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Exhibit 10.1
ASSET SALE AGREEMENT
BETWEEN
▇▇▇▇▇, INC.
AND
CRL SYSTEMS, INC.
MAY 31, 2000
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TABLE OF CONTENTS
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I. THE ACQUISITION................................................................. 1
1.1. Purchase and Sale of Assets.......................................... 1
1.1.1. Personal Property........................................... 1
1.1.2. Inventory................................................... 2
1.1.3. Contract Rights............................................. 2
1.1.4. Intellectual Property....................................... 2
1.1.5. Governmental Licenses, Permits and Approvals................ 2
1.1.6. Accounts Receivable......................................... 2
1.2. Excluded Assets...................................................... 2
1.2.1. Cash........................................................ 2
1.2.2. Ordinary Course of Business Dispositions.................... 2
1.2.3. Property To Be Leased....................................... 2
1.2.4. Employee Plans.............................................. 2
1.2.5. Names....................................................... 2
1.2.6. Administrative Systems...................................... 3
1.2.7. Excluded Contracts.......................................... 3
1.2.8. Software Licenses........................................... 3
1.2.9. Other Specified Assets...................................... 3
1.3. Nonassignable Contracts Generally.................................... 3
1.3.1. Nonassignability............................................ 3
1.3.2. Seller to Use Reasonable Efforts............................ 3
1.3.3. If Waivers or Consents Cannot Be Obtained................... 3
1.3.4. Obligation of Purchaser to Perform.......................... 3
II. PURCHASE PRICE.................................................................. 4
2.1. Purchase Price....................................................... 4
2.2. Utility Deposit Proration............................................ 4
2.3. Net Accounts Receivable Adjustment................................... 4
2.4. Timing of Adjustments................................................ 5
2.5. Allocation of Purchase Price......................................... 5
III. ASSUMPTION OF LIABILITIES....................................................... 5
3.1. Assumed Liabilities.................................................. 5
3.2. Retained Liabilities................................................. 6
IV. REPRESENTATIONS AND WARRANTIES.................................................. 6
4.1. Representations and Warranties of Seller............................. 6
4.1.1. Corporate Matters........................................... 6
4.1.2. Authorization and Effect of Agreement....................... 6
4.1.3. No Restrictions Against Sale of the Assets.................. 6
4.1.4. Compliance With Laws........................................ 7
4.1.5. Accounts Receivable......................................... 7
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4.1.6. Tangible Personal Property.................................. 7
4.1.7. Leased Real Property........................................ 7
4.1.8. Intellectual Property....................................... 7
4.1.9. Licenses and Permits........................................ 8
4.1.10. Insurance................................................... 8
4.1.11. Litigation; Decrees; Warranty Claims........................ 8
4.1.12. Contract Rights............................................. 8
4.1.13. Taxes....................................................... 9
4.1.14. Environmental Matters....................................... 9
4.1.15. Customers and Suppliers..................................... 10
4.1.16. Sufficiency of the Total Assets............................. 10
4.1.17. Brokers, Finders and Agents................................. 10
4.1.18. Assumed Liabilities......................................... 10
4.1.19. Employee Plans; Labor Relations............................. 10
4.1.20. Accuracy of Representations and Warranties.................. 11
4.2. Representations and Warranties of Purchaser.......................... 11
4.2.1. Corporate Matters........................................... 11
4.2.2. Authorization and Effect of Agreement....................... 11
4.2.3. Brokers, Finders and Agents................................. 11
4.2.4. HSR......................................................... 11
4.2.5. Accuracy of Representations and Warranties.................. 11
V. COVENANTS....................................................................... 12
5.1. Investigation by Purchaser........................................... 12
5.2. Press Releases....................................................... 12
5.3. Regulatory Approvals................................................. 12
5.4. Injunctions.......................................................... 12
5.5. Operation of the Business............................................ 12
5.6. Consents and Approvals............................................... 13
5.7. Employee Matters..................................................... 13
5.8. Certain Tax Matters.................................................. 13
5.9. Satisfaction of Conditions........................................... 14
5.10. Intentionally Omitted................................................ 15
5.11. Noncompetition....................................................... 15
5.12. Credit Agreement..................................................... 15
5.13. Senior Financing..................................................... 15
5.14. Change of Name....................................................... 15
5.15. Post-Closing Audit................................................... 15
VI. THE CLOSING..................................................................... 15
6.1. Conditions Precedent to Obligations of Purchaser and Seller.......... 15
6.2. Additional Conditions Precedent to Obligations of Purchaser.......... 16
6.2.1. Accuracy of Representations and Warranties.................. 16
6.2.2. Compliance with Covenants................................... 16
6.2.3. Delivery of Documents by or on behalf of Seller............. 16
6.3. Additional Conditions to Obligations of Seller....................... 16
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6.3.1. Accuracy of Representations and Warranties.................. 16
6.3.2. Compliance with Covenants................................... 16
6.3.3. Delivery of Documents by or on behalf of Purchaser.......... 16
6.3.4. Credit Agreement............................................ 16
6.4. The Closing.......................................................... 16
6.5. Termination.......................................................... 18
VII. REPURCHASE TRANSACTION......................................................... 18
VIII. SURVIVAL AND INDEMNIFICATION................................................... 19
8.1. Survival of Representations, Warranties and Covenants................ 19
8.2. Indemnification by Purchaser......................................... 19
8.3. Indemnification by Seller............................................ 19
8.4. Notice of Claim; Right to Participate in and Defend Third Party Claim 19
8.5. Limitations.......................................................... 20
8.5.1. Effect of Schedules......................................... 20
8.5.2. Thresholds and Deductibles.................................. 20
8.5.3. Maximum Liability........................................... 21
8.5.4. Exclusive Rights............................................ 21
8.5.5. Offset...................................................... 21
IX. MISCELLANEOUS PROVISIONS....................................................... 21
9.1. Notices.............................................................. 21
9.2. Expenses............................................................. 22
9.3. Successors and Assigns............................................... 22
9.4. Waiver............................................................... 22
9.5. Entire Agreement..................................................... 23
9.6. Amendments, Supplements, Etc......................................... 23
9.7. Rights of the Parties................................................ 23
9.8. Applicable Law; Jurisdiction......................................... 23
9.9. Arbitration.......................................................... 23
9.10. Waiver of Trial by Jury.............................................. 23
9.11. Titles and Headings.................................................. 24
9.12. Passage of Title and Risk of Loss.................................... 24
9.13. Certain Interpretive Matters and Definitions......................... 24
9.14. Execution in Counterparts............................................ 24
9.15. Reliance on Information.............................................. 24
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EXHIBITS
EXHIBIT A Form of Note A
EXHIBIT B Form of Note B
EXHIBIT C Form of Assignment and Assumption Agreement and Consent of Landlord
to Assignment and Assumption Agreement
EXHIBIT D Form of Assumption Agreement
EXHIBIT E Form of Credit Agreement
SCHEDULES
Schedule 1.1.1 Owned Tangible Personal Property
Schedule 1.1.5 Licenses, Permits and Authorizations
Schedule 1.2.3 Property To Be Leased
Schedule 1.2.9 Other Specified Assets
Schedule 2.5 Allocation of Purchase Price
Schedule 4.1.4 Noncompliance With Laws
Schedule 4.1.6 Tangible Personal Property Liens
Schedule 4.1.7(a) Parties in Possession of Property To Be Leased
Schedule 4.1.7(b) Real Property Lease
Schedule 4.1.8 Material Intellectual Property Rights
Schedule 4.1.10 Insurance
Schedule 4.1.11 Litigation
Schedule 4.1.12(a) Assumed Contracts
Schedule 4.1.19(a) Employee Plans
Schedule 5.7 Severance Plans
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ASSET SALE AGREEMENT
This ASSET SALE AGREEMENT (this "AGREEMENT") is made and entered into
as of the 31st day of May, 2000, between ▇▇▇▇▇, Inc., a Delaware corporation
("SELLER"), and CRL Systems, Inc., a Nevada corporation ("PURCHASER").
