substance to Seller and its counsel.
8.09 Stockholder Approval. The voting stockholders of Seller shall have
duly authorized the transaction contemplated hereby in accordance with Chapter
156B, Section 75 of the Massachusetts General Laws.
8.10 Personal Financial Statement. At Closing, Thomas T. Gores shall
deliver to Seller a personal financial statement as of a date no later than five
days before the Closing Date (the "Statement") and shall certify that the
Statement fairly presents the financial condition of Mr. Gores as of such date.
There shall have been no material adverse change in the Statement, or any item
thereof (including without limitation, the cash component thereof), from the
personal financial statement of Thomas T. Gores dated August, 1996 and
previously delivered to Seller. The Statement shall be subject to the
confidentiality covenants of Section 5 of the Personal Guaranty referred to in
Section 2.03(e) above.
27
<PAGE>
ARTICLE IX
INDEMNIFICATION
9.01 Obligation of the Seller to Indemnify. Subject to the limitations
contained in Section 9.05 hereof, (i) the Seller shall indemnify, defend and
hold harmless the Buyer and its officers, directors, employees and agents and
their respective assigns from and against any and all liabilities, losses,
claims, damages, costs and expenses (including without limitation, court costs
and reasonable attorney's fees) (collectively, "Losses"), suffered, sustained,
incurred or required to be paid by any of the Buyer or its officers, directors,
shareholders, employees or agents or their respective assigns based upon,
arising out of or in respect to: (i) any breach or inaccuracy of any
representation or warranty, or any failure to perform or comply with any
covenant or agreement of Seller contained in or made pursuant to this Agreement
or any Related Agreement, or (ii) the ownership of Assets or the operation of
the Business prior to the Closing Date, other than as expressly assumed by Buyer
under or pursuant to the terms of this Agreement.
9.02 Obligation of the Buyer to Indemnify. The Buyer shall indemnify,
defend and hold harmless the Seller and its officers, directors, shareholders,
employees and agents and their respective assigns from and against any Losses
suffered, sustained, incurred or required to be paid by any of the Seller, or
its officers, directors, shareholders, employees or agents or their respective
assigns based upon, arising out of or in respect to: (i) any breach or
inaccuracy of any representation or warranty, or any failure to perform or
comply with any covenant or agreement of Buyer contained in or made pursuant to
this Agreement or any Related Agreement, or (ii) any Assumed Liabilities. The
foregoing indemnity shall not be exclusive, but shall be in addition to any
other rights or remedies to which the Seller and any of the foregoing persons
may be entitled at law or in equity, including without limitation, any rights
and remedies under the Security Agreement described in Section 3.02 and the
Personal Guaranty described in Section 3.06.
9.03 Notice and Opportunity to Defend.
(a) If any person entitled to indemnification pursuant to this ARTICLE
IX (an "Indemnified Person") receives notice of any claim or the commencement of
any suit, action, proceeding or investigation with respect to which any other
person (or persons) is obligated to provide indemnification (an "Indemnifying
Person") pursuant to this ARTICLE IX, the Indemnified Person shall promptly give
the Indemnifying Person notice thereof (an "Indemnification Notice"), but the
failure to give an
28
<PAGE>
Indemnification Notice to the Indemnifying Person shall not relieve the
Indemnifying Person of any Liability that it may have to an Indemnified Person
except to the extent that the Indemnifying Person shall have been materially
prejudiced in its ability to defend the suit, action, claim, proceeding or
investigation for which such indemnification is sought by reason of such
failure.
(b) Upon receipt of an Indemnification Notice, the Indemnifying Person
shall be entitled at its option and at its cost and expense to assume the
defense of such suit, action, claim, proceeding or investigation with respect to
which it is called upon to indemnify an Indemnified Person pursuant to this
ARTICLE IX; provided that, notice of the Indemnifying Person's intention to
assume such defense shall be delivered by the Indemnifying Person to the
Indemnified Person within a reasonable time in light of the circumstances then
and there existing. In the event that the Indemnifying Person elects to assume
the defense of such suit, action, claim, proceeding or investigation, as the
case may be, the Indemnifying Person shall promptly retain counsel of its own
choosing reasonably satisfactory to the Indemnified Person. The Indemnified
Person shall have the right to employ its own counsel in any such suit, action,
claim, proceeding or investigation, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Person unless: (i) the employment of
such counsel shall have been authorized by the Indemnifying Person; or (ii) the
Indemnifying Person shall not have promptly retained counsel reasonably
satisfactory to the Indemnified Person to take charge of the defense of such
suit, action, claim, proceeding or investigation. In the event of (i) or (ii)
above, the Indemnifying Person shall not have the right to direct the defense of
any suit, action, claim, proceeding or investigation on behalf of the
Indemnified Person.
(c) If an Indemnifying Person elects to assume the defense of any
suit, action, claim, proceeding or investigation for which it is called upon to
indemnify an Indemnified Person pursuant to this ARTICLE IX: (i) no compromise
or settlement thereof may be effected by the Indemnifying Person without the
Indemnified Person's written consent (which shall not be unreasonably withheld
or unreasonably delayed) unless: (x) there is no finding or admission or any
violation of any judgment, ruling, order, writ, award, decree, statute, law,
ordinance, code, rule or regulation of any court or foreign, federal, state,
county or local government or any other governmental, regulatory or
administrative agency or authority or any violation of the rights of any person
by the Indemnified Person and no effect on any other suit, action, claim,
proceeding or investigation that may be made against the Indemnified Person; and
(y) the sole relief provided is monetary damages that are
29
<PAGE>
paid in full by the Indemnifying Person; and (ii) the Indemnified Person shall
have no liability with respect to any compromise or settlement thereof effected
without its consent (which shall not be unreasonably withheld or unreasonably
delayed). Notwithstanding the foregoing, if any Indemnified Person determines in
good faith that there is a reasonable probability that an action may adversely
affect it or its Affiliates other than as a result of monetary damages, such
Indemnified Person may, by written notice to the Indemnifying Person, assume the
exclusive right to defend, compromise or settle such action, but the
Indemnifying Person shall not be bound by any determination of an action so
defended or any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld or unreasonably delayed).
(d) If the Indemnifying Person fails to give written notice to the
Indemnified Person of its election to assume the defense of any suit, action,
claim, proceeding or investigation for which it is called upon to indemnify an
Indemnified Person pursuant to this ARTICLE IX within 21 days after the
Indemnified Person gives the Indemnification Notice to the Indemnifying Person,
the Indemnifying Person shall be bound by any determination made in such suit,
action, claim, proceeding or investigation or compromise or settlement thereof
effected by the Indemnified Person.
