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): June 3, 1996
TESSCO Technologies Incorporated
(Exact name of registrant as specified in its charter)
Delaware 0-24746 52-0729657
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
34 Loveton Circle, Sparks, Maryland 21152-5100
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 472-7000
Not applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On May 7, 1996, the Registrant and Cartwright Communications
Company ("Cartwright"), entered into an Asset Purchase
Agreement (the "Agreement") whereby the Registrant would
acquire substantially all of Cartwright's assets (excluding
real estate) for $3.0 million in cash and an $800,000 note,
plus the net value of inventory, receivables and payables.
Cartwright is a value-oriented distributor of radio
communications equipment throughout the United States. The
purchase price was determined by negotiations between the
parties. The transactions contemplated by the Agreement were
consummated on June 3, 1996.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
It is impracticable for the Registrant to provide the required
financial statements at the time of the filing of this Report.
The Registrant will file the required financial statements as
soon as practicable, but no later than sixty (60) days after
the date this Report was required to be filed.
(b) Pro Forma Financial Information.
It is impracticable for the Registrant to provide the required
pro forma financial information at the time of the filing of
this Report. The Registrant will file the required pro forma
financial information as soon as practicable, but no later
than sixty (60) days after the date this Report was required
to be filed.
(c) Exhibits.
Exhibit No.
2 Asset Purchase Agreement dated May 7, 1996, by and between
TESSCO Technologies Incorporated and Cartwright Communications
Company.
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SIGNATURE
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.
TESSCO Technologies Incorporated
Date: June 11, 1996 By: /s/ Gerald T. Garland
---------------------------
Gerald T. Garland
Chief Financial Officer and Treasurer
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Exhibit 2
Asset Purchase Agreement
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ASSET PURCHASE AGREEMENT
BETWEEN
CARTWRIGHT COMMUNICATIONS COMPANY
("Seller")
AND
TESSCO TECHNOLOGIES INCORPORATED
("Purchaser")
MAY 7, 1996
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ASSET PURCHASE AGREEMENT
BETWEEN
CARTWRIGHT COMMUNICATIONS COMPANY
AND
TESSCO TECHNOLOGIES INCORPORATED
TABLE OF CONTENTS
RECITALS ....................................................................1
SECTION 1. DEFINITIONS..............................................1
1.01 Accounts Receivable......................................1
1.02 Accounts Receivable Balance..............................1
1.03 Acquired Assets..........................................1
1.04 Assignment and Assumption Agreement......................2
1.05 Assumed Contracts .......................................2
1.06 Assumed Payables.........................................2
1.07 Audited Financial Statements . . . . . . ................2
1.08 Base Purchase Price . . . . . . .........................2
1.09 Base Purchase Price Note.................................2
1.10 Business Records.........................................2
1.11 Cartwright Facility .....................................2
1.12 Cartwright Noncompetition Agreement. . ..................2
1.13 Closing Date.............................................2
1.14 Corporate Noncompetition Agreement............................2
1.15 Cost.....................................................3
1.16 Current Inventory........................................3
1.17 Intangibles..............................................3
1.18 Inventory................................................3
1.19 Inventory Value..........................................3
1.20 Noncurrent Inventory.....................................3
1.21 Obsolete Inventory.......................................4
1.22 Other Tangible Personal Property.........................4
1.23 Seller's Knowledge.......................................4
1.24 Shares...................................................4
1.25 Warehouse Lease..........................................4
SECTION 2. PURCHASE AND SALE........................................4
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SECTION 3. PURCHASE PRICE...........................................5
3.01 In General...............................................5
3.02 Payment of Base Purchase Price ..........................5
3.03 Payment of Accounts Receivable Balance...................5
3.04 Payment of Inventory Value...............................5
3.05 Determination of Inventory...............................5
3.06 Adjustment for Returned Merchandise .....................6
3.07 Method of Payment .......................................6
3.08 Allocation of Purchase Price.............................7
3.09 No Assumption of Liabilities.............................7
3.10 Deposit; Escrow Arrangement..............................7
SECTION 4. CLOSING..................................................7
4.01 Time and Place...........................................7
4.02 Seller's Obligations at Closing..........................7
4.03 Purchaser's Obligations at Closing.......................8
4.04 Purchaser's Conditions Precedent to Closing..............9
4.05 Sellers' Conditions Precedent to Closing.................9
4.06 Further Assurances......................................10
4.07 Operations Pending Closing..............................10
4.08 Cooperation in Satisfying Conditions Precedent..........10
SECTION 5. ADDITIONAL COVENANTS....................................11
5.01 Sales, Etc. Taxes.......................................11
5.02 Bulk Sales Act..........................................11
5.03 Risk of Loss............................................11
5.04 Survival of Representations and Warranties..............11
5.05 Employees...............................................12
5.06 Access to Information...................................12
5.07 Publicity...............................................13
5.08 Lease of Cartwright Facility ...........................13
5.09 Removal of Fixtures; Restoration
of Cartwright Facility ..........................13
5.10 Cost of Audited Financial Statements ...................13
5.11 Preservation of and Access to Books and Records ........14
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER................14
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6.01 Corporate Organization..................................14
6.02 Authorization...........................................14
6.03 No Violation............................................14
6.04 Consents................................................15
6.05 Books, Records, and Financial Statements................15
6.06 Taxes...................................................15
6.07 Inventory and Other Tangible Property...................15
6.08 Insurance...............................................15
6.09 Compliance with Law ....................................16
6.10 Licenses and Permits....................................16
6.11 Title to Assets.........................................16
6.12 Accounts Receivable.....................................16
6.13 Intangibles.............................................17
6.14 No Litigation or Adverse Events.........................17
6.15 Contracts and Commitments...............................17
6.16 Outstanding Proposals ..................................17
6.17 Liabilities of Acquisition Sub .........................18
6.18 No Broker's or Finder's Fees or
Professional Fees................................18
6.19 Material Misstatements or Omissions.....................18
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.............18
7.01 Organization............................................18
7.02 Authorization...........................................18
7.03 No Violation............................................19
7.04 Consents................................................19
7.05 Material Misstatements or Omissions.....................19
SECTION 8. INDEMNIFICATION ........................................19
8.01 Indemnification by Seller ..............................19
8.02 Indemnification by Purchaser............................20
8.03 Costs and Expenses......................................20
8.04 Limitation on Claims....................................20
SECTION 9. MISCELLANEOUS...........................................20
9.01 Incorporation of Recitals, Exhibits,
and Schedules.........................................20
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9.02 Governing Law...........................................20
9.03 Headings................................................21
9.04 Notices.................................................21
9.05 Successors and Assigns..................................21
9.06 Assignment..............................................21
9.07 Entire Agreement; Amendments............................22
9.08 Counterparts............................................22
9.09 Arbitration of Certain Disputes.........................22
9.10 Time of the Essence.....................................22
EXHIBITS:
Exhibit A - Assignment and Assumption Agreement
Exhibit B - Base Purchase Price Note
Exhibit C-1 - Cartwright Noncompetition Agreement
Exhibit C-2 - Corporate Noncompetition Agreement
Exhibit D - Warehouse Lease
Exhibit E - Assignment Separate from Certificate
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SCHEDULES:
Schedule 1.05 .......... Assumed Contracts
Schedule 1.20 .......... Noncurrent Inventory
Schedule 1.21 .......... Obsolete Inventory
Schedule 1.23 .......... Other Tangible Personal Property
Schedule 3.08 .......... Allocation of Purchase Price
Schedule 6.07 .......... Certain Matters Relating to Inventory
Schedule 6.11 .......... Encumbrances
Schedule 6.12 .......... Accounts Receivable
Schedule 6.16 .......... Outstanding Proposals
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of
the 7th day of May, 1996, by and between CARTWRIGHT COMMUNICATIONS COMPANY, an
Ohio corporation ("Seller"), and TESSCO TECHNOLOGIES INCORPORATED, a Delaware
corporation ("Purchaser").
