Exhibit 2.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as of
this 4th day of November, 1996, by and among LANSTAR SEMICONDUCTOR, INC., a Utah
corporation, ("Purchaser"), having its principal place of business at ▇▇▇▇
▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, WORLD DATA, LIMITED, a Cayman IS
corporation, (sometimes called the "Shareholder," "Seller" or "Seller Corp."),
and SOUTHWEST MEMORY INTERNATIONAL, INC., a Texas corporation having its
principal place of business at Camillton,CT (the "Corporation to be Sold").
WHEREAS, the Corporation to be Sold, which is wholly owned by Shareholder,
is engaged in the business of the sale of computer equipment and parts; and
WHEREAS, the Seller Corp. desires to sell and the Purchaser desires to buy
all of the issued and outstanding shares of the Corporation to be Sold
including all of its assets, rights and opportunities (collectively
sometimes called the "Business").
NOW, THEREFORE, in consideration of the mutual benefits to be derived and
the representations and warranties, conditions and promises herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
GENERAL
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1.01 Definitions. Unless otherwise stated in this Agreement, the following
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terms shall have the following meanings (the following definitions to be
equally applicable to both the singular and plural forms of any of the
terms herein defined):
"Accounts": As defined in Section 1.02(b)(12).
"Affiliate": Any Person that, directly or indirectly, controls, or is
controlled by or under common control with, another Person. For the
purposes of this definition "control" (including the terms "controlled by"
and "under common control with"), as used with respect to any Person,
means the power to direct or cause the direction of the management and
policies of such Person, directly or indirectly, whether through the
ownership voting securities or by contract or otherwise.
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"Agreement": As defined in the first paragraph hereof.
"Assets": As defined in Section 1.02(a).
"Audited Balance Sheer": As defined in Section 2.01(c)(3)(i).
"Audited Financial Statements": As defined in Section 2.01(c)(3)(i).
"Backlog Orders": As defined in Section 1.02(b)(l1).
"Balance Sheets": As defined in Section 2.01(c)(4)(ii).
"Business": As defined in the recitals of this
Agreement.
"Cash": As defined in Section 1.02(b)(13).
"Claim": As defined in Section 6.02(a).
"Closing": As defined in Section 5.01(a).
"Closing Date": As defined in Section 5.01(a).
"Code": The Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement": As defined in Section 3.01(b).
"Corporation to be Sold": As defined in the opening paragraph of this Agreement.
"Customer Data": All of Corp's customer lists, sales records and other customer
data (including credit data) relating to the Business.
"Damages": As defined in Section 6.01(a).
"Disclosure Letter": The disclosure letter delivered by Seller Corp. and
Corporation to be Sold to Purchaser contemporaneously with the execution and
delivery of this Agreement, and a "Supplement" thereto means any supplemental
disclosure letter delivered pursuant to Section 3.12.
"Effective Time of Closing": As defined in Section 5.01(b).
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"Employees": As defined in Section 2.01(c)(1 1)(ii).
"Environmental Laws": As defined in Section 6.01(a)(3)
"Equipment": As defined in Section l.02(b)(4).
"ERISA": Employee Retirement Income Security Act of 1974, as amended.
"Financial Statements": As defined in Section 2.01(c).
"GAAP": As defined in Section 2.01(c).
"General Conveyance, Transfer and Assignment": As defined in Section 1.05.
"Governmental Body": Any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
"Indemnitee": As defined in Section 6.02(a).
"Indemnitor": As defined in Section 6.02(a).
"Instruments": As defined in Section 2.01(c)(10).
"Intangible Assets": As defined in Section l.02(b)(7).
"Interim Balance Sheet": As defined in Section 2.01(c)(2).
"Interim Financial Statements": As defined in Section 2.01(c)(3).
"Inventories": As defined in Section l.02(b)(10).
"IRS": The Internal Revenue Service.
"Known" or "Knowledge": Whenever a statement regarding the existence or absence
of facts in this Agreement is qualified by a phrase such as "to such Person's
knowledge" or "known to such Person," it is intended by the parties that the
only information to be attributed to such Person is information actually known
to (a) the Person in the case of an individual, or (b) a current officer in the
case of a corporation or entity. Unless
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otherwise provided in this Agreement, no such Person is represented to have
undertaken a separate investigation in connection with the transactions
contemplated hereby to determine the existence or absence of facts in any
statement qualified by "known by" or "to the knowledge of" any Person.
"Lien": All mortgages, deeds of trust, liens, security interest, pledges,
conditional sale contracts, claims, rights of first refusal, options, charges,
agreements, liberties, easements, rights-of-way, limitations, reservations,
restrictions and other encumbrances of any kind.
"Material Adverse Effect": "Material Adverse Effect" means (a) any change,
development or effect (individually or in the aggregate) in the general affairs,
management, business, results of operations, conditions (financial or
otherwise), assets, liabilities or prospects (whether or not the result thereof
would be covered by insurance) that would be material and adverse to
Shareholder, or Corporation to be Sold, or (b) any fact or development that
would (individually or in the aggregate), impair Shareholder, or Corporation to
be Sold's ability or obligations to perform on a timely basis any material
obligations it has under this Agreement.
"Materials of Environmental Concern": As defined in Section 6.01(a)(3).
"Operative Documents": This Agreement and all other agreements, instruments,
documents, and certificates executed and delivered by or on behalf of
Shareholder, or Corporation to be Sold, or Purchaser pursuant to this Agreement.
"Order": Any order, writ, injunction, decree, judgment, award or determination
of any court or Governmental Body.
"Permits": All permits, authorizations, certificates, approvals, registrations,
variances, exemptions, rights-of-way, franchises, immunities, grants,
ordinances, licenses and other rights of every kind and character (a) under any
(1) federal, state, local or foreign statute, ordinance or regulation, (2)
Order, or (3) contract with any Governmental Body or (b) granted by any
Governmental Body.
"Permitted Encumbrances": (a) The Liens described or referred to in Appendix
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1.01-1 to Disclosure Letter which are approved by Purchaser, (b) Liens for
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current Taxes and assessments not yet due and payable, including, but not
limited to, Liens for non-delinquent ad valorem Taxes, non-delinquent statutory
Liens arising other than by reason of any default on the part of Corporation to
be Sold, and (c) such liens, minor imperfections of title, or easements on real
property, leasehold estates, or personalty as
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do not in any material respect detract from the value thereof and do not
interfere with the present use of the property subject thereto.
"Person": An individual, partnership, joint venture, corporation, bank, trust,
unincorporated organization or a Governmental Body.
"Plan": As defined in Section 2.01(j).
"Products": All products manufactured, produced, marketed or distributed by
Corporation to be Sold.
"Purchase Price": As defined in Section 1.03(a).
"Purchaser": As defined in the opening paragraph of this Agreement.
"Purchaser Indemnitees": As defined in Section 6.01(a).
"Purchaser Representative": As defined in Section 3.01(b).