9.04 Cooperation. If requested by the Indemnifying Person, the Indemnified
Person shall cooperate to the extent reasonably requested in the defense or
prosecution of any suit, action, claim, proceeding or investigation for which
such Indemnifying Person is being called upon to indemnify the Indemnified
Person pursuant to this ARTICLE IX, and the Indemnified Person shall furnish
such records, information and testimony and attend all such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested in connection therewith and, if appropriate, the Indemnified Person
shall make any counterclaim against the party asserting such suit, action,
claim, proceeding or investigation or any cross complaint against any person in
connection therewith and the Indemnified Person further agrees to take such
other actions as reasonably may be requested by an Indemnifying Person to reduce
or eliminate any Loss for which the Indemnifying Person would have
responsibility, but the Indemnifying Person will reimburse the Indemnified
Person for any fees or expenses incurred by it in so cooperating or acting at
the request of the Indemnifying Person.
9.05 Limitations on Indemnification. The liability of the Seller under this
Article IX is subject to the following conditions and limitations:
30
<PAGE>
(a) The Seller shall have no indemnification obligation under this
Agreement and no amount shall be payable by the Seller, except to the extent
that its liability under Section 9.01 exceeds $50,000, and then only to the
extent of such excess.
(b) The total amount payable by the Seller for all claims for
indemnification and any claims with respect to the sale of the Assets and this
Agreement (whenever asserted) shall not exceed $1,000,000 in the aggregate,
inclusive of insurance proceeds.
(c) The Seller shall have no indemnification obligation hereunder with
respect to any matter unless a claim specifying in detail all facts and
information which form the basis of the claim is asserted with respect to such
matter before the first anniversary of the Closing Date.
(d) The indemnification obligations of the Seller set forth in Section
9.01 constitute the Buyer's sole and exclusive remedy with respect to the
matters covered by indemnification hereunder.
9.06 Recoveries. The amount of any Losses suffered, sustained, incurred or
required to be paid to or for the benefit of any Indemnified Person shall be
reduced by the amount of (a) any insurance proceeds and other amounts paid to or
for the benefit of the Indemnified Person with respect to such Losses by any
person not a party to this Agreement or (b) any income or tax benefits actually
received by or for the benefit of the Indemnified Person or any Affiliate of any
Indemnified Person. Anything herein to the contrary notwithstanding, Losses with
respect to any breach or claim under Article IV shall be limited strictly to
out-of-pocket costs, out-of-pocket expenses and out-of-pocket deficiencies
arising out of, based upon or otherwise in respect of such breach or claim, and
shall not include any loss of profits, consequential damages or any other form
of indirect damages.
9.07 Payment of Losses. The Indemnifying Person shall pay to the
Indemnified Person in cash the amount of any Loss to which the Indemnified
Person may become entitled by reason of the provisions of ARTICLE IX hereof,
such payment to be made within 15 days after such Losses are finally determined
either by mutual agreement of the parties hereto or pursuant to the final
unappealable judgment of a court of competent jurisdiction.
9.08 Survival. Subject to the provisions of Section 9.05 hereof, all
representations, warranties, agreements and covenants of the parties made in
this Agreement shall survive the Closing.
31
<PAGE>
ARTICLE X
TERMINATION OF AGREEMENT
10.01 Termination of Agreement. This Agreement may be terminated prior to
the Closing as follows:
(a) at the election of the Seller or the Buyer, if the Closing shall
not have occurred on or before February 15, 1997;
(b) at the election of the Seller, pursuant to written notice by the
Seller to Buyer, if any of the conditions set forth in Article VIII have not
been satisfied at or prior to the Closing;
(c) at the election of the Buyer, pursuant to written notice by the
Buyer to the Seller, if any of the conditions set forth in Article VII have not
been satisfied at or prior to the Closing;
(d) at any time on or prior to the Closing Date, by mutual written
consent of the Seller and the Buyer.
10.02 Effect of Termination. In the event that this Agreement is terminated
pursuant to Section 10.01 hereof, it shall become null and void and have no
further force or effect, except as otherwise specifically provided in this
Section 10.02, Section 12.03 and Section 1.02(b) hereof. In furtherance of the
foregoing, the parties hereto expressly agree that upon any such termination
neither party shall have any recourse to the other for monetary damages, except
that if the conditions giving rise to a termination are as a result of the
willful or deliberate actions of one of the parties the non-defaulting party
shall be entitled to recover the out-of-pocket expenses incurred by such party
in connection with negotiating, preparing and entering into this Agreement and
carrying out the transactions contemplated hereby. In addition, in the event of
such termination, Buyer shall immediately discontinue the use of the name,
"Alden", in any and all respects.
ARTICLE XI
POST CLOSING MATTERS
11.01 Preservation of Records. The Buyer agrees for a period of six (6)
years after the Closing, to preserve, retain and permit access to and copying by
the Seller, and its representatives at a location convenient to the Seller, all
books, records, accounts, purchase orders, invoices and other material documents
of or relating to the Seller together with all minute books, seals, share
certificate, share ledgers and other
32
<PAGE>
corporate records and material relinquished by the Seller to the Buyer at the
Closing.
11.02 Provisions Relating to Employees. Except as set forth in Schedule
11.02, employees of the Seller who are employed in the Business on the Closing
Date shall be terminated by the Seller as its employees as of the Closing. The
Buyer shall offer to employ each such person as an "employee-at-will" on the
first business day following the Closing and shall offer such benefits and
salaries comparable to those previously provided or paid by the Seller. The
Buyer shall grant each employee of the Seller who accepts the Buyer's offer of
employment with credit for his years of service with the Seller for purposes of
calculating such employee's right to participate in applicable benefit plans and
programs and the level of such participation.
ARTICLE XII
MISCELLANEOUS
12.01 Certain Definitions. As used in this Agreement, the following terms
shall have the following meanings unless the context otherwise requires:
(a) "Affiliate" means a person that, directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, the Seller or the Buyer, as the case may be;
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Employee Benefit Plan" means each single employer, multiemployer
and multiple employer pension, profit-sharing, stock bonus, money purchase,
retirement, welfare benefit, savings, insurance, vacation pay, severance pay,
stock purchase, stock option, incentive or deferred compensation and bonus plan
or arrangement, and any other employee benefit plan covering employees,
consultants, agents and ex-employees, and their dependents and beneficiaries of
the Seller.
(d) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(e) "GAAP" means generally accepted accounting principles in the
United States of America.
