Exhibit 2.1
MERGER AGREEMENT, dated as of May 31, 2001 (this "Agreement"), by and
among (i) the individuals listed on Schedule A hereto (collectively such
individuals are referred to herein as the "Company Stockholders" or as "Sellers"
and each individually as a "Seller"), (ii) Aviv Instruments, Inc., a New Jersey
corporation ("Instruments"), (iii) Aviv Associates, Inc., a New Jersey
corporation ("Associates" and, together with Instruments, referred to herein
individually as a "Company" and together as the "Companies"), (iv) Rheometric
Scientific, Inc., a Delaware corporation ("Rheometric"), and (v) Tel Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of Rheometric
("Acquisition Sub"). Sellers, Instruments, Associates, Rheometric and
Acquisition Sub will be sometimes referred to herein individually as a "Party"
and collectively as the "Parties".
The Companies are engaged in the design, development, manufacture and sale
of Circular Dichroism Spectrometers, Automated Titrating Differential/Ratio
Spectrofluorometers, UV-VIS Spectrophotometers and associated accessories
including Stopped Flow Systems and associated parts and repair services, as well
as the design, development and proposed marketing of a Coupled Plasmon Waveguide
Resonance Spectrometer (the "Business").
The Sellers collectively own all of the Shares (as defined in Section
2.2(c) hereof). Rheometric wishes to acquire all of the issued and outstanding
capital stock of each of Instruments and Associates and thereby all their
respective assets, business and operations.
The Boards of Directors of Rheometric, Instruments, Associates and
Acquisition Sub have duly approved this Agreement, which sets forth the terms
and conditions of the plan of merger and such other provisions as they consider
necessary or desirable, and the respective Boards of Directors of Instruments
and Associates have determined that it is in the best interests of the Company
Stockholders for Instruments and Associates to merge with and into Acquisition
Sub in accordance with Section 252 of the Delaware General Corporation Law (the
"GCL") and Section 14A:10-7 of the New Jersey Business Corporation Act (the
"NJ-Law") and subject to the terms and conditions set forth herein (the
"Merger"). Pursuant to the Merger, all of the Shares will be converted into the
right to receive a portion of the Merger Consideration (as hereinafter defined)
as hereinafter provided in this Agreement. The parties hereto intend that the
Merger will qualify as a forward triangular merger meeting the requirements of
Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual benefits to be derived and
of the mutual promises, covenants, representations, warranties and agreements
herein contained, and intending to be legally bound hereby, the Sellers,
Instruments, Associates, Rheometric and Acquisition Sub hereby agree as follows:
ARTICLE I
THE MERGER
1.1. Merger of Instruments and Associates into Acquisition Sub. Subject to
the terms and conditions of this Agreement, at the Effective Time (as such term
is defined in Section 1.2 hereof) of the Merger, each of Instruments and
Associates shall be merged with and into Acquisition Sub. The separate corporate
existence of each of Instruments and Associates shall thereupon cease, and
Acquisition Sub (sometimes hereinafter referred to as the "Surviving
Corporation") shall continue its corporate existence as the surviving
corporation in the Merger under the laws of the State of Delaware. The corporate
existence of Acquisition Sub with all of its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. Acquisition Sub
and the Companies are sometimes referred to herein as the "Constituent
Corporations."
1.2. Effective Time of the Merger. The Merger shall become effective as of
the date and time of the filing of a certificate of merger setting forth the
information required by Section 252 of the GCL (the "Delaware Certificate of
Merger") with the Secretary of State of the State of Delaware and a certificate
of merger setting forth the information required by Section 14A:10-7 of the
NJ-Law (the "New Jersey Certificate of Merger") and the Plan of Merger attached
hereto as Exhibit A with the Secretary of State of the State of New Jersey (the
"Effective Time").
1.3. Effects of the Merger. At the Effective Time:
(a) Certificate of Incorporation. The Certificate of Incorporation of
Acquisition Sub, amended as set forth in the Certificate of Merger, shall be the
Certificate of Incorporation of the Surviving Corporation.
(b) By-Laws. The By-laws of Acquisition Sub as in effect immediately
prior thereto shall be the By-laws of the Surviving Corporation.
(c) Officers and Directors. The directors and officers of Acquisition
Sub in office at the Effective Time shall continue as the directors and
officers, respectively, of the Surviving Corporation, each of such directors and
officers to hold office, subject to the applicable provisions of the Certificate
of Incorporation and By-laws of the Surviving Corporation and the GCL, until his
successor is duly elected or appointed and shall qualify or until his earlier
death, resignation or removal.
(d) Rights, etc. of Surviving Corporation. The Surviving Corporation
shall possess all the rights, privileges, immunities, powers and purposes of
each of the Constituent Corporations, and all of the property, real and
personal, including causes of action and every other asset of the Constituent
Corporations, shall vest in the Surviving Corporation without further act or
deed, and all debts, liabilities and duties of the Constituent Corporations
shall become the debts, liabilities and duties of the Surviving Corporation.
Notwithstanding the foregoing, if at any date after the Effective Time, the
Surviving Corporation shall consider that any assignments, transfers, deeds or
other assurances in law are necessary or desirable to vest,
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perfect or confirm, of record or otherwise, in the Surviving Corporation, title
to any property or rights of either of the Constituent Corporations, each
Constituent Corporation and its officers and directors at the Effective Time
shall execute and deliver such documents and do all things necessary and proper
to vest, perfect or confirm title of such property or rights in the Surviving
Corporation, and the officers and directors of the Surviving Corporation are
fully authorized in the name of either of the Constituent Corporations or
otherwise to take any and all such action.
(e) Change of Name. At the Effective Time, pursuant to the Delaware
Certificate of Merger, the name of the Surviving Corporation shall be amended to
be "Aviv Instruments, Inc."
1.4. Conversion of Common Stock of the Companies. (a) At the Effective
Time, each share of common stock, without nominal or par value per share, of
Instruments (the "Instruments Common Stock") outstanding immediately prior to
the Effective Time (excluding those held in the treasury of the Company), shall,
by virtue of the Merger, and without any action on the part of the holder
thereof, be converted into and shall represent the right to receive 475.736
shares of Common Stock, par value $.01 per share of Rheometric (the "Rheometric
Common Stock") (the "Instruments Per Share Merger Consideration") on and subject
to the terms and conditions hereinafter provided.(a)
(b) At the Effective Time, each share of common stock, without nominal
or par value per share, of Associates (the "Associates Common Stock")
outstanding immediately prior to the Effective Time (excluding those held in the
treasury of the Company), shall, by virtue of the Merger, and without any action
on the part of the holder thereof, be converted into and shall represent the
right to receive 330.146 shares of Rheometric Common Stock (the "Associates Per
Share Merger Consideration" and together with the Instruments Per Share Merger
Consideration, the "Merger Consideration"), on and subject to the terms and
conditions hereinafter provided. Notwithstanding the foregoing, the aggregate
number of shares of Rheometric Common Stock comprising the Merger Consideration
shall not exceed 805,882 shares. Such aggregate number of shares shall be
referred to herein as the "Rheometric Shares".
(c) Each share of Instruments Common Stock and Associates Common Stock
held in the treasury of the applicable Company immediately prior to the
Effective Time shall be canceled and retired and no shares of stock or other
securities of Rheometric, the Surviving Corporation or any other corporation
shall be issuable, and no payment shall be made with respect thereto.
1.5. Conversion of Acquisition Sub Shares at Time of Merger. Each share of
the Common Stock, par value $.01 per share, of Acquisition Sub (the "Acquisition
Sub Common Stock") which is outstanding immediately prior to the Effective Time
and without further action on the part of the holder thereof, shall be converted
into and become, as of the Effective Time, one validly issued, fully paid and
nonassessable share of the Common Stock, par value $.01 per share, of the
Surviving Corporation.
1.6. Payment for Common Stock of the Companies. At the Closing, Acquisition
Sub will pay to the Company Stockholders the Merger Consideration; provided,
however, notwithstanding the foregoing, at the Closing, 10% of the Merger
Consideration shall be
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deposited with the Escrow Agent (as that term is defined in the Escrow
Agreement) in support of the Company Stockholders' indemnification obligations
hereunder, pursuant to an escrow agreement being executed and delivered by the
parties thereto simultaneously with the execution and delivery of this Agreement
(the "Escrow Agreement"). One half of the Merger Consideration shall be eligible
for release from escrow on the first anniversary of the Closing and one half on
the second anniversary of the Closing. At or prior to the Closing, each Company
Stockholder will execute and deliver to Acquisition Sub a transmittal letter
(the "Letter of Transmittal") and will deliver to Acquisition Sub all of his
certificates representing shares of Instruments Common Stock or Associates
Common Stock, as the case may be, as contemplated by such Letter of Transmittal.
1.7. Closing. The closing of the transactions provided for herein (the
"Closing") shall take place at the offices of Wilentz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ on May 31, 2001 at 10:00 a.m.,
local time, or at such other place, date or time as the parties shall mutually
agree. The date of the Closing is sometimes referred to herein as the "Closing
Date." At the Closing, the Delaware Certificate of Merger and the New Jersey
Certificate of Merger shall be executed and delivered on behalf of each of the
Companies and Acquisition Sub and submitted to the Secretaries of State of the
States of Delaware and New Jersey for filing in accordance with the GCL and
NJ-Law.
1.8. Disbursement of Merger Consideration. Following the Effective Time,
Rheometric, on behalf of the Acquisition Sub, shall cause:
(a) the transfer agent of Rheometric (the "Transfer Agent") to deliver
the Rheometric Shares to the Company Stockholders and the Escrow Agent at the
Closing or as soon as practicable following the Closing in accordance with a
letter of instruction from Rheometric to the Transfer Agent (the "Letter of
Instruction") executed by Rheometric at the Closing.
(b) the Surviving Corporation to pay on the Closing Date to the payees
thereof the indebtedness set forth on Schedule 1.8.
1.9. Earnout.
(a) Definitions. The following terms shall have the following meanings
when used in this Section 1.9:
(i) "Earnout Products" means the Coupled Plasmon-Waveguide
Resonance Spectroscopic Instrument utilizing U.S. patent number 5,991,488 and
the Reusable Biocompatible Interface for Immobilization of Materials on a Solid
Support utilizing U.S. patent number 5,521,702, in either case as modified or
supplemented by patent application 09/572,165.
(ii) "Earnout Term" means the period beginning with the date of
the first commercial sale of an Earnout Product and ending on the third
anniversary of the date of such first commercial sale.
(iii) "Selling Price" means the price received by Rheometric from
sales of Earnout Products, less volume, trade, and quantity discounts and
product returns and adjustments and less: (a) freight charges (including imputed
freight charges based on
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Rheometric's actual charges where the Earnout Product is sold freight prepaid);
(b) sales and/or use taxes (including value added tax and duty directly imposed
on or with reference to the sale of such Earnout Product); (c) costs of
collections or commissions paid or due with the sale thereof; (d) royalties paid
to others; and (e) container and packaging costs.
