EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SUNCOAST ACQUISITION CORP.,
SUNCOAST AUTOMATION, INC.,
AND PROTOSOURCE CORPORATION
DATED AS OF JULY 1, 2001
TABLE OF CONTENTS
Page
----
RECITALS......................................................................1
ARTICLE I - PURCHASE AND SALE
1.1 Purchased Assets.......................................1
1.2 Excluded Assets........................................2
1.3 Liabilities............................................2
ARTICLE II - PURCHASE PRICE
2.1 Purchase Price.........................................3
2.2 Allocation of Purchase Price...........................4
ARTICLE III - CLOSING
3.1 Closing Date...........................................4
3.2 Buyer"s Deliveries.....................................4
3.3 Suncoast"s Deliveries..................................5
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SUNCOAST AND SHAREHOLDER
4.1 Corporate Status.......................................5
4.2 Power and Authority....................................6
4.3 Enforceability.........................................6
4.4 No Restrictions........................................6
4.5 No Violation...........................................6
4.6 Financial Statements...................................7
4.7 Liabilities............................................7
4.8 Litigation.............................................7
4.9 Good Title to, Condition of, and Adequacy
of Purchased Assets..................................8
4.10 Compliance with Laws...................................8
4.11 Labor and Employment Matters...........................8
4.12 Employee Benefit Plans.................................8
4.13 Tax Matters............................................9
4.14 Receivables...........................................10
4.15 Inventory.............................................10
4.16 Licenses and Permits..................................10
4.17 Intellectual Property.................................10
4.18 Contracts.............................................10
4.19 Accuracy of Information Furnished to Buyer............11
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Corporate Status......................................12
5.2 Corporate Power and Authority.........................12
5.3 Enforceability........................................12
5.4 No Commissions........................................12
5.5 Litigation ...........................................13
5.6 Reporting Company.....................................13
5.7 Statements and Other Documents Not Misleading.........13
ARTICLE VI - CLOSING CONDITIONS
6.1 Conditions to Each Party"s Obligations................13
6.2 Conditions to Obligations of Suncoast and
Shareholder.........................................13
6.3 Conditions to the Obligations of Buyer................14
6.4 Other Documents.......................................14
ARTICLE VII - EMPLOYEE MATTERS
7.1 Employees ............................................15
7.2 Worker"s Compensation.................................15
ARTICLE VIII - TERMINATION
8.1 Termination ..........................................15
8.2 Effect of Termination ................................15
ARTICLE IX - INDEMNIFICATION
9.1 Agreement by Suncoast and Shareholder to Indemnify....16
9.2 Conditions of Indemnification of Buyer................17
9.3 Minimum Threshold for Indemnification by Suncoast
and Shareholder.....................................18
ARTICLE X - ADDITIONAL AGREEMENTS
10.1 Reputation of the Dauphin Shares......................18
10.2 Conduct of Operations.................................20
10.3 Tax Matters...........................................20
10.4 Best Efforts..........................................20
10.5 Further Assurances....................................20
10.6 Negotiations with Others..............................20
10.7 Brokers...............................................20
10.8 Sales and Transfer Taxes and Fees.....................21
10.9 Cooperation...........................................21
10.10 Other Agreements......................................21
10.11 Corporate Name Change.................................21
ARTICLE XI - DEFINITIONS
11.1 Defined Terms.........................................21
11.2 Other Definitional Provisions.........................23
ARTICLE XII - GENERAL PROVISIONS
12.1 Survival of Obligations................................24
12.2 Notices................................................24
12.3 Successors and Assigns.................................25
12.4 Entire Agreement; Amendments...........................25
12.5 Interpretation.........................................25
12.6 Expenses...............................................25
12.7 Partial Invalidity.....................................25
12.8 Governing Law..........................................26
12.9 Public Announcements...................................26
12.10 Counterparts/Facsimiles................................26
INDEX OF EXHIBITS
Exhibit A Employment Agreement for Key Employees
Exhibit B ▇▇▇▇ of Sale, Assignment and Assumption
INDEX OF SCHEDULES
Schedule 1.2(c) Excluded Assets
Schedule 1.3 Assumed Liabilities
Schedule 2.2 Allocation of Purchase Price
Schedule 4.1 Qualification Jurisdiction
Schedule 4.5 Violations; Conflicts; etc.
Schedule 4.6 Financial Statements
Schedule 4.7 Liabilities
Schedule 4.8 Litigation
Schedule 4.10 Compliance with Laws
Schedule 4.12 Employee Benefit Plans
Schedule 4.13 Tax Matters
Schedule 4.17 Intellectual Property
Schedule 4.18 Purchased Contracts
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into effective
as of July 1, 2001 (the "Effective Date"), by and among Suncoast Acquisition
Corp., an Illinois corporation ("Buyer"); Suncoast Automation, Inc., a Delaware
corporation ("Suncoast"); and ProtoSource Corporation, a California corporation
and owner of all issued and outstanding shares of stock in Suncoast
("Shareholder").
R E C I T A L S:
A. Suncoast is engaged in the business of providing cable television and
high speed Internet access to the timeshare industry (the "Business").
B. Buyer is engaged in the business of designing, developing, manufacturing
and marketing leading-edge technology equipment including, but not limited to,
mobile computers, set-top boxes and industrial products.
3. Suncoast desires to sell to Buyer, and Buyer desires to purchase from
Suncoast, on a going-concern basis, those certain hereinafter defined Purchased
Assets of Suncoast, other than certain hereinafter defined Excluded Assets, all
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, it is hereby agreed as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchased Assets. Upon the terms and subject to the conditions of this
Agreement, on the Closing Date, Suncoast shall sell, transfer, assign, convey,
and deliver to Buyer, and Buyer shall purchase from Suncoast, on a going-concern
basis, free and clear of all Liens (except for hereinafter defined Permitted
Liens), all of the Business and operations of Suncoast related to the Business
and, except for the Excluded Assets as set forth in Section 1.2 hereof, all of
the assets and properties of Suncoast of every kind and description, wherever
located, tangible or intangible, used or useable in connection with the Business
as the same shall exist on the Effective Date (collectively, the "Purchased
Assets"), including, without limitation, all right, title, and interest of
Suncoast in, to, and under:
(a) All of the assets reflected on the Balance Sheet, including,
without limitation, cash; accounts receivable; all contracts-in-progress and
proposals; all customer listings; all computer hardware, software, and
accessories; all furniture and equipment; all pertinent Business information,
software product licenses and resale licenses; and those assets acquired
subsequent to the Balance Sheet Date (as hereinafter defined), except those
assets disposed of or converted into cash after the Balance Sheet Date in the
ordinary course of business;
(b) The name "Suncoast Automation, Inc." and any derivation thereof,
trademarks, trade names, service marks, and copyrights, which Suncoast owns or
has the right to use (and all goodwill associated therewith), registered or
unregistered, and the applications for registration thereof, and the patents and
applications therefor, and the licenses relating to any of the foregoing listed
in Schedule 4.16 (as further defined in Section 4.16, the "Intellectual
Property");
(c) All mailing lists, customer lists, subscriber lists, processes,
manuals or business procedures, trade secrets, designs, engineering drawings and
reports, know-how and other proprietary or confidential information used in or
relating to the Business;
(d) A copy of all books and records (including all data and other
information stored on discs, tapes, written, electronic or other media) of
Suncoast relating to the assets, properties and operations of the Business;
(e) All of Suncoast"s rights, claims, or causes of action against
third parties relating to the assets, properties, or operations of the Business
arising out of transactions occurring prior to the Effective Date;
(f) All of Suncoast"s interest in and to all telephone and telephone
facsimile numbers, Internet websites, and other directory listings of the
Business and any assumed or fictitious names related to the Business;
(g) All prepaid expenses and deposits that benefit the Buyer after the
Effective Date; and
(h) All other assets, properties and rights specifically set forth in
the Agreement as being sold, transferred or assigned to, or purchased by, Buyer.
