1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
FOR THE ASSETS OF Global Village Communication, Inc.
by Boca Global, Inc.
March 31, 1998
2
TABLE OF CONTENTS
Recitals Page No.
-------- --------
ARTICLE I - DEFINITIONS
1.1 Definitions.......................................................1
ARTICLE II - PURCHASE AND SALE OF ASSETS
2.1 Purchase of Assets...................................................6
2.2 Retained Assets......................................................7
2.3 Assumed Liabilities..................................................8
2.4 Retained Liabilities.................................................8
2.5 Purchase Price.......................................................9
2.6 Allocation of Purchase Price.........................................9
2.7 Time and Place of Closing............................................9
2.8 Execution and Delivery of Documents of Title by the Company;
Further Assurances..................................................10
2.9 Execution and Delivery of Documents by Buyer; Further Assurances....10
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization and Qualification......................................10
3.2 Authority; No Violation.............................................10
3.3 [Intentionally Omitted].............................................11
3.4 [Intentionally Omitted].............................................11
3.5 SEC Reports and Financial Statements................................11
3.6 Absence of Undisclosed Liabilities..................................11
3.7 Absence of Certain Changes..........................................11
3.8 Title to the Transferred Assets.....................................13
3.9 Sufficiency and Condition of Assets.................................13
3.10 Real Estate........................................................13
3.11 Accounts Receivable.................................................14
3.12 Inventories.........................................................14
3.13 Intellectual Property...............................................14
3.14 Trade Secrets and Customer Lists....................................15
3.15 Contracts...........................................................16
3.16 Customers and Suppliers.............................................17
3.17 Compliance with Laws................................................18
3.18 Taxes...............................................................18
-i-
3
3.19 [Intentionally Omitted].............................................19
3.20 Environmental Matters...............................................19
3.21 Employees...........................................................20
3.22 Litigation..........................................................20
3.23 [Intentionally omitted].............................................20
3.24 Company Products....................................................20
3.25 [Intentionally Omitted].............................................21
3.26 Brokers.............................................................21
3.27 Burdensome Agreements...............................................21
3.28 [Intentionally Omitted].............................................21
3.29 Transactions with Interested Persons................................21
3.30 Copies of Documents.................................................21
3.31 Disclosure of Material Information..................................21
3.32 Opinion of the Financial Advisor....................................22
3.33 Board Recommendation................................................22
3.34 Required Company Vote...............................................22
3.35 State Takeover Statutes.............................................22
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER AND BRI
4.1 Organization and Qualification......................................22
4.2 Authority; No Violation.............................................23
4.3 [Intentionally Omitted].............................................23
4.4 [Intentionally Omitted].............................................23
4.5 SEC Reports and Financial Statements................................23
4.7 Disclosure of Material Information..................................23
4.8 Opinion of the Financial Advisor....................................24
4.9 Board Recommendation................................................24
4.10 Subsidiaries........................................................24
4.11 Absence of Undisclosed Liabilities..................................24
4.12 Absence of Certain Changes..........................................24
4.14 Sole Representations and Warranties.................................24
ARTICLE V - COVENANTS
5.1 Covenants of the Company............................................25
5.2 Covenants of the Company and Buyer..................................26
5.3 Preparation of Proxy Statement; Stockholder Meeting.................29
5.4 Covenants of Buyer and BRI..........................................29
5.5 Covenants of Buyer and BRI and the Company..........................30
ARTICLE VI - CLOSING CONDITIONS
-ii-
4
6.1 Conditions to Obligations of Buyer..................................31
6.2 Conditions to Obligations of the Company............................34
ARTICLE VII - TERMINATION
7.1 Termination of Agreement............................................36
7.2 Effect of Termination and Right to Proceed..........................37
ARTICLE VIII - INDEMNIFICATION
8.1 Survival of Representations and Warranties..........................37
8.2 Indemnification by the Company......................................37
8.3 Indemnification by Buyer and BRI....................................38
8.4 Minimum Indemnification; Materiality................................38
8.5 Notice and Opportunity to Defend....................................39
8.6 Full Access to Business.............................................39
ARTICLE IX - MISCELLANEOUS
9.1 Fees and Expenses...................................................39
9.2 Publicity and Disclosures...........................................40
9.3 Notices.............................................................40
9.4 Successors and Assigns..............................................41
9.5 Descriptive Headings................................................41
9.6 Counterparts........................................................41
9.7 Severability........................................................41
9.8 Attorneys' Fees.....................................................41
9.9 Course of Dealing...................................................41
9.10 Third Parties.......................................................42
9.11 Tax Matters.........................................................42
9.12 Variations in Pronouns..............................................42
9.13 WAIVER OF JURY TRIAL................................................42
9.14 GOVERNING LAW.......................................................43
9.15 Entire Agreement....................................................43
-iii-
5
TABLE OF EXHIBITS
-----------------
Exhibit A ▇▇▇▇ of Sale
Exhibit B Instrument of Assumption
Exhibit C Opinion of Company's Counsel
Exhibit D Form of Promissory Note
Exhibit E Form of Guaranty
Exhibit F NonCompetition Agreements
Exhibit G Form of Warrant
Exhibit H Opinion of Buyer's Counsel
TABLE OF SCHEDULES
------------------
Schedule 1.1 Balance Sheet Methodology
Schedule 2.1 Fixed Assets
Schedule 2.2 Retained Assets
Schedule 2.3 Assumed Liabilities
Schedule 3.1 Qualification
Schedule 3.2 No Violations
Schedule 3.5 Financial Statements
Schedule 3.6 Liabilities
Schedule 3.7 Changes
Schedule 3.8 Material Liens or Defects
Schedule 3.9 Assets; Condition
Schedule 3.10 Real Estate
Schedule 3.11 Accounts Receivable
Schedule 3.12 Inventories
Schedule 3.13 Intellectual Property
Schedule 3.14 Trade Secrets
Schedule 3.15 Contracts
Schedule 3.16 Major Customers and Suppliers
Schedule 3.17 Necessary Permits
Schedule 3.18 Taxes
Schedule 3.20 Environmental Matters
Schedule 3.21 Employees
Schedule 3.22 Litigation
Schedule 3.24 Warranty and other Claims
Schedule 3.26 Brokers
Schedule 3.29 Transactions with Interested Persons
Schedule 4.1 Organization and Qualification
Schedule 4.5 BRI Financial Statements
-iv-
6
Schedule 4.6 Brokers
Schedule 4.10 Subsidiaries
Schedule 4.12 Certain Changes
Schedule 5.1(a) Interim Conduct
-v-
7
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement") dated as of , 1998, by
and among BOCA GLOBAL, INC., a Florida corporation ("Buyer"), BOCA RESEARCH,
INC., a Florida corporation ("BRI"), and GLOBAL VILLAGE COMMUNICATION, INC., a
Delaware corporation (the "Company").
This Agreement sets forth the terms and conditions upon which the Buyer
will purchase from the Company, and the Company will sell to the Buyer, all of
those assets related to the modem business of the Company hereinafter defined
(other than the Retained Assets, as hereinafter defined) and the business and
goodwill of the Company as a going concern as to the modem development,
manufacturing, distribution and sale business, subject to those liabilities of
the Company which are specifically hereinafter described, for the consideration
provided herein.
In consideration of the foregoing, the mutual representations, warranties
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For the purposes of this Agreement, all capitalized words
or expressions used in this Agreement (including the Schedules and Exhibits
annexed hereto) shall have the meanings specified in this Article (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Affiliate" means when used with respect to any Person, (a) if such Person
is a corporation, any officer or director thereof and any Person which is,
directly or indirectly, the beneficial owner (by itself or as part of any group)
of more than five percent (5%) of any class of any Equity Security thereof, and,
if such beneficial owner is a partnership, any general or limited partner
thereof, or if such beneficial owner is a corporation, any Person controlling,
controlled by or under common control with such beneficial owner, or any officer
or director of such beneficial owner or of any corporation occupying any such
control relationship, (b) if such Person is a partnership, any general or
limited partner thereof and (c) any other Person which, directly or indirectly,
controls or is controlled by or is under common control with such Person. For
purposes of this definition, (i)"control" (including the correlative terms
"controlling", "controlled by" and "under common control with"), with respect to
any Person, shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise;
and (ii) all employees, stockholders, consultants and agents of Buyer and any
direct or indirect stockholder of Buyer shall be considered an Affiliate of
Buyer.
8
"Agreement" means this Asset Purchase Agreement (together with all Exhibits
and Schedules hereto) as from time to time assigned, supplemented, modified,
amended, or restated or as the terms hereof may be waived.
"Balance Sheet Methodology" means the procedures identified on Schedule 1.1
attached hereto with respect to the preparation of the Last Balance Sheet and
the Closing Balance Sheet.
"BRI" means Boca Research, Inc., a Florida corporation, and its successors
and assigns.
"Business Day" means any day, excluding Saturday, Sunday and any other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Buyer" means BOCA GLOBAL, INC. , a Florida corporation, and its successors
and assigns.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, and the regulations thereunder, and court
decisions in respect thereof, all as the same shall be in effect at the time.
"Charter" means the Certificate of Incorporation, Articles of Incorporation
or Organization or other organizational document of a corporation, as amended
and restated through the date hereof.
"Claim" means an action, suit, proceeding, hearing, investigation,
litigation, charge, complaint, claim or demand.
"Closing Balance Sheet" means the consolidated balance sheet of the Company
as to the Business as of the Closing Date prepared in accordance with the
Balance Sheet Methodology.
"Code" means the Internal Revenue Code of 1986, and the regulations
thereunder, published Internal Revenue Service rulings, and court decisions in
respect thereof, all as the same shall be in effect at the time.
"Commission" means the Securities and Exchange Commission and any other
similar or successor agency of the federal government administering the
Securities Act or the Exchange Act.
"Company" means GLOBAL VILLAGE COMMUNICATION, INC., a Delaware corporation,
and its successors and assigns.
"Environmental Action" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of noncompliance or
violation, investigation, request for information, proceeding, consent order or
consent agreement relating in any way to any Environmental Law or any
Environmental Permit, including, without limitation, (a) any claim by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or
-2-
9
other actions or damages pursuant to any Environmental Law and (b) any claim by
any third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials, damage to
the environment or alleged injury or threat of injury to human health or safety
from pollution or other environmental degradation.
"Environmental Law" means any applicable federal, state or local law,
statute, rule, regulation, or ordinance relating to the environment, human
health or safety from pollution or other environmental degradation or Hazardous
Materials, including, without limitation, CERCLA, the Resource Conservation and
Recovery Act, the Hazardous Materials Transportation Act, the Clean Water Act,
the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide
Act and the Occupational Safety and Health Act, and any similar state and local
laws or bylaws, the rules, regulations and interpretations thereunder, all as
the same shall be in effect from time to time.
"Environmental Permit" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"Equity Security" shall have the meaning given to such term in Section
3(a)(ii) of the Exchange Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, and any
similar or successor federal statute, and the rules, regulations and
interpretations thereunder, all as the same shall be in effect at the time.
"ERISA Affiliate" means, for purposes of Title IV of ERISA, any trade or
business, whether or not incorporated, that together with the Company or any
Subsidiary of the Company, would be deemed to be a "single employer" within the
meaning of Section 4001 of ERISA, and, for purposes of the Code, any member of
any group that, together with the Company or any Subsidiary of the Company, is
treated as a "single employer" for purposes of Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, and any similar
or successor federal statute, and the rules and regulations and interpretations
of the Commission thereunder, all as the same shall be in effect at the time.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Hazardous Materials" means (a) petroleum or petroleum products, natural or
synthetic gas, asbestos, urea formaldehyde foam insulation and radon gas, (b)
any substances defined as or included in the definition or "hazardous
substances," "hazardous wastes," "hazardous materials,"
-3-
10
"extremely hazardous wastes" "restricted hazardous waters," toxic substances,"
"toxic pollutants," "contaminants" or "pollutants," or words of similar import,
under any Environmental Law and (c) any other substance exposure to which is
regulated under any Environmental Law.
"Indebtedness" means all obligations, contingent or otherwise, whether
current or longterm, which in accordance with GAAP would be classified upon the
obligor's balance sheet as liabilities (other than deferred taxes) and shall
also include capitalized leases, guaranties, endorsements (other than for
collection in the ordinary course of business) or other arrangements whereby
responsibility is assumed for the obligations of others, including any agreement
to purchase or otherwise acquire the obligations of others or any agreement,
contingent or otherwise, to furnish funds for the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
"IRS" means the Internal Revenue Service and any similar or successor
agency of the federal government administering the Code.
"Last Balance Sheet" shall mean the consolidated balance sheet of the
Company as to the Business as at the month ended February 28, 1998, delivered to
the Buyer prior to the date hereof and prepared in accordance with the Balance
Sheet Methodology.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing.