(b) Payment. Rheometric shall pay to the Sellers an amount equal to one
and one-half percent (1.5%) of the aggregate Selling Price realized by the
Surviving Corporation from sales of the Earnout Products during the Earnout
Term, but only so long as sales and/or use of such Earnout Products are not in
violation of the rights of any third party or any applicable law (the "Earnout
Payment").
(c) Revenue Reports. Within 45 days following each June 30 and December
31 occurring during the Earnout Term, Rheometric will in writing advise the
Sellers of the calculation of the Earnout Payment due to the Sellers for the
six-month period or portion thereof then ended; and such calculation shall be
accompanied by a check in payment of the Earnout Payment for such six-month
period.
(d) Record Keeping. Rheometric shall keep accurate and complete
records, files and account books containing all of the data reasonably required
for the computation and verification of the Earnout Payment. Upon written
request from the Sellers, and not more than once per calendar year, Rheometric
agrees to permit such records, files and account books to be examined to the
extent necessary to verify the correctness of the Earnout Payments hereunder.
Such examination shall be conducted at the Sellers' expense by an independent
certified public accountant designated by the Sellers and reasonably acceptable
to Rheometric, who shall enter into an appropriate non-disclosure agreement with
Rheometric and report to the Sellers only (i) the amount of the Earnout Payment
for the period under audit, and/or (ii) whether said records, files and accounts
books are consistent with the Revenue Reports submitted pursuant to this
Section, and if not, the reasons therefor; provided, however, that in the event
such accountant discovers during such examination that the Earnout Payment has
been under-reported by 20% or more, Rheometric shall be responsible for the
reasonable expenses incurred by such accountant in connection with such
examination.
1.10. Seller Representative. Each of the Sellers, for himself, and for his
heirs, legal representatives, successors and assigns, hereby irrevocably
nominates, constitutes and appoints ▇▇▇▇ Aviv as the "Seller Representative"
with full discretionary power and authority and without any further consent of
such Seller, and with full power of substitution, for and on such Seller's
behalf and in such Seller's name, place and stead, to perform and consummate all
acts and transactions as may be required, permitted or contemplated to be
performed by Sellers pursuant to this Agreement. The Seller Representative shall
have no liability to Sellers for anything done or omitted to be done by him
hereunder in his capacity as Seller Representative except for his willful
misconduct, gross negligence or bad faith. Each of Rheometric, Acquisition Sub
and the Surviving Corporation shall be entitled to rely, as being binding upon
Sellers, upon any document, instrument or other communication believed by it to
be genuine or correct and to have been signed or sent by the Seller
Representative and none of Rheometric, Acquisition Sub or the Surviving
Corporation shall be liable to any Seller for any action taken or omitted to be
taken by Rheometric, Acquisition Sub or the Surviving Corporation based upon
such reliance. All actions required, permitted or contemplated to be performed
by Sellers under this Agreement may only
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be performed by the Seller Representative. ▇▇▇▇ Aviv agrees to act as Seller
Representative on behalf of Sellers. Each of the Sellers listed on Schedule B
hereto acknowledges that the Seller Representative is such Seller's purchaser
representative (as defined in Rule 501(h) promulgated under the Securities Act)
in connection with evaluating the merits and risks of the prospective investment
in Rheometric.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
2.1. Representations and Warranties of Sellers With Respect to Themselves.
Each Seller severally represents and warrants to Rheometric and Acquisition Sub
as follows, and acknowledges and confirms that Rheometric and Acquisition Sub
are relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation that may have been made by Rheometric and Acquisition Sub or on
their behalf.
(a) Capacity, Organization and Standing. Such Seller has the right,
power and authority and legal capacity to own his Shares and to enter into and
perform his obligations under this Agreement.
(b) Consents, Authorizations and Binding Effect. Such Seller may
execute, deliver and perform his obligations under this Agreement without the
necessity of obtaining any consent, approval, authorization, advice or waiver or
giving any notice, except for such consents, approvals, authorizations, advice
or waivers (individually a "Consent" and collectively "Consents") which have
been obtained and are unconditional and in full force and effect and such
notices (individually a "Notice" and collectively "Notices") which have been
duly given, all of which are listed on Schedule 2.1(b). This Agreement has been
duly executed and delivered by such Seller and constitutes his legal, valid and
binding obligation, enforceable against him in accordance with its terms, except
as may be limited by bankruptcy, reorganization, insolvency and similar laws of
general application relating to or affecting the enforcement of rights of
creditors. The execution, delivery and performance of this Agreement by such
Seller will not:
(i) conflict with, result in the breach of or constitute a default
under any contract, agreement, commitment, undertaking, restriction or other
instrument to which such Seller is a party or by which he may be bound or
affected, or
(ii) constitute a violation of any statute, judgment, order,
decree, regulation or rule of any court, governmental authority or arbitrator
applicable or relating to or binding upon such Seller.
(c) Governmental Consents. No consent, license, approval, waiver,
expiration of waiting period or authorization of, or registration or declaration
with, any governmental authority, agency, bureau or commission is required to be
obtained or made by such Seller in connection with its execution, delivery and
performance of the transactions contemplated by this Agreement.
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(d) Disputes. There is no litigation pending or, to such Seller's
knowledge, threatened, against such Seller which would materially impair the
ability of such Seller to consummate the transactions contemplated by this
Agreement.
(e) Shares. Such Seller has good and marketable title to his Shares set
forth on Schedule 2.1(e) hereto as being owned by him, and has the right, title,
power and authority to sell, transfer and vote such Shares. Such Seller's Shares
are owned by him free and clear of all Liens (as defined in Section 2.2(i)).
There are no options, proxies, voting trusts or other agreements or
understandings with respect to the issuance, transfer or voting of the Shares
(other than powers of attorney executed in connection with this Merger Agreement
and the consummation of the Merger, copies of which are attached to the Letters
of Transmittal).
(f) Investment Representation. (i) The Rheometric Common Stock being
acquired hereunder is being acquired by such Seller for investment and not with
a view to any distribution thereof that would violate the Securities Act of
1933, as amended (the "Securities Act"), or the applicable state securities laws
of any state; and such Seller will not distribute the Rheometric Common Stock in
violation of the Securities Act or the applicable securities laws of any
state.(i)
(ii) Such Seller understands that the Rheometric Common Stock
being acquired hereunder has not been registered under the Securities Act or the
securities laws of any state and must be held indefinitely unless transfer
thereof is subsequently registered under the Securities Act and any applicable
state securities laws or unless an exemption from such registration becomes or
is available.
(iii) Such Seller is financially able to hold the Rheometric
Common Stock being acquired hereunder for long-term investment, believes that
the nature and amount of the Rheometric Common Stock being purchased are
consistent with such Seller's overall investment program and financial position,
and recognizes that there are substantial risks involved in the purchase of the
Rheometric Common Stock.
(iv) Such Seller confirms that (i) he is familiar with the
proposed business of Rheometric, (ii) he has had the opportunity to ask
questions of the officers and directors of Rheometric and to obtain (and that he
has received to his satisfaction) such information about the business and
financial condition of Rheometric as he has reasonably requested, and (iii) such
Seller, either alone or with his purchaser representative (as defined in Rule
501(h) promulgated under the Securities Act), if any, has such knowledge and
experience in financial and business matters such that he is capable of
evaluating the merits and risks of the prospective investment in Rheometric.
(v) The certificates representing the Rheometric Common Stock,
including certificates issued upon any voluntary or involuntary transfer of such
Securities, unless such transfer is pursuant to a registered public offering of
the Rheometric Common Stock, shall bear the following legend in addition to any
other legend required under applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS
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AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OR STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY
TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
2.2. Representations and Warranties of Sellers With Respect to the
Companies. Each Seller, jointly and severally, represents and warrants to
Rheometric and Acquisition Sub as follows, and acknowledges and confirms that
Rheometric and Acquisition Sub is relying upon such representations and
warranties in connection with the execution, delivery and performance of this
Agreement, notwithstanding any investigation that may have been made by
Rheometric or Acquisition Sub or on their behalf.
(a) Organization and Standing. Each Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. Neither Company is required to qualify to transact business as a
foreign corporation in any other jurisdiction. Each Company has the right, power
and authority (corporate and otherwise) to own, lease and operate its properties
and to carry on its business.
(b) Consents, Authorizations and Binding Effect. Each Company may
execute, deliver and perform this Agreement without the necessity of obtaining
any Consent or giving any Notice, except for such Consents or Notices as may be
listed on Schedule 2.2(b). This Agreement has been duly authorized, executed and
delivered by each Company and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as may
be limited by bankruptcy, reorganization, insolvency and similar laws of general
application relating to or affecting the enforcement of rights of creditors. The
execution, delivery and performance of this Agreement by Sellers and by each
Company will not:
(i) constitute a violation of either Company's Certificate of
Incorporation or By-laws,
(ii) except as set forth on Schedule 2.2(b), conflict with, result
in the breach of or constitute a default, or give any other person the right to
terminate and/or to accelerate any obligation, under any contract, agreement,
commitment, undertaking, restriction or other instrument to which either Company
is a party or by which either Company or the Shares may be bound or affected,
(iii) constitute a violation of any statute or regulation or any
judgment, order, decree or rule of any court, governmental authority or
arbitrator applicable or relating to or binding upon either Company or its
business, or
(iv) result in the creation of any Lien upon the Shares or any
assets of either Company.
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Except as set forth on Schedule 2.2(b), no consent, approval or authorization
of, waiver from or notice to any other person is required to maintain in full
force and effect for the benefit of the Companies after the Closing any Company
Contract (as defined in Section 2.2(v) hereof).
(c) Capitalization. (i) The total authorized capitalization of
Instruments consists solely of 2500 shares of Instruments Common Stock, of which
a total of only 1000 shares are presently issued and outstanding (the
"Instruments Shares"), all of which are owned by the Sellers. The total
authorized capitalization of Associates consists solely of 2500 shares of
Associates Common Stock, of which a total of only 1000 shares are presently
issued and outstanding (the "Associates Shares" and together with the
Instruments Shares, the "Shares"), all of which are owned by the Sellers.
Instruments does not hold any shares of its capital stock in its treasury.
Associates holds 111 shares of its capital stock in its treasury. All of the
issued and outstanding shares of capital stock of the Companies have been duly
authorized and validly issued and are fully paid and nonassessable and no
liability attaches to the ownership thereof.(i)
(ii) With respect to each Company, there are no authorized,
outstanding or existing:
(1) proxies (other than powers of attorney executed in
connection with this Merger Agreement and the consummation of the Merger, copies
of which are attached to the Letters of Transmittal) or other agreements or
understandings with respect to the voting of any capital stock of such Company;
(2) depositary receipts of shares (certificates) issued by
such Company;
(3) securities convertible into or exchangeable for any
capital stock of such Company;
(4) options, warrants or other rights to purchase or
subscribe for any capital stock of such Company (other than this Agreement), or
securities convertible into or exchangeable for any capital stock of such
Company;
(5) agreements of any kind relating to the sale or issuance
of any capital stock of such Company, any such convertible or exchangeable
securities or any such options, warrants or rights; or
(6) agreements of any kind which may obligate such Company to
sell, issue or purchase any of its securities.