"Real Property": That certain leasehold located at ___________________________
___________________________, consisting of approximately ____ square feet
leased to Corporation to be Sold by ______________________ by lease
agreement referred to Appendix 1.01-2 to the Disclosure Letter.
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"Records": As defined in Section l.02(b)(3).
"Release": Any spilling, leaking, pumping, pouring, emitting emptying,
discharging, injecting, escaping, leaching, dumping, or disposing into the
environment (including the abandonment or discarding of barrels, containers, and
other closed receptacles containing any hazardous substance or pollutant or
contaminant).
"Scheduled Contracts": As defined Section 1.02(b)(9).
"Seller Corp.": As defined in the opening paragraph of this Agreement.
"Seller Indemnitees": As defined in Section 6.01(b).
"Shareholder": As defined in the opening paragraph of this Agreement.
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"Shares": As referred to in this Agreement, means the _______ issued and
outstanding shares of the Corporation to be Sold which are being sold and
delivered by Seller to Purchaser.
"Supplier Data": All of Corporation to be Sold's supplier lists and other
supplier data relating to the purchase of raw materials, utilities and
other supplies used in connection with the Business.
"Tax Obligations": As defined in Section l.05(b)(3).
"Taxes": As defined in Section 2.0l(c)(8).
"Transaction": The sale and purchase of the Shares, the assignments and
the performance of covenants, in each case is contemplated by this
Agreement.
"Unaudited Balance Sheet": As defined in Section 2.0l(c)(3).
"U.S.": The United States of America.
1.02. Agreement to Purchase and Sell
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(a) On and subject to the terms and conditions of this Agreement, Seller
agrees to sell, transfer and deliver to the Purchaser, free and
clear of all claims, the Shares of the Corporation to be Sold and
including the Corporation to be Sold's rights of ownership of all of
the assets, franchises and properties described in Section 1.02(b),
(all such assets, rights, franchises and properties being herein
collectively referred to as the "Assets" of the Corporation to be
Sold) the Shares and the Assets at the time of sale being free and
clear of all liens other than Permitted Encumbrances, if any. The
Shares shall be ______ shares of the Corporation to be Sold which
represent all of the issued and outstanding shares of the
Corporation to be Sold.
(b) The Assets shall consist of all assets of the Corporation to be Sold
as of the date of this Agreement and at the Effective Time of
Closing described in the following clauses (1) through (20) as
further described in the Disclosure Letter which shall be accurate
as of the date of this Agreement, and, by supplement accurate as of
the Closing Date.
(1) [INTENTIONALLY OMITTED]
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(2) [INTENTIONALLY OMITTED]
(3) [INTENTIONALLY OMiTTED]
(4) Equipment. All of Corporation to be Sold's furniture, equipment, machinery,
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apparatus, tools, appliances, vehicles, implements, spare parts, supplies
and all other tangible personal property of every kind and description
located either on the Real Property, or elsewhere insofar as any of the
foregoing relates to the Business (the "Equipment"). The Equipment
includes, without limitation, all of the items listed in Appendix
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1.02(b)(4) to the Disclosure Letter.
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(5) [INTENTIONALLY OMITTED]
(6) Permits. All right, title and interest of Corporation to be Sold in, to and
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under all Permits relating to the Business or all or any of the Assets,
including, without limitation, those listed in Appendix 1.02(b)(6) to the
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Disclosure Letter.
(7) Intangible Assets. All right, title and interest of Corporation to be Sold
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in, to and under all patents, trademarks, technology, know-how, data,
copyrights, tradenames, servicemarks, licenses, covenants by others not to
compete, rights and privileges used in the conduct of the Business and the
right to recover for infringement thereon and all goodwill associated with
the business in connection with which the marks are used (the "Intangible
Assets"). The Intangible Assets include, without limitation, all of the
items listed in Appendix 1.02(b)(7) to the Disclosure Letter.
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(8) Goodwill. The goodwill and going concern value of the Business.
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(9) Scheduled Contracts. All right, title and interest of Corporation to be
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Sold in, to and under the contracts, leases and agreements described in
Appendix 1.02(b)(9) to the Disclosure Letter (the "Scheduled Contracts")
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and all rights (including rights of refund and offset), privileges,
deposits, claims, causes of action and options relating or pertaining to
the Scheduled Contracts or any thereof.
(10) Inventories. All of Corporation to be Sold's inventories located either at
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the Real Property, or elsewhere insofar as any of the foregoing relates
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to the Business, including, without limitation, finished goods, work-in-
progress, raw materials, supply inventories, and other inventories (the
"Inventories"). The Inventories include, without limitation, all of the
items listed in Appendix 1.02(b)(l0) to the Disclosure Letter.
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(11) Backlog Orders. All of Corporation to be Sold's backlog of orders for
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products manufactured or sold by Corporation to be Sold in the ordinary
course of business prior to the Effective Time of Closing and, in each
case, not invoiced or shipped or cancelled prior to the Effective Time of
Closing (collectively, the "Backlog Orders").
(12) Accounts. All accounts receivable of Corporation to be Sold and all other
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rights of Corp. to payment for goods sold or leased or for services
rendered, including without limitation those which are not evidenced by
instruments or chattel paper, whether or not they have been earned by
performance or have been written off or reserved against as a bad debt or
doubtful account in any Financial Statements; together with all instruments
and all documents of title representing any of the foregoing, all rights in
any merchandise or goods which any of the same represent, and all rights,
title, security and guaranties in favor of Corporation to be Sold with
respect to any of the foregoing, including, without limitation, any right
of stoppage in transit (the "Accounts").
(13) Cash. Cash on deposit in the bank accounts and statement of accounts of
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each banking institution with which Corporation to be Sold conducts or has
conducted business since January 1, 1996, described in Appendix 1.02(b)(13)
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to the Disclosure Letter (including all cash on deposit in such accounts
and uncleared deposits in such accounts), payments in transit, deposits and
all other legal tender wherever located or situated.
(14) Books and Records. All of Corporation to be Sold's books, records, papers
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and instruments of whatever nature and wherever located that relate to the
Business or the Assets or which are required or necessary in order for
Purchaser to conduct the Business for and after the Effective Time of
Closing in the manner in which it is presently being conducted, including,
without limitation, blueprints, specifications, plats, maps, surveys,
building and machinery diagrams, accounting and financial records,
maintenance and production records, personnel and labor relations records,
environmental records and reports, sales and property
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Tax records and returns, sales records, the Customer Data and the Supplier
Data.
(15) Prepaid Expenses and Current Assets. All right, title and interest of
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Corporation to be Sold in and to all prepaid rentals, other prepaid
expenses, bonds, deposits and financial assurance requirements, and other
current assets relating to any of the Assets or the Business, including
without limitation, all prepaid expenses of the nature described in the
Interim Balance Sheet.
(16) Insurance Proceeds. All insurance proceeds and insurance claims of Corp.
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relating to all or any part of the Assets and, to the extent transferable,
the benefit of and the right to enforce the covenants and warranties, if
any, that Corporation to be Sold is entitled to enforce with respect to the
Assets against Corporation to be Sold's predecessors in title to the
Assets.