"Material Adverse Effect" shall be defined as an event, occurrence or act
which shall result in a material adverse impact or effect on (a) the business,
operations, assets, liabilities, prospects or condition (financial or otherwise)
of the Business, with respect to the Company, and BRI, with respect to BRI or
the Buyer, (b) the ability of such party to perform its respective obligations
under any of the Purchase Documents, (c) the validity or enforceability of any
of the Purchase Documents or (d) the rights and remedies of the Buyer and BRI on
the one hand and the Company on the other under any of the Purchase Documents.
"Officer's Certificate" means a certificate signed in the name of a
corporation by its President, Chief Executive Officer, Treasurer, Chief
Financial Officer, or, if so specified, the Clerk or Secretary, acting in his or
her official capacity.
"Person" means any individual, firm, partnership, association, trust,
corporation, limited liability company, governmental body or other entity.
-4-
11
"Purchase Documents" means this Agreement, the NonCompetition Agreements
and any other certificate, document, instrument, stock power, or agreement
executed in connection therewith.
"Release" means any release, issuance, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water, or property other than in compliance
with all Environmental Laws and Permits.
"Securities Act" means the Securities Act of 1933, and any similar or
successor federal statute, and the rules, regulations and interpretations of the
Commission thereunder, all as the same shall be in effect at the time.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative
or addon minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
The following terms are defined in the following Sections of this
Agreement:
Term Section
---- -------
Assumed Liabilities 2.3
Business 2.1
Business Employees 5.5
Closing 2.7
Closing Date 2.7
Current Asset Value 6.1(m)
Financial Statements 3.5
Indemnifying Party 8.5
Losses 8.2
Necessary Permits 3.17(a)
NonCompetition Agreements 6.1(l)
Plan 3.19(a)
Proxy Statement 5.3
Purchased Assets 2.1
Purchase Price 2.5
Accounts Receivable 2.1(a)
-5-
12
Retained Assets 2.2
Retained Liabilities 2.4
SEC Reports 3.5
Stockholders' Meeting 5.3(c)
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchase of Assets. Upon the terms and subject to the conditions
contained in this Agreement, at the Closing (as defined in Section 2.7 below),
the Company shall sell, assign, transfer and convey to Buyer, and Buyer shall
purchase, acquire and accept from the Company, the modem development,
manufacturing, distribution and sales business of the Company as a going concern
(the "Business"), including all of the Company's assets of every kind and
description relating to the Business (other than those assets included in the
Retained Assets as defined in Section 2.2 below) (the "Transferred Assets"), and
subject only to the liabilities and obligations of the Company which are defined
in Section 2.3 (the "Assumed Liabilities"). The Transferred Assets include,
without limitation, the following assets and properties (other than those assets
included in the Retained Assets as defined in Section 2.2):
(a) all assets relating to the Business owned by the Company. Such assets
include, without limitation, (i) all trade and other accounts receivable and
other Indebtedness owing to the Company with respect to the Business and
including the benefit of all collateral, security, guaranties, and similar
undertakings received or held in connection therewith (the Accounts Receivable);
(ii) all inventories with respect to the Business wherever located, including
raw materials, goods consigned to vendors or subcontractors, work in process,
finished goods and goods in transit; (iii) all prepaid expenses, deposits and
rights to refunds from customers and suppliers with respect to the Business;
(iv) all machinery, equipment, fixtures and furniture used in the Business and
preliminarily listed on Schedule 2.1 (a final mutually agreed upon list to be
provided to Buyer prior to the Closing); (v) all motor vehicles and; (vi) all
real estate described on Schedule 3.10 attached hereto, provided, that Buyer
shall have 30 days from the date hereof to complete its due diligence with
respect to such property, and provided, further, that Buyer shall notify the
Company of its intention to sublease the space currently occupied by the Company
upon the same terms as currently paid by the Company, receive an assignment of
the leases for such premises or refuse to accept the real estate identified on
Schedule 3.10 prior to the end of such 30-day period.
(b) all rights and interests of the Company in and to any Business
contracts, including contracts for the purchase of materials, supplies and
services and the sale of products and services, equipment leases, and any other
contract of the Company relating to the Business, including, without limitation,
those listed on Schedule 3.15 attached hereto;
-6-
13
(c) copies of or access to all of the Company's books, records and other
data relating to the Business;
(d) all of the Company's goodwill, dealer and customer lists and all other
sales and marketing information, and all knowhow, technology, drawings,
engineering specifications, bills of materials, software and other intangible
assets of the Company in each case, relating to the Business;
(e) all of the Company's interest in patents, patent applications,
proprietary designs, copyrights, tradenames, servicemarks, trademarks and
trademark applications (including, without limitation, the exclusive right to
use the names "Global Village" and "Teleport" and all variants thereof), and all
patents, trademarks, servicemarks, proprietary designs, trade names, assumed
names and copyrights listed in Schedule 3.13 attached hereto, in each case
relating to the Business and together with the goodwill appurtenant thereto, all
federal, state, local and foreign registrations thereof, if applicable, all
common law rights thereto, and all claims or causes of action for infringement
thereof;
(f) all permits, licenses, orders, ratings and approvals of all federal,
state, local or foreign governmental or regulatory authorities or industrial
bodies that are held by the Company and relate to the Business, to the extent
the same are transferable;
(g) all rights of the Company to causes of action, lawsuits, judgments,
claims and demands of any nature which would relate to the Business or
constitute counterclaims, rights of setoff, and affirmative defenses to any
claims brought against Buyer by third parties relating to the Business;
(h) [Intentionally omitted]
(i) all present and future insurance proceeds which may be payable under
the insurance policies listed on Schedule 3.23 attached hereto to the extent
that such proceeds relate to the future loss of asset value of the Purchased
Assets;
(j) except for Retained Assets described in Section 2.2 below, all other
items of property, real or personal, tangible or intangible, including, without
limitation, all restrictive and negative covenant agreements with employees and
others, including, without limitation, nondisclosure agreements, computer
programs, tapes, discs and timesharing files, owned, used by or accruing to the
benefit of the Company in each case, used in the Business
(k) Intellectual property and associated html code that is transferable by
the Company, as well as the exclusive rights to operate the Global Village
website located at "▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇", "▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" and
"▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇".
-7-
14
2.2 Retained Assets. The Company will retain ownership of the following
assets of the Company listed on Schedule 2.2 attached hereto (collectively, the
"Retained Assets").
2.3 Assumed Liabilities. The Buyer shall assume and agree to pay, perform
and discharge only the Assumed Liabilities, and will pay, perform and discharge
the Assumed Liabilities as they become due. The Assumed Liabilities shall
consist of only those liabilities of the Company listed on Schedule 2.3 attached
hereto or otherwise specifically provided for in this Agreement.
2.4 Retained Liabilities. The liabilities and obligations which shall be
retained by the Company (the "Retained Liabilities") shall consist of all
liabilities of the Company other than Assumed Liabilities, including, without
limitation, the following:
(a) all liabilities of the Company relating to indebtedness for
borrowed money;
(b) all liabilities of the Company resulting from, constituting or
relating to a breach of any of the representations, warranties, covenants or
agreements of the Company under this Agreement in accordance with the
indemnification provisions of this Agreement;
(c) all liabilities of the Company for federal, state, local or
foreign Taxes, including Taxes incurred in respect of or measured by the income
of the Company earned on or realized prior to the Closing Date, including any
gain and income from the sale of the Assets and other transactions contemplated
herein, excluding those incurred by Buyer in connection with this transaction;
(d) all liabilities for all environmental, ecological, health or
safety claims to the extent arising out of the operation of the Business or the
Purchased Assets by the Company on or before the Closing Date;
(e) all liabilities of the Company arising in connection with its
operations unrelated to the Business except as otherwise specifically provided
herein or in Schedule 2.3;
(f) any liability of the Company based on its tortious or illegal
conduct;
(g) any liability or obligation incurred by the Company in connection
with the negotiation, execution or performance of this Agreement, including,
without limitation, all legal, accounting, brokers', finders' and other
professional fees and expenses other than through Buyer's breach of this
Agreement;
(h) all liabilities incurred by the Company after the Closing Date
other than through Buyer's breach of this Agreement (except to the extent such
liability is specifically assumed by Buyer); and
-8-
15
(i) all liabilities or obligations associated with the Business
Employees (as defined in Section 5.5(b)(i)), including but not limited to any
liability or obligation under or with respect to any collective bargaining
agreement, employment agreement, any Plan (as defined in Section 3.19),
unemployment or workers' compensation laws, sales commissions (other than on
orders shipped and billed after the Closing Date) unless specifically provided
for elsewhere in this Agreement.
2.5 Purchase Price. Upon the terms and subject to the conditions contained
in this Agreement, in reliance upon the representations, warranties and
agreements of the Company contained herein, and in consideration of the sale,
assignment, transfer and delivery of the Transferred Assets, the covenants not
to compete and the Warrant Purchase Agreement received from the Company, Buyer
will assume the Assumed Liabilities and will pay, upon the schedule set forth
below, by wire transfer of immediately available funds, to the Company, Ten
Million and no/00 Dollars (US$10,000,000.00) the "Purchase Price"). Payment of
the Purchase Price to the Company shall be made to the Company's account which
shall be provided to the Buyer prior to the Closing. The Purchase Price shall be
payable without interest, as follows:
(a) Four Million Dollars (US$4,000,000.00) of the Purchase Price
shall be payable in cash at the Closing Date; and
(b) Buyer shall deliver to the Company at the Closing a
Promissory Note in the amount of Six Million and no/100
Dollars (US$6,000,000.00), bearing no interest, payable as
follows:
(i) Three Million Dollars (US$3,000,000.00) of the Purchase Price
shall be payable in cash on September 30, 1998; and
(ii) Three Million Dollars (US$3,000,000.00) of the Purchase Price
shall be payable in cash on December 31, 1998.
Such promissory note shall be in form attached hereto as
Exhibit D and shall become due and payable upon a change of
control of BRI and such note shall be made by Buyer and
unconditionally guaranteed by BRI in the form of Guaranty
attached hereto as Exhibit E.
2.6 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Transferred Assets and the covenants not to compete received from the
Company in a manner that is mutually agreed upon by the parties prior to the
Closing. The Company and Buyer shall be bound by such allocation for all
purposes and to account for and report the purchase and sale contemplated hereby
for all financial, accounting and Tax purposes in accordance with such
allocation.
2.7 Time and Place of Closing. The closing of the transactions described in
Sections 2.1 through 2.6 above (the "Closing") shall take place at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
-9-
16
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m. (local time) on
the third business day following the satisfaction of the conditions to closing
as provided in this Agreement, but in no event later than June 30, 1998, or at
such other place or time as the parties hereto may agree. The date and time at
which the Closing actually occurs is hereinafter referred to as the "Closing
Date."
2.8 Execution and Delivery of Documents of Title by the Company; Further
Assurances. At the Closing, the Company shall execute and deliver to Buyer the
▇▇▇▇ of Sale attached hereto as Exhibit A and such deeds, conveyances, bills of
sale, certificates of title, assignments, assurances and other instruments and
documents as Buyer may reasonably request in order to effect the sale,
conveyance, and transfer of the Purchased Assets from the Company to the Buyer.
Such instruments and documents shall be sufficient to convey to Buyer good and
merchantable title in all of the Transferred Assets. The Company will, from time
to time after the Closing Date, take such additional actions and execute and
deliver such further documents as Buyer may reasonably request in order more
effectively to sell, transfer and convey the Transferred Assets to Buyer and to
place Buyer in position to operate and control all of the Transferred Assets. To
the extent any of such assets are, by nature or terms, not transferrable, the
Company shall hold, provide, and make such assets available for the use and
benefit of Buyer as Buyer's agent.
2.9 Execution and Delivery of Documents by Buyer; Further Assurances. At
the Closing, Buyer shall execute and deliver to the Company an Instrument of
Assumption in the form attached hereto as Exhibit B, the Promissory Note, and
such other documents as the Company may reasonably request in order to evidence
Buyer's assumption of the Assumed Liabilities. Buyer will, from time to time
after the Closing Date, take such additional action and deliver such further
documents as the Company may reasonably request in order effectively to assume
the Assumed Liabilities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
3.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has full power and authority to own, use and lease their
properties and to conduct its business as such properties are owned, used or
leased and as such business is currently conducted. The copies of the Company's
Charter and ByLaws, as amended to date, in each case certified by their
respective Secretaries and delivered to Buyer's counsel prior to the Closing,
are true, complete and correct. Except as set forth on Schedule 3.1 attached
hereto, the Company is qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which it owns or leases property or
maintains inventories or where the conduct of its business would require such
qualification.