RECITALS:
A. Seller is presently engaged in the business (the
"BUSINESS") of manufacturing and selling signal processing equipment used in
broadcast applications principally for radio stations.
B. Seller desires to Transfer (as defined herein) to
Purchaser, and Purchaser desires to purchase from Seller, all of Seller's right,
title and interest in and to the rights, properties and assets owned or leased
by Seller in connection with the conduct of the Business, other than the
Excluded Assets (as defined herein), on the terms and subject to the conditions
set forth in this Agreement.
C. Seller desires to delegate to Purchaser, and Purchaser is
willing to assume from Seller, the Assumed Liabilities (as defined herein), on
the terms and subject to the conditions set forth in this Agreement.
D. Seller agrees to accept a portion of the Purchase Price in
the form of promissory notes, on the terms and conditions set forth in the
Credit Agreement, dated as of even date with this Agreement between Purchaser
and Seller (the "CREDIT AGREEMENT").
NOW, THEREFORE, the parties hereto agree as follows:
I. THE ACQUISITION
1.1. Purchase and Sale of Assets. On the terms and subject to the
conditions hereof, at the Closing (as defined herein), Seller will sell,
transfer, grant, convey, assign and deliver ("TRANSFER") to Purchaser, and
Purchaser will purchase and accept from Seller, all of Seller's right, title and
interest in and to the rights, properties and assets owned or leased by Seller
in connection with the conduct of Business as of the date hereof, or acquired by
Seller in connection with the conduct of Business between the date hereof and
the Closing Date (as defined herein), including all of Seller's right, title and
interest in and to the rights, properties and assets described in this Section
1.1 (collectively the "ASSETS"):
1.1.1. Personal Property. The furnishings, furniture,
equipment, tools, supplies, spare parts, computers, printers, files, books,
records, and all other tangible personal property owned by Seller, including
those items listed or described on Schedule 1.1.1 (collectively, the "OWNED
TANGIBLE PERSONAL PROPERTY");
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1.1.2. Inventory. All raw materials, work-in-process and
finished goods inventories relating to the Business (collectively, the
"INVENTORY");
1.1.3. Contract Rights. All leases (including the Real
Property Lease (as defined herein)), agreements, and contracts relating to the
Business (collectively, the "CONTRACTS");
1.1.4. Intellectual Property. All patents, copyrights,
trademarks, trade names, service marks, and trade secrets, whether registered or
unregistered, and any applications for any of the foregoing used exclusively in
the Business (collectively, the "INTELLECTUAL PROPERTY RIGHTS");
1.1.5. Governmental Licenses, Permits and Approvals. To the
extent Transferable without any cost or expense to Seller, all licenses, permits
and authorizations (collectively, the "LICENSES") issued or requested to be
issued by any foreign, United States, state, local or other governmental entity
or municipality or any subdivision thereof or any authority, department,
commission, board, bureau, agency, court, arbitration panel or instrumentality
(collectively, "GOVERNMENTAL ENTITIES") in connection with the conduct of the
Business, including to the extent transferable without any cost or expense to
Seller, the licenses, permits and authorizations listed or described on Schedule
1.1.5; and
1.1.6. Accounts Receivable. All accounts receivable arising
from the conduct of the Business (the "ACCOUNTS RECEIVABLE").
1.2. Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, the following rights, properties and assets
(collectively, the "EXCLUDED ASSETS") will not be included in the Assets:
1.2.1. Cash. Cash and equivalent assets, promissory notes
owing to Seller and investment securities;
1.2.2. Ordinary Course of Business Dispositions. Inventory and
Owned Tangible Personal Property that will have been Transferred or otherwise
disposed of by Seller between the date hereof and the Closing Date in the
ordinary and normal course of the conduct of the Business consistent with past
practices (the "ORDINARY COURSE");
1.2.3. Property To Be Leased. The fee simple title to the real
property described on Schedule 1.2.3 (the "PROPERTY TO BE LEASED");
1.2.4. Employee Plans. All assets and rights held in
connection with any Employee Plans (as defined herein);
1.2.5. Names. The name "▇▇▇▇▇▇" and any similar words.
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1.2.6. Administrative Systems. Any accounting or other
administrative systems that are owned and used by any Affiliate of Seller
outside of the Business;
1.2.7. Excluded Contracts. Any contracts or agreements that
benefit Seller's Affiliates' operations outside the Business; and
1.2.8. Software Licenses. Any computer software licensed to
Seller other than ordinary, prepackaged consumer software such as Microsoft Word
and similar packaged software.
1.2.9. Other Specified Assets. Any right, property or asset,
including any asset leased by Seller pursuant to a Contract, that is listed or
described on Schedule 1.2.9.
1.3. Nonassignable Contracts Generally.
1.3.1. Nonassignability. To the extent that any Contract to be
Transferred pursuant to the terms of Section 1.1.3 is not capable of being
Transferred without the consent, approval or waiver of a third person or entity
(including a Governmental Entity), or if such Transfer or attempted Transfer
would constitute a breach thereof or a violation of any law, statute, rule,
regulation, ordinance, order, code, arbitration award, judgment, decree or other
legal requirement of any Governmental Entity (collectively, "LAWS"), nothing in
this Agreement will constitute a Transfer or an attempted Transfer thereof.
1.3.2. Seller to Use Reasonable Efforts. Seller will use
commercially reasonable efforts, and Purchaser will cooperate with Seller in
such efforts to obtain such consents, approvals and waivers, to resolve the
impracticalities of Transfer referred to in Section 1.3.1 and to obtain any
other consents, approvals and waivers necessary to Transfer to Purchaser all of
such Contracts.
1.3.3. If Waivers or Consents Cannot Be Obtained. To the
extent that the consents, approvals and waivers referred to in Section 1.3.1 are
not obtained by Seller, or until the impracticalities of Transfer referred to
therein are resolved, Seller will, during the term of the affected Contract, use
reasonable efforts at Purchaser's sole cost and expense to (a) provide to
Purchaser the benefits of any Contract referred to in Section 1.3.1, (b)
cooperate in any reasonable and lawful arrangement designed to provide such
benefits to Purchaser, and (c) enforce, at the written request of Purchaser, for
the account of Purchaser, any rights of Seller arising from any such Contract
(including the right to elect to terminate such Contract in accordance with the
terms thereof upon the advice of Purchaser).
1.3.4. Obligation of Purchaser to Perform. Purchaser will
perform the obligations arising under all Contracts referred to in Section 1.3.1
for the benefit of Seller and the other party or parties thereto, but only if
Seller performs as required pursuant to Section 1.3.3.
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II. PURCHASE PRICE
2.1. Purchase Price. In addition to assuming the Assumed Liabilities
(as defined herein), Purchaser will pay for the Assets an aggregate purchase
price in the amount of $10,000,000 subject to adjustment as provided in Sections
2.2 and 2.3 (the "PURCHASE PRICE"), payable as follows: (i) $1,500,000, payable
in cash by wire transfer of immediately available funds; (ii) $5,000,000,
payable in the form of a promissory note ("NOTE A"), having such terms and
conditions as set forth in the Credit Agreement and in the form attached hereto
as Exhibit A; and (iii) $3,500,000, payable in the form of a promissory note
("NOTE B"), having such terms and conditions as set forth in the Credit
Agreement and in the form attached hereto as Exhibit B (Note A together with
Note B, the "NOTES"). At the Closing, the Deposit will be applied as a credit to
the Purchase Price.
2.2. Utility Deposit Proration. A list of all security deposits,
escrows, utility deposits and other deposits of a similar nature (collectively,
the "PREPAID DEPOSITS") of Seller in respect of the Business shall be provided
by Seller to Purchaser on the Closing Date (the "DEPOSIT CERTIFICATE").
Purchaser shall pay to Seller on the Closing Date the aggregate amount of all
items shown on the Deposit Certificate and the Prepaid Deposits reflected on the
Deposit Certificate shall be included in the Assets.