RECITALS
Seller is engaged in the sale and distribution of wireless
communications equipment and supplies and other products (the "Cartwright
Business"). Seller desires to sell and Purchaser desires to acquire
substantially all of Seller's assets. In order to effect the acquisition as a
purchase of stock, rather than as a purchase of assets, by Purchaser, Seller (as
more fully set forth below) has agreed to cause the assets to be acquired to be
transferred to a newly-formed Delaware corporation ("Acquisition Sub") in
exchange for shares of the capital stock of Acquisition Sub and to sell such
shares to Purchaser on the terms and subject to the conditions hereinafter set
forth.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and the
mutual promises of the parties herein contained, the parties intending to be
legally bound hereby agree as follows:
1. DEFINITIONS. Except as otherwise expressly provided
herein, the following terms have the meanings set forth in this section:
1.01. "Account Receivable" means the balance owing
to Seller as of the Closing Date from any particular customer of Seller arising
from the sale of merchandise by Seller to such customer, net of reserves or
charges (if any) reflected on Seller's books and records with respect to that
particular customer in accordance with Seller's customary accounting practices
and subject to any subsequent reductions or credits made on account of damaged,
defective, or returned merchandise, all as reasonably determined by Purchaser in
consultation with Seller.
1.02. "Accounts Receivable Balance" means the
aggregate total as of the Closing Date of the Accounts Receivable.
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1.03. "Acquired Assets" means the Accounts
Receivable, the Inventory, the Intangibles, the Business Records, and the Other
Tangible Personal Property. Specifically excluded from such term are cash,
marketable securities and other cash-equivalents, and the Cartwright Facility.
1.04. "Assignment and Assumption Agreement" means
the Assignment and Assumption Agreement between Acquisition Sub and Seller
in substantially the form of Exhibit A.
1.05. "Assumed Contracts" means those contracts,
license agreements, service agreements, leases of tangible personal property,
and other obligations of a contractual nature (if any) identified in Schedule
1.05.
1.06. "Assumed Payables" means those trade accounts
payable of Seller that Purchaser, in its sole discretion, elects to assume and
discharge by notice to Seller given on or before the Closing Date.
1.07. "Audited Financial Statements" means balance
sheets as of December 31, 1995 and 1994, and statements of income, cash flows,
and changes in stockholders equity for each of the three years in the period
ended December 31, 1995 of Seller, together with the report thereon of
independent public accountants dated March 29, 1996, prepared and certified
(as defined in Regulation S-X) by Arthur Andersen LLP.
1.08. "Base Purchase Price" means $3,800,000.
1.09. "Base Purchase Price Note" means the
promissory note of Purchaser in favor of Seller in the amount of $800,000 in
substantially the form of Exhibit B.
1.10. "Business Records" means all files, records,
documents, and other written or otherwise recorded (including machine-readable)
materials and information relating to the Cartwright Business but excluding
charter documents, bylaws, minutes of meetings of the board of directors and
stockholders of Seller, and other, similar corporate documents that do not
relate to the Acquired Assets.
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1.11. "Cartwright Facility" means the real property
and improvements thereon from which the Cartwright Business is conducted, but
such term does not include trade fixtures included within the meaning of "Other
Tangible Personal Property."
1.12. "Cartwright Noncompetition Agreement" means
the Noncompetition Agreement between Purchaser and William Cartwright in
substantially the form of Exhibit C-1.
1.13. "Closing Date" means the date on which Closing
occurs as provided in section 4.01.
1.14. "Corporate Noncompetition Agreement" means the
Noncompetition Agreement between Purchaser and Seller in substantially the form
of Exhibit C-2.
1.15. "Cost" with respect to any unit of
Inventory means the amount reflected as per-unit "Cost" in Schedule 1.15 or,
if not reflected therein, Seller's actual cost for such unit of Inventory as
reflected on Seller's books and records, which actual cost shall be subject to
verification by Purchaser.
1.16. "Current Inventory" means those items (and
only those items) of Inventory that: (i) are not Noncurrent Inventory and (iii)
are not Obsolete Inventory.
1.17. "Intangibles" means all of Seller's rights
to trademarks, logos, trade names, contract rights, chooses in action,
goodwill, customer lists, and other items of intangible personal property in
any way relating to the Cartwright Business, including but not limited to
the names "Cartwright" and "Cartwright Communications," but excluding any
amount due Seller in respect of a warranty or similar claim against one of
Seller's suppliers or vendors but only if and to the extent any such claim (i)
relates to or arises out of Inventory on hand as of the Closing Date that is
not sold to Purchaser or (ii) relates to or arises out of a sale by Seller to
one of Seller's customers that occurred before the Closing Date with
respect to which there is no amount due from such customer that is included in
the Accounts Receivable Balance.
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1.18. "Inventory" means all goods held by or on
behalf of, or for the benefit of, Seller for sale to customers in the
ordinary course of the Cartwright Business, together with all related packing
and packaging materials, and all consumable supplies held for use in the
Cartwright Business.
1.19. "Inventory Value" means (i) the aggregate
Cost of the Current Inventory as of the Closing Date plus (ii) one-half of
the aggregate Cost of the Noncurrent Inventory as of the Closing Date.
1.20. "Noncurrent Inventory" means:
(a) any item of Inventory identified in
Schedule 1.20A to the extent of the greater of:
(i) the total quantity of such item on
hand as of the Closing Date less the quantity shown as "Current
Inven." in such Schedule; and
(ii) the lesser of (a) the quantity shown
as "Non-Current Inven." in such Schedule and (b) the total quantity of such
item on hand as of the Closing Date.
(b) any item of Inventory identified in
Schedule 1.20B to the extent that the quantity of such item on hand as of the
Closing Date exceeds the total quantity of such items sold by Seller in the one
(1) year period ending on the Closing Date.
1.21. "Obsolete Inventory" means any item of
Inventory: (i) that is identified in Schedule 1.21, (ii) that is damaged or
defective and as such is not saleable or useable (other than at a reduced
price or as scrap) or is otherwise below standard quality, (iii) with
respect to which there have been no sales in the twelve (12) month period
ending on the last day of the month preceding the Closing Date, (iv) that is
no longer being manufactured as of the Closing Date, or (v) that Seller has
reason
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to believe is not saleable within the twelve (12) months following the
Closing Date.