-10-
17
3.2 Authority; No Violation. The Company has all requisite corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company have been duly and validly authorized and approved by all
necessary corporate action. This Agreement constitutes the legal and binding
obligation of the Company, enforceable against it in accordance with its terms.
To the best knowledge of the Company and except as set forth on Schedule 3.2,
the entering into of this Agreement by the Company does not, and the
consummation by the Company of the transactions contemplated hereby, including
specifically the transfer of the Transferred Assets to Buyer by the Company,
will not violate the provisions of (a) any applicable federal, state, local or
foreign laws, (b) the Company's respective Charter or ByLaws, or (c) any
provision of, or result in a default or acceleration of any obligation under, or
result in any change in the rights or obligations of the Company under any Lien,
contract, agreement, license, lease, instrument, indenture, order, arbitration
award, judgment, or decree to which the Company is a party or by which any of
them is bound, or to which any property of the Company is subject.
3.3 [Intentionally Omitted]
3.4 [Intentionally Omitted]
3.5 SEC Reports and Financial Statements. Since December 31, 1996, the
Company has filed all material forms, reports and documents with the Commission
required to be filed by it pursuant to the Securities Act and the Exchange Act
(the "SEC Reports"), and all of such filings complied in all material respects
with all applicable requirements of the Securities Act and the Exchange Act.
Attached hereto as Schedule 3.5 are the following financial statements
(collectively the "Financial Statements"): (i) audited consolidated and
unaudited consolidating balance sheets and statements of operations, changes in
owners' equity and consolidated statements of cash flow as of and for the fiscal
year ended March 31, 1997; and (ii) unaudited consolidated and
consolidating balance sheets and statements of income, changes in stockholders'
equity, and cash flow (the "Most Recent Financial Statements") as of and for the
nine (9) months ended December 31, 1997, for the Company.
3.6 Absence of Undisclosed Liabilities. Except as set forth in the Last
Balance Sheet or Schedule 3.6 attached hereto, there are no material liabilities
of the Company, whether accrued, absolute, contingent or otherwise (including,
without limitation, liabilities as guarantor or otherwise with respect to
obligations of any other Person, or liabilities for Taxes due or then accrued or
to become due), except for liabilities which have arisen in the ordinary course
of business of the Company since the date of the Last Balance Sheet. Schedule
3.6 sets forth a true and correct aged list of all accounts payable of the
Company as of February 28, 1998, in excess of $10,000 to any one payee.
3.7 Absence of Certain Changes. Except as otherwise disclosed in Schedule
3.5 or Schedule 3.7 attached hereto, as contemplated in this Agreement or in the
ordinary course of business, since February 28, 1998, there has not been:
-11-
18
(a) any change in the business, operations, assets, liabilities,
prospects or condition (financial or otherwise) of the Company that, by itself
or in conjunction with all other such changes, whether or not arising in the
ordinary course of business, has been or is reasonably likely to be materially
adverse with respect to the Business (including, by way of example and not of
limitation, the loss of any significant distributor, customer or vendor);
(b) any announcement or communication to the Company on the part of
any key employee of the Company of his or her intention to leave the Company's
employ;
(c) any Lien placed on any of the Transferred Assets which remains in
existence on the date hereof;
(d) any contingent liabilities incurred by the Company with respect to
the obligations of any other Person that would be Assumed Liabilities;
(e) any purchase, sale, lease, assignment, transfer or other
disposition, or any agreement or other arrangement for the purchase, sale,
lease, assignment, transfer or other disposition, of any part of the Business
properties or assets, other than purchases for and sales from inventory for fair
consideration in the ordinary course of business, except for fixed assets
purchased or other capital expenditures made in amounts not exceeding $10,000
for any single item and $50,000 in the aggregate for all such items;
(f) any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Business;
(g) any labor trouble or claim of unfair labor practices involving the
Company; any change in the employment contracts of or compensation payable or to
become payable by the Company to any of its officers, directors, employees,
consultants or agents who are Business Employees, or any bonus payment or
arrangement made by the Company to or with any of such officers, directors,
employees, consultants or agents who are Business Employees; or any change in
coverage or benefits available under any Plan described in Section 3.19
provided, however, that the Buyer and BRI acknowledge and agree that the Company
shall be entitled to increase the compensation of the Business Employees by a
maximum of 6.5% of total compensation in the aggregate;
(h) any payment or discharge of a material Lien or liability of the
Company relating to the Transferred Assets not disclosed on the Financial
Statements or incurred in the ordinary course of business;
(i) any contracts, licenses, leases or agreements entered into by the
Company which would be assumed pursuant to this Agreement, which are outside the
ordinary course of business and which obligate the Company for more than $10,000
in any one case or more than $35,000 in the aggregate;
-12-
19
(j) any amendment or other change (or any authorization to make such
an amendment or change) to the Company's Charter or ByLaws, that would prohibit
the consummation of the transactions contemplated hereby;
(k) any postponement or delay in payment of any accounts payable or
other liability of the Company that will be included as Assumed Liabilities
except in the ordinary course of business consistent with prior practices;
(l) any cancellation, waiver, compromise or release of any right or
claim relating to the Business involving more than $10,000 and outside the
ordinary course of business consistent with prior practices;
(m) any cancellation, termination, modification, or acceleration by
any party to any contract, license, lease or agreement involving more than
$10,000 which will be assigned hereunder to which the Company is a party or by
which it is bound; or
3.8 Title to the Transferred Assets. The Company has good and marketable
title to, or a valid leasehold interest in, all of the Transferred Assets, free
and clear of all material Liens, and free of any material infractions or
noncompliance with zoning and building laws (collectively, "Defects") and the
sale and delivery of the Transferred Assets to Buyer pursuant hereto shall vest
in Buyer good and marketable title thereto, free and clear of any and all
material Liens or Defects, other than as disclosed in Schedule 3.8 hereto or as
may be created by Buyer. The Company shall prior to the Closing use their
commercially reasonable efforts to cure at their expense any material Defect
identified by Buyer.
3.9 Sufficiency and Condition of Assets. To the knowledge of the Company,
all tangible properties and assets that have an assigned value owned or leased
by the Company and contained in the Transferred Assets are in good operating
condition and repair, ordinary wear and tear excepted, have been well
maintained, and conform with all applicable laws, statutes, ordinances, rules
and regulations, other than as disclosed on Schedule 3.9.
3.10 Real Estate. Schedule 3.10 lists and describes briefly all real
property leased or subleased to or by the Company that will be assumed by the
Buyer or BRI. With respect to each such lease and sublease;
(i) correct and complete copies thereof have been delivered to
Buyer;
(ii) to the knowledge of the Company, the lease or sublease is
legal, valid binding, enforceable, and in full force and effect;
(iii) to the knowledge of the Company, no party to the lease or
sublease is in breach or default, and no event has occurred which, with notice
or lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
-13-
20
(iv) to the knowledge of the Company, no party to the lease or
sublease has repudiated any provision thereof, and there are no disputes, oral
agreements, or forbearance programs in effect as to the lease or sublease;
(v) to the knowledge of the Company, with respect to each
sublease, the representations and warranties set forth in subsections (ii),
(iii) and (iv) above are true and correct with respect to the underlying lease;
(vi) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered materially any interest in the
leasehold or subleasehold;
(vii) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities; and
3.11 Accounts Receivable. All of the Accounts Receivable of the Company are
properly reflected in the Last Balance Sheet and will be on the Closing Balance
Sheet, and are, subject to the allowance for doubtful accounts set forth
therein, valid and enforceable claims, subject to no setoff or counterclaim, and
are to the knowledge of the Company collectible in the ordinary course of
business. Except as set forth in Schedule 3.11 attached hereto, the Company does
not have any accounts receivable or loans or notes receivable to be assigned to
the Buyer pursuant to this Agreement from any Affiliates or from any of its
officers, directors, consultants, employees, agents or stockholders.
3.12 Inventories.
(a) Except as disclosed in Schedule 3.12 attached hereto: (i) the
inventories of the Company to be transferred to the Buyer pursuant to this
Agreement will be properly reflected in the Closing Balance Sheet and will be of
a quality and quantity saleable in the ordinary course of business of the
Company at prevailing market prices, are priced at the lower of cost (first in,
first out) or market, (ii) the values of the inventories stated in the Last
Balance Sheet reflect the Company's normal inventory valuation policies and were
determined in accordance with GAAP consistently applied and (iii) the values of
the inventories to be stated in the Closing Balance Sheet will reflect the
Company's normal inventory valuation policies and will be determined in
accordance with GAAP consistently applied.
(b) As of the date hereof, purchase commitments for raw materials and
parts for the Company to be assumed by the Buyer pursuant to this Agreement are
not, individually or in the aggregate, in excess of normal requirements and none
of such commitments are at prices materially in excess of current market prices.
3.13 Intellectual Property. All patents, patent applications, proprietary
designs, copyrighted works, trade names, servicemarks, trademarks and trademark
applications which are owned by or licensed to the Company and are used in the
Business are listed in Schedule 3.13
-14-
21
attached hereto, which indicates with respect to each the nature of the
Company's interest therein and the expiration date thereof or the date on which
the Company's interest therein terminates. Except as set forth on Schedule 3.13,
all of the Company's patents and registered trademarks have been duly registered
in, filed in or issued by the United States Patent Office or the corresponding
offices of other countries identified in Schedule 3.13, and have been properly
maintained and renewed in accordance with all applicable laws and regulations in
the United States and each such country. Except as set forth on Schedule 3.13,
those copyrighted works for which copyright registration has been secured with
the U.S. Register of Copyright or corresponding offices in other countries are
set forth in Schedule 3.13, which indicates the registration number and date of
registration of each such registered work. Except as set forth in Schedule 3.13,
each such registration has been secured and maintained in accordance with all
applicable laws and regulations in the United States and each such country.
Except as set forth in Schedule 3.13, use of said patents, patent applications,
copyrighted works, servicemarks, trade names, registered trademarks or trademark
applications owned by the Company does not require the consent of any other
Person and the same are freely transferable (except as otherwise provided by
law) and are owned exclusively by the Company, free and clear of any Liens.
Except as set forth in Schedule 3.13, (a) no other Person has an interest in or
right or license to use, or the right to license any other Person to use, any of
said patents, patent applications, proprietary designs, copyrighted works, trade
names, servicemarks, trademarks or trademark applications, (b) except as set
forth on Schedule 3.13, there are no claims or demands of any other Person
pertaining thereto and no proceedings have been instituted, or are pending or,
to the knowledge of the Company, threatened, which challenge the Company's
rights in respect thereof, (c) to the knowledge of the Company, none of the
patents, copyrighted works, trade names or trademarks listed in Schedule 3.13 is
being infringed by another Person or is subject to any outstanding order,
decree, ruling, charge, injunction, judgment or stipulation, (d) no Claim has
been made or to the knowledge of the Company is threatened charging the Company
with infringement of any adversely held patent, trade name, trademark or
copyright and (e) to the knowledge of the Company, there does not exist (i) any
unexpired patent with claims which are or would be infringed by products of the
Company or any Subsidiary of the Company or by apparatus, methods or designs
employed by it in manufacturing such products or (ii) any patent or application
therefor or invention which would materially adversely affect the Company's or
any Subsidiary's ability to manufacture, use or sell any such product,
apparatus, method or design.
3.14 Trade Secrets and Customer Lists.
(a) Except as set forth on Schedule 3.14, the Company has the right to
use, free and clear of any Claims or rights of any other Person, all trade
secrets, customer lists, manufacturing and secret processes and knowhow (if any)
required for or used in the manufacture or marketing of all products relating to
the Business being sold, manufactured, including products licensed from other
Persons, and all of such trade secrets, customer lists, manufacturing and secret
processes and knowhow shall be transferred to Buyer as part of the Transferred
Assets. Any payments required to be made by the Company for the use of such
trade secrets, customer lists, manufacturing and secret processes and knowhow
are described in Schedule 3.14 attached hereto. The Company warrants that it
will keep confidential, and preserve the secrecy of, all confidential
information,
-15-
22
knowhow, and trade secrets transferred to Buyer as part of the Transferred
Assets, and that it will enforce this ongoing obligation of confidentiality as
to present and past employees of the Company, to the same extent as it would
have if the transfer had not taken place. To the knowledge of the Company it is
in no way making an unlawful or wrongful use of any confidential information,
knowhow, or trade secrets of any other Person, including, without limitation,
any former employer of any present or past employee of the Company or any
Subsidiary of the Company. Except as described on Schedule 3.14 and to the
knowledge of the Company, no officer, director or employee of the Company is a
party to any noncompetition or confidentiality agreement with any Person other
than the Company or a Subsidiary of the Company.