1.2 Excluded Assets. Notwithstanding the provisions of Section 1.1, the
Purchased Assets shall not include the assets listed on Schedule 1.2 ("Excluded
Assets").
1.3 Liabilities. Buyer shall:
(a) upon receipt at Closing of duly executed lessor's consents in form
reasonably acceptable to Buyer, assume payment of monthly rental obligations
under two equipment leases dated May 16, 2001 by and between Shareholder and
Highland Capital Corp. in the form of the copies attached as Schedule 1.3
("Highland Equipment Leases"), and shall make monthly payments required
thereunder until the Expiration Date, as defined in the Sublease Agreement by
and between the Buyer, Shareholder and ▇▇▇▇▇▇▇ ▇▇▇▇▇, dated July 1, 2001 (the
"Sublease Agreement"). Prior to the Expiration Date Shareholder shall cause the
Master Lease to be terminated or shall purchase the equipment from Highland
Capital Corp, subject to the terms and conditions of Section 8 of the Sublease
Agreement. Upon receipt of documentation evidencing lessors' termination of the
Highland Equipment Leases and transfer to Shareholder of all right, title and
interest in and to the equipment identified therein, free and clear of any and
2
all liens, encumbrances, and claims of any nature or kind, in form reasonably
acceptable to Buyer (the "Equipment Transfer Notice"), Buyer shall reimburse
Shareholder for the purchase price paid by Shareholder for the equipment subject
to the Highland Equipment Leases, i.e., the lesser of the fair market value of
the equipment as of the date of purchase or the aggregate rent payable over the
then remaining term of the Highland Equipment Leases or any lesser amount
accepted by the lessor in connection with the purchase (the "Equipment Cost"),
and upon receipt of such reimbursement Shareholder shall transfer to Buyer all
right, title and interest in and to the equipment identified therein, free and
clear of any and all liens, encumbrances, and claims of any nature or kind.
Reimbursement to Shareholder may be made in cash or through delivery of such
number of shares of $0.01 par value common stock in Dauphin Technology, Inc., an
Illinois corporation and owner of all issued and outstanding shares of stock in
Buyer ("Dauphin"), equal to the Equipment Cost divided by the average closing
bid price of the Dauphin common stock for the five trading days preceding the
Shareholder's delivery of the Equipment Transfer Notice (the "Equipment Payment
Shares"). If paid through delivery of such shares, Buyer shall cause the
Registration Statement referenced in Section 2.1 to be amended to include such
Equipment Payment Shares;
(b) assume and be obligated to discharge the Suncoast liability to
Electroline Equipment, Inc. in the amount of $83,413.80; and
(c) assume and be obligated to discharge the Suncoast liability to ▇▇▇
Communications, Inc. in the amount of $45,520.00.
Excepting the liabilities expressly assumed in Sections 1.3(a), 1.3(b), and
1.3(c) above, Buyer shall not assume or be obligated to pay, perform, or
otherwise discharge any liability or obligation of Suncoast, direct or indirect,
known or unknown, absolute or contingent, not expressly assumed by Buyer and,
notwithstanding anything to the contrary contained in this Agreement, none of
the following liabilities shall be assumed by Buyer:
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. The purchase price (the "Purchase Price") for the
Purchased Assets shall be equal to Seven Hundred Sixty Six Thousand Fifty Eight
(766,058) shares of $0.01 par value common stock in Dauphin (the "Dauphin
Shares"). The Dauphin Shares shall be issued at Closing (as hereinafter defined)
without prior registration under federal or state securities laws, in reliance
upon certain registration exemptions available thereunder, and as follows:
38,303 of such Dauphin Shares shall be issued to Andrew, Alexander, Wise &
Company, and 727,755 of such Dauphin Shares shall be issued to Shareholder.
Following Closing, Buyer shall cause Dauphin to file at its sole expense a
3
registration statement ("Registration Statement") on Form S-3, if use of such
form is then available to Dauphin pursuant to the rules of the Securities and
Exchange Commission ("SEC") and, if not, on such other form promulgated by the
SEC for which Dauphin then qualifies and which counsel for Dauphin shall deem
appropriate, for the registration under the Securities Act of 1933 of the resale
by the holder of the Dauphin Shares, such Registration Statement to be filed
with the SEC prior to the thirtieth (30th) day following the filing date of
Dauphin"s Form 10-Q for the period ending June 30, 2001 and pursuant to the
additional terms and conditions described in Section 10.1 hereto.
2.2 Allocation of Purchase Price. The Purchase Price shall be allocated for
tax purposes among the Purchased Assets in such amounts as Buyer may reasonably
request, in accordance with generally accepted accounting principles and as set
forth in Schedule 2.2. Such allocations shall be accepted by the parties in
writing at Closing and shall be binding on the parties. Suncoast shall sign and
submit all necessary forms to report this transaction for federal and state
income tax purposes in accordance with that allocation and shall not take a
position for tax purposes inconsistent therewith.
ARTICLE III
CLOSING
3.1 Closing Date. The closing ("Closing") of the transactions contemplated
by this Agreement shall be held on July 1, 2001 ("Closing Date") at the office
of Buyer at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Closing
shall be deemed to be effective as of 12:01 A.M., Chicago Time, on the Effective
Date.
3.2 Buyer"s Deliveries. At Closing, Buyer shall deliver to Suncoast all of
the following:
(a) A certificate of the Secretary or an Assistant Secretary of Buyer,
dated no earlier than thirty (30) days prior to the Closing Date, in form and
substance reasonably satisfactory to Suncoast, as to the resolutions of the
Board of Directors of Buyer authorizing the execution and performance of this
Agreement, and the transactions contemplated thereby;
(b) Such other documents as Suncoast may reasonably request or as may
be otherwise necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Buyer;
(c) A Certificate of Good Standing issued by the Secretary of State of
Illinois, with respect to Buyer dated no earlier than thirty (30) days prior to
the Closing Date;
(d) An Employment Agreement for each of the Key Employees (as
hereinafter defined) executed by an authorized officer of Buyer and in
substantially the form contained in Exhibit A;
4
(e) A Certificate representing the Dauphin Shares issued in the name
of Suncoast or its designee; and
(f) The ▇▇▇▇ of Sale, Assignment and Assumption duly executed by an
authorized officer of Buyer and in substantially the form contained in Exhibit
B.