Subsequent to September 30, 2000, neither Company has declared or paid, or has
any obligation to declare or pay, any dividends, and, except as disclosed on
Schedule 2.2(c), neither Company has made, or has any obligation to make, any
distribution or payment to any stockholder of such Company or his or its
affiliates.
(d) The Business. The Companies are engaged in the Business and are not
engaged in any other business.
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(e) Subsidiaries. Neither Company owns any equity interest in any other
entity. Except for any interest which may be deemed to occur as a result of the
ownership of any shares in a publicly traded mutual fund, no Seller owns,
directly or indirectly, any equity interest in any entity engaged in business
activities related to the Business.
(f) Minute Books and Stock Records. The minute books of each Company
have been furnished to Rheometric for inspection and in the form so furnished
are correct (including signatures), complete and current in all material
respects and fairly reflect the respective corporate actions of the Board of
Directors and shareholders meetings of each Company. The stock record books of
each Company are correct (including signatures), complete and current. Schedule
2.2(f) includes a list of the directors and officers of each Company.
(g) Articles of Incorporation. Copies of the Certificate of
Incorporation and By-laws of each Company have heretofore been delivered to
Rheometric or Rheometric's counsel and are correct and complete and reflect all
amendments or changes in effect.
(h) Financial Statements and Financial Condition. Except as may be
disclosed on Schedule 2.2(h), each Company has maintained its books of account
in accordance with applicable laws, rules and regulations and with generally
accepted accounting principles consistently applied ("GAAP"), and such books and
records are, and during the periods covered by the Financial Statements (as
hereinafter defined) were, correct and complete in all material respects, fairly
and accurately reflect or reflected each Company's income, expenses, assets and
liabilities, including the nature thereof and the transactions giving rise
thereto, and provided a fair and accurate basis for the preparation of the
Financial Statements. Attached to Schedule 2.2(h) hereto are: the balance sheets
of each Company as of December 31, 2000 and March 31, 2001 (the "March Balance
Sheet"), and (y) statements of income, retained earnings and cash flows for each
Company for the twelve-month period ended December 31, 2000 and the three-month
period ended March 31, 2001 (collectively, the "Financial Statements").
Except as may be disclosed on Schedule 2.2(h) the Financial Statements have
been prepared in conformity with GAAP and present fairly the consolidated
financial position of each Company as of the dates of such statements and the
results of operations for the periods covered by such statements. As of the date
hereof, neither Company has any liabilities other than:
(i) those set forth or reserved against in the March Balance
Sheet,
(ii) those incurred since the date of the March Balance Sheet in
the ordinary course of business in arms' length transactions and consistent in
nature, amount and scope with past practice,
(iii) obligations under contracts, agreements and leases
disclosed, or not required to be disclosed, pursuant to Section 2.2(v) hereof,
and
(iv) those described on Schedule 2.2(h) hereto.
Except as set forth in Schedule 2.2(h), neither Company has any long or
short-term bank debt or notes or obligations payable to shareholders (other than
salary payments in the ordinary course of business).
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(i) Title and Condition of Assets. Except as set forth on Schedule
2.2(i), each Company has good and marketable title to its assets, free and clear
of all liens, encumbrances, claims, security interests, mortgages, pledges,
agreements and rights of others (individually a "Lien" and collectively
"Liens"). Except as set forth on Schedule 2.2(i), each Company owns all of the
assets used in the operation of, and necessary to operate, its business as
presently conducted or proposed to be conducted by it. No significant asset of
either Company or property leased by either Company has been affected by any
fire, accident, act of God or any other casualty that adversely impairs its use
by such Company, or the financial condition or prospects of such Company.
Schedule 2.2(i) hereto includes a summary description of material tangible
personal property in the nature of machinery and equipment owned or leased by
each Company.
(j) Real Estate. Schedule 2.2(j) hereto contains a true and complete
list of all real property leased by each Company. Neither Company owns any real
property. No real property is used in connection with the Business except as
listed on Schedule 2.2(j). To the best knowledge of Sellers, no real property
listed on Schedule 2.2(j) is subject to any zoning ordinance or other
restriction which would have a material adverse effect on the Business or the
use and enjoyment of such property in the manner in which such property is
currently used and enjoyed. To the best knowledge of Sellers, there is no
pending legislation, regulation or ordinance which would adversely affect the
use of such real property as it is presently used or the conduct of the Business
as it is presently conducted. Each lease listed on Schedule 2.2(j) is valid and
in full force and effect and is enforceable in all material respects in
accordance with its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws. Neither Company, or, to the
best knowledge of Sellers, any of the other parties thereto, is in material
default under such leases, and no event, act or omission has occurred which
(with or without notice, lapse of time or the happening or occurrence of any
other event) would result in a default thereunder. With respect to real property
leases so listed that are cancelable by the lessor on sixty (60) days' notice or
less, to the best knowledge of Sellers, no lessor has any present intention of
exercising its rights of cancellation, and none has communicated any intention
to do so (whether or not withdrawn).
(k) Inventories. The inventories of each Company have been valued at
the lower of cost or market in accordance with GAAP and the value of obsolete
materials and materials of below standard quality has been written down in
accordance with Schedule 2.2(k). Neither Company is under any liability or
obligation with respect to the return of inventory or merchandise in the
possession of wholesalers, distributors, retailers or other customers. No
inventory of either Company is on consignment.
(l) Receivables. Except as set forth on Schedule 2.2(l), the trade
accounts and other receivables of each Company are bona fide, collectible
receivables, arose out of arms-length transactions, and are recorded correctly
on the applicable books and records of such Company. Such trade accounts and
other receivables are not subject to any counterclaim or setoff not reflected in
the reserves set forth on the Financial Statements and, except as set forth on
Schedule 2.2(l), will be collected in full in accordance with the Companies'
normal credit and collection policies and consistent with past practice, and in
any event within 120 days of the Closing. During the last three years the net
losses on receivables of each Company have not exceeded one percent (1%) of its
sales per year.
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(m) Insurance. Schedule 2.2(m) hereto contains a list of all policies
of insurance maintained by or on behalf of each Company, including insurance
providing benefits for employees, in effect on the date hereof and generally
describing the coverage thereby. Except as set forth in Schedule 2.2(m) there
are no claims pending or, to the knowledge of Sellers, threatened under any of
said policies or disputes with underwriters, and all premiums due and payable
have been paid and all such policies are in full force and effect in accordance
with their respective terms. Neither Company has been denied insurance, or been
offered insurance only at a commercially prohibitive premium, within the last
five years.
(n) Litigation and Other Proceedings. With respect to each Company,
except as described on Schedule 2.2(n) hereof, and whether or not covered by
insurance, there are no actions, suits, liens, claims or proceedings, whether in
law or equity, or governmental or administrative investigations pending or, to
the knowledge of Sellers, threatened against such Company or with respect to its
assets or any asset or property of others leased or used by it, or which
questions or challenges the validity of this Agreement or any action taken or to
be taken pursuant to this Agreement. There are no requests for environmental
cleanup actions, cost reimbursement or contribution by any governmental agencies
or by any private parties pending or, to the knowledge of Sellers, threatened
against either Company.
(o) Compliance. Except as described in Schedule 2.2(o): (i) each
Company is in compliance with, and no default or violation exists under,
material laws, rules, regulations, decrees and orders applicable to such Company
and its respective employees, products and properties; (ii) neither Company nor
its respective assets nor the property leased under leases to which it is a
party nor the transactions contemplated under this Agreement are subject to any
judgment, order or decree entered in any lawsuit or governmental or legal
proceeding, and no investigations have been conducted during the three (3) years
prior to the date of this Agreement in connection with the ownership, operation
or use by such Company of its assets or the property leased under leases to
which it is a party or its operations; and (iii) each Company has duly filed all
reports and returns required to be filed by it with governmental authorities and
obtained all governmental or regulatory permits and licenses and other
governmental consents which are required in connection with its operations. Such
permits, licenses and consents are in full force and effect, no proceedings for
the suspension or cancellation of any of them is pending or, to the knowledge of
Sellers, threatened, and none will lapse, terminate or otherwise become
ineffective upon the consummation of this Agreement. Schedule 2.2(o) contains a
complete list of permits, licenses and consents referred to in clause (iii)
above. Except as specified in Schedule 2.2(o), no application for any such
permits, licenses or consents within such three (3) year period has been denied.
(p) Environment, Health and Safety. Except as specified in Schedule
2.2(p):
(i) Each Company has complied with, and its operations are in
compliance with, all Environmental Laws (as hereinafter defined), and no charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand or
notice has been filed or commenced, or to the knowledge of Sellers, threatened,
against either Company alleging any failure to comply with any such law or
regulation.
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(ii) As used herein, the term "Environmental Law" means any law
(or ordinance, rule, order, directive, requirement or regulation) of any
government (or agency thereof), or any applicable common law, judgment,
agreement or decree, concerning pollution or protection of, or damage to, the
environment, public or employee health and safety, including laws relating to
emissions, discharges, releases or threatened releases of Hazardous Substances
(as hereinafter defined) into ambient air, surface water, ground water or lands
or otherwise relating to the release, reporting, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances. As used herein, "Hazardous Substances" shall mean (A) all
materials that are classified as special wastes, hazardous or toxic or polluting
under any Environmental Law; (B) petroleum products, including but not limited
to gasoline, diesel fuel, fuel oil, crude oil and motor oil, and the
constituents of those products; (C) explosives or radioactive materials and (D)
asbestos containing materials.
(iii) Neither Company has any liability, and there is no basis for
liability against either Company, under any Environmental Law or any applicable
law or regulation, judgment, agreement or decree concerning employee health and
safety.
(iv) Neither Company has any liability, and there is no basis for
liability against either Company, for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim or demand (under any law
or pursuant to any statute, rule, regulation or ordinance in effect on or prior
to the date hereof or any applicable law, judgment, agreement or decree in
effect on or prior to the date hereof) for any illness of or personal injury to
any current or prior employee of either Company (other than routine claims under
either Company's medical coverage insurance policies for its employees).
(v) Each Company has obtained and has been and is in compliance
with all environmental permits that are required under, and has complied with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables which are contained in, all
applicable Environmental Laws.
(vi) Except as listed in Schedule 2.2(p) and heretofore provided
to Rheometric, within five (5) years prior to the Closing Date there have been
no environmental inspections, investigations, studies, audits, tests, reviews or
other analyses conducted in relation to either Company or any other property or
business now or previously owned, operated, or leased by either Company.