1.22. "Other Tangible Personal Property" means
the furniture, trade fixtures, equipment, and other tangible personal
property identified in Schedule 1.23.
1.23. "Seller's Knowledge" means the actual
knowledge, after due inquiry (unless otherwise provided herein), of William
Cartwright.
1.24. "Shares" means the shares of capital stock
of Acquisition Sub to be issued to Seller and transferred to Purchaser as
contemplated by sections 2 and 4, which shares shall constitute all such shares
issued and outstanding as of the Closing Date.
1.25. "Warehouse Lease" means a Lease of the
Cartwright Facility in substantially the form of Exhibit D.
The following additional terms are defined elsewhere in this Agreement:
"Accountants" .................... Section 3.06
"Acquisition Sub" ................ Recitals
"Cartwright Business" ............ Recitals
"Closing" ........................ Section 4.01
"Closing Inventory" .............. Section 3.03
"Encumbrances" ................... Section 6.11
"Outstanding Proposals" .......... Section 6.16
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2. PURCHASE AND SALE.
Seller hereby agrees to transfer the Acquired Assets
to Acquisition Sub on the Closing Date and to sell, assign, and transfer the
Shares to Purchaser, and Purchaser hereby agrees to purchase and accept the
Shares from Seller, all on the terms and subject to the conditions herein set
forth.
3. PURCHASE PRICE.
3.01. In General. The purchase price of the
Shares shall be the sum of (i) the Base Purchase Price, (ii) an amount equal
to the Accounts Receivable Balance, and (iii) an amount equal to the
Inventory Value.
3.02. Payment of Base Purchase Price. On the
Closing Date, Purchaser shall: (a) pay to Seller an amount equal to (i) the
Base Purchase Price less (ii) the principal amount of the Base Purchase Price
Note less (iii) the aggregate face amount of the Assumed Payables; (b) execute
and deliver to Seller the Base Purchase Price Note; and (c) cause Acquisition
Sub to execute and deliver to Seller the Assignment and Assumption
Agreement.
3.03. Payment of Accounts Receivable Balance. On
the Closing Date, Purchaser shall pay to Seller an amount equal to one
hundred percent (100%) of the Accounts Receivable Balance. Notwithstanding
the foregoing, however, Purchaser shall be entitled to offset the aggregate
amount (or any portion thereof as Purchaser may elect) of any Accounts
Receivable that remain outstanding three (3) months after the Closing Date (the
"Uncollected Receivables Credit") against any payments next becoming due
under the Base Purchase Price Note. Any outstanding Accounts Receivable that
Purchaser elects to include in the Uncollected Receivables Credit shall
promptly be reassigned to Seller.
3.04. Payment of Inventory Value. On the Closing
Date, Purchaser shall pay to Seller an amount equal to one hundred percent
(100%) of the Inventory Value.
3.05. Determination of Inventory. On or
immediately before the Closing Date, Seller shall make the
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Inventory available to Purchaser. Seller and Purchaser shall cause a physical
count or verification of the Inventory to be conducted as of the Closing Date,
the results of which (the "Closing Inventory") shall promptly be made available
to both parties. Unless the parties have agreed to some other method of
presentation, such results shall also include the Cost of each unit of Inventory
and an indication with respect to each unit of Inventory whether it is Current
Inventory or Noncurrent Inventory. Seller and Purchaser and their
representatives may observe the conduct of the physical count of the Inventory
and may otherwise review the work done (including without limitation any
relevant workpapers) in the preparation of the Closing Inventory, as well as any
and all records of Seller relating to Cost.
3.06. Adjustment for Returned Merchandise.
Notwithstanding any other provision hereof (but subject to section 8.04), in
the event that (i) any merchandise is sold by Seller to a customer on or before
the Closing Date, (ii) the amount due Seller with respect to such sale is
included in the Accounts Receivable, and (iii) such merchandise is returned
to Purchaser or Acquisition Sub for credit or refund after the Closing Date
consistent with Seller's customary policies or practices relating thereto,
then Purchaser shall be entitled to offset against any amount otherwise due
Seller hereunder the amount refunded or credited to the customer with respect to
such returned merchandise, whereupon Seller shall be entitled to pursue any
claims that may exist against the supplier of such merchandise.
3.07. Method of Payment. Except as may otherwise
be agreed by the parties, all payments due hereunder shall be made by wire
transfer of immediately available federal funds.
3.08. Allocation of Purchase Price. The parties
agree that the Purchase Price shall be allocated as set forth in Schedule
3.08 and that such allocation shall be used for federal, state, and local
income tax purposes.
3.09. No Assumption of Liabilities. Except for
(i) the Assumed Payables, (ii) obligations under the Assumed Contracts
that relate to goods received by or services rendered to Purchaser or
Acquisition Sub, or that otherwise accrue, after the Closing Date, and (iii)
amounts due on account of warranty,
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product liability, or similar claims or obligations arising out of sales by
Purchaser or Acquisition Sub of Inventory transferred to Acquisition Sub by
Seller (all of which obligations shall be assumed by Acquisition Sub as
provided in the Assignment and Assumption Agreement), neither Purchaser nor
Acquisition Sub shall assume or be liable for any obligations of Seller
arising out of the Cartwright Business. All such liabilities and obligations
not expressly assumed by Purchaser or Acquisition Sub that are incurred by
Seller or arise out of the Cartwright Business before the Closing Date, or that
otherwise accrue before the Closing Date and relate to the Acquired Assets
(including but not limited to accounts payable that are not Assumed Payables,
accrued compensation, and other accrued expenses and all amounts due on account
of warranty, product liability, or similar claims or obligations arising
out of sales by Seller made on or before the Closing Date), shall be the
responsibility of, and shall be promptly discharged when due by, Seller.
3.10. Deposit; Escrow Arrangement. At or before
the execution by Seller of this Agreement, Purchaser has deposited the sum
of $1,000,000 (the "Deposit") as earnest money pursuant to an Escrow
Agreement among Purchaser, Seller, and Graydon, Head & Ritchey as Escrow
Agent. The Deposit shall be held in accordance with the Escrow Agreement and
applied against that portion of the Base Purchase Price payable in cash at the
Closing.
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4. CLOSING.
4.01. Time and Place. The closing of the
transactions contemplated by this Agreement (the "Closing") shall commence
at 10:00 a.m. on May 31, 1996, and continue thereafter until completed at a
mutually agreeable location in Cincinnati, Ohio, or at such other place, date,
and time as the parties may agree in writing. The Closing shall be deemed to
have occurred as of the close of business on the Closing Date. In the
event that the Closing does not commence on or before the date aforesaid or
continue thereafter to completion on account of the failure of any of the
conditions set forth in sections 4.04 and 4.05, then, unless the parties
have agreed in writing to extend the date for Closing (and subject in any
event to section 4.08), the party whose obligations are subject to the
condition that is not satisfied shall have the absolute right in its sole
discretion to terminate this Agreement without any liability to the other party.