(17) Computers. All right, title and interest of Corporation to be Sold in
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computer equipment and hardware, including, without limitation, all central
processing units, terminals, disk drives, tape drives, electronic memory
units, printers, keyboards, screens, peripherals (and other input/output
devices), modems and other communication controllers, and any and all parts
and appurtenances thereto, together with all intellectual property used by
Corporation to be Sold in the operation of such computer equipment and
hardware, including, without limitation, all software, all of Corporation
to be Sold's rights under any licenses related to Corporation to be Sold's
use, at any time, of such computer equipment, hardware or software, and all
leases pursuant to which Corporation to be Sold leases any computer
equipment, hardware of software insofar and only insofar as any of the
foregoing relates to the Business or comprises any of the Assets.
(18) [INTENTIONALLY OMiTTED]
(19) [INTENTIONALLY OMITTED]
(20) Other Intangibles. All right, tide and interest of Corporation to be Sold
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in, to and under all rights, privileges, claims, causes of action, and
options relating or pertaining to the Business or the foregoing Assets.
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(c) Seller agrees to enter into a non-competition agreement (the "Non-
Competition Agreement") with Purchaser in the form of Exhibit 1.02-1
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hereto. [FORM ATTACHED].
1.03. Purchase Price.
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(a) Purchase Price. The purchase price for the Shares (the "Purchase
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Price") which shall be issued and delivered to the Seller constitutes
TWENTY-NINE MILLION (29,000,000) common shares of the Purchaser
representing approximately SEVENTY-ONE and 4/l0ths percent (71.4%) of
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the issued and outstanding shares of the Purchaser, as of the time
immediately after the issue and delivery of the Purchase Price. The
common shares representing the Purchase Price shall not have been
registered pursuant to the Securities Act of 1933, as Amended (the
"Securities Act") and shall be subject to such further restrictions
and limitations all of which shall be set forth in the Shareholders
Agreement by and between the Purchaser and the Seller in the form of
Exhibit 1.03-1. [FORM ATTACHED].
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(b) [INTENTIONALLY OMITTED]
1.04 Payment of Purchase Price. The Shares representing the Purchase Price
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shall be issued and delivered to the at Closing.
1.05 Instruments of Transfer, Further Assurances. In order to consummate the
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transactions contemplated hereby, at the Closing Seller and Purchaser
shall deliver to each other (a) the certificate or certificates
representing the Shares, (b) completed General Conveyance, Transfer and
Assignment, in the form attached as Exhibit 1.05-1 hereto ("General
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Conveyance, Transfer and Assignment") [FORM ATTACHED], (c) a stock power,
executed in blank by the Seller, witnessed by an officer of a bank
approved by the Purchaser, referring to each and every of the
certificates representing the Seller's ownership of the Shares of the
Corporation to be Sold, and evidencing their transfer to the Purchaser in
the form attached as Exhibit 1.05-2 [FORM ATTACHED], and (d) such other
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instruments, at Closing or thereafter, as Purchaser may reasonably
request, to vest in the Purchaser full and complete ownership in the
Shares and the rights of the sole shareholder of the Corporation to be
Sold which such Shares are herein warranted to represent and which are
herein transferred to the Purchaser.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
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2.01 Representations and Warranties of Seller and Corporation to be Sold.
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Seller and Corporation to be Sold jointly and severally, represent and
warrant to Purchaser that the following are true and correct on and as of
the date of this Agreement and will be true and correct through the
Effective Time Closing as if made on and as of that date:
(a) The Seller's Representations:
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(1) (Organization and Good Standing of Seller. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of
_________________and is qualified to transact business and is in
good standing in ______________________.
(2) Seller has the corporate power and authority to own, lease or operate all
properties and assets now owned, leased or operated by it and to carry on
it businesses as now conducted.
(3) Seller has heretofore delivered to Purchaser as an attachment to Appendix
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2.01(a)(3) to the Disclosure Letter, complete and correct copies of its
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Certificate of Incorporation, bylaws, each as amended and in effect on the
date hereof and a certificate of the Corporate Secretary or other official
custodian of the corporate records of Seller, certifying that the minutes
of the Board of Directors approving this transaction, the Closing and the
delivery of all those things Seller must deliver at Closing is approved.
(4) Seller is the owner of the Shares, free and clear of all liens,
encumbrances and there are no options, warrants, or conditioned sales
agreements constructively owned but unissued shares or obligations
regarding the purchase or ownership of Corporation to be Sold.
(5) The Shares, to Sellers knowledge, are fully paid and non-assessable and
represent ONE HUNDRED PERCENT (100%) of the issued and outstanding shares
of the Corporation to be Sold.
(6) The following list identifies the true owner of the shares if Seller Corp.
is registered as owner of the shares in a capacity of agent, nominee or
trustee.
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If the Seller Corp. owns the shares in its own right, such shall be
reflected by writing "NONE" in the space provided below:
(7) The following list identifies the names of each director and officer
of the Seller Corp. as of the date this Agreement is executed:
(8) The individuals signing the instruments relating to this transaction
in behalf of the Seller are duly elected representatives of the Seller
and have actual authority to execute and deliver this Agreement, the
Disclosure Letter, any supplements thereof, including the Closing Date
Disclosure Statement, and each and every obligation of the Seller
which shall be required to effect a closing.
(b) The Corporation to be Sold's Representations:
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(1) Organization and Good Standing of the Corporation to be Sold. The
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Corporation to be Sold is a corporation duly organized, validly
existing and in good standing under the laws of the State of
_______________ and is qualified to transact business and is in good
standing as a foreign corporation in every state where it maintains a
presence or is otherwise required to be qualified.
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(2) The Corporation to be Sold has the corporate power and authority to
own, lease or operate all properties and assets now owned, leased or
operated by it and to carry on it businesses as now conducted.
(3) The Corporation to be Sold has heretofore delivered to Purchaser as an
attachment to Appendix 201(b)(3) to the Disclosure Letter complete
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and correct copies of its Certificate of Incorporation and bylaws, as
amended and in effect on the date hereof, and a certificate of the
Corporate Secretary of the Corporation to be Sold certifying that the
officers of the Corporation to be Sold who execute any instrument
called for by this Agreement as well as this Agreement, the Disclosure
Letter and every supplement thereto, including the Closing Date,
Disclosure Statement, are duly elected and incumbent in their
respective positions as officers.
(4) The Shares have been validly issued, are outstanding and are fully
paid and non-assessable.
(5) The Shares were issued in full compliance with applicable federal and
state laws regulating the offer and sale of corporate securities.
(6) The Shares represent ONE HUNDRED PERCENT (1000%a) of the issued and
outstanding shares of the Corporation to be Sold. There are no
options, warrants, contractual rights or obligations which under any
condition or circumstance, past, present or in the future, would
obligate Corporation to be Sold to issue any additional shares of its
common stock to any person.