3.3 Suncoast"s Deliveries. At Closing, Suncoast shall deliver to Buyer the
following:
(a) A certificate of the Secretary or an Assistant Secretary of
Shareholder, dated no earlier than thirty (30) days prior to the Closing Date,
in form and substance reasonably satisfactory to Buyer, as to the resolutions of
the Board of Directors of Shareholder authorizing the execution and performance
of this Agreement, and the transactions contemplated thereby;
(b) Such other documents as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Buyer;
(c) A Certificate of Good Standing issued by the Secretary of State of
Delaware, with respect to Suncoast dated no earlier than thirty (30) days prior
to the Closing Date;
(d) An Employment Agreement for each of the Key Employees executed by
each of the Key Employees and in substantially the form contained in Exhibit A;
(g) The ▇▇▇▇ of Sale, Assignment and Assumption duly executed by an
authorized officer of Suncoast and in substantially the form contained in
Exhibit B; and
(8) The lessor consents referenced in Section 1.3.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SUNCOAST AND SHAREHOLDER
As a material inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Suncoast and Shareholder each
hereby makes the following representations and warranties to Buyer, as of the
date hereof and as of the Effective Date:
4.1 Corporate Status. Suncoast is a corporation duly organized, legally
existing and in good standing, and has filed all required annual reports and
paid all required franchise and other taxes and fees, under the laws of the
State of Delaware. Suncoast has the requisite power and authority to own or
lease its property and to carry on its Business as now being conducted. On the
Closing Date, Suncoast shall be legally qualified to transact business as a
foreign corporation in all jurisdictions where the nature of its respective
properties and the conduct of its business requires such qualification (all of
which jurisdictions are listed on Schedule 4.1) and will be good standing in
each of the jurisdictions in which it is so qualified, with the exception of a
pending filing of corporation reinstatement in the State of Florida, of which
Buyer is aware. There is no pending or threatened proceeding for the
dissolution, liquidation, insolvency, or rehabilitation of Suncoast.
5
4.2 Power and Authority. Each of Suncoast and Shareholder has the power and
authority to execute and deliver this Agreement, to perform their respective
obligations hereunder and to consummate the transactions contemplated hereby.
Each of Suncoast and Shareholder has taken all action necessary to authorize the
execution and delivery of this Agreement, the performance of its respective
obligations hereunder and the consummation of the transactions contemplated
hereby.
4.3 Enforceability. Each of this Agreement and any other agreement executed
in connection herewith has been, or will have been at the time of Closing, duly
executed and delivered by Suncoast and Shareholder and constitutes, or will
constitute, the legal, valid, and binding obligation of each of them,
enforceable against each of them in accordance with its terms.
4.4 No Restrictions. There are no proxies, voting rights, Contracts, or
other agreements or understandings with respect to the voting of shares in
Suncoast or the transfer of the Purchased Assets other than as set forth in this
Agreement.
4.5 No Violation. Except as set forth on Schedule 4.5, the execution and
delivery of this Agreement by Suncoast, the performance of its respective
obligations hereunder and the consummation of the transactions contemplated by
this Agreement will not:
(a) contravene any provision of the Articles of Incorporation or
Bylaws of Suncoast;
(b) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against Suncoast;
(c) conflict with, result in any breach of, or constitute a default
(or an event which would, with the passage of time or the giving of notice or
both, constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against Suncoast that contemplate transactions valued in excess
of $10,000;
(d) result in or require the creation or imposition of any Lien upon
or with respect to any of the property or assets of Suncoast; or
(e) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person.
6
4.6 Financial Statements. Suncoast has delivered to Buyer the unaudited
financial statements of Suncoast, as of December 31, 1999, December 31, 2000 and
for the interim period ended March 31, 2001, and the related statements of
income and retained earnings for said periods (collectively, the "Financial
Statements") The balance sheet dated as of March 31, 2001, included in the
Financial Statements is referred to herein as the "Balance Sheet" and the
"Balance Sheet Date" shall mean March 31, 2001. The Financial Statements fairly
present the financial position of Suncoast at each of the balance sheet dates
and the results of operations for the periods covered thereby. Except as set
forth in Schedule 4.6: (a) the books and records of Suncoast fully and fairly
reflect the transactions, properties, assets, and liabilities of Suncoast; (b)
there are no material, special or non-recurring items of income or expense
during the periods covered by the Financial Statements; and (c) the Financial
Statements reflect all adjustments necessary for a fair presentation of the
financial information contained therein.
4.7 Liabilities. Except as set forth on Schedule 4.7, Suncoast does not
have any liabilities or obligations, whether accrued, absolute, contingent, or
otherwise, except:
(a) to the extent reflected or taken into account in the Current
Balance Sheet and not heretofore paid or discharged;
(b) to the extent specifically set forth in or incorporated by express
reference in any of the Schedules attached hereto;
(c) liabilities incurred in the ordinary course of business consistent
with past practice since the date of the Current Balance Sheet (none of which
relates to breach of contract, breach of warranty, tort, infringement, or
violation of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding);
(d) normal accruals, reclassifications, and audit adjustments which
would be reflected on an audited financial statement and which would not be
material in the aggregate;
(e) subcontractor liabilities specifically related to the Receivables
and set forth in Schedule 1.2, which Suncoast and Shareholders assume and agree
to pay; and
(f) operating leases requiring an annual gross rental exceeding Ten
Thousand and No/100 Dollars ($10,000).
4.8 Litigation. Except as set forth on Schedule 4.8, there is no action,
suit, or other legal or administrative proceeding or governmental investigation
pending or threatened by or against Suncoast or anticipated or contemplated by
Suncoast, nor is there any such action, suit, or other legal or administrative
proceeding or governmental investigation anticipated or contemplated against
Suncoast, affecting Suncoast or any of its respective properties or assets, or
which question the validity or enforceability of this Agreement or the
transactions contemplated hereby, and there is no basis for any of the
foregoing. Except as set forth in Schedule 4.8, there are no outstanding orders,
decrees or stipulations issued by any Governmental Authority in any proceeding
to which Suncoast is or was a party which have not been complied with in full or
which continue to impose any material obligations on Suncoast.
7
4.9 Good Title to, Condition of, and Adequacy of Purchased Assets.
(a) Except as set forth on Schedule 4.9, Suncoast has good and
marketable title to all of the Purchased Assets, free and clear of any Liens
(other than Permitted Liens) or restrictions on use.
(b) The Purchased Assets are in good operating condition, normal wear
and tear excepted, and have been maintained in accordance with sound industry
practices.
(c) The Purchased Assets constitute all of the assets and properties
necessary for the conduct of the Business of Suncoast in the manner in which and
to the extent to which such Business is currently being conducted.
4.10 Compliance with Laws.
(a) Except as set forth in Schedule 4.10, Suncoast is and has been in
compliance in all material respects with all laws, regulations, and orders
applicable to it, its respective Business and operations (as conducted by it now
and in the past), and the Purchased Assets, except as such would not have a
material adverse effect on the Business. Except as set forth on Schedule 4.10,
Suncoast has not been cited, fined, or otherwise notified of any asserted past
or present failure to comply with any laws, regulations or orders which have not
been permanently cured and no proceeding with respect to any such violation is
pending or threatened.
(b) Suncoast has not made any payment of funds in connection with its
Business that is prohibited by law, and no funds have been set aside to be used
in connection with its Business for any payment prohibited by law.