4.02. Seller's Obligations at Closing. At the
Closing, Seller shall:
(a) assign and transfer the
Acquired Assets to Acquisition Sub in exchange for the Shares by executing
and delivering to Acquisition Sub the Assignment and Assumption
Agreement, together with assignments of Seller's rights under the Assumed
Contracts to the extent set forth in Schedule 1.05;
(b) deliver or cause to be delivered
to Purchaser: (i) an Assignment of the Shares in substantially the form
of Exhibit E, together with the certificate(s) evidencing the Shares;
(ii) the Corporate Noncompetition Agreement, and (iii) the Warehouse
Lease, all duly executed by Seller and accompanied by such consents of third
parties as may be necessary;
(c) deliver or cause to be
delivered to Purchaser the Cartwright Noncompetition Agreement duly executed
by William Cartwright;
(d) deliver or cause to be
delivered to Purchaser an opinion of counsel in form and substance
reasonably satisfactory to Purchaser and its counsel with respect to legal
matters relating to the transactions contemplated hereby; and
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(e) such other documents,
certificates, and instruments as Purchaser may reasonably request, including
but not limited to certificates of resolutions and incumbency and certificates
relating to the accuracy as of the Closing Date of the representations and
warranties made by Seller in connection herewith.
Simultaneously with the consummation of the transfer of the Acquired Assets to
Acquisition Sub, Seller, through its officers, agents, and employees, shall put
acquisition Sub into full possession and enjoyment of the Acquired Assets.
4.03. Purchaser's Obligations at Closing. At the
Closing, Purchaser shall pay to Seller that portion of the Purchase Price
payable on the Closing Date under section 3 and, in addition, shall deliver or
cause to be delivered to Seller the following:
(a) the Base Purchase Price Note
duly executed by Purchaser;
(b) duly executed counterparts
of the Corporate Noncompetition Agreement and the Warehouse Lease;
(c) the Assignment and
Assumption Agreement duly executed by Acquisition Sub;
(d) an opinion of counsel in
form and substance reasonably satisfactory to Seller and its counsel with
respect to legal matters relating to the transactions contemplated hereby;
and
(e) such other documents,
certificates, and instruments as Seller may reasonably request, including but
not limited to certificates of resolutions and incumbency and certificates
relating to the accuracy of as of the Closing Date of the representations and
warranties made by Purchaser in connection herewith.
4.04. Purchaser's Conditions Precedent to
Closing. Except to the extent waived in writing by Purchaser,
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Purchaser's obligation to close the transactions contemplated by this
Agreement shall be subject to the satisfaction of all of the following
conditions precedent:
(a) Condition of Acquired
Assets. No substantial portion of the Acquired Assets shall have been
destroyed or damaged before the Closing Date.
(b) No Material Adverse Changes.
No material adverse change shall have occurred since December 31, 1995
that affects or would in Purchaser's reasonable opinion affect the
operations or financial condition of the Cartwright Business (provided,
however, that for purposes hereof a termination of the Distributor Agreement
between Seller and Andrew Corporation shall not be deemed a material adverse
change or otherwise constitute a breach by Seller of this Agreement).
(c) Representations and
Warranties. The representations and warranties of Seller contained in
this Agreement and in any certificate or document delivered pursuant to
the provisions hereof or in connection with the transactions contemplated
hereby shall be true and correct on and as of the Closing Date as if made on
the Closing Date.
(d) Performance of Obligations.
All of the agreements and covenants of Seller set forth herein and which are
to be performed at or before the Closing Date shall have been duly performed.
(e) Cartwright Noncompetition
Agreement. William Cartwright shall have executed and delivered to Purchaser
the Cartwright Noncompetition Agreement.
4.05. Seller's Conditions Precedent to Closing.
Except to the extent waived in writing by Seller, Seller's obligations to
close the transactions contemplated by this Agreement shall be subject to the
satisfaction of all of the following conditions precedent:
(a) Representations and
Warranties. The representations and warranties of Purchaser contained in
this Agreement and in any certificate or document delivered pursuant to
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the provisions hereof or in connection with the transactions contemplated
hereby shall be true and correct on and as of the Closing Date as if made on
the Closing Date.
(b) Performance of Obligations.
All of the agreements and covenants of Purchaser set forth herein and which
are to be performed at or before the Closing Date shall have been duly
performed.
(c) Cartwright Noncompetition
Agreement. Purchaser shall have executed and delivered to William
Cartwright the Cartwright Noncompetition Agreement.
4.06. Further Assurances. Seller, at any time
and from time to time after the Closing Date, shall execute,
acknowledge, and deliver any further deeds, assignments, conveyances, and
other assurances, documents, and instruments of transfer as may reasonably be
requested by Purchaser or Acquisition Sub and shall take any other action
consistent with the terms of this Agreement that may reasonably be requested
by Purchaser or Acquisition Sub for the purpose of assigning, transferring,
granting, conveying, and confirming to Acquisition Sub, or reducing to
Acquisition Sub's possession, any or all of the Acquired Assets. Purchaser or
Acquisition Sub shall bear the cost of preparing any and all such further
documentation either of them may request but any additional costs incurred
by Seller in connection with its review and execution of such
documentation shall be borne by Seller. If requested by Purchaser or Acquisition
Sub, Seller further agrees to prosecute or otherwise enforce in its own name for
the benefit of Purchaser and Acquisition Sub, and at Seller's expense, any
claims, rights, or benefits that are transferred to Acquisition Sub pursuant to
this Agreement and that require prosecution or enforcement in Seller's name.
4.07. Operations Pending Closing. Pending Closing,
Seller shall use its best efforts to preserve substantially intact the
Cartwright Business; to conduct its operations only in the ordinary course,
without substantial change; to take such steps as are necessary and appropriate
to preserve its existing relationships with customers, suppliers, and key
employees; neither negotiate for nor consummate the sale,
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transfer, or conveyance of any of the Acquired Assets or any other assets
used in the Cartwright Business or any right thereto to any party other than
Purchaser (except for sales of inventory in the ordinary course of business);
to inform Purchaser promptly of the occurrence of any event which may result in
any material adverse change to the Cartwright Business, the Acquired
Assets, or Seller's financial condition or operations; and to maintain the
Acquired Assets in good repair and condition.
4.08. Cooperation in Satisfying Conditions
Precedent. Each of the parties agrees to provide the other with all reasonable
cooperation and assistance necessary to satisfy the conditions to closing
contained in sections 4.04 and 4.05.
5. ADDITIONAL COVENANTS.
5.01. Sales, Etc. Taxes. Each party shall be
fully responsible for any applicable federal, state, and local sales, use,
transfer, and documentary stamp taxes, and any income or similar taxes,
imposed by law upon it as a result of the transactions contemplated by
this Agreement. All other taxes, filing, and recording fees, and similar
expenses payable in connection with the transactions contemplated by this
Agreement shall be paid by Seller, and Seller shall prepare and file all
appropriate returns and reports in connection therewith.
5.02. Bulk Sales Act. Purchaser hereby agrees to
waive compliance by Seller with the provisions of the Ohio Uniform Commercial
Code -- Bulk Transfers, Ohio Revised Code Annotated ss.ss. 1306.01 et seq., but
such waiver shall in no way be deemed to modify or diminish Seller's obligations
under section 8.01 of this Agreement.