(c) Additional Joint Representations of Seller and Corporation to be Sold.
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(1) Consents, Authorizations and Binding Effect.
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(i) Seller is fully authorized to execute, deliver and perform this
Agreement (including without limitation execution, delivery and
performance of the Operative Documents to which Seller or
Corporation to be Sold is a party) without the necessity of
Seller obtaining any consent, approval, authorization or waiver
or giving any notice or otherwise, except for such consents,
approvals, authorizations, waivers and notices:
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- which have been obtained and are unconditional and are in full
force and effect and such notices which have been given, or
- which are described in Appendix 2.01(c)(1)(i) of the Disclosure
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Letter, and
- in either case approved by Purchaser prior to the Closing.
(ii) Seller and Corporation to be Sold each has the corporate power to
enter into this Agreement and to carry out its respective obligations
hereunder. This Agreement has been duly authorized, executed and
delivered by Seller and Corporation to be Sold and constitutes the
legal, valid and binding obligation of Seller and Corporation to be
Sold, enforceable against it in accordance with its terms, except as
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may be limited by bankruptcy, reorganization, fraudulent conveyance,
insolvency and similar laws of general application relating to or
affecting the enforcement of rights of creditors and subject to
general principles of equity.
(iii) Except as described in Appendix 2.01(c)(1)(iii) of the Disclosure
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Letter, the execution, delivery and performance of this Agreement by
Seller and Corporation to be Sold does not and will not:
- constitute a violation of either's Certificate of Incorporation, as
amended, or Bylaws, as amended (except for those which, singly or
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in the aggregate, would not create or result in a Material Adverse
Effect),
- result in any Lien against the Shares or the Assets (except for
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those which singly or in the aggregate, would not create or result
in a Material Adverse Effect),
- constitute a violation of any statute, judgment, order, decree or
regulation or rule of any Governmental body applicable or relating
to Seller, or Corporation to be Sold, or the Assets or the business
of Seller and Corporation to be Sold (except for those which,
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singly or in the aggregate, would not create or result in a
Material Adverse Effect), or
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- conflict with, or constitute a breach or default under, or give
rise to any right of termination, cancellation or acceleration
under, any term or provision of any contract, agreement, lease,
commitment, license, franchise, permit, authorization or any other
instrument or obligation known to Seller and Corporation to be Sold
to which any of Seller and Corporation to be Sold is a party or by
which their respective assets are bound, or an event which with
notice, lapse of time, or both, would result in any such conflict,
breach, default or right (except for those which, singly or in the
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aggregate, would not create or result in a Material Adverse Effect)
or other than those breaches, defaults or violations which Seller
and Corporation to be Sold shall have cured on or before the
Effective Time of Closing.
(2) Corporate Governance. Without limiting the foregoing, the execution,
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delivery and performance of the Operative Documents, and consummation of
the transactions contemplated thereby, have been duly authorized and
approved by the Board of Directors and shareholders of Seller and
Corporation to be Sold without dissent, effectively acted on by the Board
of Directors of both the Seller and the Corporation to be Sold immediately
before the Closing.
(3) Financial Statements, etc. The following audited and unaudited financial
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statements of Corporation to be Sold have been delivered to Purchaser and
are attached as Appendix 2.01(c)(3) to the Disclosure Letter:
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(i) the audited consolidated balance sheet of Corporation to be Sold as
of _______________, 19__, (the "Audited Balance Sheet") and the
related statements of operations, of stockholders equity and of cash
flows for the period ending __________, 19__, (together with related
notes and schedules), which financial statements contain a report of
____________, independent auditors, reporting thereon (such balance
sheets, the related statements of operations, of stockholder's equity
and of cash flows, and the related notes and schedules being
hereinafter together referred to as the "Audited Financial
Statements") and
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(ii) the unaudited balance sheet of Corporation to be Sold for the periods
ending _________________, 19__ and __________,19___ and
_______________, 19__, ("Unaudited Balance Sheet") and the related
unaudited statements of operations, of stockholder's equity and of
cash flows (together with related notes and schedules) (such balance
sheets, the related statements of operations, of stockholder's equity
and of cash flows, and the related notes and schedules being
hereinafter together referred to as the "Unaudited Financial
Statements").
(iii) the unaudited balance sheet of Corporation to be Sold as of _______,
19__ (the "Interim Balance Sheet") and the related unaudited
statement of operations of stockholders equity and of cash flow for
the _________-month period ended _______________, 19__ (the "Interim
Financial Statements").
(4) Regarding the Financial Statements.
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(i) The Audited Financial Statements, the Unaudited Financial Statements,
and the Interim Financial Statements (collectively, the "Financial
Statements"), including the related notes and schedules, have been
prepared from the books and records of Corporation to be Sold in
conformity with generally accepted accounting principles applied on a
basis consistent with preceding years and throughout the periods
involved ("GAAP") and present fairly the financial position of
Corporation to be Sold as of the dates of such statements, subject to
year-end adjustments made consistent with GAAP with respect to the
Interim Financial Statements.
(ii) The trade accounts and other receivables of Corporation to be Sold
which are classified as current assets on the Audited Balance Sheet,
Unaudited Balance Sheet and the Interim Balance Sheet (collectively,
the "Balance Sheets") are bona fide receivables, were acquired in the
ordinary course of business, are stated in accordance with GAAP and,
subject to the reserve for doubtful accounts, need not be written-off
as uncollectible.
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(iii) The inventories of Seller and Corporation to be Sold reflected on the
Interim Balance Sheets have been valued in accordance with GAAP, and
the value of obsolete materials and materials of below standard quality
has been written down or reserved against in accordance with GAAP.
There have been no write-ups of inventories or other assets.
(iv) The aggregate fair market value (on a going concern basis) of the
Equipment is at least equal to the aggregate net book value thereof as
set forth on the Interim Balance Sheet.
(v) The Corporation to be Sold has no liabilities of the type and in
amounts required to be reflected or disclosed in a balance sheet (or
notes thereto) prepared in accordance with GAAP other than:
- those set forth or reserved against in the Interim Balance
Sheet,
- those incurred since the date of the Interim Balance Sheet
in the ordinary course of business,
- those disclosed in Appendix 2.01(c)(4)(c) to the Disclosure
----------------------
Letter,
- those referred to in this Agreement or that exist by reason of
this Agreement, but only to the extent that the existence of such
liabilities is ascertainable solely by reference to this Agreement
or to the Disclosure Letter, and
(vi) Seller and Corporation to be Sold's books of account have been kept
accurately in all material respects in the ordinary course of business,
the transactions entered therein represent bona fide transactions, and
the revenues, expenses, assets and liabilities of Seller and
Corporation to be Sold have been properly recorded in such books in all
material respects.
(vii) The Corporation to be Sold, in connection with this Agreement, has in
any other way, obtained forgiveness of any of its indebtedness forgiven
or otherwise, pursuant to federal income tax
-17-
law, realized any income by reason of debt forgiveness during any
reporting period.