(b) The Company agrees and promises to execute all assignments and
other such instruments, and render all such assistance as Buyer may reasonably
require in order to accomplish the transfer of Transferred Assets, and to
confirm in Buyer legal title to said Transferred Assets, including, without
limitation, recordation of assignment documents in the United States Patent and
Trademark Office, Copyright Office, or corresponding offices in other countries.
3.15 Contracts. Except for contracts, commitments, leases, licenses, plans
and agreements described in Schedule 3.15 attached hereto, pursuant to the terms
of this Agreement, Buyer will not assume or otherwise become subject to:
(a) any plan or contract regarding or providing for bonuses, pensions,
options, stock purchases, deferred compensation, severance benefits retirement
payments, profit sharing, stock appreciation, collective bargaining or the like
relating to the Business Employees, or any contract or agreement with any labor
union;
(b) any employment or consulting contract or contract for personal
services relating to Business Employees not terminable at will by the Company
without penalty to the Company;
(c) any contract or agreement for the purchase of any commodity,
product, material, supplies, equipment or other personal property, or for the
receipt of any service, other than purchase orders entered into in the ordinary
course of business for less than $10,000 each and which in the aggregate do not
exceed $35,000;
(d) any contract or agreement for the purchase or lease of any fixed
asset, whether or not such purchase or lease is in the ordinary course of
business, for a price in excess of $10,000;
(e) any contract or agreement for the sale of any commodity, product,
material, equipment, or other personal property, or the furnishing by the Buyer
of any service, other than contracts with customers entered into in the ordinary
course of business;
-16-
23
(f) any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a supplier,
or for periodic minimum purchases of a particular product from a supplier;
(g) any contract or agreement with any sales agent, distributor or OEM
of products of the Company;
(h) any contract or agreement concerning a partnership or joint
venture with one or more Persons;
(i) any confidentiality agreement or any noncompetition agreement or
other contract or agreement containing covenants limiting the Buyer's freedom to
compete in any line of business or in any location or with any Person;
(j) any license agreement (as licensor or licensee);
(k) any contract or agreement with any present or former officer,
director, consultant, agent or stockholder of the Company or with any Affiliate
of any of them;
(l) any loan agreement, indenture, note, bond, debenture or any other
document or agreement evidencing a capitalized lease obligation or Indebtedness
to any Person;
(m) any agreement of guaranty, indemnification, or other similar
commitment with respect to the obligations or liabilities of any other Person.
(n) any other agreement or contract (or group or related agreements or
contracts) the performance of which involves consideration paid or received by
the Buyer in excess of $10,000.00.
Copies of all such contracts, commitments, plans, leases, licenses and
agreements have been provided or made available to Buyer or its counsel prior to
the execution of this Agreement, and all such copies are true, correct and
complete and have been subject to no amendment, extension or other modification
as of the date hereof, except such as are described in Schedule 3.15 or as
indicated in the provided copies. Except as listed and described in Schedule
3.15, the Company is not, and to the knowledge of the Company, no other Person,
is in material default under any such contract, commitment, plan, lease, license
or agreement described in Schedule 3.15 (a "default" being defined for purposes
hereof as an actual default or event of default or the existence of any fact or
circumstance which would, upon receipt of notice or passage of time, constitute
a default).
3.16 Customers and Suppliers. Schedule 3.16 attached hereto sets forth the
ten (10) largest suppliers and customers of the Company in the calendar year
1997 (the "Large Suppliers and Customers"). Except as reflected in Schedule
3.16, no supplier is a material sole source of supply to the Company. The
relationships of the Company with its suppliers and customers are good
-17-
24
commercial working relationships and, except as set forth on Schedule 3.16,
neither (i) any of the Large Suppliers and Customers nor (ii) any supplier or
customer who at any time during 1996 or 1997 was or is the sole source of supply
of any item or purchase of any of the Company's products, has canceled or
otherwise terminated, or threatened to cancel or otherwise terminate, its
relationship with the Company or has during the last twelve (12) months
decreased materially or threatened to decrease or limit materially, its
services, supplies or materials to the Company or its usage or purchase of the
services or products of the Company, as the case may be. The Company does not
have any knowledge that any of the Large Suppliers and Customers intends to
cancel or otherwise adversely modify its relationship with the Company or any
Subsidiary or to decrease materially or limit its services, supplies or
materials to the Company or its usage or purchase of the services or products of
the Company, and the acquisition of the Transferred Assets and the Business by
Buyer will not, to the knowledge of the Company, adversely affect the
relationship of the Company with any of the Large Suppliers and Customers.
3.17 Compliance with Laws.
(a) Except as disclosed in Schedule 3.17, the Company has all
licenses, permits, franchises, orders, approvals, accreditations, written
waivers and other authorizations as are necessary in order to enable it to own
and conduct the Business and to occupy and use its real and personal properties
without incurring any material liability ("Necessary Permits"). No registration,
filing, application, notice, transfer, consent, approval, order, qualification,
waiver or other action of any kind is required by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to effect the transfer to Buyer of such Necessary Permits. The Company is
in full compliance with the terms and conditions of all Necessary Permits except
where the failure to be in compliance would not have a Material Adverse Effect.
(b) Except as disclosed in Schedule 3.17, the Company has conducted
and is conducting its business in material compliance with applicable federal,
state, local or foreign laws, statutes, ordinances, regulations, rules or orders
or other requirements of any governmental, regulatory or administrative agency
or authority or court or other tribunal relating to it (including, but not
limited to, any law, statute, ordinance, regulation, rule, order or requirement
relating to securities, properties, business, products, advertising, sales or
employment practices, immigration, terms and conditions of employment, wages and
hours, safety, occupational safety, health or welfare conditions relating to
premises occupied, product safety and liability or civil rights). The Company is
not now charged with, and to the knowledge of the Company, is not now under
investigation with respect to, any possible violation of any applicable law,
statute, ordinance, regulation, rule, order or requirement relating to any of
the foregoing in connection with the Business and the Company has filed all
material reports required to be filed with any governmental, regulatory or
administrative agency or authority. The Company shall promptly inform Buyer of
any notice relating to the foregoing received after the date hereof and on or
prior to the Closing Date.
3.18 Taxes. Except as disclosed in Schedule 3.18,
-18-
25
(a) to the extent a failure to do so would adversely impact Buyer, the
Business, the Transferred Assets or Buyer's use of such Transferred Assets, (i)
the Company has timely filed within the time period for filing or any extension
granted with respect thereto, all federal, state, local and foreign tax returns,
reports and estimates ("Returns") which it is required to file relating or
pertaining to any and all taxes attributable to or levied upon the Transferred
Assets and (ii) paid any and all taxes it is required to pay in connection with
the taxable periods to which such Returns relate. There are (and immediately
following the Closing there will be) no liens or similar encumbrances on the
Transferred Assets relating or pertaining to taxes, except with respect to taxes
not yet due and payable. The Company has no knowledge of any basis for the
assertion of any claims which, if adversely determined, would result in a lien
or other encumbrance on the Transferred Assets or otherwise adversely effect
Buyer or the Transferred Assets; and
(b) to the extent relevant to the Transferred Assets and the Business,
the Company shall (i) provide Buyer with such assistance as may reasonably be
required in connection with the preparation of any tax Return and the conduct of
any audit or other examination by any taxing authority or in connection with
judicial or administrative proceedings relating to any liability for taxes and
(ii) retain and provide Buyer with copies of or access to all records or other
information that may be relevant to the preparation of any tax Returns, or the
conduct of any audit or examination, or other tax proceeding. The Company shall
retain all relevant documents, including prior year's tax Returns, supporting
work schedules and other records or information that may be relevant to such
returns and shall not destroy or otherwise dispose of any such records without
the prior written consent of Buyer.
3.19 [Intentionally Omitted]
3.20 Environmental Matters.
(a) Except as disclosed in Schedule 3.20 attached hereto, to the
knowledge of the Company, the use and operation by the Company of all facilities
and properties used in the business of the Company have been, and will be on the
Closing Date, in material compliance with all Environmental Laws, and no
Environmental Action has been filed, commenced, or, to the knowledge of the
Company, threatened with or against any of them alleging any failure so to
comply.
(b) to the knowledge of the Company, the Company has received all
material Environmental Permits required to allow each of them to conduct their
operations and businesses, such Environmental Permits are valid and in effect,
and the Company is in compliance with such Environmental Permits.
(c) Except as disclosed in Schedule 3.20, the Company has not received
notice from any Person, (i) that it has been identified by the EPA or similar
state authority as a potentially responsible party under CERCLA with respect to
a site listed on the "National Priorities List," as in effect as of the Closing
Date, of hazardous waste sites or any similar state list; (ii) that any
Hazardous Materials which the Company has generated, transported, or disposed of
has been found
-19-
26
at any site at which a Person has conducted or has ordered that the Company
conduct a remedial investigation, removal, or other response action pursuant to
any Environmental Law; or (iii) that the Company is or shall be a named party to
any Environmental Action arising out of any Person's incurrence of costs,
expenses, losses, or damages of any kind whatsoever in connection with the
release of Hazardous Materials.
(d) Except as disclosed in Schedule 3.20, to the knowledge of the
Company, there have been no unpermitted Releases of Hazardous Materials on,
upon, into, or from the real property owned or leased at any time by the
Company.
3.21 Employees. Prior to the date hereof, the Company has set forth a true
and complete list of (a) all officers (with office held) of the Company with
respect to the Business who are contemplated to be transferred, (b) all
consultants and independent contractors retained by the Company currently or
during the last fiscal year with respect to the Business who are contemplated to
be transferred and (c) all employees of the Company with respect to the Business
who are contemplated to be transferred, including each such employee's job
title, remuneration and duration of employment period. Except as disclosed in
Schedule 3.21, the Company is not a party to any written or oral employment,
consulting, service, severance or pension agreement to which the Buyer will
become subject. The Company is not a party to, and none of its employees are
subject to, any collective bargaining agreement or other union contract. The
Company enjoys good relations with its employees and there is no pending or, to
the knowledge of the Company, threatened labor trouble with or effort to
organize any of its employees, and there has been no such labor trouble or, to
the knowledge of the Company, effort to organize during the past five (5) years.
3.22 Litigation. Except as disclosed on Schedule 3.22 attached hereto, (a)
there is no Claim pending or, to the knowledge of the Company, threatened (or,
to the knowledge of the Company, any facts which could lead to such a claim) by,
against, affecting or regarding the Business at law or in equity, before any
federal, state, local or foreign court or any other governmental or
administrative agency or tribunal or any arbitrator or arbitration panel, and
(b) there are no judgments, orders, rulings, charges, decrees, injunctions,
notices of violation or other mandates against or affecting the Business.
Nothing listed on Schedule 3.22, either individually or when aggregated with
other listings on such Schedule, would reasonably be expected to have a Material
Adverse Effect.
3.23 [Intentionally omitted]
3.24 Company Products. Each product manufactured, sold, leased, distributed
or delivered by the Company ("Company Products") has been in conformity with all
applicable contractual commitments and all applicable express and implied
service and product warranties. Except as disclosed in Schedule 3.24 attached
hereto or in the ordinary course of Business, (a) there are no existing or, to
the knowledge of the Company, threatened Claims that would be assumed by the
Buyer for services or merchandise which are defective or fail to meet any
express or implied service or product warranties, or any facts which, if
discovered by a third party, would support such a Claim;
-20-
27
and (b) no Claim that would be assumed by the Buyer has been asserted against
the Company for renegotiation or price redetermination with respect to any
transaction, and there are no facts upon which any such Claim could be based
other than through the ordinary course of business. Except as set forth on
Schedule 3.24, there are no statements, citations or decisions by any
governmental or regulatory body or agency that any Company Product is defective
or fails to meet any standards promulgated by any such governmental or
regulatory body or agency. Except as set forth on Schedule 3.24, there have been
no recalls ordered by any such governmental or regulatory body or agency with
respect to any Company Product.
3.25 [Intentionally Omitted]
3.26 Brokers. Except as disclosed in Schedule 3.26 attached hereto, none of
the Company, its Subsidiaries, or anyone acting on their behalf, has engaged,
retained, or incurred any liability to any broker, investment banker, finder or
agent or has agreed to pay any brokerage fees, commissions, finder's fees or
other fees with respect to the sale of the Business or the transactions
contemplated by this Agreement.
3.27 Burdensome Agreements. The Company is not subject to or bound by any
agreement, judgment, decree or order relating to the Business which is expected
to result in a Material Adverse Effect.
3.28 [Intentionally Omitted]
3.29 Transactions with Interested Persons. To the Company's knowledge and
except as set forth on Schedule 3.29 attached hereto or in the documents of the
Company as required by the Securities Act, no officer, supervisory employee or
director of the Company owns directly or indirectly, either individually or
jointly, any material interest in, or serves as an officer or director of, any
customer, competitor or supplier of the Company, or any organization which has a
material contract or arrangement with the Company relating to the Business.