(c) Suncoast is not subject to any Contract, decree or injunction
which restricts the continued operation of any Business or the expansion thereof
to other geographical areas, customers and suppliers, or lines of Business.
4.11 Labor and Employment Matters. Suncoast has complied with applicable
laws, rules, and regulations relating to employment, civil rights and equal
employment opportunities, including, but not limited to, the Civil Rights Act of
1964, and the Fair Labor Standards Act, except as such would not have a material
adverse effect on the Business.
4.12 Employee Benefit Plans.
(a) Employee Benefit Plans. Schedule 4.12 contains a list setting
forth each employee benefit plan or arrangement of Suncoast, including, but not
limited to, employee pension benefit plans, as defined in Section 3(2) of the
8
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), employee
welfare benefit plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, stock option plans, Section 125 Premium Only Plan, bonus
plans, stock purchase plans, hospitalization, disability and other insurance
plans, severance or termination pay plans and policies, whether or not described
in Section 3(3) of ERISA, in which employees, their spouses or dependents, of
Suncoast participate (the "Employee Benefit Plans").
(b) Compliance with Law. With respect to each Employee Benefit Plan:
(i) each has been administered in all material respects in
compliance with its terms and with all applicable laws, including, but
not limited to, ERISA and the Internal Revenue Code of 1986, as
amended (the "Code");
(ii) no actions, suits, claims or disputes are pending or
threatened;
(iii) no audits, inquiries, reviews, proceedings, claims, or
demands are pending with any governmental or regulatory agency;
(iv) there are no facts which could give rise to any
material liability in the event of any such investigation, claim,
action, suit, audit, review, or other proceeding;
(v) all reports, returns, and similar documents required to
be filed with any governmental agency or distributed to any plan
participant have been duly or timely filed or distributed; and
(vi) no "prohibited transaction" has occurred within the
meaning of the applicable provisions of ERISA or the Code.
(c) Welfare Plans. Other than as disclosed in Schedule 4.12, Suncoast
is not obligated under any employee welfare benefit plan as described in Section
3(1) of ERISA ("Welfare Plan"), whether or not disclosed in Schedule 4.12, to
provide medical or death benefits with respect to any employee or former
employee of Suncoast or its predecessors after termination of employment.
(d) Other Liabilities. Except as set forth on Schedule 4.12, all
required or discretionary (in accordance with historical practices) payments,
premiums, contributions, reimbursements, or accruals for all periods ending
prior to or as of the Effective Date shall have been made or properly accrued on
the Current Balance Sheet.
4.13 Tax Matters. Except as set forth in Schedule 4.13 hereto, all Tax
returns required to be filed prior to the date hereof with respect to Suncoast
or any of its respective income, properties, franchises, or operations have been
filed, each such Tax Return has been prepared in compliance with all applicable
laws and regulations, and all such Tax Returns are true, complete, and accurate
in all respects. All Taxes due and payable by or with respect to Suncoast have
been paid or accrued on the Current Balance Sheet or will be accrued on its
books and records as of the Closing.
9
4.14 Receivables. Suncoast"s accounts receivable are fully and accurately
reported in the Financial Statements, and determined in a manner consistent with
generally accepted accounting principles, arose from bona fide transactions, are
fully collectible within ninety (90) days of the date any such account
receivable arose, and accounts receivable as of Closing will be in a face amount
equal to at least the amount set forth in the Current Balance Sheet net of the
allowance for doubtful accounts.
4.15 Inventory. Suncoast"s inventory as of the Closing will be in an amount
not less than the amount set forth in the Current Balance Sheet, at cost as
determined in a manner consistent with generally accepted accounting principles,
and will consist of items of a quality and quantity which are good, usable and
saleable in the usual and ordinary course of business of Suncoast, at customary
prices therefor and will not include any items which are damaged, obsolete or
below standard quality.
4.16 Licenses and Permits. Suncoast possesses all licenses and required
governmental or official approvals, permits or authorizations (collectively, the
"Permits") for its Business and operations. All such Permits are valid and in
full force and effect, Suncoast is in full compliance with the requirements
thereof, and no proceeding is pending or threatened to revoke or amend any of
them.
4.17 Intellectual Property. Schedule 4.17 sets forth a list of all
trademarks, service marks, trade names, copyrights, know-how, patents, trade
secrets, licenses (including licenses for the use of computer software
programs), all rights in mask works and other intellectual property used in the
conduct of Suncoast"s Business (the "Intellectual Property") and all such
rights, titles and interests shall be transferred to Buyer at Closing, free and
clear of any liens or restrictions. Suncoast has full legal right, title, and
interest in and to all Intellectual Property used in its Business. The conduct
of the Business of Suncoast as presently conducted, and the unrestricted conduct
and the unrestricted use and exploitation of the Intellectual Property, does not
infringe or misappropriate any rights held or asserted by any Person, and no
Person is infringing on the Intellectual Property. No payments are required for
the continued use of the Intellectual Property, except as set forth in Schedule
4.16. None of the Intellectual Property has ever been declared invalid or
unenforceable, or is the subject of any pending or threatened action for
opposition, cancellation, declaration, infringement, or invalidity,
unenforceability or misappropriation or like claim, action or proceeding.
4.18 Contracts. Schedule 4.18 sets forth a list of each Contract, that
contemplates any transaction valued in excess of $10,000 to which Suncoast is a
party or by which its properties or assets are bound and which is material to
its Business, assets, properties or prospects (the "Purchased Contracts"), true
and correct copies of which have been provided to Buyer. The copy of each
10
Purchased Contract provided to Buyer is a true and complete copy of the document
it purports to represent and reflects all amendments thereto made through the
date of this Agreement. Except as set forth on Schedule 4.18, Suncoast has not
violated any of the material terms or conditions of any Purchased Contract or
any term or condition which would permit termination or material modification of
any Purchased Contract, and all of the covenants to be performed by any other
party thereto have been fully performed and there are no claims for breach or
indemnification or notice of default or termination under any Purchased
Contract. Except as set forth on Schedule 4.18, no event has occurred which
constitutes, or after notice or the passage of time, or both, would constitute,
a material default by Suncoast under any Purchased Contract, and to the best
knowledge of Suncoast and Shareholder, no such event has occurred which
constitutes or would constitute a material default by any other party. Except as
set forth in Schedule 4.18, all Purchased Contracts are freely assignable to
Buyer without notice to or the consent of any third party and, Suncoast is not
subject to any liability or payment resulting from renegotiation of amounts paid
it under any Purchased Contract. As used in this Section, Purchased Contracts
shall include, without limitation:
(a) loan agreements, indentures, mortgages, pledges, hypothecations,
deeds of trust, conditional sale or title retention agreements, security
agreements, equipment financing obligations or guaranties, or other sources of
contingent liability in respect of any indebtedness or obligations to any other
person, or letters of intent or commitment letters with respect to same;
(b) contracts obligating Suncoast to purchase or sell products or
services;
(c) leases of real or personal property not cancelable without penalty
on notice of sixty (60) days or less or calling for payment of an annual gross
rental exceeding Ten Thousand and No/100 Dollars ($10,000.00);
(d) distribution, sales agency, or franchise or similar agreements, or
agreements providing for an independent contractor"s services, or letters of
intent with respect to same;
(e) employment agreements, management service agreements, consulting
agreements, confidentiality agreements, non-competition agreements, and any
other agreements relating to any employee, officer or director of Suncoast;
(f) licenses, assignments or transfers of trademarks, trade names,
service marks, patents, copyrights, trade secrets, or know how, or other
agreements regarding proprietary rights or intellectual property ("Licenses");
(g) any Contract relating to pending capital expenditures by Suncoast;
and
(h) other material Contracts or understandings, irrespective of
subject matter and whether in writing, not entered into in the ordinary course
of business by Suncoast and not otherwise disclosed on the Schedules.