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5.03. Risk of Loss.
(a) The risk of loss or damage to
the Acquired Assets shall remain with Seller until Closing. If there
occurs before the Closing any loss, casualty, or other damage to or
destruction of any portion of the Acquired Assets to be transferred at such
Closing, (i) the Purchase Price shall be reduced by the fair market value as
of the Closing Date of the Acquired Assets so damaged or destroyed or (ii) at
Purchaser's election, the proceeds of any insurance covering such loss,
casualty, or other damage shall be applied by Seller to repair or replace such
Acquired Assets, in part, in which case the Purchase Price shall be reduced
only by the fair market value as of the Closing Date of the Acquired Assets
not so replaced. For purposes of this section 5.03(a), "loss, casualty,
or other damage" shall not include depletion or consumption of, or normal
wear and tear on, the Acquired Assets in the ordinary course of business.
(b) If the parties cannot agree
upon the amount of such reduction, then such amount shall be determined by
appraisal by an appraiser mutually acceptable to the parties. The expense of
such appraisal shall be borne equally by Seller and Purchaser. If the parties
cannot agree upon the selection of an appraiser, then each shall select an
appraiser and the appraisers so selected shall designate a third appraiser,
whose determination shall be final and binding upon the parties.
5.04. Survival of Representations and
Warranties. Except for the undertaking by Seller to indemnify Purchaser
with respect to the matters described in subsection (c) of section
8.01 (which undertaking shall be of unlimited duration) and except as may
otherwise be expressly provided in any instrument or agreement delivered or to
be delivered pursuant to this Agreement in or in connection with the
consummation of the transactions contemplated hereby, the covenants,
agreements, representations, and warranties of the parties contained in this
Agreement and in any document, statement, schedule, certificate, exhibit,
or other instrument delivered or to be delivered pursuant to this Agreement
or in connection with the consummation of the transactions
contemplated hereby shall survive the Closing Date for a period of two (2)
years.
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5.05. Employees. Purchaser currently contemplates
hiring as of the Closing Date, either directly or through an affiliate,
substantially all of Seller's current sales employees and certain of Seller's
other employees, but Purchaser shall not be obligated to do so, nor shall
Purchaser be obligated, if it does hire any such employees, to pay such
employees any particular compensation or benefits except as may be agreed upon
between Purchaser and such employees. Regardless of whether Purchaser hires any
of Seller's employees, Seller shall remain liable for and shall pay as and
when due all compensation and benefits (including but not limited to salary,
earned commissions, vacation and sick pay, and pension contributions or
similar obligations) accruing on or before the Closing Date. Without limiting
the generality of the foregoing, the employment by Seller of any employee who
is hired by Purchaser shall be terminated by Seller as of the Closing Date,
and Seller shall be solely responsible for all claims and obligations
arising out of or by virtue of such termination, including severance obligations
and accrued compensation and benefits.
5.06. Access to Information. Seller, upon
reasonable notice, shall: (i) give or cause to be given to Purchaser and
to its accountants, counsel, and other representatives, during regular
business hours and in a manner so as not to disrupt Seller's business
activities, reasonable access to all of the properties, facilities,
employees, documents, and records of Seller (other than documents and records
to which access cannot reasonably be provided without disclosing to
Purchaser information concerning Seller's customers ("Customer
Information")) used in or relating to the Acquired Assets or the Cartwright
Business, and (ii) provide or cause to be provided to Purchaser at its expense
such copies or extracts of Seller's documents and records (other than Customer
Information) relating to the Acquired Assets or the Cartwright Business as
Purchaser may reasonably request. Without limiting the generality of the
foregoing, Purchaser shall be entitled to make such surveys, assessments, and
inspections of the Inventory and the Other Tangible Personal Property as
Purchaser deems appropriate, provided Purchaser restores any damage to the
foregoing that may be occasioned by any such survey, assessment, or inspection.
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<PAGE>
5.07. Publicity. Except as may be required by law,
neither Purchaser nor Seller (nor any of their affiliates or anyone acting on
their behalf) shall make any public announcement concerning the transactions
contemplated by this agreement without the consent of the other or otherwise
divulge the terms and conditions of this Agreement. Seller acknowledges that
Purchaser intends and is entitled to make a public announcement promptly after
the execution of this Agreement and following the Closing.
5.08. Lease of Cartwright Facility. Purchaser and
Acquisition Sub shall be entitled to use the Cartwright Facility for the
purpose of conducting their business and removing or disposing of the Acquired
Assets during the period commencing on the Closing Date, all on the terms and
conditions set forth in the Warehouse Lease.
5.09. Removal of Fixtures; Restoration of
Cartwright Facility. Acquisition Sub shall be deemed to have acquired and
shall be entitled (but not required) to remove any and all racks, equipment,
and other items that may be affixed to the Cartwright Facility
notwithstanding that the same may constitute fixtures under local law, but
Purchaser shall repair any damage to the Cartwright Facility occasioned by
such removal. Unless Purchaser notifies Seller to the contrary by the end of
the term of the Warehouse Lease, any items not so removed by Purchaser
shall be deemed abandoned.
5.10. Cost of Audited Financial Statements.
Provided that Closing has occurred, Seller shall reimburse Purchaser
promptly upon Purchaser's written request for one-half the cost incurred by
Purchaser for the Audited Financial Statements (but in no event more that
$30,000).
5.11. Preservation of and Access to Books and
Records. Each party agrees to retain for a period of six (6) years after the
Closing Date, and to permit the other party to inspect and copy upon
reasonable notice (and subject to reasonable restrictions necessary to
preserve the confidentiality of otherwise confidential or proprietary
information), all books, records, and information relating to the Cartwright
Business and the Acquired Assets (as conducted or existing as of the Closing
Date) that may reasonably be required by the other party in
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connection with any return, report, or other disclosure such other party may
by law or legal process be required to file or make.
6. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Purchaser that both as of the date hereof and (except
as may otherwise be expressly provided below) as of the Closing Date:
6.01. Corporate Organization. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of its state of incorporation and has the corporate power and authority to
own its properties and assets, to carry on its business as it is now being
conducted, to enter into this Agreement, and to consummate the transactions
contemplated hereby.
6.02. Authorization. The execution and delivery
of this Agreement by Seller and the due consummation by Seller of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action and this Agreement constitutes a valid and legally binding
agreement of Seller, enforceable against Seller in accordance with its terms,
subject only to bankruptcy, insolvency, and other laws generally affecting the
rights of creditors.
6.03. No Violation. Neither the execution and
delivery of this Agreement by Seller nor the consummation by Seller of the
transactions contemplated hereby will constitute a violation of, or be in
conflict with, or constitute a default under:
(i) any term or provision of
the corporate charter or bylaws of Seller;
(ii) any contract, agreement,
indenture, lease, or other commitment to which Seller is a party or by which
Seller is bound; or
(iii) any judgment, decree, or order of
any court or governmental authority or, to the best of Seller's Knowledge, any
statute, regulation, or rule of any governmental authority.