(vii) Except as disclosed on Schedule 2.2(p), neither Company has
released nor is it releasing any Hazardous Substances on, upon, into, over or
from any real property owned, operated or leased by either Company. No oral or
written notification of a release or threat of release of a Hazardous Substance
has been filed by or on behalf of either Company in relation to any property
owned, operated or leased by it within five (5) years prior to the Closing Date.
(viii) There have been no private or governmental claims,
citations, complaints, notices of violation or requests for information, demands
or notices, letters made, issued to or, to the knowledge of Sellers, threatened
against either Company by any governmental or private entity or other party
within five (5) years prior to the date of this
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Agreement for the impairment or diminution of, or damage, injury or other
adverse effects to, the environment or public health. Neither Company has any
liability under any Environmental Law for the off-site transport or disposal or
release of any substances. Schedule 2.2(p) sets forth a description of locations
used by each Company during the five (5) years prior to the date of this
Agreement for the treatment, storage, transportation or disposal of Hazardous
Substances, or to the knowledge of Sellers, used by any other person in
connection with the operations of either Company.
(ix) Neither Company is a party to or otherwise required to comply
with any environmental agreement. Neither Company is under any obligation to
investigate or to research with respect to soil or soil-water, to take safety
measures or to clean-up any pollution.
(q) Taxes and Other Payments.
(i) Each Company has or will accrue on the Closing Balance Sheet
all domestic and foreign taxes, additions to tax, penalties, interest and other
similar payments (for purposes of this Section 2.2(q), collectively "Taxes" and
each a "Tax") due on or before the Closing Date in respect of such Company and
its employees, and neither Company is in default in payment of any such Taxes or
Tax related obligation, and except as set forth on Schedule 2.2(q) each Company
has duly filed in a timely fashion all Tax reports and returns required to be
filed on or before the Closing Date, and all such reports and returns are
correct and complete as filed. Except as described in Schedule 2.2(q), neither
Company has received notice of any Tax deficiency outstanding, proposed or
assessed against it, nor has it executed any waiver of any statute of
limitations on the assessment or collection of any tax or Tax related
obligation. There are no Tax liens upon or pending against or, to the knowledge
of Seller, threatened against either Company's assets or the property leased
under any lease to which it is as party, and except as disclosed in Schedule
2.2(q) there are no powers of attorney executed by either Company with respect
to Taxes. Schedule 2.2(q) lists all deficiencies proposed or asserted by any
taxing authority in connection with each Company within the last five calendar
years. Except as described on Schedule 2.2(q), to the knowledge of Sellers there
is no basis for an assertion of any Tax deficiency or assessment against either
Company for any tax period (or portion thereof) ending on or before the Closing
Date.
(ii) With respect to the March Balance Sheet, each Company has
properly accrued all liability for unpaid Taxes as of the dates thereof. With
respect to the tax period (or portion thereof) ending on the Closing Date,
neither Company has incurred any liability for Taxes other than as a result of
the conduct of its business in the ordinary course.
(iii) With respect to the assessment or payment of Taxes, no
special agreements, rulings or compromises have been entered into by either
Company with the tax authorities.
(iv) Neither Company is liable for taxes or social security
charges imposed on or due by any third party except to the extent that full
provision will be made in the Closing Balance Sheet.
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(v) All Taxes and employment related charges that each Company or
any of its affiliates were required to withhold, collect or pay over to the
appropriate governmental authority as of the Closing Date have been duly and
timely withheld, collected and paid over or are accrued on the March Balance
Sheet and will be accrued on the Closing Balance Sheet.
(r) Customers and Suppliers. Schedule 2.2(r) sets forth a list of the
25 largest customers and 10 largest suppliers of each Company, in terms of sales
and purchases, as the case may be, during the twelve months ended December 31,
2000 and the three months ended March 31, 2001. Sellers are unaware of any loss
or threatened loss of any customer, supplier or account listed on Schedule
2.2(r) or any loss of any other customer, supplier or account except to the
extent specifically disclosed in Schedule 2.2(r). Sellers have no reason to
believe that any supplier of either Company intends to sell directly to such
Company's customers products currently purchased by such Company from such
supplier. Sellers believe that each Company's relations with its suppliers and
customers are good and Sellers do not have any knowledge of any termination,
cancellation or threatened termination or cancellation of or limitation of, or
any material adverse modification or change in, or material dissatisfaction with
the business relationship between such Company and such suppliers and customers.
(s) Patents, Trademarks, Trade Secrets, Etc.
(i) Schedule 2.2(s) contains a complete and accurate list of all
patents and patent applications, trademarks, service marks, trade names, and
registrations and applications for registration of industrial designs,
copyrights, mask works, trademarks, service marks, trade names, trade dress and
domain names used or held for use by either Company in the conduct of the
Business specifying as to each such item, as applicable: (i) the owner of the
item, (ii) the jurisdictions in which the item is issued or registered or in
which any application for issuance or registration has been filed, (iii) the
respective issuance, registration, or application number of the item, and (iv)
the date of application and issuance or registration of the item.
(ii) Schedule 2.2(s) contains a complete and accurate list of all
licenses, sublicenses, consents and other agreements (whether written or
otherwise) (A) pertaining to any patents and patent applications, industrial
design rights, trademarks, service marks, trade names, trade dress, copyrights,
mask works, trade secrets, inventions and technology (whether or not
patentable), confidential and proprietary information, domain names, software,
databases and other collections and compilations of data, rights of
publicity/privacy, or other intellectual property (collectively, "Intellectual
Property") used by either Company in the conduct of the Business, and (B) by
which either Company licenses or otherwise authorizes a third party to use any
Intellectual Property.
(iii) Neither Company or, to the knowledge of either Company or
the Sellers, any other party is in breach of or default under any license,
sublicense, consent or other agreement (i) pertaining to any Intellectual
Property used by either Company in the conduct of its Business, and (ii) by
which either Company licenses or otherwise authorizes a third party to use any
Intellectual Property, and each such license, sublicense, consent or other
agreement is now and immediately following the Closing shall be valid and in
full force and effect. Except as explicitly indicated in Schedule 2.2(s), no
person who has licensed any Intellectual Property to
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either Company has ownership rights or license rights to improvements or
modifications made by either Company in or with respect to such Intellectual
Property or any works of authorship, materials, products, technology or software
embodying such Intellectual Property. Except as explicitly indicated in Schedule
2.2(s), there are no contracts, licenses or agreements between either Company
and any other person with respect to Intellectual Property under which there is
any dispute known to either Company or the Sellers regarding the scope of such
agreement, or performance under such agreement including with respect to any
payments to be made or received by either Company thereunder.
(iv) Except as explicitly indicated in Schedule 2.2(s), the
respective Company owns or is licensed or otherwise has the exclusive right to
use, and has the right to bring actions for the infringement, dilution,
misappropriation or other violation of, all Intellectual Property. To the extent
that any works of authorship, materials, products, inventions, technology or
software have been developed or created independently or jointly by any person
other than one of the Companies for which one of the Companies has, directly or
indirectly, paid, the relevant Company has a written agreement with such person
with respect thereto, and the relevant Company thereby has obtained ownership
of, and is the exclusive owner of, all Intellectual Property therein or thereto
by operation of law or by valid assignment.
(v) The business operations of each Company, do not infringe,
dilute, misappropriate, or otherwise violate the Intellectual Property of any
third party, or constitute unfair competition or trade practices under the laws
of any jurisdiction, and, except as explicitly indicated and described in
Schedule 2.2(s) no claim has been made, notice given, or dispute arisen to that
effect. Except as explicitly indicated and described in Schedule 2.2(s), neither
Company has any pending claim that a third party has infringed, diluted,
misappropriated or otherwise violated any Intellectual Property owned or used by
such Company, and neither Company nor the Sellers are aware of any basis for
such a claim. Neither Company has given any indemnification to any third party
against infringement, dilution, misappropriation or other violation of such
Intellectual Property. Except as explicitly indicated in Schedule 2.2(s),
neither Company has agreed to, or assumed, any obligation or duty to indemnify,
reimburse, hold harmless, guaranty or otherwise assume or incur any obligation
or liability or provide a right of rescission to any third party with respect to
the infringement, dilution, misappropriation or other violation of the
Intellectual Property of that or any other third party. Except as explicitly
indicated in Schedule 2.2(s), no Intellectual Property owned or used by either
Company is subject to any outstanding decree, order, judgment, settlement
agreement or stipulation that restricts in any manner the use, transfer or
licensing thereof by such Company.
(vi) Except as explicitly indicated in Schedule 2.2(s), all of the
patents, industrial design registrations, trademark and service ▇▇▇▇
registrations, copyright registrations, mask work registrations and domain name
registrations indicated in Schedule 2.2(s) are valid and in full force, are held
of record in the name of one of the Companies free and clear of all Liens, are
not the subject of any cancellation or reexamination proceeding or any other
proceeding challenging their extent or validity, and all necessary registration,
maintenance and renewal fees in connection with such patents and registrations
have been paid and all necessary documents and certificates in connection with
such patents and registrations have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such patents
and registrations.
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Except as explicitly indicated in Schedule 2.2(s), one of the Companies is the
applicant of record in all patent applications, and applications for trademark,
service ▇▇▇▇, trade dress, industrial design, copyright and mask work
registration indicated in Schedule 2.2(s) and no opposition, extension of time
to oppose, interference, final rejection, or final refusal to register has been
received in connection with any such application. There are no actions that must
otherwise be taken by either Company within sixty (60) days of the Closing Date,
including the payment of any registration, maintenance or renewal fees or the
filing of any documents, applications or certificates for the purposes of
maintaining, perfecting or preserving or renewing any rights in any Intellectual
Property owned or used by either Company.
(vii) Each Company has taken, in light of all relevant
circumstances, reasonable steps to protect such Company's rights in material
trade secrets, know-how or other confidential or proprietary information of such
Company or provided by any other person to such Company. To the knowledge of the
Sellers and each Company, none of the material trade secrets, know-how or other
confidential or proprietary information of either Company has been disclosed to
any person unless such disclosure was necessary and was made pursuant to an
appropriate confidentiality agreement.
(t) Employees. Schedule 2.2(t) lists all persons receiving compensation
from either Company and a description of the compensation and the components
thereof (including, without limitation, any commission) to which each such
person presently is or in the future will be entitled. As of the Closing Date,
no employee of either Company performs or has any obligation to perform any
services for any other entity affiliated with a Seller.
(u) Pension and Other Employee Plans and Contracts.
(i) The only employee pension, early retirement, bonus, stock
purchase, stock ownership, stock option, deferred compensation, incentive,
severance, termination and other compensation or fringe benefit plans or
arrangements, maintained by, or contributed to by either Company with respect to
its employees or former employees (or their beneficiaries) at any time within
the past five years or under which either Company has any liability or
obligation, contingent or otherwise, as of the date hereof (the "Benefit
Plans"), are those listed in Schedule 2.2(u), a true and complete copy of each
of which has been furnished to Rheometric.