3.30 Copies of Documents. The Company has made available for inspection and
copying by Buyer and its counsel true and correct copies of all documents
referred to in this Article III or in the Schedules delivered to Buyer pursuant
to this Agreement.
3.31 Disclosure of Material Information. Neither this Agreement (including
the Schedules and Exhibits hereto) nor any document, certificate or instrument
furnished in connection therewith contains, when all such documents are read
together, with respect to the Company, any untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein not
misleading. The Company has reported to Buyer any and all indications of which
it is aware of potential material adverse factors in the Business (other than
factors affecting industry generally), such as (by way of example, not of
limitation) loss of a distributor, vendor or customer, announcements of key
employees to resign or leave the Company or any other material adverse factor
taking place on or after February 28, 1998, to the date of this Agreement. The
representations and
-21-
28
warranties contained in this Article are the only representations and warranties
made by the Company in connection with the transactions contemplated by this
Agreement and supersede any and all previous written or oral statements made by
the Company to the Buyer.
3.32 Opinion of the Financial Advisor. The Company has received the opinion
of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC as of the date hereof, to the effect that the
consideration to be received by the Company is fair to the holders of the
Company's Common Stock from a financial point of view.
3.33 Board Recommendation. The Board of Directors of the Company, at a
meeting duly called and held, has (a) determined that this Agreement and the
transactions contemplated hereby, taken together, are advisable and in the best
interests of the Company and its stockholders, and (b) subject to the other
provisions hereof, resolved to recommend that the holders of the shares of the
Company's Common Stock approve this Agreement and the transactions contemplated
hereby.
3.34 Required Company Vote. The affirmative vote of a majority of the
shares of the Company's Common Stock is the only vote of the holders of any
class or series of the Company's securities necessary to approve this Agreement
and the transactions contemplated hereby.
3.35 State Takeover Statutes. The Board of Directors has taken such action
so that no state takeover statute or similar statute or regulation of the State
of Delaware (and, to the knowledge of the Company after due inquiry, of any
other state or jurisdiction) applies to this Agreement or any of the
transactions contemplated hereby. Neither the Company nor any of its
subsidiaries has any rights plan, preferred stock or similar arrangement which
have any of the aforementioned consequences in respect of the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND BRI
Each of Buyer and BRI, separate and severally, hereby represent and warrant
to the Company as follows:
4.1 Organization and Qualification. Each of Buyer and BRI is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and has full power and authority to own, use and lease their
properties and to conduct its business as such properties are owned, used or
leased and as such business is currently conducted and as it is proposed to be
conducted. The copies of the Buyer's and BRI's respective Charters and ByLaws,
as amended to date, in each case certified by their respective Secretaries and
delivered to the Company's counsel prior to the Closing, are true, complete and
correct. Except as set forth on Schedule 4.1 attached hereto, the Buyer is
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which it owns or leases property or maintains inventories
or where the conduct of its business would require such qualification.
-22-
29
4.2 Authority; No Violation. Each of Buyer and BRI has all requisite
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Buyer and BRI have been duly and validly authorized and
approved by all necessary corporate action. This Agreement constitutes the legal
and binding obligation of the Buyer and BRI, enforceable against them in
accordance with its terms. To the best knowledge of the Buyer and BRI, the
entering into of this Agreement by the Buyer and BRI does not, and the
consummation by the Buyer and BRI of the transactions contemplated hereby,
including specifically the transfer of the Transferred Assets to Buyer by the
Company, will not violate the provisions of (a) any applicable federal, state,
local or foreign laws, (b) the Buyer's and BRI's respective Charter or ByLaws,
or (c) any provision of, or result in a default or acceleration of any
obligation under, or result in any change in the rights or obligations of the
Buyer or BRI, any Subsidiary of the Buyer or BRI under, any Lien, contract,
agreement, license, lease, instrument, indenture, order, arbitration award,
judgment, or decree to which the Buyer or BRI is a party or by which any of them
is bound, or to which any property of the Buyer or BRI is subject.
4.3 [Intentionally Omitted]
4.4 [Intentionally Omitted]
4.5 SEC Reports and Financial Statements. Since December 31, 1996, BRI has
filed all material forms, reports and documents with the Commission required to
be filed by it pursuant to the Securities Act and the Exchange Act (the "SEC
Reports"), and all of such filings complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act. Attached
hereto as Schedule 4.5 are financial statements (collectively the "BRI Financial
Statements")of audited consolidated and unaudited consolidating balance sheets
and statements of income, changes in stockholders' equity and cash flow as of
and for the fiscal year ended December 31, 1997.
4.6 Brokers. Except as disclosed in Schedule 4.6 attached hereto, neither
the Buyer, BRI, or anyone acting on their behalf, has engaged, retained, or
incurred any liability to any broker, investment banker, finder or agent or has
agreed to pay any brokerage fees, commissions, finder's fees or other fees with
respect to the transactions contemplated by this Agreement.
4.7 Disclosure of Material Information. Neither this Agreement (including
the Schedules and Exhibits hereto) nor any document, certificate or instrument
furnished in connection therewith contains, when all such documents are read
together, with respect to the Buyer or BRI, any untrue statement of a material
fact or omits to state a material fact necessary to made the statements therein
not misleading. Each of the Buyer and BRI has reported to the Company any and
all indications of which it is aware of potential material adverse factors in
their respective businesses taking place between December 31, 1997 and the date
of this Agreement.
-23-
30
4.8 Opinion of the Financial Advisor. The Buyer has received the opinion of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, LLC, as of the date hereof, to the effect that
the consideration to be paid by the Buyer to the Company is fair to the holders
of BRI's Common Stock from a financial point of view.
4.9 Board Recommendation. The Board of Directors of the Buyer and BRI, at
meetings duly called and held, has determined that this Agreement and the
transactions contemplated hereby, taken together, are advisable and in the best
interests of the Buyer, BRI, and their stockholders and have authorized the
execution, delivery and performance of this Agreement in accordance with its
terms.
4.10 Subsidiaries. Schedule 4.10 attached hereto sets forth for each
Subsidiary of BRI (a) the name of the Subsidiary, (b) its jurisdiction of
incorporation, (c) the number of authorized, issued and outstanding securities
of each class of Equity Security of such Subsidiary, and (d) the name of each
holder of such Equity Security and the number of Securities held by such holder.
Except as set forth on Schedule 4.10, neither the Buyer nor BRI owns, directly
or indirectly, any securities issued by any other Person except for United
States government securities, certificates of deposit, or other cash equivalents
and is not a partner or participant in any partnership or joint venture of any
kind.
4.11 Absence of Undisclosed Liabilities. Except as set forth in the BRI
Financial Statements, there are no material liabilities of the Buyer or BRI,
whether accrued, absolute, contingent or otherwise (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations of
any other Person, or liabilities for Taxes due or then accrued or to become
due), except for liabilities which have arisen in the ordinary course of
business of the Buyer or BRI.
4.12 Absence of Certain Changes. Except as otherwise disclosed in Schedule
4.12 attached hereto, since December 31, 1997, there has not been any change in
the business, operations, assets, liabilities, prospects or condition (financial
or otherwise) of the Buyer or BRI that, by itself or in conjunction with all
other such changes, whether or not arising in the ordinary course of business,
has been or is reasonably likely to be materially adverse with respect to the
Buyer or BRI or their abilities to perform their obligations under this
Agreement.
4.13 Availability of Capital. BRI and Buyer have adequate means to perform
their respective obligations under this Agreement and the Promissory Note.
4.14 Sole Representations and Warranties. The representations and
warranties contained in this Article IV are the only representations and
warranties made by Buyer and BRI in connection with the transactions
contemplated by this Agreement and supersede any and all previous written or
oral statements made by Buyer and BRI to the Company.
-24-
31
ARTICLE V
COVENANTS
5.1 Covenants of the Company. The Company shall keep, perform and fully
discharge the following covenants and agreements:
(a) Interim Conduct of Business. Except as contemplated by the terms
of this Agreement, from the date hereof until the Closing, the Company shall
operate the Business as a going concern consistent with prior practice and in
the ordinary course of business (except as may be authorized pursuant to this
Agreement or as set forth on Schedule 5.1(a) hereto). Without limiting the
generality of the foregoing, from the date hereof until the Closing, except for
transactions contemplated by this Agreement or expressly approved in writing by
Buyer, the Company shall not:
(i) except as contemplated hereby, enter into or amend any
employment, bonus, severance, or retirement contract or arrangement (including
any Plan as described in Section 3.19), or increase any salary or other form of
compensation payable or to become payable to any Business Employee other than in
the ordinary course of business consistent with prior practice;
(ii) purchase, lease or otherwise acquire any real estate or any
interest therein that would be assumed by the Buyer;
(iii) sell, lease or otherwise dispose of or agree to sell, lease
or otherwise dispose of any of the Transferred Assets except in the ordinary
course of business consistent with prior practice;
(iv) incur any liability, guaranty or obligation (fixed or
contingent) that would be assumed by the Buyer other than in the ordinary course
of business consistent with prior practice;
(v) place or permit to be placed any Lien on any of the
Transferred Assets, other than statutory Liens arising in the ordinary course of
business;
(vi) make or authorize any amendments or changes to its Charter
or ByLaws preventing the consummation or the transactions contemplated by this
Agreement;
(vii) make any investment in excess of $50,000, whether singly or
in the aggregate, in property, plant and equipment and other items of capital
expenditure that would be transferred to the Buyer;
-25-
32
(viii) accelerate receivables or delay or postpone payment of any
accounts payable or other liability, except in the ordinary course of business
consistent with prior practice; or
(ix) abandon any part of the Business.
(x) fail to protect the character, quality and transferability of
the Transferred Assets, including without limitation, the Intellectual Property,
at the same level of care that the Company takes with its intellectual property.
(b) Access. The Company shall, upon reasonable notice, give Buyer and
its representatives full and free access to all properties, assets, books,
contracts, commitments and records of the Company during reasonable business
hours and shall promptly furnish Buyer with all financial and operating data and
other information as to the history, ownership, Affiliates, business,
operations, properties, assets, liabilities, or condition (financial or
otherwise) of the Company as Buyer may from time to time reasonably request. It
being understood and agreed by Buyer that any such request for information
relates solely to the Business, Transferred Assets or the Assumed Liabilities,
and the Company's ability to transfer the same.
(c) Transfer of Necessary Permits. From and after the date hereof
through to the Closing Date and following the Closing the Company will use its
commercially reasonable efforts to effect the transfer to Buyer of all of the
Necessary Permits and all other permits, licenses, and leases which are
associated with the Business as presently conducted, to the extent the same are
by their terms transferable.
(d) Change of Name; Use of Name. The Company will take all action
necessary or appropriate to change its corporate name, effective upon the
Closing, to a name that does not include the words "Global" and " Village" and
will take such other actions within its power as may be necessary or appropriate
to permit Buyer immediately after the Closing to use the Company's present
corporate name. From and after the effective date of the change of the Company's
corporate name, the Company shall not use the name or any other name that
includes both such words or that is substantially similar thereto for any
purpose except to refer to the business conducted by the Company prior to the
Closing.
(e) Satisfaction of Conditions. The Company shall use its commercially
reasonable efforts to accomplish the satisfaction of the conditions precedent to
Closing contained in Section 6.1 herein on or prior to the Closing Date.
(f) Purchase Orders. The Company shall not place purchase orders with
its turnkey manufacturer for the month of June 1998 without the prior written
consent of BRI.
5.2 Covenants of the Company and Buyer. The Company shall keep, perform and
fully discharge the following covenants and agreements:
-26-
33
(a) Confidentiality. The Buyer, BRI, and the Company (individually, a
"Party", and collectively, the "Parties") have and will request certain written
and verbal information that is material and confidential in nature (the
"Information") relating to a possible purchase of the Business (such purchase to
be referred to herein as the "Transaction"). For purposes of this Asset Purchase
Agreement, the term Information shall include all information relating to the
Transaction that has been received as of the date of this Asset Purchase
Agreement and any additional information that may be received in the future from
or between the Parties in conjunction with their evaluation of the Transaction.
In consideration of the Parties being furnished with the Information:
(i) The Parties agree that the Information will be
kept confidential and will not, without the other's prior
written consent, be disclosed by the Parties or the Parties'
representatives (which term shall mean, for all purposes
herein, Parties' directors, officers, employees, agents or
representatives, including, without limitation, attorneys,
accountants, consultants, lenders and financial advisors),
in any manner whatsoever, in whole or in part, and will not
be used by the Parties or the Parties' representatives
directly or indirectly for any purpose other than for the
sole purpose of evaluating the Transaction. The Parties
agree to transmit the Information only to those
representatives who need to know the Information for the
purpose of evaluating the Transaction, who are informed by
the Parties of the confidential nature of the Information
and who agree to be bound by the terms of this Agreement.