2.3. Net Accounts Receivable Adjustment.
2.3.1. As used in this Agreement, "NET ACCOUNTS RECEIVABLE"
means: (a) 80% of the face amount of all Accounts Receivable existing at the
Closing (excluding all Accounts Receivable with a due date earlier than the 90th
day prior to the Closing) minus (b) the minimum amount that would be required to
be accrued on the face of a balance sheet of Seller as of the Closing prepared
in accordance with Generally Accepted Accounting Principals ("GAAP") (a "CLOSING
BALANCE SHEET") for trade accounts payable of Seller included in the Assumed
Liabilities.
Within 90 days following the Closing, Purchaser will prepare
(under the observation of Seller or Seller's designee) and will provide Seller
with a calculation of Net Accounts Receivable. Following the preparation of the
Net Accounts Receivable calculation, Purchaser and Seller will in good faith
work to promptly agree on a final calculation of Net Accounts Receivable.
2.3.2. If Seller disagrees with Purchaser's calculation of Net
Accounts Receivable, Seller may, within 30 days (the "OBJECTION PERIOD") after
the delivery to Seller by Purchaser of the Net Accounts Receivable calculation,
deliver a notice (the "OBJECTION NOTICE") to Purchaser disputing such
calculation and setting forth Seller's calculation thereof. Any Objection Notice
shall, to the extent reasonably practicable, specify in reasonable detail those
items or amounts as to which Seller disagrees and the basis for disagreement.
Except with respect to the items set forth in the Objection Notice and items
affected by the disputed items, Seller shall be deemed to have agreed with all
other items and amounts contained in Purchaser's Net Accounts Receivable
calculation.
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2.3.3. If an Objection Notice shall be properly and timely
delivered, Purchaser and Seller shall cause the Los Angeles office of
PricewaterhouseCoopers LLP (or, if they are unable or unwilling to serve, a firm
of independent accountants of nationally recognized standing reasonably
satisfactory to Purchaser and Seller (which shall not have any material
relationship with Purchaser or Seller)) (the "ACCOUNTANTS") to promptly review
this Agreement and the disputed items or amounts for the purpose of calculating
the final Net Accounts Receivable. In making such calculation, the Accountants
shall consider only those items or amounts in Purchaser's calculation of Net
Accounts Receivable as to which Seller has, in the Objection Notice, disagreed
and such other issues as may reasonably be affected by the items as to which
Seller has disagreed. The Accountants shall deliver to Purchaser and Seller, as
promptly as practicable, a written report setting forth their calculation of the
disputed items. Absent manifest error, such report shall be final and binding
upon Purchaser and Seller. The cost of such review and report shall be divided
equally between Purchaser and Seller.
2.3.4. Each of Purchaser and Seller will cooperate and assist
in the preparation of the Net Accounts Receivable calculation and in the conduct
of the reviews referred to in this Section 2.3, including, without limitation,
(a) Purchaser making available to the extent reasonably necessary or helpful any
books, records and personnel relating to the Assets, the Accounts Receivable and
trade accounts payable included in the Assumed Liabilities or the Business and
(b) Seller making available to the extent reasonably necessary or helpful any
books, records and personnel of Seller.
2.3.5. Within 30 days following the determination of Net
Accounts Receivable, Seller will pay Purchaser an amount equal to the amount by
which, if any, Net Accounts Receivable are less than $0.00.
2.4. Timing of Adjustments. All adjustments to the Purchase Price will
be calculated as of 11:59 p.m. on the Closing Date.
2.5. Allocation of Purchase Price. The Purchase Price represents the
amount agreed upon by Purchaser and Seller to be the aggregate fair market value
of the Assets. Purchaser and Seller have agreed that the Purchase Price will be
allocated among the Assets in the manner set forth in Schedule 2.5. Purchaser
and Seller will allocate the Purchase Price to the Assets in such manner
consistently for all purposes, including in connection with all federal,
foreign, state, local and other Tax Returns (as defined herein) and reports
prepared and filed by or for either of Purchaser or Seller.
III. ASSUMPTION OF LIABILITIES
3.1. Assumed Liabilities. Subject to Section 3.2 hereof, as of the
Closing, Purchaser will assume and thereafter in due course pay, perform and
discharge the following liabilities and obligations of Seller (the "ASSUMED
LIABILITIES"):
3.1.1. All liabilities and obligations of Seller arising under
the terms of the Contracts.
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3.1.2. All accounts payable and other liabilities and
obligations (whether fixed or contingent) of Seller arising out of or incurred
in connection with the conduct or operation of the Business or use of the Assets
at the Property To Be Leased including, without limitation, all warranty
obligations, capital lease obligations, and employee benefit, salary and
severance obligations.
3.2. Retained Liabilities. Seller will retain, and Purchaser will not
assume, liabilities with respect to, any liabilities or obligations of Seller
that relate to long-term or short-term bank debt obligations of Seller, any
Taxes that are income Taxes, or any Taxes due prior to the Closing Date
(collectively the "RETAINED LIABILITIES").
IV. REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:
4.1.1. Corporate Matters. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller is duly qualified to conduct business as a foreign corporation
in each other jurisdiction in which its ownership or lease of property or
conduct of the Business requires such qualification under applicable Laws.
4.1.2. Authorization and Effect of Agreement. Seller has the
requisite corporate power to execute and deliver this Agreement and to perform
the transactions contemplated by this Agreement to be performed by Seller. The
execution and delivery by Seller of this Agreement and the performance by Seller
of the transactions contemplated by this Agreement to be performed by Seller
have been duly authorized by all necessary action on the part of Seller. This
Agreement has been duly executed and delivered by Seller and, assuming the due
execution and delivery of this Agreement by Purchaser, constitutes a valid and
binding obligation of Seller enforceable in accordance with its terms except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally.
4.1.3. No Restrictions Against Sale of the Assets. Except as
set forth on Schedule 4.1.3, to Seller's knowledge, the execution and delivery
of this Agreement by Seller does not, and the performance by Seller of the
transactions contemplated hereby to be performed by it will not, conflict with,
or result in any violation of, or constitute a default under, or give rise to a
right of termination, cancellation or acceleration of any Assumed Contract,
except where such conflict, violation, default, termination, cancellation or
acceleration would not have a material adverse effect on the continued conduct
of the Business or Purchaser's use of the Acquired Assets or the Property To Be
Leased (collectively, the "TOTAL ASSETS") taken as a whole ("MATERIAL ADVERSE
EFFECT"). To Seller's knowledge, no consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to Seller under any
applicable Law in connection with the execution and delivery of this Agreement
by Seller or the performance by Seller of the transactions contemplated hereby
to be performed by it, except where the failure to obtain or
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make such consent, approval, order, authorization, resolution, declaration or
filing would not have a Material Adverse Effect.
4.1.4. Compliance With Laws. Except as described on Schedule
4.1.4, to Seller's knowledge Seller has complied with all Laws applicable to it,
except where the failure to be in compliance would not have a Material Adverse
Effect. Except as set forth on Schedule 4.1.4, Seller has not received any
written notice of any violation of any Law, or any potential liability under any
Law, which violation or liability would have a Material Adverse Effect.
4.1.5. Accounts Receivable. The Accounts Receivable are
ordinary trade receivables that have arisen from bona fide transactions in the
Ordinary Course. To Seller's knowledge, the Accounts Receivable are not subject
to any presently existing claim of offset or rebate.
4.1.6. Tangible Personal Property.
(a) Seller has marketable title to the Owned Tangible Personal
Property, and the Owned Tangible Personal Property is free and clear of all
liens, mortgages, security interests, preemptive purchase rights or other
similar encumbrances (collectively, "LIENS"), except for Permitted Tangible
Personal Property Liens (as defined herein) and any additional Liens listed or
described in Schedule 4.1.6.
(b) The delivery to Purchaser at Closing of the instruments of
Transfer contemplated by this Agreement will vest in Purchaser title to the
Owned Tangible Personal Property and Inventory, free and clear of all Liens,
except for (i) Liens for current property Taxes or governmental charges or
levies which are not yet due and payable and (ii) Liens listed or described on
Schedule 4.1.6 and marked with an "*" (the Liens described in the foregoing
clauses (i) and (ii) being collectively referred to herein as "PERMITTED
TANGIBLE PERSONAL PROPERTY LIENS").