(f) "Guarantied Obligations" means the Note and the following elements
of the Assumed Obligations:
33
<PAGE>
(i) The Seller's and its Subsidiaries' liabilities and
obligations for accounts payable, accrued expenses and for sales commissions,
whether reflected in the Balance Sheet, incurred in the ordinary course from the
Balance Sheet Date through the Closing Date or disclosed in the Disclosure
Schedule,
(ii) The Seller's and its Subsidiaries' liabilities and
obligations for severance, wage and salary and vacation pay and all other
employee benefits of whatever nature, including, without limitation, severance
obligations to Messrs. Kraft, Alexanderson, Sviokla, Farrington and Girouard,
whether reflected in the Balance Sheet, incurred in the ordinary course from the
Balance Sheet Date through the Closing Date or disclosed in the Disclosure
Schedule,
(iii) The Seller's and its Subsidiaries' liabilities and
obligations to be performed or discharged pursuant to purchase orders,
contracts, agreements, leases, permits, approvals and other documents,
commitments, arrangements, undertakings, practices and authorizations, whether
reflected in the Balance Sheet, entered into in the ordinary course from the
Balance Sheet Date through the Closing Date or disclosed in the Disclosure
Schedule,
(iv) The Seller's and its Subsidiaries' liabilities and
obligations for payroll, sales and other taxes, whether reflected in the Balance
Sheet, incurred in the ordinary course from the Balance Sheet Date through the
Closing Date or disclosed in the Disclosure Schedule, and
(v) The Seller's and its Subsidiaries' liabilities and
obligations with respect to Seller's and its Subsidiaries' product warranty
obligations;
provided, however, that the Guarantied Obligations shall be decreased by
the amount thereof that (i) the Buyer is unable to pay or discharge because a
breach of Section 4.10 on account of Seller's failure to disclose to Buyer
written notice of breach under any Contract identified on Schedule 4.10 hereof
has impaired the ability of the Buyer to pay or discharge the Guarantied
Obligations, and (ii) the Buyer would have been entitled to recover for such
breach under Article IX but for the limitations set forth in the last sentence
of Section 9.06.
(g) "Lien" means and includes any lien, security interest, pledge,
charge, option, right of first refusal, claim, mortgage, lease, easement or any
other encumbrance whatsoever.
34
<PAGE>
(h) "Permit" means any notice to, filing or registration with, or
permit, license, variance, waiver, exemption, franchise, order, consent,
authorization or approval of, any foreign, federal, state, county or local
government or any other governmental, regulatory or administrative agency or
authority.
(i) "Seller's Adjusted Working Capital" means the current assets of
the Seller and its Subsidiaries (other than current assets identified in Section
1.01(b), except, with respect to Section 1.01(b)(ii), all of the Seller's Cash
shall be excluded up to $100,000), less the current liabilities of the Seller
and its Subsidiaries (other than the Excluded Liabilities), determined as of the
fifth business day next prior to the Closing Date and in accordance with GAAP,
applied on a basis consistent with past practice, and on a consolidated basis.
(j) "Seller's Excluded Cash" shall mean:
(A) if the Seller's Adjusted Working Capital is $650,000 or less,
Seller's Excluded Cash shall mean an amount equal to (i) the lesser of (1)
$100,000 or (2) the Seller's Cash (as defined in Section 1.01(a) above), reduced
by (ii) the lesser of (1) $25,000 or (2) the product obtained by multiplying .50
times the excess of $650,000 over the Seller's Adjusted Working Capital.
Notwithstanding the foregoing, in no event shall the amount determined under
clause (A)(ii) above exceed the amount determined under clause (A)(i) above; or
(B) if the Seller's Adjusted Working Capital exceeds $650,000,
Seller's Excluded Cash shall equal the Seller's Cash, but if Seller's Cash
exceeds $100,000, Seller's Excluded Cash shall mean an amount equal to (i)
$100,000, increased by (ii) the lesser of (1) $25,000, or (2) the product
obtained by multiplying .50 times the excess of the Seller's Adjusted Working
Capital over $750,000; provided, however, any adjustment under Clause B(ii)
above shall not exceed the amount of the Seller's Cash in excess of $100,000 and
the amount calculated under Clause B(ii)2 above shall be deemed to be zero if
the Seller's Adjusted Working Capital is $750,000 or less. Notwithstanding the
foregoing, if the Seller's Adjusted Working Capital is greater than $800,000,
all of the Seller's Cash shall be excluded from the purchase and sale hereunder,
in which event the Seller's Excluded Cash shall equal the Seller's Cash, except
to the extent that the full exclusion of Seller's Cash results in the Seller's
Adjusted Working Capital (determined without any Seller's Cash) falling below
$800,000.
(k) "Subsidiaries" means Zephyr Weather Information Service, Inc., a
Massachusetts corporation, Alfax Paper
35
<PAGE>
& Engineering Company, Inc., a Massachusetts corporation, Alden International,
Inc., a corporation organized under the laws of U.S. Virgin Islands, and Alfax
Paper of United Kingdom, Limited, a corporation organized under the laws of the
United Kingdom.
(l) "Tax" or "Taxes" means: all foreign, federal, state, county and
local net income, gross income, gross receipts, sales, use, ad valorem,
withholding, employment, payroll, social security, unemployment, disability,
excise, severance, occupation, premium, windfall profits, additional, add on
minimum, franchise, license, profit, real and personal property, capital,
recording, transfer, customs or other taxes, fees, stamp taxes and duties,
assessments or charges of any kind whatsoever relating to taxes, together with
any interest and any penalties, fines, additions to tax or additional amounts
imposed with respect thereto.
(m) "Tax Return" means all income tax, excise tax, sales tax, use tax,
gross receipts tax, franchise tax, employment and payroll related tax, property
tax and all other tax returns, reports and forms required to be filed with
respect to any Taxes.
12.02 Fees and Expenses. Except as set forth in Section 10.02, each of the
parties hereto shall pay its own fees and expenses incident to the negotiation,
preparation and execution of this Agreement, including attorneys', accountants'
and other advisors fees and the fees and expenses of any broker, finder or agent
retained by such party in connection with the transactions contemplated hereby.
12.03 Confidentiality. All documents and other papers and other information
given by any party hereto to any other party shall be considered confidential
and shall be used only for the purposes intended. If this Agreement is
terminated without the Closing having taken place, all documents and other
papers of any party which have been delivered to another party shall be returned
and all copies, summaries and extracts thereof shall be returned or destroyed,
and such delivery and destruction shall be certified by a duly authorized
officer of the party making such delivery or destruction. Notwithstanding
anything herein to the contrary, the provisions of the Confidentiality and
Non-Disclosure Agreement executed by Buyer and dated June 14, 1996 shall remain
in full force and effect, except as modified by the immediately preceding
sentence.
12.04 Bulk Sales. The parties hereto waive compliance with all applicable
bulk sales laws, including without limitation the Uniform Commercial Code Bulk
Transfer provisions.
36
<PAGE>
12.05 Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, or overnight
delivery by a nationally recognized carrier, postage prepaid, to the parties at
the following addresses or at such other addresses as shall be specified by the
parties by like notice, and shall be deemed given when so delivered personally
or if telecopied, upon receipt of confirmation of receipt by sender, or if
mailed, 2 days after the date of mailing, as follows:
if to the Buyer, to: 16255 Ventura Boulevard
Suite 450
Encino, CA 91436
Telecopier No: 818-380-9249
Attention: Thomas T. Gores
with a copy to: Riordan & McKinzie
695 Town Center Drive, Suite 1500
Costa Mesa, CA 92626
Telecopier No: 714-549-3244
Attention: James W. Loss, Esq.
if to the Seller, to: 40 Washington Street
Westboro, Massachusetts 01581
Telecopier No: 508-836-5451
Attention: President
with a copy to: Burns & Levinson LLP
125 Summer Street
Boston, Massachusetts 02110
Telecopier No.: 617-345-3299
Attention: Lawrence M. Levinson, Esq.