(5) Title and Condition of Assets. The Shares owned by Seller and Assets owned
-----------------------------
by Corporation to be Sold are free and clear of Liens, other than Permitted
Encumbrances, or Liens which will be released or discharged at or prior to
the Effective Time of Closing.
The tangible Assets are in good operating condition and repair, subject to
ordinary wear and tear, and have been maintained in accordance with
standard industry practice, are capable of being used in the Business as
presently being conducted without present need for repair or replacement
except in the ordinary course of the Business, conform in all material
------
respects with all applicable legal requirements known to Seller and
Corporation to be Sold, and in the aggregate provide the capacity to enable
Corporation to be Sold to engage in commercial operation on a continuous
basis (subject to normal maintenance and repair outages in the ordinary
course).
Since the date of the Interim Balance Sheet, Corporation to be Sold has not
sold, transferred, leased, distributed or otherwise disposed of any of its
assets, or agreed to do so except for sales of products and services in the
------
ordinary course of business or the disposition of immaterial assets in the
ordinary course of business or which in the reasonable judgment of
management are not necessary or advisable to the efficient operations of
Seller and Corporation to be Sold.
All items of raw materials, work-in-process and finished goods included in
the Inventories are in such condition that they can be readily converted
into merchantable finished goods by industry standard processing procedures
currently used by Corporation to be Sold, all items of finished goods are
of good standard and merchantable quality, and none of the items is
obsolete or defective, except in each case for items which have been
------
written off or written down and so reflected on the Interim Balance Sheet
or for which reserves are provided the Interim Balance Sheet.
(6) Insurance. Appendix 2.01(c)(6) to the Disclosure Letter contains a list of
--------- -------------------
all policies of insurance maintained as of the date of this Agreement by
Corporation to be Sold, or maintained by Seller in respect of the Business
-18-
and Assets including without limitation insurance providing benefits for
employees. The insurance policies set forth in Appendix 2.01(c)(6) to the
-------------------
Disclosure Letter shall provide adequate coverage less deductibles against
the risks involved in the Business and the Assets except for business
------
interruption insurance. Neither Seller nor Corporation to be Sold has
received notice from any insurance carrier of the intention of such carrier
to discontinue any insurance coverage afforded to Corporation to be Sold.
(7) Litigation and Compliance With Laws, etc. There are no claims, actions,
----------------------------------------
suits or proceedings, whether in equity or at law, or governmental or
administrative investigations pending or, to the knowledge of Seller,
threatened against Seller or Corporation to be Sold or the Shares, or any
Asset, and no claim, action, suit or proceeding, at law or in equity, which
seller or Corporation to be Sold, in good faith, anticipates might be
asserted against Seller or Corporation to be Sold or its Assets, or the
Shares, as a result of or in connection with this transaction or for the
purpose of challenging or attempting to set aside, this transaction except
------
(1) as described in Appendix 2.0l(c)(7) to Seller and Corporation to be
-------------------
Sold's Disclosure Letter, or as may arise with respect to any of the
matters described thereon, or (2) for minor product warranty claims arising
in the usual and ordinary course of business for repair of products
manufactured by Corporation to be Sold which in the aggregate may be
satisfied at nominal cost to Corporation to be Sold.
Except as described in Appendix 201(c)(7) to the Disclosure Letter:
------ ------------------
(i) Seller and Corporation to be Sold, in all material respects, are in
compliance with, has conducted for the past three years and does
conduct their respective businesses and operations in compliance
with, and is not in default or violation in any respect under any
law, regulation, writ, injunction, decree or order applicable to the
Seller, the Corporation to be Sold or its Assets, including without
limitation all safety and health, antitrust, consumer protection,
labor, equal opportunity or discrimination laws, rules and
regulations,
(ii) to Seller and Corporation to be Sold's knowledge, there are no
judgments outstanding and unsatisfied against them or their Assets,
and
-19-
(iii) to Seller and Corporation to be Sold's knowledge, there is no basis
for any claim against or liability of Corporation to be Sold on
account of product warranties or with respect to the manufacture,
sale or rental of defective products (other than minor claims arising
in the usual and ordinary course of business for the repair of
Corporation to be Sold's products which may be satisfied at nominal
cost to Corporation to be Sold).
(8) Taxes. Except as described in Appendix 2.01(c)(8) to the Disclosure Letter
----- ------ ------------------
(i) Seller and Corporation to be Sold have duly filed when due, including
any extensions, all Tax reports and returns in connection with and in
respect of Seller and Corporation to be Sold's business, assets and
employees, and have timely paid and discharged all Tax Obligations
shown thereon. Seller and Corporation to be Sold have made available
to Purchaser, to the extent requested by Purchaser, all Tax reports
and returns of Corporation to be Sold for all periods ending prior to
the Closing Date.
(ii) Seller and Corporation to be Sold have not received notice of any Tax
deficiency outstanding, proposed or assessed against or allocable to
Corporation to be Sold, nor have any of them executed any waiver of
any statute of limitations on the assessment or collection of any Tax
or executed or filed with the IRS or any other Governmental Body
extending the period for assessment or collection of any Taxes
against Corporation to be Sold.
(iii) To Seller and Corporation to be Sold's knowledge, there are not Tax
Liens upon, pending against or, to the knowledge of Seller or
Corporation to be Sold, threatened against any Asset.
(iv) Consummation of the transactions herein contemplated will not result
in the imposition or creation of any Tax Obligations on the Shares or
the Assets, except for (1) Tax Obligations which remain the liability
------
of Seller or (2) Tax Obligations resulting from any Tax election made
by Purchaser after the Effective Time of Closing, or (3) additional
income, gains or other Tax Obligations of Seller arising out of the
transactions contemplated hereunder.
-20-
(9) Intangible Assets. Appendix 2.01(c)(9) to Seller and Corporation to be
----------------- -------------------
Sold's Disclosure Letter sets forth:
(i) all patents, patent applications, trademarks, servicemarks (i) which
Corporation to be Sold owns or (ii) which are used in any way in, or
are necessary for the conduct of, the Business, and
(ii) all license agreements with respect to any of the foregoing as to
which Corporation to be Sold is licensor or licensee.
(iii) There are no pending or, to the knowledge of Seller and Corporation
to be Sold threatened, infringement claims against Corporation to be
Sold by any Person with respect to any of the items listed in
Appendix 1.02(b)7 to the Disclosure Letter, nor has any such item
-----------------
been declared invalid or been limited by any court or agreement.
Subject to any required third party consents, the Intangible Assets
will afford Purchaser at all times after the Effective Time of
Closing the rights to use all technology, proprietary information,
know-how or patented ideas, designs, inventions, trademarks,
copyrights, tradenames and servicemarks owned by Corporation to be
Sold or others necessary for the conduct of the Business as presently
being conducted. To Seller and Corporation to be Sold's knowledge and
subject to any required third party consents, the use of the
Intangible Assets will not and, the conduct of the Business as
presently conducted, does not infringe on the rights of any Person.