(c) To Seller's knowledge, the Owned Tangible Personal
Property is in working order, reasonable wear and tear excepted.
4.1.7. Leased Real Property. The Property To Be Leased
constitutes all of the real property used by Seller in connection with the
conduct of the Business. Except as described on Schedule 4.1.7(a), Seller has
not sublet, as sublessor, and no third party is in possession of, any of the
Property To Be Leased. The real property lease (the "REAL PROPERTY LEASE"), a
copy of which is attached hereto as Schedule 4.1.7(b) pursuant to which Seller
leases the Property To Be Leased is, to Seller's knowledge, in full force and
effect and no default on the part of Seller exists.
4.1.8. Intellectual Property. (a) Schedule 4.1.8 lists or
describes all material registered patents, copyrights, trademarks, trade names,
service marks and applications therefor used in the conduct of the Business
(collectively, the "SCHEDULED INTELLECTUAL PROPERTY RIGHTS").
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(b) Seller has title to, or the valid and enforceable right to
use, the Scheduled Intellectual Property Rights free and clear of all Liens. The
delivery to Purchaser at the Closing of the instruments of Transfer contemplated
by this Agreement will vest title to the Scheduled Intellectual Property Rights
owned by Seller in Purchaser, free and clear of all Liens.
(c) Seller has title to, or a valid and enforceable right to
use, the intellectual property consisting of Version 3.0 of Audicy as used in
Seller's current product lines, free and clear of all Liens. The delivery to
Purchaser at the Closing of the instruments of Transfer contemplated by this
Agreement will vest title to the rights of Seller in Version 3.0 of Audicy in
Purchaser, free and clear of all Liens.
4.1.9. Licenses and Permits. Schedule 1.1.5 contains a true
and complete list of all material Licenses owned or held by Seller. To Seller's
knowledge, each of the Licenses is valid and in full force and effect, and
Seller is in compliance with all the provisions of the Licenses except where
such invalidity, non-effectiveness or non-compliance would not have a Material
Adverse Effect.
4.1.10. Insurance. Schedule 4.1.10 sets forth a true and
complete list of all policies of property, casualty, liability and other forms
of insurance of Seller covering any portion of the Total Assets or aspect of the
Business. Except as set forth on Schedule 4.1.10, to Seller's knowledge all such
insurance is in full force and effect and Seller is not in default under any
such policies.
4.1.11. Litigation; Decrees; Warranty Claims. Except as listed
or described on Schedule 4.1.11, there are no pending or, to the knowledge of
Seller, threatened lawsuits or administrative or other proceedings against
Seller arising out of or relating to this Agreement or the transactions
contemplated by this Agreement or the conduct of the Business, or otherwise
pertaining to or affecting the Total Assets that would have a Material Adverse
Effect if decided adversely, and Seller is not aware of any facts or
circumstances that could reasonably be expected to give rise to any such
lawsuits or proceedings that would have a Material Adverse Effect if decided
adversely.
4.1.12. Contract Rights.
(a) Schedule 4.1.12(a) contains a true and complete list of
all written Contracts other than (i) Contracts entered into with unaffiliated
third parties in the Ordinary Course which are not material to the conduct of
the Business, which are terminable without payment of premium or penalty at will
or upon not more than 30 days' notice, or which impose monetary obligations not
in excess of $100,000, and (ii) Employee Plans (as defined herein). Except as
set forth on Schedule 4.1.12(a), no Contract listed or described on Schedule
4.1.12(a) has been amended. Seller heretofore has provided or made available to
Purchaser true, complete and correct copies of each of the Contracts listed or
described on Schedule 4.1.12(a).
(b) To Seller's knowledge (i) Seller has performed all
obligations required to be performed by it to date under the Contracts, (ii)
Seller has not improperly terminated and is
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not in breach or default under such Contracts, and (iii) each of the Contracts
is in full force and effect and is a legal, binding and enforceable obligation
of Seller.
4.1.13. Taxes.
(a) Seller has (i) filed or caused to be filed with the
appropriate Governmental Entities all returns, declarations, reports and
information returns or statements relating to Taxes, including any amendments
thereto ("TAX RETURNS"), required to be filed by it on or prior to the Closing
Date (taking into account all extensions of due dates). All such Tax Returns
were correct and complete in all material respects, and all amounts in respect
of Taxes due to or claimed to be due by any Governmental Entity or other taxing
authority or any other person or entity from Seller have been fully and timely
paid.
(b) For purposes of this Agreement, the term "TAXES" means all
federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, withholding,
payroll, employment, excise, severance, stamp, occupation, property, customs,
duties, or other taxes, fees, assessments, or charges of any kind whatever,
together with any interest and any penalties, additions to tax, or additional
amounts with respect thereto, and the term "TAX" means any one of the foregoing
Taxes.
4.1.14. Environmental Matters.
(a) Except in compliance with all applicable Environmental
Requirements, (i) neither the Seller nor, to Seller's knowledge, any other
person or entity has engaged in or permitted any operations or activities upon,
or any use or occupancy of, the Property To Be Leased or any portion thereof,
resulting in the storage, emission, release, discharge, dumping or disposal of
any Hazardous Materials (as defined herein) on, under, in or about the Property
To Be Leased, in violation of any Law, except where such violation would not
have a Material Adverse Effect; and (ii) to Seller's knowledge no Hazardous
Materials have migrated from the Property To Be Leased to, upon, about or
beneath other properties in violation of any Law, except where such violation
would not have a Material Adverse Effect.
(b) To Seller's knowledge, Seller is in compliance with all
laws pertaining to existence, handling, use, generation, treatment, storage,
reporting, licensing, permitting, investigation, and remediation of emissions,
discharges, releases, or threatened releases of Hazardous Materials except where
such noncompliance would not have a Material Adverse Effect. To Seller's
knowledge, Seller has filed all reports relating to Hazardous Materials required
to be filed by Seller pursuant to any applicable Law.
(c) For purposes of this Agreement, the term "HAZARDOUS
MATERIALS" means any substance: (i) the presence of which requires investigation
or remediation under any federal, state or local statute, regulation, ordinance,
order, action, policy or common law; (ii) which is or has been identified as a
potential hazardous waste, or hazardous substance, under any applicable Law, or
(iii) which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, reactive, or otherwise hazardous and has been
specifically identified as regulated by any Governmental Entity.
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4.1.15. Customers and Suppliers. Seller is not involved in any
material claim or controversy with any material customer or supplier.
4.1.16. Sufficiency of the Total Assets. The Total Assets
constitute all of the properties, assets and rights required for the continued
conduct of the Business as presently conducted.
4.1.17. Brokers, Finders and Agents. Seller has not taken any
action that would directly or indirectly obligate Seller, Purchaser or anyone
else to anyone acting as a broker, finder, financial advisor or in any other
similar capacity in connection with this Agreement or the transactions
contemplated by this Agreement.
4.1.18. Assumed Liabilities. The face amount of all Accounts
Receivable existing at the Closing (excluding all Accounts Receivable with a due
date earlier than the 90th day prior to the Closing) shall be at least equal to
(i) the minimum amount that would be required to be accrued on a Closing Balance
Sheet for the Assumed Liabilities less (ii) the trade accounts payable of Seller
included in the Assumed Liabilities.
4.1.19. Employee Plans; Labor Relations.
(a) For purposes of this Agreement, the term "EMPLOYEE PLAN"
means each employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), other than a
multiemployer plan within the meaning of Section 3(37) of ERISA ("MULTIEMPLOYER
PLAN"), sponsored or maintained by Seller or to which Seller contributes or is
obligated to contribute. The term "EMPLOYEE" means any person presently employed
by Seller in the Business and includes, where an Employee Plan provides benefits
for beneficiaries or dependents, the beneficiaries and dependents of an
Employee. Except as set forth on Schedule 4.1.19(a), each Employee Plan that
provides benefits to an Employee has been maintained in all material respects in
accordance with its terms and applicable Law except where the failure to do so
would not result in a Material Adverse Effect. Seller has delivered to
Purchaser, a summary or description of the Employee Plans under which any
Employee participates or has accrued any rights, or under which Seller is liable
in respect of any Employee.