12.06 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) contains the entire agreement among the parties with respect
to the purchase of the Assets and related transactions, and merges and
supersedes (i) all prior discussions, agreements and understandings of every
kind and nature between them as to the subject matter hereof, and (ii) all
drafts, correspondence, papers and writings of any kind and character and all
projections and all financial information exchanged by the parties, and no party
hereto shall be bound by any condition, definition, warranty or representations
relating to said subject matter other than as expressly contained in this
Agreement.
37
<PAGE>
12.07 Waivers and Amendments. This Agreement may be, amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties hereto or, in
the case of a waiver, by the party waiving compliance. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
12.08 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by, and construed and enforced in accordance with and subject to, the
laws of the Commonwealth of Massachusetts applicable to agreements made and to
be performed entirely within such Commonwealth. Each of the parties hereto
consents and agrees to the jurisdiction of any State or Federal court sitting in
the County of Suffolk, Commonwealth of Massachusetts and waives any objection
based on venue or forum non conveniens with respect to any action instituted
therein, and agrees that any dispute concerning the conduct of any party in
connection with this Agreement or otherwise shall be heard only in the courts
described above.
12.09 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto and any Indemnified Person or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
12.10 No Assignment. This Agreement is not assignable without the prior
written consent of all of the nonassigning parties hereto.
12.11 Variations in Pronouns. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
12.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
12.13 Exhibits and Schedules. The Exhibits and Schedules to this Agreement
are a part of this Agreement as if set forth in full herein.
38
<PAGE>
12.14 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
12.15 Severability. If any term, provision, covenant or restriction of this
Agreement, or any part thereof, is held by a court of competent jurisdiction or
any foreign, federal, state, county or local government or any other
governmental, regulatory or administrative agency or authority to be invalid,
void, unenforceable or against public policy for any reason, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
ALDEN ELECTRONICS, INC., a
Delaware corporation
By: /s/ Thomas T. Gores
--------------------------
Name: Thomas T. Gores
Title: Chief Executive Officer
ALDEN ELECTRONICS, INC., a
Massachusetts corporation
By: /s/ Robert J. Wentworth
--------------------------
Name: Robert J. Wentworth
Title: President and Chief
Operating Officer
39
ALDEN ELECTRONICS, INC.
INFORMATION STATEMENT
January 8, 1997
Table of Contents
Page
----
Introduction 2
The Transaction 3
Effect of Transaction on Operations of Alden 5
Information About the Acquisition Company 5
Recommendation of Board of Directors of Alden 6
Opinion of O'Conor, Wright Wyman, Inc. 7
Change of Corporate Name 9
Legal Proceedings 10
Security Ownership 10
Market Data 13
Financial Information 14
Rights of Objecting Stockholders 14
Exhibits
Exhibit A - Asset Purchase Agreement
Exhibit B - Fairness Opinion of O'Conor, Wright Wyman, Inc.
Exhibit C - Summary Historical Financial
Information
Exhibit D - Appraisal Rights of Dissenting
Stockholders
<PAGE>
INTRODUCTION
This Information Statement is furnished on behalf of the Board of Directors
of Alden Electronics, Inc., a Massachusetts corporation ("Alden"). It is
intended to describe briefly the proposed actions listed in the Notice of
Special Meeting of Class A Common and Class B Common Stockholders of Alden dated
January 8, 1997 (the "Notice") accompanying this Information Statement and being
considered at the Special Meeting of Class A Common and Class B Common
Stockholders to be held on January 31, 1997 at 9:00 A.M. Eastern Time, at the
principal office of Alden at 40 Washington Street, Westborough, Massachusetts
01581, and any adjournments and postponements thereof (the "Special Meeting").
Capitalized terms not separately defined herein, or in the attachments hereto,
shall have the meanings set forth in the Notice.
The proposed actions of Alden listed in the Notice, including the
Transaction and the name change (collectively, "the Proposals"), are all
components of a plan to transfer substantially all of Alden's operating assets
to Alden Electronics, Inc., a Delaware corporation (the "Acquisition Company"),
which is owned by Thomas T. Gores. As part of the Transaction, the Acquisition
Company will assume substantially all of the liabilities and obligations of
Alden.
THIS INFORMATION STATEMENT IS INTENDED ONLY AS A BRIEF SUMMARY OF THE
TRANSACTIONS CONTEMPLATED BY ALDEN AND DOES NOT PURPORT TO BE COMPLETE.
REFERENCE SHOULD BE MADE TO THE ATTACHED ASSET PURCHASE AGREEMENT FOR A COMPLETE
DESCRIPTION OF THE TERMS AND CONDITIONS OF THE PROPOSED TRANSACTION (AND FOR
DEFINITIONS OF CERTAIN CAPITALIZED TERMS USED HEREIN). ADDITIONAL INFORMATION
RELATING TO THE PROPOSALS AND THE OTHER TRANSACTIONS DESCRIBED IN THIS
INFORMATION STATEMENT IS AVAILABLE AT THE WESTBOROUGH OFFICES OF ALDEN, 40
WASHINGTON STREET, WESTBOROUGH, MASSACHUSETTS 01581.
The Board of Directors recommends approval of the Proposals and the
consummation of the Transaction described in the Notice and this Information
Statement.
Consummation of the Transaction requires the satisfaction or waiver before
Closing of various conditions, among which is the approval of the Transaction by
the Class B Common Stockholders of Alden. Pursuant to Section 75 of Chapter 156B
of the General Laws of Massachusetts, approval of the Transaction requires an
affirmative vote from holders of at least two-thirds (2/3) of the Class B Common
Stock of Alden. In addition, it is a further condition to consummation of the
Transaction, that stockholders of Alden who file a written objection to the
Transaction hold, in the aggregate, no more than 5% of the total number of
shares of common stock of Alden, on a fully converted basis. As of January 2,
1997, there were 2,010,385 shares of Class A Common Stock and 25,000 shares of
Class B Common Stock outstanding.
-2-
<PAGE>
Additional conditions to the consummation of the Transaction are set forth
in greater detail below.
The Class B Common Stock of Alden has sole voting rights unless more than
5,000 shares of Class B Common Stock are converted into Class A Common Stock, at
which time the holders of Class A Common Stock will have sole voting rights.
Each share of Class B Common Stock is convertible, at any time, into seven
shares of Class A Common Stock. In all other respects, the Class A Common Stock
and Class B Common Stock have the same rights, preferences and privileges on a
share for share basis.
THE TRANSACTION
The Acquisition Company has proposed to purchase substantially all of the
operating assets of Alden and its subsidiaries, except the real property and
certain other assets as described in the Asset Purchase Agreement dated December
19, 1996 and attached hereto as Exhibit A (the "Agreement").