4.19 Accuracy of Information Furnished to Buyer. No representation,
statement, or information made or furnished by Suncoast or Shareholder to Buyer
or any of Buyer"s representatives, including those contained in this Agreement
and the various Schedules attached hereto and the other information and
statements referred to herein and previously furnished by Suncoast or
Shareholder, contains or shall contain any untrue statement of a material fact
or omits any material fact necessary to make the information contained therein
not misleading.
11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Suncoast and Shareholder to enter into this
Agreement and to consummate the transactions contemplated hereby, Buyer makes
the following representations and warranties to Suncoast and Shareholder as of
the date hereof and as of the Closing Date:
5.1 Corporate Status. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Illinois.
5.2 Corporate Power and Authority. Buyer has, or at the time of Closing
will have, the corporate power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder, and consummate the
transactions contemplated hereby. Buyer has or at the time of Closing will have
taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby. The execution and delivery of this
Agreement by Buyer, the performance by it of its obligations hereunder, and the
consummation by it of the transactions contemplated by this Agreement will not:
(a) contravene any provision of the Articles of Incorporation or
Bylaws of Buyer;
(b) in any material respect violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment, or order of any
Governmental Authority or of any arbitration award which is either applicable
to, binding upon, or enforceable against Buyer;
(c) conflict with, result in breach of, or constitute a default (or
any event which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate any material Contract;
(d) result in or require the creation or imposition of any lien upon
or with respect to any property or assets of Buyer; or
(e) require the consent, approval, authorization, or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal, or any other Person.
5.3 Enforceability. Each of this Agreement and any other agreement executed
in connection herewith has been, or will have been at the time of Closing, duly
executed and delivered by and constitutes or will constitute a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with their
respective terms.
5.4 No Commissions. Buyer has not incurred any obligation for any finder"s
or broker"s or agent"s fees or commissions or similar compensation in connection
with the transactions contemplated hereby.
12
5.5 Litigation. Except as set forth on Schedule 5.5, there is no action,
suit, or other legal or administrative proceeding or governmental investigation
pending or threatened by or against Buyer or anticipated or contemplated by
Buyer, nor is there any such action, suit or other legal or administrative
proceeding or governmental investigation anticipated or contemplated against
Buyer which question the validity or enforceability of this Agreement or the
transactions contemplated hereby, and there is no basis for any of the
foregoing.
5.6 Reporting Company. The Common Stock of Dauphin is trading on the OTC
Electronic Bulletin Board. Dauphin is a reporting company under the Securities
and Exchange Act of 1934 as amended.
5.7 Statements and Other Documents Not Misleading. Neither this Agreement,
including all exhibits and schedules and other closing documents, nor any other
financial statement document or other instrument heretofore or hereafter
furnished by the Buyer or Dauphin to Suncoast or Shareholder in connection with
this Agreement or other transactions contemplated hereby, or any information
furnished by Buyer or Dauphin taken as a whole contains or will contain any
untrue statement of any material fact or omit or will omit to state any material
fact required to be stated in order to make such statement, information,
document, or other instruments, in light of the circumstances in which they are
made not misleading. There is no fact known to Buyer or Dauphin taken as a whole
which may have a Material Adverse Effect on the business, prospects, financial
condition or results of operations of Buyer or Dauphin taken as a whole or of
any of its properties or assets which has not been set forth in this Agreement
as an exhibit or schedule hereto.
ARTICLE VI
CLOSING CONDITIONS
6.1 Conditions to Each Party"s Obligations. The respective obligations of
each party to effect the transactions contemplated hereby shall be subject to
the fulfillment at or before the Closing Date of the condition that neither
Suncoast, Shareholder nor Buyer shall be subject to any order, decree or
injunction of a court of competent jurisdiction which prevents or delays any of
the transactions contemplated by this Agreement.
6.2 Conditions to the Obligations of Suncoast and Shareholder. The
obligations of Suncoast and Shareholder to effect the transactions contemplated
hereby shall be further subject to the fulfillment at or before the Closing Date
of the following conditions, any one or more of which may be waived by Suncoast
and Shareholder:
13
(a) Compliance by Buyer. Buyer shall have performed and complied in
all material respects with the provisions contained in this Agreement required
to be performed and complied with by it at or before the Closing Date.
(b) Representations and Warranties. The representations and warranties
of Buyer set forth in this Agreement were true and correct in all material
respects as of the date of this Agreement and shall also be true and correct in
all material respects as of the Closing Date as though made at and as of the
Closing Date (except as otherwise contemplated by this Agreement), and Suncoast
and Shareholder shall have received certificates to that effect signed by the
President of Buyer.
6.3 Conditions to the Obligations of Buyer. The obligations of Buyer to
effect the transactions contemplated hereby shall be further subject to the
fulfillment at or before the Closing Date of the following conditions, any one
or more of which may be waived by Buyer.
(a) Compliance by Suncoast and Shareholder. Suncoast and Shareholder
shall have performed and complied in all material respects with the provisions
contained in this Agreement required to be performed and complied with by them
at or before the Closing Date.
(b) Representations and Warranties. The representations and warranties
of Suncoast and Shareholder set forth in this Agreement shall have been true and
correct in all material respects as of the date of this Agreement and shall also
be true and correct in all material respects as of the Closing Date as though
made at and as of the Closing Date (except as otherwise contemplated by this
Agreement), and Buyer shall have received a certificate to that effect signed by
the President of Suncoast.
(c) Corporate Authority; Consents; Permits. Suncoast and Shareholder
shall have delivered to Buyer evidence satisfactory to Buyer that Suncoast and
Shareholder shall have obtained any and all permits, authorizations, lessor
consents and approvals of any person or public body or authority required
effectively to transfer the Purchased Assets to Buyer and to enable Buyer to
continue Suncoast"s Business operations substantially similar to the operations
conducted by Suncoast immediately prior to Closing.
6.4 Other Documents. Each of the parties will furnish to the other party
such certificates of such party's shareholders, officers, directors, employees,
or such other documents, as may be reasonably necessary to evidence fulfillment
of the conditions set forth in this Article VI as the other party may reasonably
request.
14
ARTICLE VII
EMPLOYEE MATTERS
7.1 Employees. Suncoast shall deliver to Buyer not less than five (5) days
prior to Closing a list of all Suncoast employees and their compensation as of
the most recent date for which information is available and shall advise Buyer
of any changes in such information through the Closing Date.