(b) (i) Seller is not party to or subject to any collective
bargaining agreements with respect to any Employees, (ii) to Seller's knowledge
there are no controversies, disputes or proceedings pending or threatened
between Seller and any Employees (singly or collectively) except where the
resolution of the controversy, dispute or proceeding will not have a Material
Adverse Affect, (iii) to Seller's knowledge no labor union or other collective
bargaining unit represents or claims to represent any of the Employees, and (iv)
to Seller's knowledge, there is no union campaign being conducted to solicit
cards from Employees to authorize a union to request a National Labor Relations
Board certification election with respect to any Employees.
4.1.20. Accuracy of Representations and Warranties. Each of
the representations and warranties of Seller contained in Section 4.1 of this
Agreement will be true and correct on the Closing Date as if made anew on and as
of such date.
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4.2. Representations and Warranties of Purchaser. Purchaser represents
and warrants to Seller as follows:
4.2.1. Corporate Matters. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. Purchaser is duly qualified to conduct business as a foreign corporation
in each jurisdiction in which its ownership or lease of property or conduct of
its business requires such qualification under applicable law.
4.2.2. Authorization and Effect of Agreement. Purchaser has
the requisite corporate power to execute and deliver this Agreement and to
perform the transactions contemplated hereby to be performed by Purchaser. The
execution and delivery by Purchaser of this Agreement and the performance by
Purchaser of the transactions contemplated hereby to be performed by Purchaser
have been duly authorized by all necessary action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser and, assuming the
due execution and delivery of this Agreement by Seller, constitutes a valid and
binding obligation of Purchaser enforceable in accordance with its terms except
as such enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights generally.
4.2.3. Brokers, Finders and Agents. Except for ▇▇▇▇▇▇▇ Bros.,
Inc., Purchaser has not taken any action that would directly or indirectly
obligate Seller, Purchaser or anyone else to anyone acting as a broker, finder,
financial advisor or in any other similar capacity in connection with this
Agreement or the transactions contemplated by this Agreement. Purchaser will be
responsible for any brokerage fees, finders fees, financial advisor fees, and
commissions incurred by Purchaser in connection with the transactions
contemplated by this Agreement.
4.2.4. HSR. Neither Purchaser (individually, or when
aggregated with C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ or any Affiliate of Purchaser), nor C.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, now, or at the Closing, meets the $10 million size of person
test in 15 U.S.C. Section 18(a) and the implementing regulations in 16 C.F.R.
Section 800 et esq. Except for C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, no stockholder of Circuit
Research Labs, Inc. owns 50% or more of the outstanding capital stock of Circuit
Research Labs, Inc. entitled to vote generally in the election of directors.
Circuit Research Labs, Inc. owns all of the issued and outstanding capital stock
of Purchaser.
4.2.5. Accuracy of Representations and Warranties. Each of the
representations and warranties of Purchaser contained in Section 4.2 of this
Agreement will be true and correct on the Closing Date as if made anew on and as
of such date.
V. COVENANTS
5.1. Investigation by Purchaser. Prior to the Closing, Seller will
afford to the officers, attorneys, accountants, environmental consultants,
engineers and other authorized representatives of Purchaser full reasonable
access to the facilities (including the Property To Be Leased), personnel and
books and records of Seller relating to the Business so as to afford Purchaser a
reasonable opportunity to make at its sole cost and expense such review,
examination
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and investigation of the Business and the Total Assets as Purchaser may
reasonably desire to make, including a so-called Phase I (i.e., documentary
review and walk-through site inspection) preliminary environmental evaluation.
Purchaser will be permitted to prepare such extracts from or to make such copies
of such books and records relating to the Business as it may reasonably desire.
5.2. Press Releases. Prior to the Closing, no party will issue or cause
the publication of, or permit any of its Affiliates to issue or cause the
publication of, any press release or other public announcement (including
announcements to employees of Seller) with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of Purchaser
(in the case of Seller and its Affiliates) or Seller (in the case of Purchaser
and its Affiliates), which consent will not be unreasonably withheld; provided,
however, that nothing herein will prohibit any party or its Affiliates from
issuing or causing publication of any such press release or public announcement
to the extent that such party determines such action to be required by Law or
the rules of any national stock exchange applicable to it or its Affiliates, in
which event the party making such determination will, if practicable in the
circumstances, use reasonable efforts to allow the other party reasonable time
to comment on such release or announcement in advance of its issuance.
5.3. Regulatory Approvals. Seller and Purchaser will use their
respective commercially reasonable efforts to obtain any authorizations,
consents, orders and approvals of any Governmental Entity necessary for the
performance of their respective obligations pursuant to this Agreement and any
of the other transaction documents, and the consummation of the transactions
contemplated hereby and thereby, and will cooperate fully with each other in all
reasonable respects in promptly seeking to obtain such authorizations, consents,
orders and approvals. Neither Seller nor Purchaser will take any action that
will have the effect of delaying, impairing or impeding the receipt of any
required regulatory approvals.
5.4. Injunctions. Without limiting the generality or effect of any
provision of Section 5.3, if any federal, state or foreign court having
jurisdiction over any party issues or otherwise promulgates any injunction,
decree or similar order prior to the Closing which prohibits the consummation of
the transactions contemplated hereby, the parties will use their respective
reasonable efforts to have such injunction, decree or order dissolved or
otherwise eliminated as promptly as possible and, prior to or after the Closing,
to pursue the underlying litigation diligently and in good faith.
5.5. Operation of the Business. During the period from the date hereof
through the Closing Date, Seller will conduct the Business, operate the Total
Assets and perform the Contracts in the Ordinary Course.
5.6. Consents and Approvals. Seller and Purchaser will use their
respective commercially reasonable efforts to obtain or cause to be obtained
prior to the Closing Date consents to the assignment to Purchaser of all
Contracts and Licenses which require the consent of any third party by reason of
the transactions provided for in this Agreement provided, however, Seller will
in no event be required to expend any sum of money to obtain such consents and
assignments.
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5.7. Employee Matters.
(a) Employment. Purchaser will, or will cause one of its
Affiliates to, offer employment, from and after the Closing, to all Employees
(including Employees on authorized leave of absence, military leave or lay-off
with recall rights), with compensation and employee benefits that in the
aggregate are at least equal to the compensation and employee benefits provided
to each Employee under Employee Plans in effect on the Closing Date, including
without limitation severance benefits provided under any severance plan,
guideline, policy or agreement listed on Schedule 5.7. Nothing in this Agreement
will limit Purchaser's or any of its Affiliates' right and authority to
discontinue, suspend or modify the employment of any Employee or any employee
benefits provided to Employees after the Closing; provided, however, that in the
event of any such discontinuance, suspension or modification Purchaser will
assume and be solely responsible for any liabilities imposed upon Seller or any
of its Affiliates that result from such discontinuance, suspension or
modification.
(b) Employee Benefits. Purchaser agrees that, under any
employee benefit plan made available or established after the Closing for
Employees, Employees will receive credit for the years of service credited to
them by Seller or any of its Affiliates prior to the Closing in determining
eligibility and vesting thereunder and in determining the amount of benefits
under any applicable sick leave, vacation, severance or other welfare plan.
Purchaser will, or will cause one of its Affiliates to, cover Employees as of
the Closing under a group health plan and waive any preexisting condition
limitations applicable to Employees under any group health plan made available
to them, and Purchaser will, or will cause one of its Affiliates to, take all
action necessary to ensure that Employees are given full credit for all
co-payments and deductibles incurred under any group health plan of Seller or
any of its Affiliates for the plan year that includes the Closing Date.