The Acquisition Company has proposed to assume substantially all of the
liabilities of Alden and its subsidiaries ("Assumed Liabilities"), including,
without limitation, trade payables, severance, wage, salary and other employee
benefits, obligations and liabilities with respect to product warranty claims,
and obligations under unfilled customer orders for goods and services and
unfilled purchase orders for goods and services. The Assumed Liabilities include
not only the liabilities reflected in Alden's financial statements but certain
long term commitments and obligations and contingent liabilities which may not
be reflected in Alden's financial statements. After the Closing Date (as defined
in the Agreement), Alden remains liable for the Excluded Liabilities (as defined
below) and the Assumed Liabilities, but will be entitled to indemnification from
the Acquisition Company should the Acquisition Company fail to discharge the
Assumed Liabilities.
The Acquisition Company will not assume certain liabilities or obligations
of Alden and its subsidiaries ("Excluded Liabilities") including, without
limitation, Alden's liabilities and obligations under the Agreement, fees and
expenses of counsel, accountants and other advisors of Alden incurred in
connection with the Transaction, liabilities for money borrowed from Fleet Bank,
NA, the principal amount of which was $211,630 as of December 31, 1996, income
taxes relating to the operations prior to the Closing Date, income taxes
incurred as a result of the Transaction, and liabilities arising in connection
with a breach of any representation or warranty given by Alden under the
Agreement.
Pursuant to the Agreement, the Acquisition Company will enter into a Lease
Agreement at the Closing (as defined in the Agreement) whereby the Acquisition
Company will lease from Alden a portion of Alden's real property located in
Westborough, Massachusetts for a period of twelve (12) months following the
Closing at a rental rate of $10,000 per month, triple net. The Acquisition
Company has also agreed to provide, from and after the Closing for a period of
twenty-four (24) months, certain administrative services to Alden.
-3-
<PAGE>
The Acquisition Company will pay to Alden on the Closing Date $125,000 in
cash, of which $25,000 has been placed in escrow as a deposit.
On the Closing Date, the Acquisition Company will also deliver to Alden a
promissory note bearing interest at eight (8%) percent per annum in the
principal amount of $125,000 due in twelve equal monthly installments.
As security for the payment and discharge of the Assumed Liabilities by the
Acquisition Company, Alden will receive a security interest in all of the assets
of the Acquisition Company, for a period of two (2) years following the Closing.
In addition, Thomas T. Gores, the sole stockholder of the Acquisition Company,
has agreed to guarantee personally the payment of the Acquisition Company's
promissory note delivered at Closing and the payment and discharge by the
Acquisition Company of certain of the Assumed Liabilities, for a period of two
(2) years and in an amount not to exceed $700,000.
Alden and the Acquisition Company have also agreed that the Acquisition
Company will maintain minimum levels of working capital for a two year period
following the Closing. This minimum working capital, $300,000 for the first year
and $150,000 for the second year, will no longer be required if the Assumed
Liabilities fall below $700,000.
Alden and the Acquisition Company have each provided in the Agreement
representations and warranties that are typical and standard for transactions of
the type contemplated by the Agreement.
Consummation of the Transaction is subject to the satisfaction of various
conditions which, if not fulfilled or, in some cases, waived, permit termination
of the Agreement. The Agreement provides that it may be terminated at any time
prior to the Closing, whether before or after the approval of the Transaction
and the Agreement by the Class B Common Stockholders of Alden: (i) by either
Alden or the Acquisition Company (A) by mutual consent or (B) if the Closing
does not occur by February 15, 1997; (ii) by Alden, if (A) the Acquisition
Company has breached any representation, warranty or covenant contained in the
Agreement, (B) approval of the Class B Common Stockholders is not obtained at
the Special Meeting, (C) stockholders of Alden who file a written objection to
the Transaction in accordance with Section 86 of Chapter 156B of the
Massachusetts General Laws hold, in the aggregate, more than 5% of the aggregate
number of shares of capital stock of Alden, on a fully converted basis, (D)
there is a material adverse change in the personal financial statement delivered
at Closing of Thomas T. Gores, (E) Alden does not receive the favorable opinion
of its financial advisor, in form and substance acceptable to Alden, and (F)
Alden does not receive certain third party consents that may be necessary in
connection with the Transaction, including third party consents for assignment
of certain contracts identified in the Agreement (the "Contracts") and the
consent of Alden's institutional lender; or (iii) by the Acquisition Company,
(A) if Alden has breached any representation, warranty or covenant contained in
the Agreement, (B) Alden does not receive certain consents that may be necessary
in connection with the Transaction, from parties to the Contracts, (C) Alden's
Adjusted Working
-4-
<PAGE>
Capital (as defined in the Agreement) is less than $600,000, and (D) Alden's
institutional lender does not release its security interest in the Assets.
The Agreement may be amended by the parties thereto, provided such
amendment is in writing, at any time before or after the approval and adoption
of the Agreement and the Transaction by the Class B Common Stockholders of
Alden. After such stockholder approval has been obtained, no amendment of the
Agreement may be made which by law requires the further approval of the Class B
Common Stockholders, without obtaining such further approval.
EFFECT OF TRANSACTION ON OPERATIONS OF ALDEN
If consummated, the Transaction would liquidate the remaining operating
assets of Alden, with the exception of real estate. It is anticipated that Alden
will eventually sell its remaining assets, settle remaining obligations and
provide stockholders with a liquidating dividend if funds are available as
discussed below.
The amount, if any, and timing of any such liquidating dividend is
uncertain and will depend, among other things, on the successful liquidation of
remaining assets and settlement of all remaining obligations, including the
successful discharge of the Assumed Liabilities by the Acquisition Company.
Although the Acquisition Company will assume these liabilities and
indemnify Alden against losses arising from the failure to pay such liabilities,
there can be no assurances that the Acquisition Company will discharge these
liabilities in full or indemnify Alden against such losses. Accordingly,
creditors of Alden may pursue any number of remedies the consequence of which
may be to prevent Alden from paying any dividend to stockholders until all
creditors are paid in full. Creditors of Alden may seek a judicial attachment
upon the Transaction proceeds and Alden's real estate as security for
satisfaction of any judgment they may obtain against Alden. Such an attachment
is a judicial lien that must be satisfied to permit Alden to use the Transaction
proceeds as contemplated or transfer title to a prospective purchaser of the
real estate.
There can be no assurances that Alden will be able to distribute funds to
its stockholders unless and until all creditors' claims have been satisfied.
Moreover, payments to stockholders while Alden is insolvent (or is rendered
insolvent as a result of the distribution) may be recoverable by creditors (or a
creditors' representative, such as a bankruptcy trustee). Thus, any corporate
funds, including proceeds from the sale of any Alden assets such as the real
estate, may have to be reserved or otherwise made available to satisfy
creditors' claims before payments can be made to the stockholders.
INFORMATION ABOUT THE ACQUISITION COMPANY
The Acquisition Company, a Delaware corporation newly-organized to complete
the Transaction, is owned by Thomas T. Gores. Mr. Gores, a resident of
California, is also the founder and principal owner of Platinum Equity Holdings,
an investment company which currently
-5-
<PAGE>
manages a multi-million dollar asset base portfolio of companies which provide
products and services including computer systems, application software and other
types of information services.