The Parties will be responsible for any breach of this
Agreement by the Parties representatives.
(ii) Without the other Party's prior written
consent, the Parties and its representatives will not
disclose to any other person the fact that the Information
has been made available, or any of the terms, conditions or
other facts with respect to the Transaction, including the
status thereof, except as permitted by Subparagraph "v"
hereof.
(iii) The Information and all copies thereof will
be returned promptly to the other Party's attention in the
event that the such other Party makes such a request or if
the contemplated Transaction shall not be consummated, and
neither Party nor any representative will make or retain any
copies, extracts or other reproductions, in whole or in
part, of the Information.
(iv) This Section shall be inoperative as to such
portions of the Information which (i) are or become
generally available to the public other than as a result of
a disclosure by a Party or its representatives; (ii) become
available to a Party on a non-confidential basis from a
source other than the other Party; or (iii) was known to a
Party on a non-confidential basis prior to its disclosure to
such Party by the other Party.
-27-
34
(v) In the event that a Party or anyone to whom a
Party transmits the Information pursuant to this Agreement
is requested or becomes legally compelled (by oral
questions, interrogatories, request for information or
documents, subpoena, civil investigative demand or similar
process, including regulatory inquiries) to disclose any of
the Information, such Party will provide the other Party
with prompt prior written notice so that such other Party
may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this
Agreement. In the event that such protective order or other
remedy is not obtained, or such other Party waives
compliance with Paragraph 5.2(e)(ii) of this Agreement, the
Party will furnish only that portion of the Information that
is legally required (which determination may be based upon
advice of outside legal counsel) and will exercise all
reasonable means to obtain reliable assurance that
confidential treatment will be accorded the Information.
(vi) It is agreed and understood that in the event
of any breach or threatened breach thereof by a Party, such
other Party shall, in addition to any other remedies which
may be available, be entitled to injunctive and other
equitable relief in any court of competent jurisdiction.
(vii) It is understood and agreed that no failure
or delay by the a Party in exercising any right, power or
privilege under this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other further exercise of any right, power or
privilege hereunder.
(viii) If any provision of this Section shall be
determined to be void or unenforceable, the remaining
provisions of this Section shall nonetheless constitute
valid and enforceable obligations of the parties hereto.
(ix) Any consent or waiver of compliance with any
provision hereof shall be effective only if in writing, and
no such consent or waiver shall be deemed to extend beyond
the particular subject thereof.
(b) Exclusive Dealings. Subject to the provisions of Section 7.1, the
Company, on its own behalf and on behalf of its shareholders, agrees that, in
consideration of Buyer undertaking to prepare the necessary legal documentation
to evidence the contemplated transaction, the Company will not engage in
discussions or negotiations of any level with any other person or entity
regarding the sale of the Business or its assets or properties prior to the
termination of this Agreement. Notwithstanding the foregoing, the Company shall
be entitled to entertain, discuss and negotiate with any third party that
provides an unsolicited offer for the sale of the Company, the Business or
Transferred Assets that is potentially superior to the terms of this Agreement
in satisfaction of its fiduciary obligations to the Company's Stockholders, as
advised by its independent legal counsel.
-28-
35
(c) Disclosure Supplements. From time to time prior to the Closing,
the Company will supplement or amend the Schedule(s) hereto with respect to any
matter hereafter arising which, if existing or occurring at or prior to the date
of this Agreement, would have been required to be set forth or described in any
such Schedule or which is necessary to complete or correct any information in
any such Schedule or in any representation or warranty of the Company which has
been rendered inaccurate thereby.
(d) Books and Records. For a period of six (6) years commencing on the
Closing Date, or for such longer period as may be required by applicable law,
the Company shall make all such books and records related to the Business not
included as part of the Transferred Assets available for inspection and copying
by the Buyer and its representatives during regular business hours upon two (2)
Business Days' prior notice;
5.3 Preparation of Proxy Statement; Stockholder Meeting.
(a) Promptly following the date of this Agreement (and in no event
later than ten business days following execution and delivery of this
Agreement), the Company (i) shall prepare a proxy statement (the "Proxy
Statement")and other materials relating to the solicitation of the vote of a
majority of the issued and outstanding shares of the Company's common stock,
("Common Stock"), in favor of this Agreement and the consummation of the
transactions contemplated hereby and (ii) shall file preliminary proxy materials
with the Securities and Exchange Commission ("SEC"). The Company shall use its
commercially reasonable efforts as promptly as practicable to respond to and
resolve any comments raised by the SEC with respect to such materials. The
Company will use its commercially reasonable efforts to cause the Proxy
Statement and other materials to be mailed to the Company's stockholders as
promptly as practicable and in any event no later than the eleventh (11th)
calendar day following clearance by the SEC for distribution.
(b) The Company will immediately notify the Buyer of (i) the receipt
of any comments from the SEC regarding the Proxy Statement and (ii) any request
by the SEC for any amendment to the Proxy Statement or for additional
information. Buyer shall be given a reasonable opportunity to review and comment
on (1) all filings with the SEC, including the Proxy Statement and any
amendments thereto, (2) all correspondence from the SEC to the Company in
respect of the Proxy Statement, this Agreement and the transactions contemplated
hereby, and (3) all mailings to the Company's stockholders in connection with
the transactions contemplated hereby, including the Proxy Statement, prior to
the filing or mailing thereof. The Company shall use its commercially reasonable
efforts to reflect all reasonable comments raised by Buyer in respect of any of
the foregoing.
(c) The Company will, as promptly as practicable following the date of
this Agreement and in consultation with Buyer, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders' Meeting") for
the purpose of approving this Agreement and the transactions contemplated by
this Agreement. The Company will, through its Board of Directors, recommend to
its stockholders approval of the foregoing matters, as set forth in Section
3.36.
-29-
36
Subject to obtaining the approval by the SEC of the Proxy Statement and other
proxy materials, the Company will use its commercially reasonable efforts to
hold the Stockholders' Meeting as soon as practicable after the date hereof.
5.4 Covenants of Buyer and BRI. Buyer shall use its commercially reasonable
efforts to accomplish the satisfaction of the conditions precedent to Closing
contained in Section 6.2 herein on or prior to the Closing Date.
5.5 Covenants of Buyer and BRI and the Company. The parties hereto hereby
agree to keep, perform and fully discharge the following covenants and
agreements:
(a) Waiver of Compliance with the Bulk Sales Act. In connection with
the transactions contemplated hereby, the parties shall waive compliance with
the provisions of Article 6 of the Uniform Commercial Code Bulk Transfers and
the Bulk Sales Act and any other applicable United States, state or provincial
bulk sales act or statute ("Bulk Sales Acts").
(b) Employees.
(i) Except as herein provided, Buyer shall not be obligated to
hire any of the Company's employees. Buyer shall be free to offer employment to
such of the Company's employees identified to the Buyer by the Company prior to
the date hereof ("Business Employees") as Buyer may determine are suitable to
its needs. It is currently estimated that Buyer may want to employ approximately
60 employees (the "Offerees"). The Buyer will agree to offer employment to at
least forty-eight (48) of the Company's employees, the selection of such
employees to be in the Buyer's sole discretion. The employment relationship
between the Buyer and the employees so hired will be on an at-will basis and the
Buyer does not warrant any term of longevity of such employment nor the terms
and conditions of such employment; provided, however, that Buyer shall offer
such employment to the Offerees upon terms and conditions which, at a minimum,
equal the terms and conditions currently provided by the Company. The Company
shall be solely responsible for any employment benefits, including severance,
pension or profit sharing, medical insurance and accrued vacation due by the
Company to such employees, whether employment is offered by Buyer to such
employee or not. Employees of the Company associated with the Business and
retained by Buyer shall be entitled to participate in Buyer's employment benefit
plans, including its stock option or stock purchase plans, as such plans are
determined and directed by the Buyer's Board of Directors. Selected employees of
the Company retained by Buyer will be provided with retention incentives as
determined by the Buyer.
(ii) The Company agrees that, following the execution of this
Agreement and prior to the Closing Date, Buyer shall be allowed to discuss with
the Business Employees the possibility of employment with Buyer and shall be
allowed to employ such persons effective as of the Closing Date on such terms
and conditions as may be negotiated between Buyer and such persons. Buyer shall
identify ten (10) days prior to the Closing Date those Business Employees that
-30-
37
it intends to hire. The Company covenants not to interfere with any such efforts
by Buyer and to use all reasonable efforts to assist Buyer in employing such
individuals effective as of the Closing Date.
(iii) As to any such Business Employee who is employed by Buyer
pursuant to this Section 5.5(b), the Company agrees to cause the release of such
employee from any contractual provision with the Company, or any affiliate of
the Company which would impair the utility of such employee's services to Buyer,
or that would impose upon such employee any monetary or other obligation to the
Company that otherwise would be occasioned by the termination of such employee's
employment or any agreement of noncompetition or confidentiality.
Notwithstanding the foregoing, nothing contained herein shall prevent the
Company from seeking redress from such employees for violations of such
employees' duties as an employee of the Company.
(c) WARN Act. The Company shall be responsible for any notice required
under or liability associated with the Worker Adjustment and Retraining
Notification Act (29 U.S.C. ss.ss.21012109) and any applicable State or local
plant closing, mass layoff, relocation, or severance laws (hereinafter
collectively referred to as "WARN") associated with the Business Employees which
takes place or arises on or before the Closing Date, and Buyer shall be
responsible for any such notice or liability associated with the persons hired
by Buyer on or after the Closing Date ("Buyer's Employees") which takes place or
arises after the Closing Date.
(d) COBRA. The Company shall be responsible for any group health plan
continuation or conversion coverage required under section 4980B of the Code,
Part 6 of Title I or ERISA, or applicable State or local laws ("Required COBRA
Coverage") with respect to the Business Employees due to a qualifying event
occurring on or before the Closing Date. The Buyer shall be responsible for any
Required COBRA Coverage with respect to Buyer's Employees due to a qualifying
event occurring as a result of the closing and after the Closing Date.
(e) Distributions from Plans. Except where prohibited by applicable
law (including but not limited to section 401(k)(2)(B)(i) of the Code), the
Company shall distribute to the Business Employees their accrued benefits under
the Plans (subject, however, to any vesting schedule not otherwise accelerated
by applicable law or any term of the Plan), including but not limited to accrued
vacation, bonus, and sick pay (but determined without regard to any last day of
the plan year employment requirement or any other similar condition). Such
distributions shall be made in the manner and at the time as prescribed by the
terms of the Plan and applicable law.
(f) Buyer's Employee Plans. Effective as of the Closing Date, Buyer
shall establish for the benefit of Buyer's Employees such employee benefit plans
as Buyer shall deem appropriate.
-31-
38
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects at the Closing Date; provided,
however, that the representations and warranties contained in Sections 3.6,
3.7(a) and 3.11 shall be made with respect to the Closing Balance Sheet and no
representations and warranties shall be made with regard to Section 3.7(b)
through (r) as of the Closing Date; and provided, further, however, that the
representations and warranties contained in Section 3.7(a) shall not be deemed
to be untrue for any failure on the part of the Company to have placed orders
with its contract manufacturer in compliance with Section 5.1(f) where Buyer's
permission was reasonably and timely requested by the Company and withheld by
Buyer or the failure on the part of Buyer or BRI to provide in a timely manner
products ordered by the Company. The Company shall have performed, on or before
the Closing Date, all of its respective obligations under this Agreement and the
other Purchase Documents which by the terms thereof are to be performed on or
before the Closing Date; and the Company shall have delivered to Buyer an
Officer's Certificate dated the Closing Date of the Company to such effect.
(b) No Pending Action. No legislation, order, rule, ruling or
regulation shall have been proposed, enacted or made by or on behalf of any
governmental body, department or agency, and no legislation shall have been
introduced in either House of Congress or in the legislature of any state, and
no investigation by any governmental authority shall have been commenced or
threatened, and no action, suit, investigation or proceeding shall have been
commenced before, and no decision shall have been rendered by, any court or
other governmental authority or arbitrator, which, in any such case, in the
reasonable judgment of Buyer could materially prevent or rescind the
transactions contemplated by this Agreement (including, without limitation, the
purchase and sale of the Transferred Assets) or result in a Material Adverse
Effect.