5.8. Certain Tax Matters.
(a) Any sales, use, transfer, vehicle transfer, stamp,
conveyance, value added or other similar Taxes that may be imposed by any
Governmental Entity, and all recording or filing fees, notarial fees and other
similar costs of Closing with respect to the purchase and sale of the Assets,
the assignment of the Real Property Lease or otherwise on account of this
Agreement or the transactions contemplated hereby, will be borne by Purchaser.
(b) Seller and Purchaser will (i) each provide the other with
such assistance as may reasonably be requested by any of them in connection with
the preparation of any Tax Return, audit or other examination by any taxing
authority or judicial or administrative proceedings relating to liability for
Taxes, (ii) each retain and provide the other with any records or other
information that may be relevant to such Tax Return, audit or examination,
proceeding or determination, and (iii) each provide the other with any final
determination of any such audit or examination, proceeding or determination that
affects any amount required to be shown on any Tax Return of the other for any
period.
5.9. Satisfaction of Conditions. Without limiting the generality or
effect of any provision of Article VI, prior to the Closing, Seller and
Purchaser each will use commercially
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reasonable efforts to satisfy promptly all conditions required hereby to be
satisfied by such party in order to expedite the consummation of the
transactions contemplated hereby.
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5.10. Intentionally Omitted.
5.11. Noncompetition. For a period of two years following the Closing
Date, Seller and its Affiliates (so long as such Affiliates remain Affiliates of
Seller) shall not, directly or indirectly, compete in the Business as currently
conducted within the territory where Seller currently transacts the Business.
The provisions of this section shall not apply (i) to the extent Seller's
Affiliates are, as of the Closing, engaged in any business similar to the
Business, or (ii) if any of Seller or Seller's Affiliates acquires the shares in
or the assets of a company or group of companies which competes with the
Business so long as the competing business is not that company's or group of
companies' core business and Seller or any of Seller's Affiliates, as the case
may be, promptly informs Purchaser of the acquisition after the date of such
acquisition, or (iii) if Seller's or any of Seller's Affiliates participation in
a company or group of companies which competes with the Business is merely a
financial investment.
5.12. Credit Agreement. At or prior to the Closing, Purchaser will have
executed, and delivered to Seller, the Credit Agreement in substantially the
form of Exhibit E and all documents required by the Credit Agreement in the
forms attached thereto.
5.13. Senior Financing. Purchaser will, as expeditiously as is
commercially practicable, obtain debt financing for Purchaser to repay Note B
prior to its maturity date, and, upon receipt of the proceeds of such debt
financing, promptly pay Note B.
5.14. Change of Name. Seller agrees that within 90 days from the
Closing, Seller will change its name to a name that does not include the word
▇▇▇▇▇ or any part thereof or any similar words and will file with the Secretary
of State of Delaware and any other necessary or proper Government Entity all
documents necessary to effect such change.
5.15. Post-Closing Audit. From and after the Closing, for a period of
60 days, Seller will, at Purchaser's sole expense, upon reasonable notice and
during normal business hours and in a manner that does not disrupt the business
of Seller, make available to Purchaser and Purchaser's independent auditors, all
reasonably necessary books, financial records and personnel of Seller for the
purpose of such independent auditors to conduct an audit of Seller's financial
statements for the years ended December 31, 1998 or 1999.
VI. THE CLOSING
6.1. Conditions Precedent to Obligations of Purchaser and Seller. The
obligations of each of Purchaser and Seller under this Agreement to consummate
the transactions contemplated hereby will be subject to the satisfaction, at or
prior to Closing, of the condition that there will not have been entered a
preliminary or permanent injunction, temporary restraining order or
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other judicial or administrative order or decree in any domestic jurisdiction,
the effect of which prohibits the Closing.
6.2. Additional Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser under this Agreement to consummate the transactions
contemplated hereby will be further subject to the satisfaction, at or prior to
the Closing, of all of the following conditions, any one or more of which may be
waived by Purchaser at its option:
6.2.1. Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this Agreement will be
true and correct in all material respects both on and as of the date of this
Agreement and on and as of the Closing Date (with the same force and effect as
if made anew on and as of the Closing Date).
6.2.2. Compliance with Covenants. All terms, covenants and
conditions of Seller contained in this Agreement to be performed and complied
with by Seller on or before the Closing Date will have been performed and
complied with in all material respects.
6.2.3. Delivery of Documents by or on behalf of Seller. At or
prior to the Closing, Seller will have effected the deliveries required of it
pursuant to Section 6.4(b).
6.3. Additional Conditions to Obligations of Seller. The obligations of
Seller under this Agreement to consummate the transactions contemplated hereby
will be further subject to the satisfaction, at or prior to the Closing, of all
of the following conditions, any one or more of which may be waived by Seller at
its option.
6.3.1. Accuracy of Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement will be
true and correct in all material respects both on and as of the date of this
Agreement and on and as of the Closing Date (with the same force and effect as
if made anew on and as of the Closing Date).
6.3.2. Compliance with Covenants. All terms, covenants and
conditions of this Agreement to be performed and complied with by Purchaser on
or before the Closing Date will have been performed and complied with in all
material respects.
6.3.3. Delivery of Documents by or on behalf of Purchaser. At
or prior to the Closing, Purchaser will have effected the deliveries required of
it pursuant to Section 6.4(c).
6.3.4. Credit Agreement. At or prior to the Closing, Purchaser
will have executed, and delivered to Seller, the Credit Agreement in
substantially the form of Exhibit E and all documents required by the Credit
Agreement in the forms attached thereto.
6.4. The Closing. (a) Subject to the fulfillment or waiver of the other
conditions precedent specified in Sections 6.1, 6.2 and 6.3 hereof, the
consummation of the purchase and sale of the Assets and the assignment of the
Real Property Lease contemplated hereby (the "CLOSING") will take place on May
__, 2000. The Closing will take place at the offices of ▇▇▇▇▇, Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
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(b) At the Closing, Seller will deliver to Purchaser, at the
expense of Seller, the following:
(1) Certificates of Seller. A certificate of Seller,
signed by an authorized officer of Seller and certifying that the
conditions set forth in Sections 6.2.1 and 6.2.2 have been satisfied;
and the Deposit Certificate.
(2) Assignment and Assumption Agreement and Consent
of Landlord to Assignment and Assumption Agreement. An executed
Assignment and Assumption Agreement and Consent of Landlord to
Assignment and Assumption Agreement, each in the form attached hereto
as Exhibit C, from the lessor under the Real Property Lease consenting
to the assignment of the Real Property Lease to Purchaser.
(3) Transfer Documents. Such bills of sale,
assignments, certificates of title and other instruments of transfer
(the "TRANSFER DOCUMENTS"), duly executed by Seller, as are necessary
for the Assets to Purchaser.
(c) At the Closing, Purchaser will deliver to Seller, at the
expense of Purchaser, the following:
(1) Certificate of Purchaser. A certificate of
Purchaser, dated the Closing Date and signed by an authorized officer
of Purchaser, to the effect that the conditions set forth in Sections
6.3.1 and 6.3.2 have been satisfied.
(2) Assumption Agreement. An executed Assignment and
Assumption Agreement on the form attached hereto as Exhibit D, from
Purchaser assuming the Contracts and Assumed Liabilities.
(3) Payment of Purchase Price. An amount equal to the
Purchase Price, including the amount described in Section 2.2.
(4) Warrant. A Warrant Agreement of Circuit Research
Labs, Inc. in a form reasonably satisfactory to Seller and Circuit
Research Labs, Inc. with the following material terms: (i) exercisable
in whole for 500,000 shares (as adjusted therein) of common stock, par
value $.10 of Circuit Research Labs, Inc.; (ii) exercise price of $4.50
per share, payable in cash or by cancellation of outstanding
indebtedness owed by Purchaser to Seller, and the resulting reduction
of the obligations of Circuit Research Labs, Inc. under the Guarantee
and Collateral Agreement (as defined in the Credit Agreement); (iii)
piggyback registration rights on the capital stock for which the
warrant is exercisable; (iv) a term of 3 years following the Closing
Date; and (v) customary representations and warranties, including a
"10b-5" representation and a representation that Circuit Research Labs,
Inc. has terminated its listing agreement with the National Association
of Securities Dealers.