RECOMMENDATION OF BOARD OF DIRECTORS OF ALDEN
The Board of Directors of Alden has determined that the Transaction is in
the best interests of Alden and its stockholders. On December 18, 1996 the Board
of Directors of Alden approved the Agreement and unanimously recommended the
approval of the Transaction by the Class B Common Stockholders of Alden.
Approval by the Board of Directors was primarily based upon its
consideration of Alden's history of operating losses, a lack of available liquid
resources, ongoing long term obligations and the need to protect the remaining
assets of Alden. A summary of these considerations is as follows:
Risk of continuing losses - For the three years ended March 31, 1996
Alden experienced accumulated net losses of approximately $8,300,000.
For the most recent six months ended September 30, 1996 an additional
loss of approximately $900,000 occurred. While measures have been
taken to improve operating results (including the elimination of
product lines and reductions in operating costs), there can be no
assurances that these measures will return Alden to consistent
profitable performance.
Lack of available liquid resources - Since 1993, Alden has funded
losses through liquidation of assets and the utilization of credit
from suppliers and financial institutions. On March 27, 1993 (the
start of the period noted above), Alden had net working capital
(current assets less current liabilities) of approximately $7,400,000.
Of this amount, $2,300,000 was represented by cash and cash
equivalents. As of September 30, 1996, Alden's net working capital had
been reduced to approximately $300,000, of which $20,000 was in cash
and cash equivalents.
At December 31, 1996, Alden had no additional credit available from
its institutional lender and the outstanding balance of approximately
$211,000 is currently due and payable. The lender has informed Alden
that it does not wish to extend the remaining balance beyond February
15, 1997.
Significant ongoing obligations - The nature of the products that
Alden sells mandates that it make long term commitments to both
customers and suppliers. Long term commitments to customers involve
contractual obligations to provide equipment, data and service for
periods of up to five years. Long term commitments to suppliers
primarily involve commitments of up to five years for the acquisition
of communications capabilities. While generally accepted accounting
principles do not permit (or require) the recording of these revenues
-6-
<PAGE>
and liabilities until services are provided (or received), they
represent claims against Alden over time. A failure by Alden to honor
these obligations would likely result in an acceleration of these
claims against Alden.
Protection of remaining assets - In light of the foregoing
considerations, the remaining realizable value to stockholders of
Alden resides in its real estate in Westborough, Massachusetts.
Continuation of losses and liquidity requirements of the business
place the value to stockholders of this real estate at risk. The Board
of Directors considers the protection of this asset as the critical
factor in its recommendation to approve the Transaction.
OPINION OF O'CONOR, WRIGHT WYMAN, INC.
In order to evaluate the fairness of the Transaction and of the
consideration for the Transaction, from a financial point of view, to Alden and
the Alden stockholders, the Alden Board of Directors retained the services of
O'Conor, Wright Wyman, Inc. ("OCWW"). On December 5, 1996, OCWW made a
presentation to the Alden Board of Directors with regard to the purpose and
scope of the fairness opinion engagement and the methodology of its analysis,
and delivered to the Board its draft written opinion that, as of the date of
such draft opinion, the Transaction and the consideration for the Transaction
were fair, from a financial point of view, to Alden and the Alden stockholders.
On December 17, 1996, OCWW delivered to the Alden Board of Directors its draft
written opinion to the effect that, as of the date of such draft opinion, the
Transaction and the consideration for the Transaction were fair, from a
financial point of view, to Alden and the Alden stockholders. On January 8,
1997, OCWW delivered to the Alden Board of Directors its written opinion to the
effect that, as of January 8, 1997, the Transaction and the consideration for
the Transaction were fair, from a financial point of view, to Alden and the
Alden stockholders.
OCWW was selected by the Alden Board of Directors on the basis of its
qualifications and expertise in the valuation of businesses and their securities
in connection with mergers and acquisitions and for corporate and other
purposes, as well as its reputation as an investment banking firm. OCWW
evaluated the financial terms of the Transaction and the consideration for the
Transaction, but did not serve as financial advisors to Alden in negotiation of
the terms of the Transaction. OCWW did not determine or recommend the
consideration for the Transaction, but only undertook the reviews, analyses and
inquiries described in its opinion letter to the Alden Board of Directors,
attached hereto as Exhibit B. Alden stockholders are urged to, and should, read
such opinion in its entirety for a summary of assumptions made, procedures
followed, other matters considered and limits of the review by OCWW. The summary
of the opinion which follows is qualified in its entirety by reference to the
full text of such opinion.
In arriving at its opinion, OCWW, among other things:
-7-
<PAGE>
(a) reviewed the Agreement and the ancillary agreements to be executed in
connection therewith, the Promissory Note, the Lease Agreement, the
Security Agreement and the Personal Guaranty;
(b) reviewed the Information Statement dated January 8, 1997 and the
Notice of Special Meeting of the Class A Common and Class B Common
Stockholders of Alden dated January 8, 1997;
(c) reviewed certain historical consolidated financial statements and
public filings of Alden and its subsidiaries, including (i) audited
financial statements for the ten fiscal years ended March 28, 1987
through March 31, 1996; (ii) Form 10-K for the fiscal year ended March
31, 1996; (iii) Forms 10-Q for the fiscal quarters ended June 30, 1996
and September 30, 1996; and (iv) unaudited summary consolidated
financial statements for the seven months ended October 31, 1996 and
for the eight months ended November 30, 1996;
(d) reviewed and discussed with members of Alden's senior management and
Board of Directors (i) Alden's historical and current operations and
financial condition; (ii) certain internal financial information,
analyses and forecasts prepared by management of Alden; (iii) Alden's
future prospects and various reasons for, feasibility of, and risks
related to various prospective courses of action with regard to
Alden's business lines and operating assets, including, without
limitation: (1) sale of substantially all of Alden's operating assets,
(2) continued operation of all of Alden's business lines without the
sale of operating assets, (3) sale of a portion of Alden's operating
assets relating to certain business lines and continued operation of
remaining business lines, and (4) orderly discontinuance of all
business lines and liquidation of all of Alden's operating assets;
(iv) certain descriptive memoranda prepared by Alden with regard to
Alden's principal business lines; (v) the concerted effort made by
Alden to approach the most likely prospective purchasers of all, or
portions, of Alden's operating assets, including the negotiations with
Mr. Gores and other representatives of the Acquisition Company; and
(vi) historical stock prices and public trading volumes of Alden's
Class A Common Stock;
(e) reviewed an unaudited Statement of Financial Condition of Thomas T.