7.2 Workers' Compensation. Buyer shall be liable for all workers"
compensation claims made by Suncoast employees which relate to events occurring
after the Closing Date. Suncoast shall remain liable for all workers"
compensation claims made by Suncoast's former employees which relate to events
occurring on or before the Closing Date and shall hold harmless and indemnify
Buyer from and against such claims. Suncoast shall provide Buyer with
satisfactory evidence of workers" compensation insurance coverage through the
Closing Date.
ARTICLE VIII
TERMINATION
8.1. Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) By the written agreement of all of the parties hereto;
(b) By any party upon written notice to the others after 5:00 p.m.
Central Standard Time on July 1, 2001 if the transactions contemplated hereby
shall not have been consummated pursuant hereto, unless such date is extended by
the mutual written consent of the parties; or
(c) By either Buyer or Suncoast if: (i) the representations and
warranties of Suncoast and Shareholder or Buyer, respectively, shall not have
been true and correct in all material respects as of the date when made; (ii)
Suncoast and Shareholder or Buyer, respectively, shall have failed to perform
and comply with, in all material respects, all agreements and covenants required
by this Agreement to have been performed or complied with by such parties prior
to the time of such termination and such failure to perform or comply shall be
incurable or shall not have been cured within a reasonable period of time but
not less than ten (10) days in duration following notice of such failure,
provided that the terminating party shall have performed and complied with, in
all material respects, all agreements and covenants required by this Agreement
to have been performed or complied with by such terminating party prior to such
time; or (iii) any event shall have occurred or any fact or condition shall
exist that shall have made it impossible to satisfy a condition precedent to the
terminating party's obligations to consummate the transactions contemplated by
this Agreement, unless the occurrence of such event or existence of such fact or
condition shall be due to the failure of the party seeking to terminate this
Agreement or any of its associates or affiliates to perform or comply with any
of the covenants, agreements, or conditions hereof to be performed or complied
with by such party or any of its associates or affiliates prior to Closing.
8.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 8.1, this Agreement shall become
null and void and of no further force and effect, without any liability on the
part of any party hereto, or any of its directors, officers, employees, agents,
consultants, representatives, advisers, shareholders, associates or affiliates.
15
ARTICLE IX
INDEMNIFICATION
9.1 Agreement by Suncoast and Shareholder to Indemnify. Suncoast and
Shareholder each agrees to indemnify, defend and hold Buyer harmless from and
against the aggregate of all Buyer Indemnifiable Damages (as defined below);
provided, however, that the aggregate indemnification liability of Suncoast and
Shareholder collectively shall not exceed the Purchase Price (plus any costs of
collection).
(a) For purposes of this Agreement, "Buyer Indemnifiable Damages"
means, without limitation, the aggregate of all expenses, losses, costs, claims,
diminution in value, deficiencies, liabilities and damages (including, without
limitation as to type of expense, related reasonable counsel and paralegal fees
and expenses) incurred or suffered by Buyer, to the extent:
(i) resulting from any material breach of a representation
or warranty made by Suncoast or Shareholder in or pursuant to this
Agreement;
(ii) resulting from any material breach of the covenants or
agreements made by Suncoast or Shareholder pursuant to this Agreement;
(iii) resulting from any Excluded Assets or Liabilities, and
specifically including subcontractor liabilities related to the
Receivables; or
(iv) resulting from any fact, condition, event, act,
omission, or other matter whose occurrence or failure to occur would
have constituted a material breach of a representation or warranty
made by Suncoast or Shareholder in or pursuant to this Agreement were
not that representation or warranty qualified by the words "to the
best knowledge of" or other words of similar import.
(b) Each of the representations and warranties made by Suncoast and
Shareholder in this Agreement or pursuant hereto shall survive for a period
commencing with the Closing Date and continuing through the second anniversary
of the Closing Date, except as follows:
(i) the representations and warranties to the extent
relating to tax attributes or liabilities with respect to Taxes of
Suncoast shall expire at the time the period of limitations (including
any extensions thereof pursuant to the delivery of waivers of the
applicable period of limitations) expires for the assessment by the
taxing authority of additional Taxes with respect to which the
representations and warranties relate;
(ii) the representations and warranties of the Shareholder
and Suncoast contained in Sections 4.12 shall expire at the time the
latest period of limitations expires for the enforcement by an
applicable Governmental Authority of any remedy with respect to which
the particular representations and warranties of the Shareholder
related and if there is no such period of limitations, then the
representations and warranties shall continue indefinitely; and
16
(iii) the representations and warranties of Suncoast and
Shareholder contained in Sections 4.1 through 4.6 shall continue until
the first anniversary of the Closing, except for the representations
and warranties contained in Section 4.1, which shall expire upon the
earlier of liquidation and dissolution of Suncoast or the expiration
of the applicable statute of limitation. No claim for the recovery of
Buyer Indemnifiable Damages may be asserted by Buyer after such
representations and warranties shall thus expire; provided, however,
that claims for Buyer Indemnifiable Damages first asserted within the
applicable period shall not thereafter be barred. Notwithstanding any
knowledge of facts determined or determinable by any party by
investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other
parties contained in this Agreement or in any other documents or
papers delivered in connection herewith. Each representation,
warranty, covenant, and agreement of the parties contained in this
Agreement is independent of each other representation, warranty,
covenant, and agreement.
(c) In the event that Buyer believes it is entitled to a claim for any
Buyer Indemnifiable Damages hereunder, Buyer shall promptly give written notice
to Suncoast and Shareholder of such claim and the amount or the estimated amount
of such claim, and the basis for such claim. If neither Suncoast nor Shareholder
pay the amount of the claim for Buyer Indemnifiable Damages to Buyer within
fourteen (14) days, then Buyer may take any action or exercise any remedy
available to Buyer by appropriate legal proceedings to collect the Buyer
Indemnifiable Damages or make a claim for payment. However, this Section will
not apply to any breach by Suncoast or Shareholder with regard to any
representation or warranty of which Suncoast or Shareholder had knowledge at any
time prior to the date on which such representation and warranty is made or any
intentional breach by Suncoast or Shareholder of any covenant or obligation
hereunder, in which case Suncoast and Shareholder will be liable for all Damages
with respect to such breaches.
9.2 Conditions of Indemnification of Buyer. Except as otherwise provided in
Section 9.1, the obligations and liabilities of Suncoast and Shareholder
hereunder with respect to the indemnities pursuant to this Article IX resulting
from any claim or other assertion of liabilities by third parties (hereinafter
called collectively the "Buyer Claims") shall be subject to the following terms
and conditions:
17
(a) Buyer must give Suncoast and Shareholder notice of any such Buyer
Claim promptly after Buyer receives notice thereof;
(b) Suncoast and Shareholder shall have the right to undertake, by
counsel or other representatives of their own choosing, the defense of such
Buyer Claim; provided, however, if a Buyer Claim is made against Buyer that
exceeds the value of the Indemnification Security at such time, Buyer shall have
the right to control the defense of the Buyer Claim;
(c) in the event Suncoast and Shareholder shall elect not to undertake
such defense, or within a reasonable time after notice of any such Buyer Claim
from Buyer shall fail to defend, Buyer (upon further written notice to Suncoast
and Shareholder) shall have the right to undertake the defense, compromise, or
settlement of such Buyer Claim, by counsel or other representatives of its own
reasonable selection, on behalf of and for the account and risk of Suncoast and
Shareholder (subject to the right of Suncoast and Shareholder to assume defense
of such Buyer Claim at any time prior to settlement, compromise or final
determination thereof);
(d) anything in this Section 9.2 to the contrary notwithstanding:
(i) Buyer shall have the right, at its own cost and expense,
to have its own counsel to protect its own interests and participate
in the defense, compromise, or settlement of the Buyer Claim;
(ii) Neither Suncoast nor Shareholder shall, without Buyer"s
written consent, settle, or compromise any Buyer Claim or consent to
entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to Buyer of a
release from all liability in respect of such Buyer Claim; and
(iii) Buyer, by counsel or other representatives of its own
choosing and at its sole cost and expense, shall have the right to
consult with Suncoast, Shareholder and their respective counsel or
other representatives concerning such Buyer Claim, and Suncoast,
Shareholder and Buyer and their respective counsel shall cooperate
with respect to such Buyer Claim.