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6.04. Consents. To the best of Seller's Knowledge
(without any special inquiry), no consent of any court or of any federal,
state, or local authority or agency or of any other person is required in
connection with the execution and delivery by Seller of this Agreement or the
performance by Seller of the transactions contemplated hereby.
6.05. Books, Records, and Financial
Statements. Seller's books and records (including but not limited to
its records relating to customer orders, inventory, accounts receivable,
fixed assets, and accounts payable) are correct and complete in all material
respects, reflect fairly Seller's income, expenses, assets, and liabilities,
and provide a fair basis for the preparation of Seller's financial
statements. The Audited Financial Statements are in agreement with Seller's
books and records and present fairly the financial position of Seller as of
the dates thereof, and the results of operations for the periods then ended,
all in accordance with generally accepted accounting principles.
6.06. Taxes. There are no actions, suits, or
proceedings, or to the best of Seller's Knowledge (without any particular
inquiry) any investigations, audits, or claims, now pending against Seller
in respect of any tax assessment or proposed tax assessment in any way
relating to or affecting the Acquired Assets or the Cartwright Business.
6.07. Inventory and Other Tangible Property.
The Inventory as of the date there shown is identified with reasonable
accuracy in Schedule 6.07. Except as disclosed in Schedule 6.07: (i) the
Inventory is owned by Seller and (ii) the Inventory (other than the Obsolete
Inventory) consists of items of a quality usable and saleable in the normal
course of the Cartwright Business. Schedule 1.23 identifies all tangible
personal property (other than inventory) owned by Seller. All of the Other
Tangible Personal Property is in good working order and on the Closing Date
will be in the same condition and repair as on the date hereof, reasonable
wear and tear excepted. Except as disclosed in Schedule 6.07 or Schedule 6.11,
none of the Inventory or Other Tangible Personal Property is subject to or
held under any lease,
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security agreement, conditional sales contract, or other title retention or
security agreement.
6.08. Insurance. Seller has maintained and now
maintains (a) insurance on all of the Acquired Assets against loss or damage by
fire or other casualty (including extended coverage) and (b) insurance
protection against all liabilities, claims, and risks arising out of or
relating to its business against which it is customary to insure. All such
policies are in full force and effect.
6.09. Compliance with Law. (a) To the best of
Seller's Knowledge, Seller has not violated, and is not in violation of,
any law, statute, rule, governmental regulation, or order, which violation
might have a material adverse effect on the Acquired Assets or the Cartwright
Business; and (b) neither the execution and delivery of this Agreement, nor the
compliance or performance by Seller with the terms and provisions of this
Agreement, will: (i) give to any other party any present or future interests
or rights, including the right to terminate, cancel, accelerate, modify, or
abandon any duty or obligation to be performed or any right or benefit to be
received, in or with respect to any of the material properties, assets,
agreements, contracts, or leases used in or relating to the Cartwright Business
and having a material adverse effect thereon, or (ii) result in the creation of
any mortgage, pledge, lien, claim, charge, encumbrance, or other adverse
interest upon any of the Acquired Assets.
6.10. Licenses and Permits. Seller has
obtained all licenses, permits, and authorizations necessary for the
conduct of the Cartwright Business as now conducted and all such licenses,
permits, and authorizations will be maintained in good standing up to the
Closing Date.
6.11. Title to Assets.
(a) As of the date hereof, except
as disclosed in Schedule 6.11, Seller has good and marketable title to all
of the Acquired Assets free and clear of all mortgages, liens, claims,
charges, options, or encumbrances of any nature
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whatsoever (collectively, "Encumbrances"), other than liens for current taxes
not yet due and payable;
(b) on the Closing Date Seller
will have, and will convey to Acquisition Sub pursuant to the Assignment
and Assumption Agreement, good and marketable title to all of the
Acquired Assets free and clear of all Encumbrances; and
(c) on the Closing Date Seller
will have, and will assign and convey to Purchaser pursuant to the Assignment
of Shares, good and marketable title to the Shares, free and clear of all
Encumbrances.
6.12. Accounts Receivable. Attached as
Schedule 6.12 is an accounts receivable aging report showing Seller's
accounts receivable from customers as of the date there shown. Except as
disclosed in Schedule 6.12, each such account receivable represents amounts
validly owing to Seller on account of merchandise actually sold and delivered,
and Seller has received no notice of, and to the best of Seller's knowledge
there does not exist any basis for, any claim, reduction, or offset with
respect thereto. Seller does not customarily reflect reserves for doubtful
accounts against specific accounts receivable, and it is generally Seller's
practice to write off accounts receivable that are significantly uncertain
of collection.
6.13. Intangibles. Seller has the exclusive
right to use in the State of Ohio and to assign to Acquisition Sub for use by
Acquisition Sub or by Purchaser in the State of Ohio in connection with the
conduct of the Cartwright Business the name "Cartwright Communications" without
interference or claim of infringement by any third party. Seller has used the
name "Cartwright Communications" throughout the United States for more than
twenty five (25) years without interference or claim of infringement by any
third party and, to the best of Seller's Knowledge (without any particular
inquiry), Seller would be entitled to continue such use without interference
or claim of infringement by any third party but for the assignment of its
rights to such use to Purchaser pursuant to this Agreement.
6.14. No Litigation or Adverse Events. There
is no suit, action at law or in equity, or legal, administrative,
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arbitration, or other proceeding or governmental investigation by or
before a federal, foreign, state, provincial, or local court, governmental
or regulatory commission, agency, or other administrative authority, or
arbitration forum pending or, to the best of Seller's knowledge, threatened,
which affects materially and adversely or would affect materially and adversely
the Acquired Assets or the Cartwright Business or the right to own or use the
Acquired Assets, or which attacks the validity or propriety of this Agreement or
the transactions contemplated hereby. Seller has no knowledge of any facts that
may reasonably be expected to give rise to any such action, suit,
proceeding, or investigation, and, to the best of its knowledge, Seller is
not operating the Cartwright Business under or subject to, or in default with
respect to, any order, writ, injunction, or decree of any court or
governmental agency or body, domestic or foreign.
6.15. Contracts and Commitments. Seller is not
in default, nor is there any basis for any claim of default, under any
agreement or contract made or obligation owed by Seller relating to the
Acquired Assets or the Cartwright Business; and to the best of Seller's
knowledge no other party to any agreement or other contract made with
Seller is in default nor is there any basis for any claim that any such party
is in default thereunder. Seller is not restricted in carrying on the
Cartwright Business by any judgment, order, injunction, decree, or ruling of
any court or governmental authority, domestic or foreign, except where such
restriction is of general application, or to any material extent by any
agreement.
6.16. Outstanding Proposals. Identified in
Schedule 6.16 are all proposals for engineering or similar services made by
Seller outstanding as of the date of this Agreement (the "Outstanding
Proposals"). Seller has furnished to Purchaser copies of all the Outstanding
Proposals, and each of the Outstanding Proposals may be assumed or cancelled by
Purchaser or Acquisition Sub, as Purchaser or Acquisition Sub may in its sole
discretion determine. Seller agrees not to make any additional proposals
between the date of this Agreement and the Closing Date without Purchaser's
prior written consent.