Gores dated August, 1996 (the "Personal Financial Statement") prepared
by Mr. Gores and provided to Alden in support of the Personal Guaranty
to be executed by Mr. Gores, and a related letter dated September 11,
1996 from a certain bank confirming average deposit balances in such
bank for the month of August, 1996 under the sole personal control of
Mr. Gores, and further, conducted discussions with Mr. Gores in
November, 1996 with respect to such Personal Financial Statement and
certain more current financial information (all of such review and
discussions conducted subject to the limitations (i) that OCWW neither
performed nor obtained any independent appraisal or audit of the
assets presented in such Personal Financial Statement and (ii) that
OCWW is not, in its opinion letter or otherwise, rendering any opinion
regarding the accuracy, completeness and reasonableness of the
information presented in such Personal Financial Statement); and
-8-
<PAGE>
(f) performed such other analyses and investigations and considered such
other factors as OCWW deemed appropriate.
OCWW relied, without assuming any responsibility for the independent
verification of such information, upon the accuracy, completeness and
reasonableness of all information, including financial forecasts, whether
provided to OCWW by Alden and its professional advisors, or otherwise publicly
available. OCWW further relied upon the assurance of management of Alden that
they are unaware of any facts that would make the information they provided to
OCWW incomplete or misleading in any material respect. In arriving at its
opinion, OCWW neither performed nor obtained any independent valuation or
appraisal of the assets of Alden. OCWW's opinion is necessarily based upon
economic, market and other conditions and circumstances existing and disclosed
to OCWW that could be evaluated as of the date of its opinion.
The preparation of a fairness opinion is a complex process and involves
various subjective business determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances. Therefore, such an opinion is not susceptible to
partial analysis or summary description. Accordingly, notwithstanding the
separate factors summarized above, OCWW believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors
could create an incomplete and misleading view of the evaluation process
underlying its opinion. OCWW's analyses were prepared exclusively as part of
OCWW's review of the fairness, from a financial point of view, to Alden and the
stockholders of Alden of the Transaction and of the consideration for the
Transaction, in connection with the delivery of OCWW's opinion. In addition,
OCWW's opinion and presentation to the Alden Board of Directors was only one of
many factors taken into consideration by the Alden Board of Directors in its
determinations with regard to the proposed Transaction.
Pursuant to the terms of the engagement of OCWW for the purpose of
rendering its fairness opinion, Alden agreed to pay OCWW a fee and to reimburse
OCWW for certain expenses and Alden agreed to indemnify OCWW and certain related
parties against certain liabilities. Alden's obligation for payment of OCWW's
fees and expenses was not contingent upon OCWW's issuance of a favorable opinion
letter or upon completion of the proposed Transaction. Neither OCWW nor the
individuals involved with OCWW's opinion have any present or contemplated future
interest in Alden, the Acquisition Company or the proposed Transaction.
CHANGE OF CORPORATE NAME
Alden has proposed to effect a change of its name from "Alden Electronics,
Inc." to "AEIRE Corp.". The purpose of the name change is to enable Alden to
transfer its name to the Acquisition Company as part of the Transaction. The
vote taken at the Special Meeting will include specific authorization of an
amendment to Alden's Articles of Organization to effect the change of name.
-9-
<PAGE>
Pursuant to Section 70 of Chapter 156B of the General Laws of
Massachusetts, a proposal to amend Alden's Articles of Organization to effect a
change of name requires a vote of the holders of at least a majority of the
Class B Common Stock.
LEGAL PROCEEDINGS
As of the date of this Information Statement, there are no legal
proceedings to which Alden is a party or to which any of its property is
subject.
SECURITY OWNERSHIP
As of January 2, 1997, the following persons were the beneficial owners of
more than five percent of the Class B Common Stock:
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------- -------------------- --------
Elizabeth J. Alden 7,000 Shares. (1) 28%
68 Dover Road Sole Voting and
Wellesley, MA 02181 investment power
9,000 Shares. (2) 36%
Shared voting and
investment power
Joan K. Alden 7,000 Shares. (1) 28%
380 Grove Street
Needham, MA 02192
William L. Alden 9,000 Shares. (2) 36%
40 Washington Street Shared voting and
Westborough, MA 01581 investment power
Henry C. Horner 4,500 Shares. (3) 18%
370 Main Street Sole Voting and
Worcester, MA 01608 investment power
John Sands 1,500 Shares. 6%
5 Carpenter Lane Sole voting and
Marshfield, MA 02054 investment power
Priscilla Beck 1,500 Shares. 6%
37 Oldham Road Sole voting and
Pembroke, MA 02359 investment power
-10-
<PAGE>
Janet Samson 1,500 Shares. 6%
12715 Fredericksburg Drive Sole voting and
Saratoga, CA 95070 investment power
The Bank of Boston 9,000 Shares. (2) 36%
100 Federal Street Shared voting and
Boston, MA 02210 investment power
Frances H. Nolan 7,000 Shares. (1) 28%
Miller, Wachman & Co.
40 Broad Street
Boston, MA 02109
(1) Held as Trustee of the John M. Alden GST Exempt Qualified Terminable
Interest Marital Deduction Trust. Elizabeth J. Alden exercises sole voting
and investment control of the shares of Class B Common Stock held by the
Trust. Joan K. Alden is the sole beneficiary of the Trust.
(2) Held as Trustee of the Trust under Article Fifth of the Milton Alden
Trust-1960.
(3) These shares are held by Henry C. Horner as Trustee of the Judith G. Alden
Irrevocable Trust-1986 of which William L. Alden, a Director of Alden, is
the sole beneficiary.
The following table sets forth, as of January 2, 1997, the amount of Class
A Common Stock and Class B Common Stock beneficially owned by (i) each director
of Alden, (ii) each executive officer of Alden, and (iii) all directors and
officers of Alden as a group.
Name of Director, Title
Executive Officer of Amount and Nature of Percent
or Identity of Group Class Beneficial Ownership of Class (2)
- -------------------- ----- -------------------- ------------
Elizabeth J. Alden Class B (i) 9,000 Shares. 36%
Shared voting and
investment power.
(ii) 7,000 Shares. 28%
Sole voting and
investment power.
Class A (i) 194,612 Shares. (4) 9%
Shared voting (3) and
investment power.
-11-
<PAGE>
(ii) 158,620 Shares. (1) 7%
Sole voting (3) and
investment power.
William L. Alden (5) Class B 9,000 Shares. 36%
Shared voting and
investment power.
Class A 194,612 Shares. (4) 9%
Shared voting (3) and
investment power.
J. David Luening Class A 10,000 Shares. Less
Sole voting (3) and than 1%
investment power.
George P. Bauer Class A 190,000 Shares. 9%
Sole voting (3) and
investment power.
All Directors and
Officers as a Group (5) Class B (i) 9,000 Shares. 36%
Shared voting (3) and
investment power.
(ii) 7,000 Shares. 28%
Sole voting (3) and
investment power.
Class A (i) 358,620 Shares. (1) 17%
Sole voting (3) and
investment power.
(ii) 194,612 Shares. (4) 9%
Shared voting (3) and
investment power.
(1) This amount includes 49,000 shares which may be acquired upon conversion of
Class B Common Stock.
(2) The percentage for the Class A Common Stock is based upon outstanding
shares and assumes the conversion of all shares of Class B Common Stock
(25,000 shares) into Class A Common Stock (175,000 shares).