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(5) Certificate of Insurance. A certificate of
insurance evidencing insurance on the Assets and the Collateral (as
defined in the Guaranty and Collateral Agreement) of the type required
by the Credit Agreement and the Guarantee and Collateral Agreement and
in amounts reasonably satisfactory to Seller.
6.5. Termination. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
(a) By the mutual written consent of Seller and Purchaser;
(b) By Seller on or after June 15, 2000 by written notice to
Purchaser if any of the conditions to the obligations of Seller contained in
this Agreement have not been satisfied or, if unsatisfied, have not been waived
in writing by Seller on or prior to June 15, 2000;
(c) By Purchaser on or after June 15, 2000 by written notice
to Seller if any of the conditions to the obligations of Purchaser contained in
this Agreement have not been satisfied or, if unsatisfied, have not been waived
in writing by Purchaser on or prior to June 15, 2000;
(d) By Seller or Purchaser if there will have been entered a
final, nonappealable order or injunction of any Governmental Entity restraining
or prohibiting the consummation of the transactions contemplated hereby or any
material part thereof; and
Except as provided in the next sentence, in the event of
termination of this Agreement under this Section 6.5, there will be no further
liability hereunder on the part of any party hereto if this Agreement is so
terminated, except for obligations of the parties hereto under Article VIII and
Sections 9.2 and 9.9 which shall survive termination of this Agreement. Nothing
in this Section 6.5 shall, however, relieve either party to this Agreement of
liability for breach of this Agreement occurring prior to such termination, or
for breach of any provision of this Agreement which specifically survives
termination hereunder.
VII. REPURCHASE TRANSACTION
If, as of the six month anniversary of the Closing Date Purchaser has
not paid in full the Note B, Seller may, in its sole discretion, rescind the
transactions contemplated by this Agreement and the parties to this Agreement
will, subject to the terms of this Article VII, be restored, to the greatest
extent possible, to their respective positions of ownership as existed
immediately prior to the consummation of this Agreement. If Seller exercises its
option under this Article VII to rescind the transactions contemplated by this
Agreement, Seller will return the Purchase Price to Purchaser, less $750,000
which will be retained by Seller as liquidated damages to compensate Seller for
the failure of Purchaser to satisfy the covenant contained in Section 5.13 and
the costs, expenses and losses, including lost profits, incurred or that will be
incurred as a result of Seller having to rescind the transactions contemplated
by this Agreement, which costs, expenses and losses the parties hereto agree are
difficult, if not impossible to predict or calculate. Upon exercise by Seller of
its option under this Article VII to rescind, Purchaser
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shall transfer the Assets (except to the extent sold in the Ordinary Course)
together with all contracts, accounts receivables and inventories of the
Business, with the accounts receivable and inventory each being at levels not
less than the levels delivered by Seller to Purchaser at the Closing. Seller
will have the right, but not the obligation, to hire all employees employed in
the Business and Purchaser will make representations to Seller about the Assets,
contracts, accounts receivable, and inventory and the Business comparable to
those given by Seller to Purchaser in this Agreement. Seller will not be
obligated to assume any liabilities of the Business. Purchaser and Seller agree
to execute all necessary or desirable instruments, certificates or agreements to
facilitate the performance of, and as near as possible effect the meaning of,
this article VII.
VIII. SURVIVAL AND INDEMNIFICATION
8.1. Survival of Representations, Warranties and Covenants. The
representations and warranties of the parties contained in this Agreement will
be deemed to have been made on the date of this Agreement and on the Closing
Date will survive the Closing Date and will remain operative and in full force
and effect for a period of one year from the Closing Date.
8.2. Indemnification by Purchaser. From and after the Closing,
Purchaser will indemnify, defend and hold Seller, its Affiliates, and their
respective directors, officers, representatives, employees and agents harmless
from and against any and all claims, actions, suits, demands, assessments,
judgments, losses, liabilities, damages, costs and expenses (including interest,
penalties, attorneys' fees, accounting fees and investigation costs)
(collectively, "LIABILITIES") resulting or arising from, relating to or incurred
in connection with: (a) any failure of Purchaser to pay, perform and discharge
any of the Assumed Liabilities, (b) any material breach of any representation or
warranty of Purchaser contained in this Agreement, (c) any material breach of
any covenant of Purchaser contained in this Agreement, (d) actions of Purchaser,
its employees and agents under Section 5.1 or (e) the termination of any
Employee by Purchaser from and after the Closing.
8.3. Indemnification by Seller. From and after the Closing, Seller will
indemnify, defend and hold Purchaser, its Affiliates, and their respective
directors, officers, representatives, employees and agents harmless from and
against any and all Liabilities resulting or arising from, relating to or
incurred in connection with: (a) any failure of Seller to pay, perform and
discharge any of the Retained Liabilities, (b) any material breach of any
representation or warranty of Seller contained in this Agreement, (c) any
material breach of any covenant of Seller contained in this Agreement.
8.4. Notice of Claim; Right to Participate in and Defend Third Party
Claim.
(a) If any indemnified party receives notice of the assertion
of any claim, the commencement of any suit, action or proceeding, or the
imposition of any penalty or assessment by a third party in respect of which
indemnity may be sought hereunder (a "THIRD PARTY CLAIM"), and the indemnified
party intends to seek indemnity hereunder, then the indemnified party will
promptly provide the indemnifying party with prompt written notice of the
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Third Party Claim, but in any event not later than 30 calendar days after
receipt of such notice of Third Party Claim. The failure by an indemnified party
to notify an indemnifying party of a Third Party Claim will not relieve the
indemnifying party of any indemnification responsibility under this Article
VIII, except to the extent, if any, that such failure prejudices the ability of
the indemnifying party to defend such Third Party Claim.
(b) The indemnifying party will have the right to control the
defense, compromise or settlement of the Third Party Claim with its own counsel
(reasonably satisfactory to the indemnified party); provided, however, that the
indemnifying party will not enter into any settlement of any Third Party Claim
which would impose or create any obligation or any financial or other liability
on the part of the indemnified party if such liability or obligation (i)
requires more than the payment of a liquidated sum or (ii) is not covered by the
indemnification provided to the indemnified party hereunder. In its defense,
compromise or settlement of any Third Party Claim, the indemnifying party will
timely provide the indemnified party with such information with respect to such
defense, compromise or settlement as the indemnified party may request. The
indemnified party will be entitled (at the indemnified party's expense) to
participate in the defense by the indemnifying party of any Third Party Claim
with its own counsel.
(c) In the event that the indemnifying party does not
undertake the defense, compromise or settlement of a Third Party Claim in
accordance with subsection (b) of this Section 8.4, the indemnified party will
have the right to control the defense or settlement of such Third Party Claim
with counsel of its choosing; provided, however, that the indemnified party will
not settle or compromise any Third Party Claim without the indemnifying party's
prior written consent, unless (i) the terms of such settlement or compromise
release the indemnified party and the indemnifying party from any and all
liability with respect to the Third Party Claim or (ii) the indemnifying party
will not have acknowledged its obligations to indemnify the indemnified party
with respect to such Third Party Claim in accordance with this Article VIII. The
indemnifying party will be entitled (at the indemnifying party's expense) to
participate in the defense of any Third Party Claim with its own counsel.
(d) Any indemnifiable claim hereunder that is not a Third
Party Claim will be asserted by the indemnified party by promptly delivering
notice thereof to the indemnifying party.
8.5. Limitations.
8.5.1. Effect of Schedules. Notwithstanding any other
provision of this Agreement, if the Closing occurs, no claim for indemnification
may be asserted under Sections 8.2 or 8.3 with respect to any matter set forth
in the Schedules to this Agreement.
8.5.2. Thresholds and Deductibles. Notwithstanding any other
provision of this Agreement or of any applicable Law, no indemnified party will
be entitled to make a claim against an indemnifying party under Section 8.2(b),
on the one hand, or Section 8.3(b), on the other hand, unless and until the
aggregate amount of claims which may be asserted for Liabilities
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under Section 8.2(b), on the one hand, or Section 8.3(b), on the other hand, as
applicable, exceeds $250,000 and then only to the extent of the excess.