6.17. Liabilities of Acquisition Sub. As of the
Closing Date Acquisition Sub has no liabilities or obligations,
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fixed or contingent, matured or unmatured, other than the liabilities and
obligations assumed by Acquisition Sub pursuant to the Assignment and Assumption
Agreement.
6.18. No Broker's or Finder's Fees or Professional
Fees. No agent, broker, person, or firm acting on behalf of Seller or under
Seller's authority is or will be entitled to any commission or brokers' or
finders' fee from any of the parties to this Agreement in connection with any
of the transactions contemplated by this Agreement. Each party will bear its
own expenses of counsel and accountants (except as contemplated by sections 8.01
and 8.02).
6.19. Material Misstatements or Omissions. No
representation or warranty by Seller in this Agreement, or in any
document, statement, schedule, certificate, exhibit, or other instrument
furnished or to be furnished by Seller to Purchaser pursuant hereto or in
connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained therein not
misleading.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller that (except as may otherwise
be expressly provided below) both as of the date hereof and as of the
Closing Date:
7.01. Organization. Purchaser is a
corporation validly existing and in good standing under the laws of the
State of Delaware and has the power and authority to own its properties and
assets, to carry on its business as it is now being conducted, to enter into
this Agreement, and to consummate the transactions contemplated hereby.
7.02. Authorization. The execution and delivery
of this Agreement by Purchaser and the due consummation by Purchaser of the
transactions contemplated hereby have been duly authorized by all necessary
action of the members of Purchaser and this Agreement constitutes a valid and
legally binding agreement of Purchaser, enforceable against Purchaser in
accordance with its
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terms, subject only to bankruptcy, insolvency, and other laws generally
affecting the rights of creditors.
7.03. No Violation. Neither the execution and
delivery of this Agreement by Purchaser nor the consummation by Purchaser
of the transactions contemplated hereby will constitute a violation of, or be
in conflict with, or constitute a default under:
(i) any term or provision of
the corporate charter or bylaws of Purchaser;
(ii) any contract, agreement,
indenture, lease, or other commitment to which Purchaser is a party or by
which Purchaser is bound; or
(iii) any judgment, decree, order,
regulation, or rule of any court or governmental authority.
7.04. Consents. No consent of any court or
federal, state, or local authority, or of any other person or entity, is
required in connection with the execution and delivery by Purchaser of this
Agreement or the performance by Purchaser of the transactions contemplated
hereby.
7.05. Material Misstatements or Omissions.
No representation or warranty by Purchaser in this Agreement, or in
any document, statement, schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Purchaser to Seller pursuant
hereto or in connection with the transactions contemplated hereby, contains
or will contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained therein
not misleading.
8. INDEMNIFICATION.
8.01. Indemnification by Seller. Seller hereby
covenants and agrees to indemnify and defend Purchaser and hold Purchaser
harmless from and against any and all losses, liabilities, damages, claims,
costs (including court costs) and
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expenses (including reasonable attorneys' fees) that Purchaser incurs as a
result of or with respect to:
(a) any inaccuracy in or breach of any
representation or warranty of Seller contained in this Agreement or in any
document (including, without limitation, any statement, schedule, certificate,
exhibit, or other instrument) delivered or to be delivered by Seller pursuant to
this Agreement;
(b) any failure by Seller to perform, carry
out, comply with, or abide by its obligations under this Agreement; or
(c) any and all debts, obligations, or
liabilities of Seller, whether direct or indirect, fixed or contingent,
whether existing at or as of the Closing Date or which arise after the Closing
Date (excluding, however, the obligations of Seller assumed by
Acquisition Sub under the Assignment and Assumption Agreement).
8.02. Indemnification by Purchaser. Purchaser
hereby covenants and agrees to indemnify and defend Seller and hold Seller
harmless from and against any and all losses, liabilities, damages, claims,
costs (including court costs) and expenses (including reasonable attorneys'
fees) that Seller may incur as a result of or with respect to:
(a) any inaccuracy in or breach of
any representation or warranty of Purchaser contained in this Agreement or
in any document (including, without limitation, any statement, schedule,
certificate, exhibit, or other instrument) delivered or to be delivered by
Purchaser pursuant to this Agreement; or
(b) any failure by Purchaser to perform,
carry out, comply with, or abide by its obligations under this Agreement; or
(c) any and all debts, obligations, or
liabilities of Seller assumed by Acquisition Sub under the Assignment and
Assumption Agreement.
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8.03. Costs and Expenses. In any action
(including any arbitration proceeding) brought to enforce the provisions
of this Agreement or the rights of either party hereunder the prevailing party
shall be entitled to recover from the other its costs and expenses, including
reasonable attorneys' fees.
8.04. Limitation on Claims. No action or
arbitration proceeding shall be commenced (i) by either party against the
other in respect of any claim for damages or indemnification by reason of the
other party's breach or alleged breach of any warranty made herein (each such
claim a "Breach of Warranty Claim") or (ii) by Purchaser against Seller in
respect of any claim under section 3.06 (a "Return Claim") until such time, if
any, as the aggregate amount of such Breach of Warranty Claims and Return
Claims exceeds $5,000, and no recovery shall be allowed with respect to
Breach of Warranty Claims and Return Claims for losses, damages and claims
aggregating up to such amount.
9. MISCELLANEOUS.
9.01. Incorporation of Recitals, Exhibits, and
Schedules. Each of the recitals to this Agreement, and each of the exhibits
and schedules attached hereto, is by this reference incorporated herein and
made a part of this Agreement.
9.02. Governing Law. This Agreement shall be
construed under and in accordance with the federal law of the United States
and the laws of the State of Ohio (exclusive of any provision that would
result in the application of the laws of any other state or jurisdiction).
9.03. Headings. The headings and captions set
forth herein are for convenience of reference only and shall not affect the
construction or interpretation hereof.
9.04. Notices. Any notice or other communication
required, permitted, or desirable hereunder shall be hand delivered
(including delivery by a commercial courier service) or sent by United States
registered or certified mail, postage prepaid, addressed as follows:
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To Seller: Cartwright Communications, Inc.
7812 Red Sky Drive
Cincinnati, Ohio 45249
Attn: William Cartwright, President
With a copy to: Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
Attn: Thomas A. Brennan, Esquire
To Purchaser: TESSCO Technologies Incorporated
34 Loveton Circle
P.O. Box 5100
Sparks, Maryland 21152-5100
Attn: Robert B. Barnhill, Jr.,
President
With a copy to: Neuberger, Quinn, Gielen,
Rubin & Gibber, P.A.
One South Street
27th Floor
Baltimore, Maryland 21202
Attention: Michael L. Quinn, Esquire
or such other addresses as shall be furnished in writing by the parties. Any
such notice or communication shall be deemed to have been given as of the date
so delivered in person or three business days after so mailed.
9.05. Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of successors and permitted
assigns of the parties hereto.
9.06. Assignment. Neither Seller nor Purchaser
shall assign this Agreement or their or its rights hereunder without the
written consent of the other. Notwithstanding the foregoing, however,
Purchaser shall be entitled to assign this Agreement or any of its rights
hereunder to a subsidiary or affiliate of Purchaser, but no such assignment
shall relieve Purchaser of any of its obligations under this Agreement.