9.3 Minimum Threshold for Indemnification by Suncoast and Shareholder. No
indemnification shall be paid by Suncoast or Shareholder under Sections 9.1
(a)(i) through (iv) hereof until such time as the amount for which
indemnification would otherwise be due to any and all parties entitled to
indemnification from Suncoast or Shareholder hereunder exceeds Twenty Five
Thousand Dollars ($25,000.00).
17
ARTICLE X
ADDITIONAL AGREEMENTS
10.1 Registration of the Dauphin Shares. In connection with the issuance of
the Dauphin Shares representing the Purchase Price, as described in Section 2.1
hereto, Buyer shall cause Dauphin to:
(1) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement with respect to such securities
prior to the thirtieth (30th) day following the filing date of
Dauphin"s Form 10-Q for the period ending June 30, 2001 and shall use
its best efforts to obtain effectiveness of such registration
statement prior to the one hundred twentieth (120th) day following the
filing of the Registration Statement and shall use its best efforts to
maintain such effectiveness until all of the securities included in
such registration statement have been sold ("Requisite Period");
(2) promptly prepare and file with the Commission such amendments and
supplements to such registration statement and the prospects used in
connection therewith as may be necessary to keep such registration
statement effective for the Requisite Period and comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement.
(3) promptly furnish a reasonable number of copies of the registration
statement as may be requested in order to facilitate the intended
disposition of the securities covered by such registration statement;
(4) use its best efforts (i) to register or qualify the securities covered
by such registration statement under the securities or "blue sky"
laws, (ii) to prepare and file in those amendments (including
post-effective amendments) and supplements, and take such other
actions, as may be necessary to maintain such registration and
qualification in effect at all times for the Requisite Period and
(iii) to take such further action as may be necessary or advisable to
enable the disposition of the securities covered by such registration
statement provided;
(5) use its best efforts to list the securities covered by such
registration statement with any securities exchange on which the
Common Stock is then listed, or if the Common Stock is not then listed
on a national securities exchange use its best efforts to facilitate
the reporting of the Common Stock on the NASDAQ Stock Market if and
when Dauphin"s securities qualify for such reporting;
(6) promptly notify Suncoast and Shareholder of the issuance by the
Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that
purpose and use its best effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible time;
19
(7) take all actions reasonably necessary to facilitate the timely
preparation and delivery of certificates;
(8) take all other reasonable actions necessary to expedite and facilitate
the registration of the securities pursuant to the registration
statement;
(9) incur all expenses in complying with the registration required
hereunder, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of its counsel and
independent public accountants, fees and expenses (including its
counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., fees of transfer agents and registrars and
its other legal and accounting fees and disbursements.
10.2 Conduct of Operations. During the period from the date of this
Agreement to the Closing Date, Suncoast and Shareholder shall conduct Suncoast"s
Business operations in the manner in which they have customarily and ordinarily
conducted such Business operations in the past, preserve intact Suncoast"s
assets and Business operations and report regularly to Buyer as to the general
status thereof and as to any material event affecting Suncoast"s assets and
Business operations. During the period from the date of this Agreement to the
Closing Date, Suncoast and Shareholder will not, other than in the normal course
of business, take, without the prior written consent of Buyer, any action which
could reasonably be expected to materially adversely affect the assets or
Business operations of Suncoast.
10.3 Tax Matters. From and after the Closing Date, the parties shall
cooperate with each other in connection with the administration of employee
matters, the filing of Tax Returns and other reports required by governmental
authorities and the defense of any claim or litigation made or instituted
against either party in respect of Suncoast"s operations before the Closing
Date, which cooperation shall include, but not be limited to, making available
employees for the purposes of providing technical or expert testimony and
advice.
10.4 Best Efforts. Subject to the terms and conditions of this Agreement,
each of the parties will use its best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as soon as practicable the transactions contemplated by this Agreement.
10.5 Further Assurances. From time to time, without further consideration,
Suncoast and Shareholder, at their own expense, will execute and deliver, or
cause to be executed and delivered, such documents as Buyer may reasonably
request to more effectively consummate the transactions contemplated hereby and
to vest in Buyer good title to the Purchased Assets. From time to time, without
further consideration, Buyer, at its own expense, will execute and deliver, or
cause to be executed and delivered, such documents as Suncoast and Shareholder
may reasonably request to more effectively consummate the transactions
contemplated hereby.
10.6 Negotiations with Others. During the period from the date of this
Agreement to the Closing Date, Suncoast and Shareholder will not, directly or
indirectly, engage in discussions or negotiations with any person or entity
(other than Buyer) concerning any possible proposal regarding a sale or transfer
of all or any part of the assets or Business operations of Suncoast. Suncoast
and Shareholder agree to disclose to Buyer the existence and content of any
communication they receive concerning any such possible proposal as soon as
practicable after receipt of the communication.
10.7 Brokers. Each of the parties represents and warrants to the other that
excluding only Andrew, Alexander, Wise & Company, Inc., no broker, finder or
other person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement. Each party will
each pay or discharge, and will each indemnify and hold the other harmless from
and against, any and all other claims or liabilities for all brokerage fees,
commissions and finder's fees incurred by reason of any action taken by such
party other than those incurred in connection with services rendered by Andrew,
Alexander, Wise & Company, Inc., which shall be paid by Suncoast.
20
10.8 Sales and Transfer Taxes and Fees. Any sales and transfer Taxes and
fees directly incurred in connection with this Agreement and the transactions
contemplated hereby will be borne by Suncoast. Suncoast and Shareholder will
file all necessary Tax Returns and other documentation, if any, with respect to
all such sales, transfer and recording Taxes and fees relating to Suncoast.
10.9 Cooperation. Each party shall execute and deliver such additional
instruments and other documents and shall take such further actions as may be
necessary or appropriate to effectuate, carry out, and comply with all of the
terms of this Agreement and the transactions contemplated hereby.
10.10 Other Agreements. The parties agree that the non-competition
covenants contained in Key Employees" Employment Agreements are an integral part
of this Agreement.
10.11 Corporate Name Change. Suncoast shall, immediately following the
Closing, execute and deliver to Buyer for filing all documents or certificates
necessary to change the legal, trade or assumed name of Suncoast to any name not
confusingly similar to Suncoast Automation, Inc.