(10) Instruments in Full Force and Effect. Possession under Leases. The
-------------------------------------------------------------
Scheduled Contracts, (collectively "Instruments") are valid, binding and in
full force and effect, have not been amended or supplemented in any manner
or respect which singly or in the aggregate would result in a Material
Adverse Effect except as disclosed in Appendix 1.02(c)(10) to Seller and
------ --------------------
Corporation to be Sold's Disclosure Letter will be enforceable by
Corporation to be Sold or its assignees in accordance with their respective
terms, except as may be limited by bankruptcy, reorganization, fraudulent
------
conveyance, insolvency and similar laws of general application relating to
or affecting the enforcement of rights of creditors and subject to general
principles of equity. There are no defaults by Corporation to be Sold
thereunder and Corporation to be Sold knows of no defaults
-21-
thereunder by any other party thereto, and, to Seller and Corporation to be
Sold's knowledge, no event has occurred that with the lapse of time or
action or inaction by any party thereto would result in a violation thereof
or a default thereunder. Subject to any required third party consents, none
of the rights under the Instruments will be impaired by the consummation of
the transactions contemplated by this Agreement, and all such rights will
inure to and be enforceable by Purchaser after the Effective Time of
Closing without the authorization, consent, approval, permit or licenses
of, or filing with, any other Person. Corporation to be Sold enjoys
peaceful and undisturbed possession under all leases included in the
Scheduled Leases.
(11) Employees and Employee Plans and Agreements.
-------------------------------------------
(i) Appendix 2.01(c)(11)(i) to the Seller and Corporation to be Sold's
-----------------------
Disclosure lists (a) all full time employees of the Company, and (b) all
employment agreements between Corporation to be Sold and each such listed
employee, or an affirmative statement to the effect that, as to such named
employee, no written employment agreement exists.
(ii) Appendix 2.0l(c)(11)(ii) to Seller and Corporation to be Sold's
------------------------
Disclosure Letter (a) lists all of the profit sharing plans and all of the
retirement, stock option, stock purchase, incentive, bonus, life, medical,
vision, health, disability or accident plans, deferred compensation plans,
and other employee compensation or benefit or pension plans, agreements,
written policies, contracts, arrangements or commitments, including without
limitation severance agreements, holiday, vacation or other similar
matters, other "employee welfare benefit plans" (as defined in Section 3(1)
or ERISA), and "Employee Pension Benefit Plans" (as defined in Section 3(2)
of ERISA and not exempted under Section 4(b) or 201 or ERISA) relating to
officers or employees (including former officers or employees) of
Corporation to be Sold or any of its Affiliates who perform services to, in
the name of or for the benefit of the Business ("Employees") (collectively
the "Plans" and individually a "Plan"), and (b) identifies each of the
Plans which purports to be a tax-qualified plan under Section 401(a) of
the Code and identifies any trust funding any of such plans which
-22-
purports to be a tax exempt trust under Section 501(c)(9) of the
Code.
(iii) Except as reflected in Appendix 2.01(c)(11)(iii), all contributions
-------------------------
made to or accrued with respect to all of the Disclosure Letter,
Employee Plans are deductible under Section 404 or 162 of the Code.
No amounts, nor any assets or any Employee Plan are subject to Tax as
unrelated business taxable income under Sections 511, 512, or 419A of
the Code.
(iv) To Seller's and Corporation to be Sold's knowledge, no facts exist
which could result in a material increase in premium costs of Plans
for which benefits are insured.
(v) No Plan provides (or has any obligation or commitment to provide)
health, medical, disability, life or other similar benefits with
respect to any current or former employees (or beneficiary thereof)
of Corporation to be Sold beyond their retirement or other
termination of service (other than coverage mandated by Title I,
Subtitle B, Part 6 of ERISA, which coverage is fully paid by the
former employee or his dependents).
(12) Labor and Employee Relations.
(i) Except as set forth in Appendix 2.01(c)(12) to the Disclosure Letter,
------ --------------------
there exists (a) no charge of discrimination or lawsuit involving any
alleged violation of any fair employment law, wage payment law,
occupational safety and health law, and (b) no threatened or pending
litigation arising out of any employment relationship, or other
employment-related law, whether federal, state or local, and (c) no
threatened or pending litigation arising out of any employment
relationship, presently threatened or pending, by any applicant,
employee or former employee of Corporation to be Sold, or any
representative of any such Person or Persons. No charge or claim
involving any of the facilities or employees of Corporation to be Sold
is pending before any administrative agency, local, state or federal,
and no lawsuit involving any of such facilities or employees is
pending with respect to equal employment opportunity, age
discrimination, occupational
-23-
safety, or any other form of alleged employment practice or unfair
labor practice.
(ii) Corporation to be Sold complies in all material respects with all
applicable laws, rules and regulations relating to the employment of
labor, including but without limitation, those relating to wages,
hours, concerted activity, non-discrimination, occupational health
and safety and the payment and withholding of Taxes, and Corporation
to be Sold has no accrued liability for any arrears of wages or any
Taxes or penalties for failure to comply with any of the foregoing.
(iii) Corporation to be Sold shall be solely responsible for all
grievances, arbitrations, claims, demands, or charges of any nature
whatsoever including, but not limited to, any such grievances,
arbitrations, claims, demands, or charges whether now known or not
yet made by any employees, bargaining agents, or governmental
agencies, which result from or arise out of any event occurring
prior to the date of Closing; and, Corporation to be Sold agrees to
hold harmless and indemnity Purchaser for all such claims, if any,
asserted against Purchaser.
(13) Real Property. Except as set forth in Appendix 2.01(c)(13), the Real
------------- ------ --------------------
Property does not violate in any material respect any provisions of any
applicable building code, fire, health or safety regulations, or other
governmental ordinances, orders or regulations. No condition exists with
respect to the Real Property which would prevent, or require repair or
modification thereof as a prerequisite to, Purchaser using the Real
Property in the ordinary conduct of the Business except with respect to
------
ordinary wear and tear and scheduled maintenance and repair.
(14) Absence of Certain Changes, etc. Since _____________________, 19__,
------------------------------
and except as disclosed in Appendix 2.01(c)(14) to the Disclosure Letter,
------ -------------------
Corporation to be Sold has:
(i) conducted its operations in the ordinary course,
(ii) not entered into any material transaction or contract, or amended or
terminated any material transaction or contract, except normal
------
-24-
transactions or contracts consistent in nature and scope with prior
practices and entered into in the ordinary course of business,
(iii) not mortgaged, sold, transferred, distributed or otherwise disposed
of any of its material Assets, except in the ordinary course of
------
business,
(iv) not experienced any damage, destruction or loss to or of any of its
material Assets except in the ordinary course of business and except
------ ------
to the extent that any Asset damaged, destroyed or lost has been
repaired or replaced,
(v) not made or agreed to make any capital expenditures for additions to
property, plant or equipment, except for expenditures and
------
commitments not exceeding $5,000.00 in the aggregate, or
(vi) not made or agreed to make any change in the compensation payable to
any employee, except for increases in compensation in the ordinary
------
course of business substantially consistent with past practices of
Seller Corp.