8.5.3. Maximum Liability. Notwithstanding any other provision
of this Agreement, (i) the indemnification obligations of Purchaser under
Section 8.2(b) will not exceed $2,000,000, and (ii) the indemnification
obligations of Seller under Section 8.3(b) will not exceed $2,000,000.
8.5.4. Exclusive Rights. Except as set forth in Section 6.5,
as between Purchaser and its Affiliates, on the one hand, and Seller and its
Affiliates, on the other hand, the rights and obligations set forth in this
Article VIII will be the exclusive rights and obligations with respect to this
Agreement, the events giving rise to this Agreement and the transactions
contemplated hereby. Without limiting the generality or effect of the foregoing,
as a material inducement to the other parties hereto entering into this
Agreement, each of the parties to this Agreement hereby (a) waives any claim or
cause of action which it otherwise might assert, including without limitation
under common law or federal or state securities, trade regulation or other Laws,
by reason of this Agreement, the events giving rise to this Agreement and the
transactions provided for herein or contemplated hereby, except for claims or
causes of action brought under and subject to the terms and conditions of this
Article VIII and (b) agrees that, regardless of the foregoing provisions, no
party will have any liability in respect of any claim or cause of action that is
or may be brought except in respect of a Liability, and then only to the extent
expressly provided in this Article VIII.
8.5.5. Offset. In the event any indemnification obligation
arising under Section 8.3 results in any final, non-appealable Liability of
Seller, Purchaser may, at Seller's option, offset amounts owing by Seller to
Purchaser against amounts owed to Seller by Purchaser under the Notes or any
other obligation.
IX. MISCELLANEOUS PROVISIONS
9.1. Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
when dispatched by telegram or electronic facsimile transfer (confirmed in
writing by mail simultaneously dispatched) or one business day after having been
dispatched by a nationally recognized overnight courier service to the
appropriate party at the address specified below:
(a) If to Purchaser, to:
CRL Systems, Inc.
c/o Circuit Research Labs, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ PLC
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇
(b) If to Seller, to:
▇▇▇▇▇, Inc.
c/o Harman International Industries
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇, Vice President and General
Counsel
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
9.2. Expenses. Except as otherwise expressly provided herein, Seller
and Purchaser each will pay any expenses incurred by it incident to this
Agreement and in preparing to consummate and consummating the transactions
provided for herein.
9.3. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but will not be assignable or delegatable by any party
without the prior written consent of the other party.
9.4. Waiver. Either Purchaser or Seller by written notice to the other
may (a) extend the time for performance of any of the obligations or other
actions of the other under this Agreement, (b) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement or in any
Closing Document, (c) waive compliance with any of the conditions or covenants
of the other contained in this Agreement, or (d) waive performance of any of the
obligations of the other under this Agreement. Except as provided in the
immediately preceding sentence, no action taken pursuant to this Agreement will
be deemed to constitute a waiver of compliance with any representations,
warranties or covenants contained in this Agreement and
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will not operate or be construed as a waiver of any subsequent breach, whether
of a similar or dissimilar nature.
9.5. Entire Agreement. This Agreement (including the Schedules and
Exhibits) supersedes any other agreement, whether written or oral, that may have
been made or entered into by any party hereto or any of their respective
Affiliates (or by any director, officer or representative thereof) relating to
the matters contemplated hereby. This Agreement (including the Schedules and
Exhibits) constitutes the entire agreement by and among the parties hereto and
there are no agreements or commitments by or among such parties or their
Affiliates except as expressly set forth herein.
9.6. Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Purchaser and Seller to be necessary, desirable or expedient to
further the purposes of this Agreement, or to clarify the intention of the
parties hereto.
9.7. Rights of the Parties. Except as provided in Article VIII or in
Section 9.3, nothing expressed or implied in this Agreement is intended or will
be construed to confer upon or give any person or entity other than the parties
hereto any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
9.8. Applicable Law; Jurisdiction. This Agreement and the legal
relations among the parties hereto will be governed by and construed in
accordance with the substantive laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.
9.9. Arbitration. In the event of any dispute concerning this
Agreement, its effect, or the transactions contemplated by it, such dispute
shall be settled by arbitration conducted in Maricopa County, State of Arizona
before a panel of three arbitrators in accordance with the then applicable
provisions of the American Arbitration Association ("AAA") using the rules of
procedure of the State of New York. Each of (a) Purchaser, on the one hand, and
(b) Seller, on the other hand, will appoint one arbitrator, and those two
arbitrators will appoint a third arbitrator. In the event that the two
arbitrators cannot agree on a third arbitrator within 10 days following the
appointment of the second arbitrator, then the third arbitrator shall be
appointed by the AAA in accordance with its then applicable rules. Punitive or
exemplary damages will not be permitted under any circumstances. All
determinations made by a majority of the arbitrators shall be final, conclusive
and binding on Purchaser and Seller with costs paid by the party who does not
prevail in the arbitration.
9.10. Waiver of Trial by Jury. THE PARTIES HERETO HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION BROUGHT ON, UNDER OR BY VIRTUE OF OR RELATING IN ANY WAY TO
THIS AGREEMENT OR ANY OF THE DOCUMENTS OR CERTIFICATES EXECUTED IN CONNECTION
HEREWITH, OR ANY CLAIMS, DEFENSES, RIGHTS OF SET-OFF OR OTHER ACTIONS PERTAINING
HERETO OR THERETO.
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9.11. Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
9.12. Passage of Title and Risk of Loss. Legal title, equitable title
and risk of loss with respect to the Total Assets will not pass to Purchaser
until such Total Assets are Transferred or leased at the Closing, which
transfer, once it has occurred, will be deemed effective for tax, accounting and
other computational purposes as of 11:59 P.M. (Pacific Time) on the Closing
Date.
9.13. Certain Interpretive Matters and Definitions. (a) Unless the
context otherwise requires, (i) all references to Sections, Articles, Schedules
or Exhibits are to Sections, Articles, Schedules or Exhibits of or to this
Agreement, (ii) each term defined in this Agreement has the meaning assigned to
it, (iii) each accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with GAAP, (iv) "OR" is disjunctive but not
necessarily exclusive, (v) words in the singular include the plural and vice
versa, (vi) the terms "SUBSIDIARY" and "AFFILIATE" have the meanings given to
those terms in Rule 12b-2 of Regulation 12B under the Securities Exchange Act of
1934, as amended, and for purposes of Section 4.1.15, the term "AFFILIATE"
includes any entity which is (or at any relevant time was) a member of a
controlled group of corporations with, under common control with, or otherwise
required to be aggregated with a party hereto as set forth in Section 414(b),
(c), (m) or (o) of the Code, (vii) the phrase "LIABILITIES AND OBLIGATIONS"
means all such matters of any nature, whether fixed or contingent, known or
unknown, or arising under Contract, law, equity, or otherwise, and (viii) the
word "INCLUDING" and similar terms following any statement will not be construed
to limit the statement to the matters listed after such word or term, whether a
phrase of nonlimitation such as "WITHOUT LIMITATIONS" is used. All references to
"$" or dollar amounts will be to lawful currency of the United States of
America.
(b) No provision of this Agreement will be interpreted in
favor of, or against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof or by reason
of the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.
9.14. Execution in Counterparts. This Agreement may be executed in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
9.15. Reliance on Information. Except for the information contained in
this Agreement (including the Schedules and Exhibits), Purchaser acknowledges
and agrees that it is not relying on any information provided by or statements
made by Seller, its officers or directors.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
▇▇▇▇▇, INC.
---------------------------------------------
▇▇▇▇▇ Sales, Authorized Representative
CRL SYSTEMS, INC.
---------------------------------------------
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, President and Chairman
of the Board
31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
▇▇▇▇▇, INC.
---------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Authorized Representative
CRL SYSTEMS, INC.
---------------------------------------------
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, President and Chairman
of the Board