(ii) Each of the Benefit Plans is in compliance with the
provisions of all applicable laws.
(iii) Except as may be disclosed in Schedule 2.2(u), all
contributions to, and payments from, the Benefit Plans which may have been
required to be made on or prior to the Closing Date and all payments under the
Benefit Plans, and any other liability, contingent or otherwise of a Company
with respect to any of the Benefit Plans attributable to any period (or portion
thereof) ending on or before the Closing Date have either been timely made or
accrued on the March Balance Sheet and will be accrued on the Closing Balance
Sheet, or to the extent not required by GAAP to be so accrued, are disclosed on
Schedule 2.2(u).
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(iv) Except as indicated on Schedule 2.2(u), all reports, returns
and similar documents with respect to the Benefit Plans required to be filed
with any government agency or distributed to any Benefit Plan participant on or
prior to the Closing Date have been duly and timely filed or distributed.
(v) Each of the Benefit Plans has been administered at all times
in accordance with its terms.
(vi) There are no pending investigations by any governmental
agency involving the Benefit Plans, no termination proceedings involving the
Benefit Plans, and to the knowledge of the Sellers there are no threatened or
pending claims (except for claims for benefits payable in the normal operation
of the Benefit Plans), suits or proceedings against any Benefit Plan or
asserting any rights or claims to benefits under any Benefit Plan which could
give rise to any material liability, nor, to the knowledge of Sellers are there
any facts which could give rise to any material liability in the event of any
such investigation, claim, suit or proceeding.
(vii) Except as set forth on Schedule 2.2(u), neither Company has
ever maintained or been a party to a "pension plan" or a "multiemployer plan",
as those terms are defined under the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(v) Company Contracts. All Company Contracts (as hereinafter defined)
are valid and in full force and effect and constitute the legal, valid and
binding obligations of the Company which is a party to it and, to the knowledge
of Sellers, the other parties thereto. There are no existing defaults by either
Company or, to the knowledge of Sellers, by any other party under the Company
Contracts and, to the knowledge of Sellers, no event, act or omission (including
without limitation after giving effect to the Closing contemplated under this
Agreement) has occurred which (with or without notice, lapse of time or the
happening or occurrence of any other event) would result in a default
thereunder. No other party to a Company Contract has asserted the right, and, to
the knowledge of Sellers, no basis exists for the assertion of any right, to
renegotiate the terms or conditions of a Company Contract. None of the Company
Contracts is in excess of the normal, ordinary and usual requirements of the
Companies or at any excessive term or price, and no Company Contract could
reasonably be expected to create a loss or material adverse change in the
financial condition of either Company based upon current levels of operations
and customary practices. For purposes of this Agreement, the term "Company
Contracts" means and includes those items listed on Schedule 2.2(v) hereto, and
all other contracts, mortgages, debt instruments, security agreements, licenses,
commitments, guarantees, leases, charters, franchises, powers of attorney and
agency and other agreements to which a Company is a party or is bound. Schedule
2.2(v) lists all Company Contracts that:
(i) involve or would involve the payment by or to either Company
of in excess of $50,000 during any fiscal year or in excess of $50,000 in the
aggregate during the remaining term of such contract, or are otherwise material
to a Company,
(ii) relate to the design of any products sold by either Company
or relate to the payment of royalties with respect thereto,
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(iii) guarantee, indemnify or otherwise cause either Company to be
liable for the obligations or liabilities of another,
(iv) involve the borrowing or lending of money or an agreement
with any bank, finance company or similar organization for the sale of products
on credit,
(v) constitute a patent, trademark, service ▇▇▇▇, trade name,
copyright or similar intellectual property license agreement,
(vi) involve the sale of products on consignment,
(vii) are or contain a power of attorney,
(viii) contain any renegotiation or redetermination provision,
(ix) restrict either Company from carrying on its business
anywhere in the world,
(x) involve as a party (A) a Seller or any member of his family or
any director, officer or employee of either Company or any affiliate or any
family member of any such person or (B) any corporation, firm or individual in
which any such person has any material interest other than the Companies,
(xi) require or are otherwise contingent upon the payment of
commissions or compensation to any person not a party to such Company Contract,
or
(xii) require the Business to supply any other party with all of
such party's requirements for products or services.
True and complete copies of all Company Contracts listed on Schedule 2.2(v) have
heretofore been furnished to Rheometric. The contracts, mortgages, debt
instruments, security agreements, licenses, commitments, guarantees, leases,
charters, franchises, powers of attorney, agency and other agreements to which
either Company is a party or by which it is bound and which are not listed on
Schedule 2.2(v) will not involve the payment by the Companies thereunder in the
aggregate of more than $50,000 per year.
(w) Conflicts; Intercompany Relations. Except as disclosed on Schedule
2.2(w), no Seller and no present director, officer or employee of either Company
and no affiliate of any such person, (i) has any material direct or indirect
interest in (x) any entity which does any material business with either Company;
or (y) any material property, asset or right which is used in the conduct of the
Business, or (ii) has any material contractual relationship with either Company
other than such relationship as attaches to being such a director, officer or
employee. The Sellers have previously provided Rheometric with a description of
all oral, and complete and correct copies of all written, agreements and
arrangements pursuant to which employees of either Company are to receive a stay
bonus or any other kind of compensation in connection with the transactions
contemplated under this Agreement. The assets of the Companies together with
those properties leased by the Companies constitute all the assets and
properties, tangible and intangible, used in or necessary for the conduct of the
Business as presently conducted.
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(x) Labor Difficulties. Neither Company is a party to or bound by any
collective labor agreements. There are no disputes with trade unions, individual
employees or groups of employees or any unfair labor practice complaint against
a Company pending or, to the knowledge of Sellers, threatened before any
applicable forum.
(y) Product Claims. Except as listed in Schedule 2.2(y), there are no
product or service liability claims exceeding $10,000 pending or, to the
knowledge of Sellers, threatened against a Company or against any other person
or entity with respect to the products or services of the Business. Schedule
2.2(y) lists all product and service liability claims seeking damages in excess
of $25,000 asserted against either Company (or in respect of which either
Company has received notice) with respect to the products or services of such
Company during the last five years; such claims not listed on such Schedule do
not aggregate more than $25,000. Neither Company has experienced any unusual or
excessive product or service liability claims during the last three years with
respect to the products or services of the Business.
(z) Warranties and Returns. Schedule 2.2(z) sets forth a summary of the
present practices and policies followed by each Company with respect to
guarantees, warranties, servicing or repairs of any products sold and services
rendered by it, whether such practices are oral or in writing or are deemed to
be legally enforceable. There is not presently, nor has there been within the
last three years, any failure of a product sold by either Company such as to
require, or, to the knowledge of Sellers, which may require, a general recall or
replacement campaign with respect to such product or a reformulation or change
of such product. There has not been any acceptance of returns of defective goods
the cost of which is in excess of one percent (1%) of the sales of all products
sold by either Company during either the twelve-month period ended December 31,
2000 or the three-month period ended March 31, 2001, and, to the best of
Sellers' knowledge, no basis exists for any future returns of defective goods in
excess of one percent (1%) of the total sales of all products sold by such
Company during such periods.
(aa) Absence of Certain Changes. Since September 30, 2000, there have
been no changes in either Company or its respective assets, liabilities,
operations or prospects which individually or in the aggregate have had or could
reasonably be expected to have, a material adverse effect on such Company, nor,
to the knowledge of Sellers, is any such change threatened, except for such
changes as have affected others engaged in the same business as such Company in
a similar way. Since September 30, 2000, (i) each Company has been operated in
the ordinary course of business consistent with past practice (except for the
dedication of Company resources to assist Rheometric in its due diligence review
in connection with this transaction), (ii) neither Company has entered into, or
agreed to enter into, any transaction not in the ordinary course of business and
(iii) neither Company has made any changes in its accounting principles. Without
limiting the generality of the foregoing, since September 30, 2000, neither of
the Companies, individually or together, has:
(i) increased or experienced any adverse change in any assumption
underlying any method of calculating bad debts, contingencies or other reserves
from that reflected in the Financial Statements,
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(ii) cancelled or waived any claim or right of substantial value
or sold, transferred, distributed or otherwise disposed of any of its assets,
except dispositions of inventory in the ordinary course of business,
(iii) written down the value of any inventory having an aggregate
value in excess of $10,000 or written off as uncollectible notes, trade accounts
or other receivables having an aggregate value in excess of $20,000,
(iv) made any capital expenditure or commitment for additions to
property, plant or equipment having an aggregate cost in excess of $5,000,
(v) disposed of, permitted to lapse or disclosed to any third
person whether pursuant to a confidentiality agreement, or otherwise, any right
listed or described on Schedule 2.2(s) hereto,
(vi) declared or paid any dividend, or made any distribution of
cash or other assets to any of its stockholders except as disclosed on Schedule
2.2(c),
(vii) experienced any damage, destruction or loss, whether or not
covered by insurance, in excess of $25,000,
(viii) except as set forth in Schedule 2.2(t) made or agreed to
make any increase in the compensation payable to any of its employees,
(ix) lost any key employees or key salespersons, except as
disclosed on Schedule 2.2(x),
(x) except as set forth in Schedule 2.2(u) adopted, entered into,
terminated or amended any bonus, incentive, compensation, deferred compensation,
profit sharing, retirement, pension, group insurance or other employee benefit
plan or any employment or consulting agreement,
(xi) changed the methods of accounting or accounting principles or
practices set forth in or reflected by the Financial Statements, except as
disclosed on Schedule 2.2 (h),
(xii) permitted or allowed any of its assets to be subject to any
Lien, except for Liens presently in existence and described in Schedule 2.2(i),
(xiii) entered into any transaction or contract, or amended or
terminated any transaction or contract, except normal transactions or contracts
consistent in nature and scope with prior practices and entered into in the
ordinary course of business in arms' length transactions, none of which
transactions or contracts, or amendments or terminations thereof, could
reasonably be expected to have a material adverse effect upon either Company, or
the financial condition or prospects thereof,
(xiv) agreed, whether in writing or not, to do any of the
foregoing.
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(bb) Other Information. The documents and information with respect to
each Company required to be supplied to Rheometric or Acquisition Sub pursuant
to this Agreement or supplied to Rheometric or Acquisition Sub at its request by
Sellers or on their behalf are correct and complete.
For purposes of this Agreement, references to the "knowledge of Sellers",
"Sellers' knowledge" or "Sellers' awareness" or words of similar import shall
mean and include the actual knowledge of Sellers and each Company's directors
and officers after due inquiry of the personnel listed on Schedule 2.2(bb) with
respect to the indicated matters.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1. Representations and Warranties of Rheometric. Each of Rheometric and
Acquisition Sub, jointly and severally, represents and warrants to Sellers as
follows, and acknowledges and confirms that Sellers are relying upon such
representations and warranties in connection with the execution, delivery and
performance of this Agreement, notwithstanding any investigation made by
Sellers.