(15) Subsidiaries. There is no corporation, partnership, joint venture, business
------------
trust or other legal entity in which Corporation to be Sold, either
directly or indirectly through one or more intermediaries, owns or holds
beneficial or record ownership of any outstanding voting shares.
(16) Material Contracts, etc. Appendix 2.01(c)(10) to the Disclosure Letter
----------------------- --------------------
lists all contracts, leases, written agreements and instruments material to
the Business or requiring the performance by Corporation to be Sold of any
material obligations of Corporation to be Sold which are not heretofore
described as Scheduled Contracts.
(17) Licenses and Permits. Except as reflected in Appendix 2.01(c)(17)
-------------------- ------ --------------------
Corporation to be Sold owns, holds and possesses all the Permits necessary
under law or otherwise for Corporation to be Sold to conduct the Business
as now being conducted and to construct, own, operate, maintain and use the
Assets in the manner in which they are now being constructed, operated,
maintained and used. Each of such Permits and Corporation to be Sold's
rights with respect thereto (1) is valid and subsisting, in full
-25-
force and effect, and enforceable by Corporation to be Sold subject to
administrative powers of regulatory agencies having jurisdiction, and (2)
following consummation of the transactions contemplated hereby, will
continue to be valid and subsisting in full force and effect, and subject
to any requisite governmental consents, enforceable by Purchaser without
any consent or approval of any Governmental Body or third party; or, in
lieu of such existing Permits, replacement or substitute Permits, if
indicated in Appendix 1.02(cb(17) to the Disclosure Letter, will be
--------------------
available to or obtainable by Purchaser at little or no cost in the
ordinary course without any interruption of the conduct of the Business
following the Effective Time of Closing, assuming timely application
therefor and reasonable diligence in pursuit thereof by Purchaser.
Corporation to be Sold is in compliance in all material respects with the
terms of such Permits and none of such Permits have been, or to the
knowledge of Seller and Corporation to be Sold, are threatened to be,
revoked, cancelled, suspended or modified except as indicated in Appendix
------ --------
1.02(b)17) to the Disclosure Letter.
----------
(18) [INTENTIONALLY OMITTED]
(19) [INTENTIONALLY OMITTED]
(20) Excluded Assets. None of Corporation to be Sold's Assets are being excluded
---------------
from the Assets owned by the Corporation to be Sold.
(21) Pricing. Attached hereto as Appendix 2.01(c)(21) of the Disclosure Letter
------- --------------------
is a complete and accurate list of Corporation to be Sold's standard prices
and any applicable discounts by customer name.
(22) Absence of Certain Business Practices. Neither Seller nor Corporation to be
-------------------------------------
Sold, or any officer, employee or agent of Seller or Corporation to be
Sold, nor any other Person acting on its behalf, has, directly or
indirectly, within the past three years, given or agreed to give any gift
or similar benefit to any customer, supplier, government employee or other
Person who is or may be in a position to help or hinder the business of
Corporation to be Sold (or to assist Corporation to be Sold in connection
with any actual or proposed transaction) which (1) might subject
Corporation to be Sold to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (2) if not given in the past, might
have had a Material Adverse Effect on the assets, business or operations
-26-
of Corporation to be Sold as reflected in the Financial Statements, or (3)
if not continued in the future, might Materially Adversely Effect the
assets, business operations or prospects of Corporation to be Sold or which
might subject Corporation to be Sold to suit or penalty in a private or
governmental litigation or proceeding.
(23) Corporate Name. To Seller and Corporation to be Sold's knowledge, the use
--------------
of the corporate name of Corporation to be Sold does not infringe the right
of any third party nor is it confusingly similar with the corporate name of
any third party. After the Closing Date, no Person or business entity other
than Purchaser will be authorized directly or indirectly to use the
corporate name of Corporation to be Sold or any name deceptively or
confusingly similar thereto.
(24) Customers and suppliers. Appendix 2.01(b)(24) to the Disclosure Letter sets
----------------------- --------------------
forth (1) a true and correct list of (i) the ten (10) largest customers of
Corporation to be Sold in terms of sales during the fiscal year ended
_____________________, 19__, and (ii) the ten (10) largest customers of
Corporation to be Sold in terms of sales during the five (5) months ended
_____________________, 19__, showing the approximate total sales to each
such customer during each of such periods; (2) a true and correct list of
(x) the ten (10) largest suppliers of Corporation to be Sold in terms of
purchases during the fiscal year ended ________________,19__ and (y) the
ten (10) largest suppliers of Corporation to be Sold in terms of purchases
during the five (5) months ended ____________________, 19__, showing the
approximate total purchases from each such supplier during such respective
periods. Except to the extent set forth in Appendix 2.01(b)(24) to the
------ --------------------
Disclosure Letter, there has not been any Material Adverse Change in the
business relationship of Corporation to be Sold with any customer or
supplier so named in the disclosure statement. Except for the customers and
------
suppliers named in Appendix 2.01(b)(4) to the Disclosure Letter,
-------------------
Corporation to be Sold has not had any customer which accounted for more
than five percent (5%) of its sales during the period from
_______________________, 19__ through and including the month ending prior
to date hereof, or any supplier from whom it purchased more than 5% of the
total goods or services purchased by it during such period.
-27-
(25) [INTENTIONALLY OMITTED]
(d) Disclosure.
----------
(1) Seller and Corporation to be Sold have fully provided the Purchaser or
its representatives with all the information that the Purchaser has
requested for deciding whether to consummate the purchase of the
Shares pursuant to the terms and conditions of this Agreement.
(2) No representation or warranty of Seller and Corporation to be Sold
contained in this Agreement or statement in the Seller and Corporation
to be Sold's Disclosure Letter contains any untrue statement either at
the date this Agreement is executed, the Date the Disclosure Letter is
delivered to the Purchaser, and the date of each supplement thereto,
and the Closing Date. No representation or warranty of Seller
contained in this Agreement or statement in the Seller and Corporation
to be Sold's Disclosure Letter or any supplement omits to state a
material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that notwithstanding any provision to
the contrary herein, (i) Purchaser shall be entitled only to rely on
the latest version of information furnished to Purchaser by Seller and
Corporation to be Sold which supersedes previous information furnished
to Purchaser if the supplementary information to the Purchaser is
delivered to Purchaser in written form, expressly identifying the
prior information which is being superseded and provides an
explanation of how the superseding information was obtained and why
the Seller and Corporation to be Sold, in good faith, believed the
superseded information was true when it was provided to Purchaser, and
(ii) Seller and Corporation to be Sold shall have no liability with
respect to estimates or projections which may be or may have been
furnished to Purchaser, regarding estimates or projections which may
be or may have been furnished to Purchaser, including estimates of
future revenues, earnings or profits or estimates of amounts required
to satisfy future obligations, but all estimates or projections
communicated by any of Seller and Corporation to be Sold to Purchaser
shall be reasonably made, in good faith and based upon assumptions
reasonable under the circumstances.