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<PAGE>
9.07. Entire Agreement; Amendments. This
Agreement sets forth the entire agreement and understanding of the parties with
respect to the subject matter hereof, and there are no other prior or
contemporaneous written or oral agreements, undertakings, promises,
warranties, or covenants not specifically referred to, attached hereto, or
contained herein. This Agreement may be amended, modified, or terminated only
by a written instrument signed by the parties hereto.
9.08. Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same Agreement. This Agreement may
be delivered by facsimile transmission of an originally executed copy to be
followed by immediate delivery of the original of such executed copy.
9.09. Arbitration of Certain Disputes. Provided
that Closing has occurred, any claim or dispute arising out of this Agreement
or the transactions contemplated hereby shall be resolved by arbitration in
Cincinnati, Ohio in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Judgment on any award
resulting therefrom may be entered and enforced in any court of the State of
Ohio or elsewhere having jurisdiction. Notwithstanding any contrary provision of
such Commercial Arbitration Rules, each of the parties shall be entitled to
conduct discovery (by interrogatories, depositions, requests for production
of documents, and otherwise) in accordance with the Federal Rules of Civil
Procedure as though such arbitration proceeding were a civil action commenced
in the United States District Court for the Southern District of Ohio.
9.10. Time of the Essence. Time shall be of the
essence of this Agreement.
[Balance of this page intentionally blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
WITNESS/ATTEST: CARTWRIGHT COMMUNICATIONS COMPANY
By:
(SEAL) William Cartwright,
President
TESSCO TECHNOLOGIES INCORPORATED
By: (SEAL)
Robert B. Barnhill, Jr.
President
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EXHIBITS AND SCHEDULES
EXHIBITS:
Exhibit A .............. Assignment and Assumption Agreement
Exhibit B .............. Base Purchase Price Note
Exhibit C-1 ............ Cartwright Noncompetition Agreement
Exhibit C-2 ............ Corporate Noncompetition Agreement
Exhibit D .............. Warehouse Lease
Exhibit E .............. Assignment of Shares
SCHEDULES:
Schedule 1.05 .......... Assumed Contracts
Schedule 1.15 .......... Inventory Cost
Schedule 1.20 .......... Noncurrent Inventory
Schedule 1.21 .......... Obsolete Inventory
Schedule 1.23 .......... Other Tangible Personal Property
Schedule 3.08 .......... Allocation of Purchase Price
Schedule 6.07 .......... Matters Relating to Inventory
<PAGE>
Schedule 6.11 .......... Encumbrances
Schedule 6.12 .......... Accounts Receivable
Schedule 6.16 .......... Outstanding Proposals
<PAGE>
Exhibit A
Assignment and Assumption Agreement
<PAGE>
Exhibit B
Base Purchase Price Note
<PAGE>
Exhibit C-1
Cartwright Noncompetition Agreement
<PAGE>
Exhibit C-2
Corporate Noncompetition Agreement
<PAGE>
Exhibit D
Warehouse Lease
<PAGE>
EXHIBIT E
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, CARTWRIGHT COMMUNICATIONS COMPANY, an Ohio
corporation ("Assignor"), hereby sells, assigns, and transfers unto TESSCO
TECHNOLOGIES INCORPORATED, a Delaware corporation _________ (______) shares of
the common stock of [Acquisition Sub], a Delaware corporation, standing in the
name of Assignor on the books of said Corporation represented by Certificate(s)
No. ____ and does hereby irrevocably constitute and appoint ________________
attorney-in-fact to transfer the such shares on the books of the within named
Corporation with full power of substitution in the premises.
Dated: May ___, 1996 CARTWRIGHT COMMUNICATIONS COMPANY
By:_____________________________
William Cartwright, President
In the Presence Of:
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Schedule 1.05
Assumed Contracts
(a) Obligations to satisfy customer orders reflected on Seller's books
and records and unfilled as of the Closing Date.
(b) Obligations for inventory, supplies, or other goods or services ordered
by Seller after the date of this Agreement with Purchaser's consent
before the Closing Date that are not received or rendered until after
the Closing Date.
(c) The following distributor agreements; provided, however, that Seller
makes no representations or warranties regarding the assignability to
Purchaser or Acquisition Sub of any of the following distributor
agreements or the enforceability by Purchaser or Acquisition Sub of any
of the provisions of such agreements:
1. Allen Telecom Group, Inc.: Super Distributor Agreement dated
April 23, 1996
2. Andrew Corporation: Distributor Agreement No. 100195-2/2 dated
October 1, 1995
3. Bird Electronic Corporation: Two-Way and Amateur Radio
Distributor Agreement dated January 22, 1996
4. Radio Frequency Systems, Inc., Cablewave Systems
Division: Distributor Agreement dated as amended February
28, 1996
5. Radio Frequency Systems, Inc., Celwave Division: Distributor
Agreement effective March 25, 1996
<PAGE>
6. Federal Signal Corporation, Emergency Products: Specialty
Market Stocking Distributor Purchase Agreement for the Period
1/1/96 - 12/31/96
7. Microflect Company, Inc.: Letter dated October 18, 1996
8. Northpoint Communication Products, Inc.: Sales Bulletin No. 16
dated August 1, 1995
9. Telewave, Inc.: Letter dated November 1, 1995
10. Times Microwave Systems: Distribution Policy dated May 10,
1995 as modified by Memorandum dated January 24, 1996
11. Trilogy Communications, Inc.
<PAGE>
Schedule 1.20
Noncurrent Inventory
This Schedule consists of the following attachments:
Schedule 1.20A Inventory Not Wanted List
Schedule 1.20B [List of items on Seller's
inventory list previously furnished
to Purchaser for which quantity was
zero; these items were not examined
by Purchaser to determine whether
items of this type that may be on
hand as of the Closing Date would to
any extent constitute Noncurrent
Inventory based on previous 12
months sales]
<PAGE>
Schedule 1.21
Obsolete Inventory
1. Any cable remnant whose length is less than the minimum
remnant length for the applicable cable diameter as set forth
below:
Minimum
Diameter Remnant Length
1-5/8" 300 ft
1-1/4" 200 ft
0-7/8" 150 ft
2. Any items identified as "Obsolete" or "Unsaleable" in Schedule
1.20A.
<PAGE>
Schedule 1.23
Other Tangible Personal Property
[See Attached]
<PAGE>
Schedule 3.08
Allocation of Purchase Price
Asset: Allocation:
Inventory Inventory Value
Accounts Receivable Balance Accounts Receivable
Other Tangible Personal Property $100,000
Intangibles/Goodwill/
Business Records $3,699,000
Seller's Covenant Not to Compete $1,000
<PAGE>
Schedule 6.07
Certain Matters Relating to Inventory
[Inventory Vendor/Value Report dated 02/20/96 Attached]
<PAGE>
Schedule 6.11
Encumbrances
NONE
<PAGE>
Schedule 6.12
Accounts Receivable
[To be Delivered at Closing]
<PAGE>
Schedule 6.16
Outstanding Proposals
[To be Delivered at Closing]