(a) Due Organization. Rheometric and Acquisition Sub are each a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
(b) Consents, Authorizations and Binding Effect. Rheometric and
Acquisition Sub may execute, deliver and perform this Agreement without the
necessity of Rheometric or Acquisition Sub obtaining any Consent or Notice,
except for the consent of PNC Bank, National Association, Buyer's senior lender,
(the "PNC Consent"), which has been or will be obtained on or prior to the
Closing Date, and such other Consents which have been obtained and are
unconditional and in full force and effect and such Notices which have been
given. This Agreement has been duly authorized, executed and delivered by each
of Rheometric and Acquisition Sub and constitutes the legal, valid and binding
obligation of Rheometric and Acquisition Sub, enforceable against them in
accordance with its terms, except as may be limited by bankruptcy,
reorganization, insolvency and similar laws of general application relating to
or affecting the enforcement of rights of creditors. The execution, delivery and
performance of this Agreement will not:
(i) constitute a violation of the Certificate of Incorporation or
the By-laws of Rheometric or Acquisition Sub, or
(ii) conflict with, result in the breach of, or constitute a
default under, any restriction or other instrument to which Rheometric or
Acquisition Sub is a party or by which Rheometric or Acquisition Sub may be
bound or affected, or
(iii) constitute a violation of any statute, order, decree,
regulation or rule of any court, government authority or arbitrator which may be
applicable to Rheometric or Acquisition Sub.
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(c) Governmental Consents. No consent, license, approval, waiver,
expiration of waiting period or authorization of, or registration or declaration
with, any governmental authority, agency, bureau or commission is required to be
obtained or made by Rheometric or Acquisition Sub in connection with its
execution, delivery and performance of the transactions contemplated by this
Agreement.
(d) Disputes. There is no litigation pending or, to Rheometric's or
Acquisition Sub's knowledge, threatened, against Rheometric or Acquisition Sub
which would materially impair the ability of Rheometric or Acquisition Sub to
consummate the transactions contemplated by this Agreement.
(e) Rheometric Shares. The Rheometric Shares, upon issuance in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances with respect to the issue thereof (other than customary
restrictions under Federal and state securities laws) and shall not be subject
to preemptive rights or other similar rights of stockholders of Rheometric and
will not impose personal liability upon the holder thereof.
ARTICLE IV
CLOSING AND CONDITIONS OF CLOSING
4.1. Closing. The conditions to the Closing of the transactions
contemplated hereunder are set forth in this Article IV.
4.2. Conditions of Obligations of Rheometric. The obligations of Rheometric
and Acquisition Sub to consummate the sale and purchase under this Agreement are
subject to the satisfaction of the following conditions, each of which may be
waived by Rheometric and Acquisition Sub.
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of Sellers set forth in this Agreement shall be
true and correct in all respects when made and on and as of the Closing Date.
Sellers shall have performed the obligations necessary to be performed by them
under this Agreement on or prior to the Closing Date. None of the assets of
either Company shall have been affected by any collision, fire, explosion,
accident, embargo, act of God or any other casualty that materially impairs such
Company or that has had or could reasonably be expected to have a material
adverse effect upon the financial position or prospects of the Company.
(b) Authorization of Agreement. All action necessary to authorize the
execution, delivery and performance of this Agreement by Sellers shall have been
duly and validly taken, and Sellers shall have full right, power and authority
to consummate the transactions contemplated hereby on the terms provided herein.
(c) Consents. Rheometric shall have received evidence, in form and
substance reasonably satisfactory to Rheometric, that all Consents, licenses,
trademarks, trade names, patents, permits, registrations, authorizations and/or
orders of governmental authorities and parties to contracts with a Company as
are necessary and material to the consummation of
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the transactions contemplated by this Agreement, and for Rheometric to operate
the Business, have been obtained. All governmental authorizations, consents,
approvals, exemptions, and other actions (including without limitation any
necessary compliance with ISRA or any other applicable environmental law)
required to consummate the transactions contemplated by this Agreement shall
have been obtained and shall be in full force and effect.
(d) Security Interests, Encumbrances, Liens, etc. Rheometric shall have
received (i) a copy of a letter from each of Summit Bank and First Union
National Bank to the effect that upon payment to such institution of the amount
set forth therein, the credit facility between the Companies and such
institution shall have been terminated, and (ii) such UCC-3 and other releases
necessary or desirable to release of record any and all security interests and
other Liens thereunder.
(e) Opinion of Counsel to Seller. Rheometric and Acquisition Sub shall
have received the opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A., counsel to Sellers, dated
as of the Closing Date, and satisfactory in form and substance to Rheometric and
Acquisition Sub.
(f) Suits or Proceedings. No suit, proceeding or investigation shall
have been commenced or threatened by any governmental authority or private
person on any grounds to restrain, enjoin or hinder, or to seek material damages
on account of, the consummation of the transactions herein contemplated.
(g) Corporate Matters. Rheometric shall have received (i) such
resignations of the directors and officers of each Company as it may have
requested, such resignations to be effective as of the Effective Time and (ii)
the minute books and stockholder registers and corporate seal of each Company.
(h) Lease. ▇▇▇▇ Aviv and the Surviving Corporation shall have entered
into a new lease with respect to the facility used by the Business at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, on mutually acceptable terms.
(i) Reserved.
(j) Employment Agreements. Each of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
shall have executed a mutually satisfactory Employment Agreement with respect to
his employment by Rheometric.
(k) License Agreement. One of the Companies and the University of
Arizona shall have executed a new license agreement with respect to the
Companies' key intellectual property, acceptable in form and substance to the
Companies and Rheometric.
(l) Escrow Agreement. Rheometric, the Escrow Agent and the Company
Stockholder(s) who are a party thereto shall have executed and delivered the
Escrow Agreement.
(m) Closing Certificate. With respect to each Company, there shall have
been no material change in the amounts of such Company's assets (consisting of
(i) cash, (ii) accounts receivable, (iii) inventories, (iv) prepaid expenses and
(v) property, plant and equipment) and liabilities (consisting of (i) accounts
payable, (ii) accrued liabilities, (iii) bank debt, (iv) capital
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leases payable and (v) customer deposits) from those set forth in the such
Company's Financial Statements as of December 31, 2000, and such Company and the
Sellers shall have delivered to Rheometric a certificate representing that (A)
such assets of such Company as of the Closing Date are not less than, and such
liabilities of such Company as of the Closing Date are not more than, mutually
agreed upon amounts and (B) the gross profit of the Companies for the quarter
ending March 31, 2001 is not less than a mutually agreed upon amount. In making
such calculations, inventories shall be valued in a manner consistent with the
preparation of the Companies' Financial Statements at December 31, 2000 and
neither accounts payable nor accrued liabilities shall include any amounts in
respect of rent.
4.3. Conditions of Obligations of Seller. The obligations of Sellers to
consummate the sale and purchase under this Agreement are subject to the
satisfaction of the following conditions, each of which may be waived by
Sellers:
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of Rheometric and Acquisition Sub set forth in
this Agreement shall be true and correct in all respects when made and on and as
of the Closing Date. Each of Rheometric and Acquisition Sub shall have performed
the obligations necessary to be performed by it under this Agreement on or prior
to the Closing Date.
(b) Authorization of Agreement. All action necessary to authorize the
execution, delivery and performance of this Agreement by Rheometric and
Acquisition Sub shall have been duly and validly taken and Rheometric and
Acquisition Sub shall each have full right, power and authority to consummate
the transactions contemplated hereby on the terms provided herein.
(c) Closing Payment. The Companies shall be prepared to tender payment
of amounts sufficient to repay the Company's indebtedness in the amounts and to
the individuals set forth on Schedule 4.3(c) and the Letter of Instruction shall
have been delivered to the Rheometric Transfer Agent.
(d) Opinion of Counsel to Buyer. Seller shall have received the opinion
of Dechert, counsel to Rheometric and Acquisition Sub, dated as of the Closing
Date, and satisfactory in form and substance to Sellers.
(e) Suits or Proceedings. No suit, proceeding or investigation shall
have been commenced or threatened by any governmental authority or private
person on any grounds to restrain, enjoin or hinder, or to seek material damages
on account of, the consummation of the transactions herein contemplated.
(f) Consents. All governmental authorizations, consents, approvals,
exemptions, or other actions required to consummate the transactions
contemplated by this Agreement shall have been obtained and shall be in full
force and effect.
(g) Employment Agreements. Rheometric shall have executed and delivered
a mutually satisfactory employment agreement with each of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇ with respect to his employment.
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(h) Escrow Agreement. Rheometric, the Escrow Agent and the Company
Stockholder(s) who are a party thereto shall have executed and delivered the
Escrow Agreement.
ARTICLE V
INDEMNIFICATION
5.1. Indemnification of Rheometric. Subject to the terms and conditions of
this Article V, Rheometric, Acquisition Sub, the Surviving Corporation and each
of their affiliates and their respective directors, officers, employees,
shareholders and agents (the "Rheometric Indemnified Persons"; provided that
such term shall not include any Seller regardless of his affiliation with the
Surviving Corporation) shall be defended and indemnified from and held harmless
against, any and all loss, damage or liability, and all expenses, including
without limitation reasonable legal fees and costs of investigation, remediation
or other response action and other costs (collectively "Damages"), asserted
against or incurred by one or more Rheometric Indemnified Persons arising out of
or in connection with:
(i) any breach of the representations and warranties made by
Sellers and each of them in this Agreement or in any certificate or other
instrument furnished or to be furnished to Rheometric or Acquisition Sub
hereunder;
(ii) the non-fulfillment of any agreement or covenant made by a
Seller in or pursuant to this Agreement or in any certificate or other
instrument furnished or to be furnished to Rheometric or Acquisition Sub
hereunder;
(iii) all Taxes (as defined in Section 2.2(q) hereof) for all
periods (or portions thereof) ending on or before the Closing Date for which
either Company is liable except to the extent accrued for on the Closing Balance
Sheet;
(iv) the Company having been a member of a consolidated,
affiliated or controlled group for Tax or ERISA purposes;
(v) regardless of whether any of the following are contained in
any disclosure schedule to this Agreement or otherwise disclosed to Rheometric
or Acquisition Sub on or prior to the Closing, (i) any environmental conditions,
including without limitation, the presence, release, threat of release,
management of or exposure to Hazardous Substances, first occurring prior to the
Closing Date at, on, in or under any property now or previously owned, operated
or leased by any Company or Seller, whether into the air, soil, ground or
surface waters on-site or off-site; (ii) the off-site transportation, storage,
treatment, recycling or disposal of Hazardous Substances managed or released by
or on behalf of either Company or any Seller, or any predecessor in interest or
at or from any property now or previously owned, operated or leased by either
Company or any Seller prior to the Closing Date, (iii) any violation of any
Environmental Law first existing prior to the Closing Date and (iv) the
Remediation Agreement (as defined below) and compliance with ISRA (as defined
below);
(vi) any claim by any stockholder of either Company, or any former
stockholder of either Company, whether arising out of or in connection with
transactions
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contemplated under this Agreement, or arising out of or in connection with any
prior transaction involving such Company, or involving such stockholder's
interest in such Company;
(vii) the termination or modification of the employment of any
employee of either Company on or after January 1, 2001;
(viii) the profit sharing plan set forth on Schedule 2.2(u) hereof
and the termination thereof; and
(ix) the use by any person or entity of the either Company's
material trade secrets, know-how or other confidential or proprietary
information.