ARTICLE XI
DEFINITIONS
11.1 Defined Terms. As used herein, the following terms shall have the
following meanings: "Balance Sheet" means the unaudited balance sheet of
Suncoast as of March 31, 2001, included in Schedule 4.6.
"Balance Sheet Date" means March 31, 2001.
"▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale, Assignment and Assumption in the
form attached hereto as Exhibit B.
"Business" defined in the Recitals to this Agreement.
"Buyer Claims" as defined in Section 9.2.
"Buyer Indemnifiable Damages" defined in Section 9.1(a).
"Closing Date" defined in Section 3.1.
"Code" defined in Section 4.12.
21
"Contract" means any indenture, lease, sublease, license, loan agreement,
mortgage, note, indenture, restriction, will, trust, commitment, obligation, or
other contract, agreement or instrument, whether written or oral including, but
not limited to, the Highland Equipment Leases.
"Current Balance Sheet" defined in Section 4.6.
"Effective Date" defined in preamble.
"Employee Benefit Plans" defined in Section 4.12.
"Employment Agreement" means the Employment Agreement between Buyer and Key
Employees in the form attached hereto as Exhibit A.
"Excluded Assets" defined in Section 1.2.
"Financial Statements" defined in Section 4.6.
"Governmental Authority" means any nation or government, any state,
regional, local, or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government activity.
"Intellectual Property" defined in Section 4.17.
"Key Employees" means ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
"Licenses" defined in Section 4.18.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, but not limited to, any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or effect), in the
condition (financial or otherwise), properties, assets, liabilities, rights,
obligations, operations, Business, or prospects which change (or effect)
individually or in the aggregate, does, may, or may reasonably be expected to,
result in a financial loss relating to such condition, properties, assets,
liabilities, rights, obligations, operations, Business or prospects in excess of
Ten Thousand and No/100 Dollars ($10,000.00).
"Permitted Liens" means: (a) liens for taxes and other governmental charges
and assessments which are not yet due and payable; (b) liens of landlords and
liens of carriers, warehousemen, mechanics, and materialmen and other like liens
arising in the ordinary course of business for sums not yet due and payable; and
(c) other liens or imperfections on property which are not material in amount or
do not materially detract from the value of or materially impair the existing
use of the property affected by such lien or imperfection.
22
"Person" means an individual, partnership, corporation, business trust,
joint stock company, estate, trust, unincorporated association, joint venture,
Governmental Authority, or other entity, of whatever nature.
"Purchased Assets" defined in Section 1.1.
"Purchased Contracts" defined in Section 4.18.
"Purchase Price" defined in Section 2.1
"Receivables" means all receivables of Suncoast, including all trade
account receivables arising from the provision of services, as set forth in the
Financial Statements.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information statement required
to be filed in connection with or with respect to any Taxes.
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible, withholding,
social security, and unemployment taxes imposed by any federal, state, local or
foreign governmental agency, and any interest or penalties related thereto.
"Welfare Plan" defined in Section 4.12.
11.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) As used herein, the neuter gender shall also denote the masculine
and feminine, and the masculine gender shall also denote the neuter and
feminine, where the context so permits.
23
ARTICLE XII
GENERAL PROVISIONS
12.1 Survival of Obligations. All representations, warranties, covenants
and obligations contained in this Agreement shall survive for such time as the
indemnity for the breach thereof shall survive as set forth in Sections 9.1 and
9.2, and subject to the minimum threshold for indemnification set forth in
Section 9.3.
12.2 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given, delivered, and
received:
(a) when delivered, if delivered personally by a commercial messenger
delivery service with verification of delivery;
(b) two (2) days after mailing, when sent by registered or certified
mail, return receipt requested, and postage prepaid;
(c) one business day after delivery to a private courier service, when
delivered to a private courier service providing documented overnight service;
(d) on the date of delivery if delivered by facsimile and
electronically confirmed before 5:00 P.M. Chicago Time on any business day; or
(e) on the next business day if delivered by facsimile and
electronically confirmed either after 5:00 P.M. Chicago Time or on a
non-business day, in each case addressed as follows:
If to Suncoast or
Shareholder: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
Suncoast Automation, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Sichenzia, Ross, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, LLP ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
24
If to Buyer: ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President
Suncoast Acquisition Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇/201
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ and ▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address or addresses as may hereafter by specified by notice
given by any of the above to others.
12.3 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their successors and assigns.
12.4 Entire Agreement; Amendments. This Agreement and the Exhibits and
Schedules referred to herein and the documents delivered pursuant hereto contain
the entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all prior agreements, understandings,
or letters of intent between or among any of the parties hereto. This Agreement
shall not be amended, modified, or supplemented except by a written instrument
signed by an authorized representative of each of the parties hereto.
12.5 Interpretation. Article 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. The Schedules and
Exhibits referred to herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth verbatim herein.
12.6 Expenses. Except as otherwise set forth herein, each party hereto will
pay all costs and expenses incident to its negotiation and preparation of this
Agreement and to its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with,
including the fees, expenses, and disbursements of its counsel and accountants.
12.7 Partial Invalidity. Wherever possible, each provision hereof shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality, or unenforceability without invalidating the remainder
of such invalid, illegal, or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
25
12.8 Governing Law. This Agreement shall be enforced in accordance with the
laws of the State of Illinois and shall be construed in accordance therewith.
The parties hereto agree that all actions or proceedings arising in connection
with this Agreement shall be tried and litigated exclusively in the State and
Federal courts located in the County of ▇▇▇▇, State of Illinois. The
aforementioned choice of venue is intended by the parties to be mandatory and
not permissive in nature, thereby precluding the possibility of litigation
between the parties with respect to or arising out of this Agreement in any
jurisdiction other than that specified in this Section. Each party hereby waives
any right it may have to assert the doctrine of forum non conveniens or similar
doctrine or to object to venue with respect to any proceeding brought in
accordance with this Section, and stipulates that the State and Federal courts
located in the County of ▇▇▇▇, State of Illinois shall have in personam
jurisdiction and venue over each of them for the purpose of litigating any
dispute, controversy, or proceeding arising out of or related to this Agreement.
Each party hereby authorizes and accepts service of process sufficient for
personal mail, return receipt requested, postage prepaid, to its address for the
giving of notices as set forth in this Agreement. Any final judgment rendered
against a party in any action of proceeding shall be conclusive as to the
subject of such final judgment and may be enforced in other jurisdictions in any
manner provided by law.
12.9 Public Announcements. No party shall disclose the existence of this
Agreement, or the transactions contemplated herein, or make any public
announcement regarding the same, without the prior written notice to, and
approval of, each of the other parties.
12.10 Counterparts/Facsimiles. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when together shall constitute one and the same instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other party. Any signature to this Agreement may be made by
facsimile signature by the authorized signatory and a facsimile transmission or
copy of the original shall be as effective as the original.
[THIS SPACE INTENTIONALLY BLANK, SIGNATURES FOLLOW]
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
Suncoast Acquisition Corp., Suncoast Automation, Inc.,
an Illinois corporation a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ ------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President and CEO ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
ProtoSource Corporation,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, President and CEO
27