-12-
<PAGE>
(3) Class B Common Stock has sole voting rights unless more than 5,000 shares
of Class B Common Stock are converted into Class A Common Stock, at which
time the holders of Class A Common Stock will have sole voting rights.
(4) This amount includes 63,000 shares which may be acquired upon conversion of
Class B Common Stock.
(5) Amounts shown in this table do not include 83,910 shares of Class A Common
Stock and 4,500 shares of Class B Common Stock held by Henry C. Horner as
Trustee of the Judith G. Alden Irrevocable Trust-1986 of which William L.
Alden, a Director of Alden, is sole beneficiary.
MARKET DATA
Alden's Class A Common Stock is principally traded on The NASDAQ Small Cap
Market under the symbol "ADNEA" and has been so traded since January, 1985. Such
stock is also traded on the Boston Stock Exchange under the symbol "ADN". The
following table sets forth the quarterly high and low sales prices on The NASDAQ
Small Cap Market for Alden's Class A Common Stock for the quarters indicated:
High Low
---- ---
Quarter Ended March 31, 1995 $2-1/2 $2
Quarter Ended June 30, 1995 $2-3/4 $2
Quarter Ended September 30, 1995 $2-5/8 $2-1/4
Quarter Ended December 31, 1995 $2-3/8 $1-1/4
Quarter Ended March 31, 1996 $1-3/8 $ 3/4
Quarter Ended June 30, 1996 $1-3/8 $ 5/8
Quarter Ended September 30, 1996 $15/16 $ 5/8
Quarter Ended December 31, 1996 $11/16 $ 5/16
On December 30, 1996, the last sales price per share on The NASDAQ Small
Cap Market for the Class A Common Stock was $23/64.
By letter dated January 6, 1997, NASDAQ informed Alden that its Class A
Common Stock will be delisted from The NASDAQ Small Cap Market, effective with
the close of business on January 13, 1997, due to the fact that the closing bid
price for such stock had fallen below $1.00 per share for ten consecutive trade
dates and Alden will not be able to satisfy NASDAQ's capital, surplus and public
float continued listing eligibility requirements.
The Class B Common Stock is not publicly traded.
-13-
<PAGE>
Alden has not paid any dividends during the last three (3) years.
FINANCIAL INFORMATION
Summarized historical balance sheet and statement of operations data of
Alden are included with this Information Statement as Exhibit C. The balance
sheet data as of March 31, 1996 and 1995 and the statement of operations data
for the years ended March 31, 1996, 1995 and 1994 are derived from audited
financial statements included in Alden's Annual Report on Form 10-K for the year
ended March 31, 1996. The balance sheet data as of September 30, 1996 and the
statement of operations data for the six months ended September 30, 1996 are
derived from unaudited financial statements included in Alden's Report on Form
10-Q for the six months ended September 30, 1996.
The summarized historical financial data of Alden set forth in Exhibit C do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. Such summarized
historical financial data should be read in conjunction with the audited and
unaudited financial statements and related notes thereto for Alden which are
included in Alden's Report on Form 10-K for the year ended March 31, 1996 and
Report on Form 10-Q for the six months ended September 30, 1996, copies of which
are available upon request from Alden.
RIGHTS OF OBJECTING STOCKHOLDERS
Pursuant to Massachusetts law, Class A and Class B Common Stockholders have
the right to object to the Transaction and, if the Transaction is made, to
receive compensation equal to the fair value of their shares of Alden's stock.
Alden and any stockholders desiring to exercise such statutory appraisal rights
will have the rights and duties and must follow the procedures set forth in
section 76 and in sections 86 through 98, inclusive, of chapter 156B of the
General Laws of Massachusetts in order to perfect such rights. A brief summary
of section 76 and sections 86 through 98, inclusive, of chapter 156B of the
General Laws of Massachusetts is set forth below. THE FOLLOWING SUMMARY DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE THEIR STATUTORY APPRAISAL RIGHTS AND IS
QUALIFIED IN ITS ENTIRETY BY EXPRESS REFERENCE TO THOSE SECTIONS, THE FULL TEXT
OF WHICH IS INCLUDED IN EXHIBIT D ATTACHED HERETO. STOCKHOLDERS ARE URGED TO
READ EXHIBIT D IN ITS ENTIRETY SINCE FAILURE TO COMPLY WITH THE PROCEDURES SET
FORTH THEREIN MAY RESULT IN THE LOSS OF STATUTORY APPRAISAL RIGHTS.
To exercise appraisal rights under Massachusetts law, a stockholder must
(i) deliver to Alden, before the stockholder vote on the action giving rise to
such appraisal rights, a written objection to such action stating that such
stockholder intends to demand payment for his or her shares through the exercise
of his or her statutory appraisal rights if such action is consummated, (ii) not
vote in favor of or consent to such action and (iii) within twenty (20) days
after the date of
-14-
<PAGE>
mailing to such stockholder of a written notice that the
action giving rise to such rights has been consummated or become effective, make
written demand upon Alden for payment of his or her shares and an appraisal of
the value thereof. Alden shall, within ten (10) days after the date on which
such action became effective, notify each stockholder who filed written
objection meeting the requirements of Section 86 and whose shares were not voted
in favor of such action that the action approved at the meeting of stockholders
has become effective. The written objection described in clause (i) above may be
sent to Alden, c/o Robert C. Rives, Jr., Esq., Burns & Levinson LLP, 125 Summer
Street, Boston, MA 02110-1624.
Once written demand for payment is made as described above, if the
dissenting stockholder and Alden reach agreement on the fair value of such
stockholder's shares, Alden will pay to such stockholder the fair value of such
shares, within thirty (30) days after the expiration of the period during which
the demand may be made. If, within such thirty-day (30-day) period, the parties
fail to agree as to the fair value of such shares, Alden or the stockholder may
have such fair value determined by judicial proceedings by filing a bill in
equity in Massachusetts Superior Court for Worcester County within four (4)
months after the thirty-day (30-day) period expires. For the purposes of
Superior Court determination, the value of the shares is to be determined as of
the day preceding the date of the vote of the stockholders approving the action
giving rise to the appraisal rights, and shall be exclusive of any element of
value arising from the expectation or accomplishment of such action.
Failure to satisfy all of the conditions described above and set forth in
section 76 and sections 86 through 98, inclusive, of chapter 156B of the General
Laws of Massachusetts will preclude a stockholder's claim of statutory appraisal
rights under Massachusetts law. However, a stockholder who fails to perfect his
or her statutory appraisal rights will nevertheless remain a stockholder of
Alden entitled to all the rights and benefits appurtenant thereto.
Under section 98 of chapter 156B of the General Laws of Massachusetts, the
enforcement by a dissenting stockholder of such stockholder's right to receive
payment for his or her shares in the manner provided by section 76 and sections
86 through 98, inclusive, of chapter 156B of the General Laws of Massachusetts
is stated to be the exclusive remedy of a stockholder objecting to the
Transaction, except upon the grounds that consummation of the Transaction will
be or is illegal or fraudulent as to that stockholder.
-15-