(c) Purchase Permitted by Applicable Laws; Legal Investment. Buyer's
purchase of and payment for the Transferred Assets (a) shall not be prohibited
by any applicable law or governmental order, rule, ruling, regulation, release
or interpretation, (b) shall not constitute a fraudulent or voidable conveyance
under any applicable law and (c) shall be permitted by all applicable laws,
statutes, ordinances, regulations and rules of the jurisdictions to which Buyer
is subject.
(d) Proceedings Satisfactory. All proceedings taken in connection with
the purchase and sale of the Transferred Assets, the transactions contemplated
by Section 6.1(o) hereof, all of the other Purchase Documents and all documents
and papers relating thereto, shall be in form
-32-
39
and substance reasonably satisfactory to Buyer. Buyer and its counsel shall have
received copies of such documents and papers as Buyer or its counsel may
reasonably request in connection therewith, all in form and substance reasonably
satisfactory to Buyer. Buyer acknowledges that it has completed its due
diligence with respect to all items other than the material intellectual
property issues specifically identified in the IP letter dated March 30, 1998,
as amended, and delivered to the Company prior to the date hereof ("IP Issues").
Buyer agrees that unless Buyer notifies the Company in writing prior to April
14, 1998 that it is terminating the transaction because of a material IP Issue
reasonably satisfactory to Buyer, including a detailed analysis of the issue,
Buyer and BRI shall be deemed to have satisfied their due diligence with respect
to this Agreement and the transactions contemplated hereby. Any Purchase
Document, any Schedule or Exhibit to this Agreement and any other document,
agreement or certificate contemplated by this Agreement, not approved by Buyer
in writing as to form and substance on the date this Agreement is executed,
shall be reasonably satisfactory in form and substance to Buyer.
(e) Consents Permits. The Company shall have received (and there shall
be in full force and effect) all material consents, approvals, licenses,
permits, orders and other authorizations of, and shall have made (and there
shall be in full force and effect) all such filings, registrations,
qualifications and declarations with, any Person pursuant to any applicable law,
statute, ordinance regulation or rule or pursuant to any agreement, order or
decree to which the Company is a party or to which it is subject, in connection
with the transactions contemplated by this Agreement and the sale of the
Transferred Assets.
(f) Corporate Documents. The Company shall have delivered to Buyer an
Officer's Certificate of the Secretary of the Company certifying (A) the
incumbency and genuineness of signatures of all officers of the Company
executing this Agreement, any document delivered by the Company at the Closing
and any other document, instrument or agreement executed in connection herewith,
(B) the truth and correctness of resolutions of the Company authorizing the
entry by the Company into this Agreement and the transactions contemplated
hereby;
(g) Opinion of Counsel. Buyer shall have received an opinion, dated
the Closing Date and satisfactory in form and content acceptable to Buyer and
its counsel, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, as to
the matters set forth on Exhibit C attached hereto. In rendering such opinion
such counsel may, to the extent it may deem such reliance or limitation is
proper, (a) rely on (i) certificates of public officials, (ii) certificates, in
form and substance satisfactory to Buyer and its counsel, of officers of the
Company and (iii) an opinion or opinions, in form and substance satisfactory to
Buyer and its counsel, of other counsel satisfactory to Buyer and its counsel
and (b) limit the scope of such opinion to the laws of Delaware and the federal
laws of the United States.
(h) Transfer of Necessary Permits. All of the Necessary Permits shall
have been transferred, to the extent transferable, to Buyer on or before the
Closing Date.
-33-
40
(i) Transfer of Transferred Assets. All of the Transferred Assets
shall have been effectively sold, transferred, conveyed and assigned to Buyer
and all of the deeds, conveyances, bills of sale, certificates of title,
assignments, assurances and other instruments and documents referenced in
Section 3.2 shall have been executed, delivered and, if appropriate, filed or
recorded.
(j) Cooperation and NonCompetition Agreements. The Company shall
execute and deliver to Buyer, within ten (10) days following the execution of
this Asset Purchase Agreement, a Cooperation and NonCompetition Agreement ("the
NonCompetition Agreement") in substantially the form of Exhibit F attached
hereto:
(k) Net Current Asset Value Letter. Buyer shall have received a letter
addressed to it and satisfactory to it in form and content, from the Company's
auditor, that the Company's Closing Balance Sheet prepared in accordance with
the Balance Sheet Methodology reflects a net current asset value of at least One
Million One Hundred Thousand Dollars ($1,100,000.00).
(l) Other Transactions. Buyer and the Company shall have entered into
an Information Systems Agreement, in form and substance to be mutually agreed
upon by the parties hereto permitting Buyer to utilize all of the Company's
Information Systems currently available to the Business and agreeing to
cooperate with Buyer in creating, adapting or otherwise establishing information
systems for Buyer's business which fulfill substantially the same functions as
those currently used by the Company, including facilitating the transfer of any
data or software being transferred by the Company to Buyer hereunder.
(m) Inter-Company Manufacturing Agreement. An agreement between the
Company and Buyer for Buyer (or Boca) to manufacture servers for the Company on
a preferred "cost plus" basis" is to be agreed upon between Buyer (or Boca
Research, Inc.) and the Company in form mutually acceptable to the parties.
(n) Warrants. The Company shall grant to the Buyer Warrants purchase
425,000 shares of the Company's common stock (subject to stock splits,
recapitalizations and the like) at a price equal to 110% of the closing price
based on the ten trading days ending 3 trading days prior to the Closing Date.
Such Warrant shall be substantially in the form attached hereto as Exhibit G.
(o) License Agreement. The parties shall have entered into a Cross
License Agreement in form and substance mutually agreeable to the parties. Each
party covenants and agrees to use its good faith best efforts to conclude such
agreement prior to April 14, 1998.
6.2 Conditions to Obligations of the Company. The obligations of the
Company to consummate this Agreement and the transactions contemplated hereby
are subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties of Buyer and BRI in this Agreement shall remain true and correct in
all material respects at the
-34-
41
Closing Date, and Buyer shall, on or before the Closing Date, have performed all
of its obligations under this Agreement and the Other Purchase Documents which
by the terms thereof are to be performed by it on or before the Closing Date;
and Buyer shall have delivered an Officer's Certificate to the Company dated the
Closing Date to such effect.
(b) No Pending Action. No legislation, order, rule, ruling or
regulation shall have been proposed, enacted or made by or on behalf of any
governmental body, department or agency, and no legislation shall have been
introduced in either House of Congress or in the legislature of any state, and
no investigation by any governmental authority shall have been commenced or
threatened, and no action, suit, investigation or proceeding shall have been
commenced before, and no decision shall have been rendered by, any court or
other governmental authority or arbitrator, which, in any such case, was not
known by the Company on the date hereof or which could adversely affect,
restrain, prevent or rescind the transactions contemplated by this Agreement
(including, without limitation, the purchase and sale of the Transferred Assets)
or result in a Material Adverse Effect.
(c) Corporate Documents. Buyer and BRI shall have delivered
respectively to the Company:
(i) an Officer's Certificate of the Secretary of such party
certifying (A) the incumbency and genuineness of signatures of all officers of
Buyer executing this Agreement, any document delivered by Buyer at the Closing
and any other document, instrument or agreement executed in connection herewith,
(B) the truth and correctness of resolutions of Buyer authorizing the entry by
Buyer into this Agreement and the transactions contemplated hereby and (C) the
truth, correctness and completeness of the ByLaws of Buyer;
(ii) the Charter of Buyer certified as of a recent date by the
Secretary of State of the State of Florida; and
(iii) certificates of corporate good standing and legal existence
of Buyer as of a recent date from the Secretary of State of the State of Florida
and California.
(d) Opinion of Counsel to Buyer. The Company shall have received an
opinion, dated the Closing Date and satisfactory in form and content acceptable
to the Company and its counsel, of Spinner, Dittman, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel to Buyer, in substantially the form attached hereto as Exhibit H. In
rendering such opinion such counsel may, to the extent it may deem such reliance
or limitation is proper, (a) rely on (i) certificates of public officials, (ii)
certificates, in form and substance satisfactory to the Company, of Buyer or
officers of Buyer and (iii) an opinion or opinions, in form and substance
satisfactory to the Company and its counsel, of other counsel satisfactory to
the Company and its counsel and (b) limit the scope of such opinion to the laws
of Florida and the federal laws of the United States.
(e) This Agreement is contingent upon the approval of the Company's
Stockholders prior to the Closing Date.
-35-
42
(f) Purchase Permitted by Applicable Laws; Legal Investment. The
Buyer's purchase of and payment for the Transferred Assets (a) shall not be
prohibited by any applicable law or governmental order, rule, ruling,
regulation, release or interpretation, (b) shall not constitute a fraudulent or
voidable conveyance under any applicable law and (c) shall be permitted by all
applicable laws, statutes, ordinances, regulations and rules of the
jurisdictions to which the Buyer is subject.
(g) Proceedings Satisfactory. All proceedings taken in connection with
the purchase and sale of the Transferred Assets, the transactions contemplated
by Section 6.1(o) hereof, all of the other Purchase Documents and all documents
and papers relating thereto, shall be in form and substance reasonably
satisfactory to the Company. The Company and its counsel shall have received
copies of such documents and papers as the Company or its counsel may reasonably
request in connection therewith, all in form and substance reasonably
satisfactory to the Company. Any Purchase Document, any Schedule or Exhibit to
this Agreement and any other document, agreement or certificate contemplated by
this Agreement, not approved by the Company in writing as to form and substance
on the date this Agreement is executed, shall be reasonably satisfactory in form
and substance to the Company.
(h) License Agreement. The parties shall have entered into a [Cross]
License Agreement substantially in the form of Exhibit I attached hereto.
(i) Guaranty. The Buyer shall have delivered to the Company a Guaranty
substantially in the form of Exhibit E attached hereto.
(j) Other Transactions. Buyer and the Company shall have entered into
an Information Systems Agreement, in form and substance to be mutually agreed
upon by the parties hereto, permitting Buyer to utilize all of the Company's
Information Systems currently available to the Business and agreeing to
cooperate with Buyer in creating, adapting or otherwise establishing information
systems for Buyer's business which fulfill substantially the same functions as
those currently used by the Company, including facilitating the transfer of any
data or software being transferred by the Company to Buyer hereunder.
ARTICLE VII
TERMINATION
7.1 Termination of Agreement. This Agreement and the transactions
contemplated hereby may (at the option of the party having the right to do so)
be terminated at any time on or prior to the Closing Date:
(a) Mutual Consent. By mutual written consent of Buyer and the
Company;
-36-
43
(b) Court Order. By Buyer, or the Company if any court of competent
jurisdiction shall have issued an order pursuant to the request of a third party
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
(c) Failure to Close By June 30, 1998. By Buyer or the Company if the
transactions contemplated hereby shall not have been consummated on or before
June 30, 1998, provided, however, that such right to terminate this Agreement
shall not be available to any party whose failure to fulfill any obligation of
this Agreement has been the cause of, or resulted in, the failure of the
transactions contemplated hereby to be consummated on or before such date;
(d) Termination by Company. By the Company upon notice to Buyer at any
time prior to June 30, 1998, if (i) a condition to the performance of the
Company set forth in Section 6.2 hereof shall not be fulfilled at the time
specified for the fulfillment thereof, (ii) a material default under or a
material breach of this Agreement shall be made by Buyer and such default or
breach shall not be curable prior to June 30, 1998; or
(e) Termination by Buyer. By Buyer by notice to the Company at any
time prior to June 30, 1998, if (i) a condition to the performance of Buyer set
forth in Section 6.1 hereof shall not be fulfilled at the time specified for the
fulfillment thereof; (ii) a material default under or a material breach of this
Agreement shall be made by the Company, and such default or breach shall not be
curable prior to June 30, 1998;
(f) Termination by Buyer and/or the Company. By Buyer or the Company
by notice to the other party if the Company enters into any agreement with a
third party that would have a Material Adverse Effect on the Company's ability
to perform its obligations hereunder with respect to any of the following
involving the Company and/or its subsidiaries: (i) any merger, consolidation,
share exchange, recapitalization, business combination, or other similar
transaction involving the sale of the Company, the Business or Transferred
Assets ; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of the Company, the Business or the Transferred Assets in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for 25% or more of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act of 1933 in
connection therewith; or (iv) any public announcement by the Company of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
7.2 Effect of Termination and Right to Proceed. If this Agreement is
terminated pursuant to this Article VII, then except as provided below, all
further obligations of Buyer and the Company under this Agreement shall
terminate without further liability of Buyer or any Affiliate thereof to the
Company or to Buyer or any Affiliate thereof, except with respect to the
obligations set forth in Sections 5.2 and 7.1, and except, in the case of
termination pursuant to Section 7.1(d) or Section 7.1(e) as to liability for
misrepresentation, breach or default in connection with any warranty,
representation, covenant or obligation given, occurring or arising to the date
of termination. In addition, anything in this Agreement to the contrary
notwithstanding, if any of conditions to
-37-
44
obligations specified in Sections 6.1 or 6.2 hereof have not been satisfied,
Buyer, in addition to any other rights which it may have, shall have the right
to waive its rights to have such conditions satisfied and elect to proceed with
the transactions contemplated hereby and, if any of the conditions to the
obligations of the Company specified in Section 6.2 hereof have not been
satisfied, the Company in addition to any other rights which may be available to
them, shall have the right to waive their rights to have such conditions
satisfied and elect to proceed with the transactions contemplated hereby. If the
Company or the Buyer terminates this Agreement pursuant to Sections 5.2(b) and
7.1(f), the Company shall pay the Buyer the sum of US$3,000,000.00 on the
earlier of the closing of such transaction or 90 days after such termination.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations and Warranties. The parties hereby shorten
the applicable period of limitation of claims made under representations and
warranties, and for that purpose each and every such representation and warranty
set forth in this Agreement (including the Officer's Certificates required by
Sections 6.1 and 6.2 above), shall survive until the first anniversary of the
Closing Date, except with respect to the representations and warranties set
forth in Sections 3.2, 3.20, 3.26, 4.2 and 4.6, which shall survive the Closing
without limitation. From and after the applicable period of survival with
respect to such respective representations and warranties of the Company and
Buyer, none of the Company, or Buyer or any Affiliate of the Company or Buyer
shall have any liability whatsoever with respect to any such representation or
warranty, except for breaches as to which any party shall have notified the
other party prior to such date. This Section 8.1 shall have no effect upon any
other obligation of the parties hereto, whether to be performed before or after
the Closing Date.