Such indemnification shall be provided first, subject to Section 5.6 hereof, out
of the available property held by the Escrow Agent under the Escrow Agreement
and thereafter by ▇▇▇▇ Aviv at his own expense.
5.2. Indemnification of Seller. Subject to the terms and conditions of this
Article V, Rheometric shall defend, at its own expense, and shall indemnify each
Seller and his heirs, personal representatives and assigns (collectively the
"Seller Indemnified Persons" and together with the Rheometric Indemnified
Persons, the "Indemnified Persons") against, and hold the Seller Indemnified
Persons harmless from, any and all Damages incurred by one or more Seller
Indemnified Persons arising out of:
(i) any breach of the representations and warranties made by
Rheometric or Acquisition Sub in this Agreement or in any certificate or other
instrument furnished or to be furnished to Sellers hereunder, and
(ii) the non-fulfillment of any agreement or covenant made by
Rheometric or Acquisition Sub in or pursuant to this Agreement.
5.3. Survival. All representations and warranties contained herein or made
pursuant hereto, whether by the Sellers, Rheometric or Acquisition Sub, shall
survive the closing hereunder until June 30, 2003, except that:
(i) the representations and warranties of Sellers contained in or
made pursuant to Section 2.1(a), (b), (c) and (e) and Section 2.2(a), (b) and
(c) hereof, and of Rheometric and Acquisition Sub contained in or made pursuant
to Section 3.1(a), (b), (c) and (e) hereof, shall survive the closing hereunder
without any limitation as to time, and
(ii) the representations and warranties of Seller contained in or
made pursuant to Sections 2.2(q) and 2.2(u) hereof or otherwise with respect to
tax or employee benefit matters shall survive the closing hereunder until three
months after the date on which the right to file any claim in respect of such
matters by the appropriate governmental or administrative authority or any other
Person has expired.
The expiration of any representation and warranty or any indemnification
obligation hereunder shall not affect any claim made, by the giving of written
notice by a Party to the other in the
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manner provided by this Agreement, prior to the date of such expiration. All
covenants and agreements shall survive the closing.
5.4. Certain Claims. (a) Promptly after receipt by an Indemnified Person of
written notice of the commencement of any investigation, claim, proceeding or
other action in respect of which indemnity may be sought (an "Action") from any
other party obligated to provide indemnification pursuant to Section 5.1 or 5.2
hereof (each, an "Indemnifying Party"), such Indemnified Person shall notify the
Indemnifying Party in writing of the commencement of such Action; but the
omission to so notify the Indemnifying Party shall not relieve it from any
liability that it may otherwise have to such Indemnified Person, except to the
extent that the Indemnifying Party is materially prejudiced or forfeits
substantive rights or defenses as a result of such failure. In connection with
any Action in which the Indemnifying Party and any Indemnified Person are
parties, the Indemnifying Party shall be entitled to participate therein, and
may assume the defense thereof by so notifying the Indemnified Person and
agreeing in writing to defend the Action with counsel reasonably satisfactory to
the Indemnified Person and be responsible for any judgments or settlements
resulting therefrom. If the indemnifying party advises the Indemnified Person in
writing that it is assuming the defense of such Action and responsibility for
any judgments or settlements resulting therefrom, notwithstanding the assumption
of the defense of any such Action by the Indemnifying Party, each Indemnified
Person shall have the right to employ separate counsel and to participate in the
defense of such Action, and the Indemnifying Party shall bear the reasonable
fees, costs and expenses of such separate counsel to such Indemnified Person if:
(i) the Indemnifying Party shall have agreed to the retention of such separate
counsel, (ii) the Indemnified Person shall have reasonably concluded that
representation of such Indemnified Person and the Indemnifying Party by the same
counsel would be inappropriate due to actual or, as reasonably determined by
such Indemnified Person's counsel, potential differing interests between them in
the conduct of the defense of such Action, or if there may be legal defenses
available to such Indemnified Person that are different from or additional to
those available to the Indemnifying Party, or (iii) the Indemnifying Party shall
have failed to employ counsel reasonably satisfactory to such Indemnified Person
within a reasonable period of time after notice of the institution of such
Action or shall not be diligently defending such action. If such Indemnified
Person retains separate counsel in cases other than as described in clauses (i),
(ii) or (iii) above, such counsel shall be retained at the expense of such
Indemnified Person. Except as provided above, it is hereby agreed and understood
that the Indemnifying Party shall not, in connection with any Action in the same
jurisdiction, be liable for the fees and expenses of more than one counsel (plus
appropriate local counsel) for all such Indemnified Persons. The party from whom
indemnification is sought shall not, without the written consent of the party
seeking indemnification (which consent shall not be unreasonably withheld),
settle or compromise any claim or consent to entry of any judgment that does not
include an unconditional release of the party seeking indemnification from all
liabilities with respect to such claim.(a)
(b) In the event a person or entity should have a claim for
indemnification hereunder that does not involve a claim or demand being asserted
by a third party, the party seeking indemnification shall promptly send notice
of such claim to the party from which indemnification is sought. If the latter
does not dispute such claim, the latter shall pay such claim in full within 10
business days. If the latter disputes such claim, such dispute shall be resolved
by agreement of the parties or in any other manner available under law.
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(c) The Indemnified Person shall make available to the Indemnifying
Party or its representatives all records and other materials reasonably required
by it for use in contesting any third party claim and shall cooperate with the
indemnifying party in the defense of all such claims; all of the foregoing shall
be provided on a commercially reasonable basis.
5.5. Limitations. Any claims for breach of any representation, warranty or
covenant made hereunder shall be subject to the following limitations and
adjustments:
(a) indemnification under Section 5.1(i) and Section 5.2(i) shall only
be required to be provided by the Sellers (taken together) or Rheometric when
the aggregate amount of all claims for which indemnification is sought from such
Indemnifying Party exceeds $50,000, in which case such Indemnified Party shall
be liable for all such amounts in excess thereof;
(b) no claim for indemnity under Sections 5.1 or 5.2 shall be effective
unless notice is provided pursuant to Section 5.4 within the survival period
specified under Section 5.3; and
(c) in no event shall Sellers under Section 5.1(i) or Rheometric under
Section 5.2(i) be liable for an amount in the aggregate greater than the
"Indemnity Cap" for all claims made against them under such Sections,
respectively. The "Indemnity Cap" shall be an amount equal to the Merger
Consideration.
5.6. Payment. In the event any indemnification payment is required to be
made by Sellers to a Rheometric Indemnified Person pursuant to this Article V,
such payment shall be paid in cash if the underlying claim that formed the basis
of the indemnification claim required such Rheometric Indemnified Person to make
a cash payment and otherwise may be paid by the delivery of shares of Rheometric
Common Stock, which shares shall be valued as of the date immediately preceding
the date of such delivery; provided, however, that upon the effectiveness of the
registration statement registering the Rheometric Shares described in Section
6.6 hereof, the Sellers may in order to make the cash payment set forth above
request the release of and sell a portion of the Rheometric Shares that are
being held by the Escrow Agent pursuant to the Escrow Agreement; provided,
further, that upon such request such Rheometric Shares shall only be released
upon payment to Rheometric of the cash proceeds therefor.
ARTICLE VI
CERTAIN POST CLOSING MATTERS
6.1. Non-Competition. Each of ▇▇▇▇ Aviv and ▇▇▇▇▇ ▇▇▇▇▇ agrees,
individually, that, without the prior written consent of Rheometric, he shall
not, for a period ending the later of sixty months after the Closing Date and
twenty-four months after he ceases to be an employee of Rheometric, the
Surviving Corporation or any of their respective subsidiaries, directly or
indirectly,
(i) compete with, or be retained by, render consulting or advisory
services to or be a proprietor, director, partner or shareholder of any
enterprise that is (x) engaged in the Business, (y) engaged in the development,
sales or distribution or rheology technologies or (z) in the event such person
has, at the request of Rheometric, provided business
- 29 -
time and energies to the development or operation of any other business of
Rheometric or its subsidiaries or affiliates, engaged in such other business
(collectively, the "Post Closing Business");
(ii) interfere with, disrupt or attempt to disrupt any then
existing relationship, contractual or otherwise, between Rheometric, the
Surviving Corporation or any of their respective subsidiaries and any of their
customers or clients or other persons with whom they deal; or
(iii) directly or indirectly solicit for employment or assist any
other entity in soliciting for employment any employee or executive employed by
either Company on the Closing Date or by Rheometric, the Surviving Corporation
or one or more of their subsidiaries on the date of his termination of such
employment.
6.2. Confidentiality. Without the specific prior written consent of
Rheometric, none of the Sellers shall, directly or indirectly, divulge to any
person, firm, corporation or association, or use for his own benefit, any trade
secrets, proprietary secrets or any other confidential information concerning
either Company, the Business, or its affairs, customers or any data or
statistical information of either Company or the Business, it being the intent
of this provision to restrict each Seller from disseminating or using any data
or information of either Company or the Business which is at the time of such
use or dissemination unpublished and not readily available or generally known to
persons involved or engaged in any businesses competitive with the Business or
the Post Closing Business.
6.3. Reformation. Although the restrictions contained in Sections 6.1 and
6.2 hereof are considered by the parties hereto to be fair and reasonable in the
circumstances, if any of such restrictions shall be adjudged to be void or
unenforceable for whatever reason, but would be valid if part of the wording
thereof were deleted, or the period thereof reduced or the area dealt with
thereby reduced in scope, the restrictions contained in Sections 6.1 and 6.2
shall apply, at the election of Rheometric and/or the Surviving Corporation,
with such modifications as may be necessary to make them valid, effective and
enforceable in the particular jurisdiction in which such restrictions are
adjudged to be void and unenforceable.
6.4. Injunctive Relief. If a violation of any covenant contained in Section
6.1 or 6.2 occurs or is threatened, ▇▇▇▇ Aviv, ▇▇▇▇▇ ▇▇▇▇▇ and each of the other
Sellers acknowledges that such violation or threatened violation will cause
irreparable injury to Rheometric and/or the Surviving Corporation and the remedy
at law for any such violation or threatened violation will be inadequate, and
Rheometric and/or the Surviving Corporation shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages.