8.2 Indemnification by the Company. The Company shall indemnify, defend and
hold the Buyer and BRI, its respective officers, directors, employees,
consultants, owners, agents and Affiliates, harmless from and in respect of any
and all Losses which may be sustained or suffered by any of them arising out of
or resulting from any breach or inaccuracy of any representation or warranty or
the breach of or failure to perform any warranty, covenant, undertaking or other
agreement of the Company contained in this Agreement or any other Purchase
Document and arising out of any and all actions, suits, claims and
administrative or other proceedings of every kind and nature instituted or
pending against the Company or Buyer or any of their Affiliates at any time
before or after the Closing Date to the extent that such Losses (a) relate to or
arise out of or in connection with the assets, businesses, operations, conduct,
products and/or employees (including former employees) of the Company, whether
relating to or arising out of or in connection with occurrences before or after
the Closing Date and (b) do not arise out of a breach or inaccuracy of the
Buyer's representations and warranties in, or a breach or default by Buyer in
the performance of any warranty, covenant under, undertaking or other agreement
contained in this Agreement or any other Purchase Document (the "Losses");
provided, however, that the Company shall have no liability to
-38-
45
the Buyer pursuant to this Section as a result of the breach of any
representation or warranty to the extent that the Buyer knew that such
representation or warranty was untrue, inaccurate or incorrect prior to the
Closing Date.
8.3 Indemnification by Buyer and BRI. Buyer and BRI shall indemnify, defend
and hold the Company, its respective officers, directors, employees,
consultants, owners, agents and Affiliates, harmless from and in respect of any
and all Losses which may be sustained or suffered by any of them arising out of
or resulting from any breach or inaccuracy of any representation or warranty or
the breach of or failure to perform any warranty, covenant, undertaking or other
agreement of Buyer and BRI contained in this Agreement or any other Purchase
Document to the extent that such Losses do not arise out of a breach or
inaccuracy of the Company's representations and warranties in, or a breach or
default in the performance of any warranty, covenant under, undertaking or other
agreement contained in this Agreement or any other Purchase Document; provided,
however, that Buyer and BRI shall have no liability to the Company pursuant to
this Section 8.3 as a result of the breach of any representation or warranty to
the extent that the Company knew that such representation or warranty was
untrue, inaccurate or incorrect prior to the Closing Date.
8.4 Minimum Indemnification; Materiality. Notwithstanding anything to the
contrary contained herein, no party hereto shall be entitled to recover from any
other party unless and until the total of all claims for indemnity or damages
with respect to any inaccuracy or breach of any such representations or
warranties (other than those contained in Sections 3.26 or 4.6 above) or breach
of or default in the performance of any covenants, undertakings or other
agreements, whether such claims are brought under this Article VIII or
otherwise, exceeds $500,000.00 and then only for the amount by which such claims
for indemnity or damages exceed $250,000.00. Other than for breaches of the
representations and warranties contained in Sections 3.13 and 3.20, under no
circumstances shall the Company be obligated to indemnify BRI and Buyer for
Losses in excess of the Purchase Price received by the Company. Notwithstanding
the foregoing, under no circumstances shall BRI and Buyer collectively be
obligated to indemnify the Company for Losses in excess of the Purchase Price.
8.5 Notice and Opportunity to Defend. If there occurs an event that a party
asserts is an indemnifiable event pursuant to Section 8.2 or 8.3, the parties
seeking indemnification shall promptly notify the other parties obligated to
provide indemnification (collectively, the "Indemnifying Party"). If such event
involves (a) any Claim or (b) the commencement of any action, suit or proceeding
by a third person, the party seeking indemnification will give such Indemnifying
Party prompt written notice of such Claim or the commencement of such action,
suit or proceeding, provided, however, that the failure to provide prompt notice
as provided herein will relieve the Indemnifying Party of its obligations
hereunder only to the extent that such failure prejudices the Indemnifying Party
hereunder. In case any such action, suit or proceeding shall be brought against
any party seeking indemnification and it shall notify the Indemnifying Party of
the commencement thereof, the Indemnifying Party shall be entitled to
participate therein and, to the extent that it desires to do so, to assume the
defense thereof, with counsel reasonably satisfactory to such party seeking
-39-
46
indemnification and, after notice from the Indemnifying Party to such party
seeking indemnification of such election so to assume the defense thereof, the
Indemnifying Party shall not be liable to the party seeking indemnification
hereunder for any attorneys' fees or any other expenses, in each case
subsequently incurred by such party, in connection with the defense of such
action, suit or proceeding. The party seeking indemnification agrees to
cooperate fully with the Indemnifying Party and its counsel in the defense
against any such action, suit or proceeding. In any event, the party seeking
indemnification shall have the right to participate at its own expense in the
defense of such action, suit or proceeding. In no event shall an Indemnifying
Party be liable for any settlement or compromise effected without its prior
consent.
8.6 Full Access to Business. The Company shall also give the Buyer full
access to:
(i) the premises occupied by the Business;
(ii) the Company's books and records;
(iii) the Company's Seller's information systems; and
(iv) the Business Employees.
ARTICLE IX
MISCELLANEOUS
9.1 Fees and Expenses. Each of the parties hereto will pay and discharge
its own expenses and fees in connection of with the negotiation of and entry
into this Agreement and the consummation of the transactions contemplated
hereby.
9.2 Publicity and Disclosures. Prior to the Closing, no press release or
any public disclosure, either written or oral, of the transactions contemplated
by this Agreement shall be made by any party without the prior knowledge and
written consent of the Company and Buyer other than compliance with the
Securities Act disclosures and other regulatory bodies.
9.3 Notices. All notices, requests, demands, consents and communications
necessary or required under this Agreement or any other Purchase Document shall
be made in the manner specified, or, if not specified, shall be delivered by
hand or sent by registered or certified mail, return receipt requested, or by
telecopy (receipt confirmed) to:
-40-
47
if to Buyer:
Boca Research, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile Transmission Number: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to:
Spinner, Dittman, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile Transmission Number: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company:
[Newco]
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile Transmission Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Transmission Number: (▇▇▇)▇▇▇-▇▇▇▇
All such notices, requests, demands, consents and communications shall be
deemed to have been duly given only when such notice, request, demand, consent
or communication is delivered or, if sent by telecopier, when received.
9.4 Successors and Assigns. All covenants and agreements set forth in this
Agreement and made by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the successors and assigns of such party, whether or not
so expressed.
-41-
48
9.5 Descriptive Headings. The headings of the sections and paragraphs of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
9.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
9.7 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason in any
jurisdiction, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired or affected, it being intended that each of parties' rights and
privileges shall be enforceable to the fullest extent permitted by law, and any
such invalidity, illegality and unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the fullest extent permitted by law, the parties hereby waive any provision of
any law, statute, ordinance, rule or regulation which might render any provision
hereof invalid, illegal or unenforceable.
9.8 Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement or the other Purchase Documents, or where any
provision hereof or thereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to any
other available remedy.
9.9 Course of Dealing. No course of dealing and no delay on the part of any
party hereto in exercising any right, power, or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. The failure of any of the parties to this Agreement
to require the performance of a term or obligation under this Agreement or the
waiver by any of the parties to this Agreement of any breach hereunder shall not
prevent subsequent enforcement of such term or obligation or be deemed a waiver
of any subsequent breach hereunder. No single or partial exercise of any rights,
powers or remedies conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
9.10 Third Parties. Except as specifically set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any Person, other than the parties hereto and their permitted
successors or assigns, any rights or remedies under or by reason of this
Agreement or any other Purchase Document.
9.11 Tax Matters.
-42-
49
(a) The Buyer shall pay all real property transfer Taxes, sales Taxes,
stock transfer Taxes, documentary stamp Taxes, recording charges and other
similar Taxes resulting from, arising under or in connection with the transfer
of the Transferred Assets or any other related transaction under the Agreement.
(b) The Company shall be responsible for and shall timely pay or cause
to be paid any and all Taxes (other than Buyer's Taxes, as defined below) with
respect to or relating to the Business or the Transferred Assets, whensoever
arising, that are attributable to any taxable period ending on or prior to the
Closing Date and, in the case of a taxable period that includes, but does not
end on the Closing Date, the portion of such taxable period that ends on the
Closing Date ("the Company's Taxes"). Notwithstanding anything in this Agreement
to the contrary, the Company's Taxes shall constitute a Retained Liability.
(c) Buyer shall be responsible for and shall timely pay or cause to be
paid any and all Taxes (other than the Company's Taxes) with respect to the
Business or the Transferred Assets, whensoever arising, that are attributable to
any taxable period commencing after the Closing Date and, in the case of a
taxable period that includes, but does not end on, the Closing Date, the portion
of such taxable period that begins on the day after the Closing Date ("Buyer's
Taxes"). Notwithstanding anything in this Agreement to the contrary, Buyer's
Taxes shall constitute an Assumed Liability.
(d) The obligations of the Company set forth in the Agreement relating
to Taxes shall, except as otherwise agreed in writing, be unconditional and
absolute and shall remain in effect without limitation as to time or amount of
recovery by Buyer until thirty (30) days after the expiration of the applicable
statute of limitations governing the Taxes to which such obligations relate
(after giving effect to any agreement extending or tolling such statute of
limitations).
9.12 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.
9.13 WAIVER OF JURY TRIAL. EACH OF BUYER AND THE COMPANY HEREBY EXPRESSLY
WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OTHER PURCHASE DOCUMENT OR THE
TRANSFERRED ASSETS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THIS AGREEMENT. THE COMPANY AND BUYER ALSO WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY
PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THE COMPANY AND BUYER FURTHER WARRANT AND
-43-
50
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAVIER IS IRREVOCABLE AND MAY ONLY BE MODIFIED EITHER ORALLY OR IN
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
PURCHASE DOCUMENT OR THE SHARES. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
9.14 GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN SUCH STATE (WITHOUT GIVING EFFECT
TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). EACH OF THE PARTIES HERETO FURTHER
AGREES THAT PROCESS MAY BE SERVED UPON IT BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED AS MORE GENERALLY PROVIDED IN SECTION 9.3 HEREOF, AND
CONSENTS TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTIES WITH RESPECT
TO ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ENFORCEMENT OF ANY
RIGHTS UNDER THIS AGREEMENT.
9.15 Entire Agreement. This Agreement, including the Schedules and Exhibits
referred to herein, is complete, and all promises, representations,
understandings, warranties and agreements with reference to the subject matter
hereof, and all inducements to the making of this Agreement relied upon by all
the parties hereto, have been expressed herein or in said Schedules or Exhibits.
This Agreement may not be amended except by an instrument in writing signed on
behalf of the Company and Buyer.
-44-
51
IN WITNESS WHEREOF the parties hereto have executed this Agreement under
seal as of the date first set forth above.
ATTEST: GLOBAL VILLAGE COMMUNICATION, INC.
______________________________ By:__________________________________
Secretary President
ATTEST: BOCA GLOBAL, INC.
______________________________ By:__________________________________
Secretary President
ATTEST: BOCA RESEARCH, INC.
______________________________ By:__________________________________
Secretary President
-45-