6.5. Beneficiaries. The covenants contained in Sections 6.1 and 6.2 shall
inure to the benefit of Rheometric, the Surviving Corporation and their
respective successors or assigns.
6.6. Holding Period and Registration Statement. Each Seller agrees and
acknowledges that, except as contemplated by this Section 6.6, the Rheometric
Shares may not be sold, pledged, transferred or otherwise disposed of until
after the first anniversary of the Closing Date, and then only to the extent
such Seller satisfies the requirements of Rule 144 under the Securities
- 30 -
Act of 1933, as amended (the "Act"), and any other applicable state or federal
securities law. Promptly and in all events within 90 days after the Closing
Date, Rheometric shall file a registration statement on Form S-1 with the
Securities and Exchange Commission registering such of the Rheometric Shares as
shall be requested by Sellers and shall use all reasonable efforts to cause such
registration statement to become effective as promptly as practicable after the
date of filing of such registration statement so that the Rheometric Shares can
then be sold in compliance with the Act.
6.7. Employee Benefits. From the Effective Time through December 31, 2001,
Rheometric shall provide, or shall cause the Surviving Corporation to provide,
to those persons who, prior to the Effective Time, were employees of the Company
and who continue to be employed by the Surviving Corporation or Rheometric (the
"Employees") with employee benefit plans, programs and arrangements that provide
benefits that are no less favorable in the aggregate than those provided by the
Company to such Employees immediately prior to the Effective Time. By January 1,
2002, Rheometric shall take any and all steps necessary so that the Employees
shall be entitled to participate in all of the employee benefit plans, programs
and arrangements sponsored by Rheometric, on the same terms and conditions as
the other employees of Rheometric. The Employees shall receive full credit for
their seniority and all of their years of service with the Company, for purposes
of eligibility to participate, accrual and vesting in the employee benefit
plans, programs or arrangements of the Surviving Corporation or Rheometric,
except with respect to Rheometric's 401(k) Plan. The Employees shall not be
eligible to carry over any accrued vacations or leave benefits that are unused
as of December 31, 2001.
6.8. ISRA Compliance. The parties acknowledge that this transaction is
subject to New Jersey's Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq.,
and the regulations promulgated thereunder ("ISRA"). As a condition precedent to
the obligation of Rheometric and Tel Acquisition to complete this transaction,
the Sellers have, at their sole cost and expense entered into a Remediation
Agreement as defined at N.J.S.A. 13:1K-8 (the "Remediation Agreement"). In
connection with such Remediation Agreement, the Sellers shall (i) provide prior
written notice to Rheometric and the Surviving Corporation of any meetings
between the Sellers and the New Jersey Department of Environmental Protection
(the "NJDEP"), and representatives of Rheometric and the Surviving Corporation
shall be entitled to attend such meetings, (ii) use its best efforts to minimize
any interference with the Business and the ongoing operations of the Surviving
Corporation, (iii) provide prior written notice to Rheometric and the Surviving
Corporation of any on-site activities related to the Remediation Agreement, (iv)
provide copies of all reports and other documents submitted to the NJDEP by the
Sellers as well as copies of all correspondence the Sellers receive from the
NJDEP, and (v) pay all fees, costs and expenses incurred in connection with or
relating to the Remediation Agreement and compliance with ISRA.
ARTICLE VII
MISCELLANEOUS
7.1. Further Actions. From time to time, as and when requested by
Rheometric or the Surviving Corporation, each Seller shall execute and deliver,
or cause to be executed and
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delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions as Rheometric may reasonably deem
necessary or desirable to carry out the intent and purposes of this Agreement,
to consummate the Merger (or to evidence the foregoing) and to consummate the
other transactions contemplated hereby.
7.2. Brokerage. Each Seller represents and warrants to Rheometric that
neither Sellers nor either Company has any obligation or liability to any broker
or finder by reason of the transactions which are the subject of this Agreement;
Sellers shall indemnify the Rheometric Indemnified Persons against, and shall
hold the Rheometric Indemnified Persons harmless from, at all times after the
date hereof, any and all liabilities (including without limitation legal fees),
and shall pay any final judgment obtained by any person claiming brokerage
commissions or finder's fees, or rights to similar compensation, on account of
services purportedly rendered on behalf of any Seller or either Company in
connection with this Agreement or the transactions contemplated hereby. Each of
Rheometric and Acquisition Sub represents and warrants to Sellers that neither
Rheometric nor Acquisition Sub has any obligation or liability to any broker or
finder by reason of the transactions which are the subject of this Agreement.
Rheometric shall indemnify Sellers against, and shall hold Sellers harmless
from, at all times after the date hereof, any and all liabilities (including
without limitation legal fees), and shall pay any final judgment obtained by any
person claiming brokerage commissions or finder's fees, or rights to similar
compensation, on account of services purportedly rendered on behalf of
Rheometric or Acquisition Sub in connection with this Agreement or the
transactions contemplated hereby.
7.3. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, Rheometric and Acquisition Sub shall pay their
expenses in connection with the negotiation, execution, delivery and performance
of this Agreement and the Sellers shall pay their expenses and the expenses of
the Companies in connection with the negotiation, execution, delivery and
performance of this Agreement; it being understood and agreed that regardless of
whether the Closing hereunder is consummated, neither Rheometric nor the
Surviving Corporation shall bear any expense of Sellers or the Companies in
connection with the negotiation, execution, delivery and performance of this
Agreement.
7.4. Entire Agreement. This Agreement, which includes the Schedules and
Exhibits hereto and the other documents, agreements and instruments executed and
delivered pursuant to or in connection with this Agreement, contains the entire
agreement between Rheometric, Acquisition Sub, the Companies and Sellers with
respect to the transactions contemplated by this Agreement and supersedes all
prior arrangements or understandings with respect thereto. For all purposes of
this Agreement, all references to this Agreement shall be deemed to include the
documents, agreements and instruments executed and delivered by Sellers pursuant
to or in connection with this Agreement, unless the context clearly requires
otherwise.
7.5. Descriptive Headings. The descriptive headings of this Agreement are
for convenience only and shall not control or affect the meaning or construction
of any provision of this Agreement.
7.6. Notices. All notices and other communications hereunder shall be in
writing (including by telecopy) and shall be deemed to have been duly given when
delivered in person (including by overnight courier), when telecopied (with
confirmation of transmission having
- 32 -
been received) or three (3) days after being mailed by registered or certified
mail (postage prepaid, return receipt requested), in each case to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice).
(a) If to Sellers, to their addresses set forth on Schedule 7.6 hereto:
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fascimile No.: 732.792.7710
(b) If to Acquisition Sub or Rheometric:
Rheometric Scientific, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairman
Facsimile No.: 732.560.7451
with a copy to:
Dechert
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No.: 212.698.3599
7.7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey without regard to the
conflict of law provisions thereof, except to the extent the GCL mandatorily
applies with respect to the Merger. Each of the parties hereto irrevocably
submits to the jurisdiction of the courts of the States of Delaware and New
Jersey, and of any court of the United States of America located in such states,
in connection with any action or proceeding arising out of or relating to, or
breach of, this Agreement or of any document or instrument delivered pursuant
to, in connection with, or simultaneously with this Agreement.
7.8. Assignability. This Agreement shall not be assignable otherwise than
by operation of law by either party without the prior written consent of the
other party, and any purported assignment by any party without the prior written
consent of the other party shall be void, except that Rheometric, Acquisition
Sub, and the Surviving Corporation may assign to any financial institution
providing financing or extending credit to Rheometric, Acquisition Sub or the
Surviving Corporation any or all of its rights under this Agreement, but any
assignee of such rights shall take such rights subject to any defenses,
counterclaims and set-offs to which Sellers may be entitled under this
Agreement. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
- 33 -
7.9. Waivers and Amendments. Any waiver of any term or condition, or any
amendment or supplementation, of this Agreement shall be effective only if in
writing. A waiver of any breach of any of the terms or conditions of this
Agreement shall not in any way be construed as a waiver of any subsequent
breach.
7.10. Third Party Rights. Except as otherwise provided in Sections 5.1 and
5.2 with respect to the indemnification obligations of Sellers and Rheometric
for the benefit of the Rheometric Indemnified Persons and the Seller Indemnified
Persons, as the case may be, this Agreement shall be effective only as between
the parties hereto, their successors and permitted assigns.
7.11. Illegality. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Agreement shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
7.12. Confidentiality. Subject to compliance with applicable law and with
any requirements of the Parties to disclose the terms of this Agreement under
the provisions of any financing agreements by which the Parties may be bound,
the Parties, individually, agree to keep confidential and not disclose or
communicate the terms and conditions of this Agreement (other than to their
respective advisors and representatives).
- 34 -
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first above written.
AVIV ASSOCIATES, INC.
By: /s/ ▇▇▇▇ Aviv
-----------------------
Name: ▇▇▇▇ Aviv
Title: President
AVIV INSTRUMENTS, INC.
By: /s/ ▇▇▇▇ Aviv
-----------------------
Name: ▇▇▇▇ Aviv
Title: President
[Signature Page 1 of 4 to Merger Agreement]
STOCKHOLDERS OF AVIV
ASSOCIATES, INC.
▇▇▇▇ Aviv
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ Aviv
----------------------------
▇▇▇▇▇▇▇▇ Aviv
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ Aviv
---------------------------
▇▇▇▇ Aviv, attorney-in-fact
▇▇▇▇▇▇ Aviv
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ Aviv
---------------------------
▇▇▇▇ Aviv, attorney-in-fact
▇▇▇▇ Aviv
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ Aviv
---------------------------
▇▇▇▇ Aviv, attorney-in-fact
[Signature Page 2 of 4 to Merger Agreement]
STOCKHOLDERS OF AVIV
INSTRUMENTS, INC.
▇▇▇▇ Aviv ▇▇▇▇▇▇▇▇ Aviv
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ Aviv By: /s/ ▇▇▇▇ Aviv
--------------------------- -----------------------------
▇▇▇▇ Aviv, attorney-in-fact
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ Aviv By: /s/ ▇▇▇▇ Aviv
-------------------------- ----------------------------
▇▇▇▇ Aviv, attorney-in-fact ▇▇▇▇ Aviv, attorney-in-fact
▇▇▇▇▇▇ Aviv ▇▇▇▇ Aviv
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ Aviv By: /s/ ▇▇▇▇ Aviv
-------------------------- ----------------------------
▇▇▇▇ Aviv, attorney-in-fact ▇▇▇▇ Aviv, attorney-in-fact
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇ Aviv By: /s/ ▇▇▇▇ Aviv
-------------------------- ----------------------------
▇▇▇▇ Aviv, attorney-in-fact ▇▇▇▇ Aviv, attorney-in-fact
[Signature Page 3 of 4 to Merger Agreement]
RHEOMETRIC SCIENTIFIC, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
TEL ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
[Signature Page 4 of 4 to Merger Agreement]