-28-
(3) No record regarding Seller or Corporation to be Sold, furnished
pursuant to Section 7.16 will contain any untrue statement. No
supplement to the Seller and Corporation to be Sold's Disclosure
Letter made pursuant Section 3.12 will contain any untrue
statements or omit to state a material fact necessary in order to
make the statements therein or in this Agreement, in light of the
circumstances under which they were made, not misleading.
(4) There is no fact known to Seller which has specific application
to the Seller, the Corporation to be Sold, the Shares, the Assets
or the Business (other than general economic or industry
conditions) that could have a Material Adverse Effect which has
not been set forth in this Agreement or the Seller and
Corporation to be Sold's Disclosure Letter.
2.02 Representations and Warranties of Purchaser. Purchaser represents and
-------------------------------------------
warrants to Seller that the following are true and correct on and as of the
date of this Agreement and will be true and correct through the Effective
Time of Closing as if made on and as of that date:
(a) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Utah and is qualified to
transact business and is in good standing as a foreign corporation in
the jurisdictions where it is required to qualify in order to conduct
its businesses as presently conducted.
(b) Purchaser has the corporate power and authority to own, lease or
operate all properties and assets now owned, leased or operated by it
and to carry on its businesses as now conducted.
(c) Purchaser may execute, deliver and perform this Agreement without the
necessity of Purchaser obtaining any consent, approval, authorization
or waiver or giving any notice or otherwise, except for such consents,
------
approvals, authorizations, waivers and notices which have been
obtained and are unconditional and are in full force and effect and
such notices which have been given.
(d) The execution, delivery and performance of this Agreement do not and
will not:
(1) constitute a violation of the Articles of Incorporation, as
amended, or the Bylaws, as amended, as the case may be, of
Purchaser,
-29-
(2) constitute a violation of any statute, judgment, order, decree or
regulation or rule of any court, governmental authority or
arbitrator applicable or relating to Purchaser, or
(3) constitute a default under any contract to which Purchaser is a
party except where such default would not have a material adverse
------
effect upon the ability of Purchaser to perform its obligations
under this Agreement.
(e) This Agreement has been duly authorized, executed and delivered by
Purchaser. This Agreement constitutes the legal, valid and binding
obligation, of Purchaser enforceable 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.
(f) Purchaser acknowledges that it has sufficient knowledge and expertise
in business and financial matters to evaluate the merits and risks
associated with the transactions contemplated by this Agreement.
Purchaser has made its decision to enter into this Agreement and to
consummate the transactions contemplated hereby without relying upon
any express or implied representations from Seller except as set forth
------
in this Agreement.
ARTICLE III
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
-----------------------------------------
3.01 Access to Records and Properties: Confidentiality.
-------------------------------------------------
(a) Between the date of this Agreement and the Effective Time of Closing,
Seller shall cause Corporation to be Sold to give, and Corporation to
be Sold shall give, to Purchaser and its advisors such access to the
premises, books and records of Corporation to be Sold, and to cause
the officers, employees and accountants of Corporation to be Sold to
furnish such financial and operating data and other information with
respect to Corporation to be Sold as Purchaser shall from tune to time
reasonably request. Without limiting the generality of the foregoing,
Seller shall cause Corporation to be Sold to give, and Corporation to
be Sold shall give, to Purchaser and its representatives access during
normal business hours to the facilities and operations of Corporation
to be Sold so that Purchaser may (1) obtain evaluations of the Assets
and (2) perform any and all assessing, testing, monitoring and
investigating that Purchaser deems necessary in its sole discretion
-30-
with respect to Corporation to be Sold's assets and the operation of
the business. Any investigation pursuant to this Section 3.01 shall be
conducted in such manner as not to interfere unreasonably with the
business and operations of Corporation to be Sold.
(b) In connection with the transactions contemplated by this Agreement, in
addition to, and not by way of limitation of, any other obligations of
Purchaser under or pursuant to any other agreement, whether written or
oral, with Seller or any other obligations of Purchaser at law or in
equity, all information furnished to Purchaser or to any other Person
for the benefit of Purchaser will be kept confidential by Purchaser,
such other Person and their respective associates, Affiliates, agents,
employees, consultants and advisors (collectively, "Purchaser
Representatives") prior to payment in full of the Purchase Price, or
in the event the Closing does not occur at all times, and will not be
used in any manner adverse to the furnishing party. During such time,
Purchaser will hold and will cause the Purchaser Representatives to
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other
requirements of law, all documents and information concerning Seller
which is furnished to Purchaser or any Purchaser Representative by
Seller or any of their representatives in connection with the
transactions contemplated by this Agreement (except to the extent that
------
such information can be shown to have been (1) previously available to
the Person to which it was furnished on a non-confidential basis prior
to its disclosure, (2) in the public domain or (3) available on a non-
confidential basis from a Person other than a Person not bound by any
confidentiality agreement). Purchaser may release or disclose such
information to any Purchaser Representative in connection with this
Agreement prior to the Closing Date or in the event the Closing does
not occur only if the Purchaser Representatives are informed of the
confidential nature of such information and they agree in writing
(substantially similar in substance to the matters contained in this
Section 3.01(b)) to such confidential treatment of all such
information. If the transactions contemplated by this Agreement are
not consummated, Purchaser agrees to remain bound by (x) the
Confidentiality Agreement previously executed by Purchaser and
Corporation to be Sold, a copy of which is attached hereto as
Exhibit 3.01-1, [FORM ATTACHED] (the "Confidentiality Agreement") and
--------------
incorporated herein for all purposes.
3.02 Operation of Corporation to be Sold. Between the date hereof and the
-----------------------------------
Closing Date, except as contemplated herein or except with the prior
------ ------
consent of Purchaser, which
-31-
consent will not be unreasonably withheld or delayed, Seller and
Corporation to be Sold shall:
(a) cause Corporation to be Sold to operate the business as presently
operated, only in the ordinary course, and in compliance with all
laws, regulations, writs, injunctions, decrees or orders applicable to
Corporation to be Sold or its Assets, including without limitation all
environmental, safety and health, antitrust, consumer protection,
labor, equal opportunity or discrimination laws, rules and
regulations,
(b) cause the tangible assets (except for sales from Inventory) to be
------
maintained and repaired in accordance with past practices of
Corporation to be Sold,
(c) not dispose of, or commit to dispose of, any Assets (other than the
liquidation and settlement of Accounts and the sale and delivery of
Inventory and products covered by Backlog Orders, all in the ordinary
and customary course of Corporation to be Sold's business),
(d) actively market the Products and services of Corporation to be Sold in
accordance with its usual practices, and
(e) continue in effect until immediately following the Effective Time of
Closing all present insurance coverage with respect to the Assets, the
Business and the Employees.
All risk of loss arising out of fire and casualty and all liability to
third parties or to Employees arising out of operations of the
Business prior to the Effective Time of Closing shall be that of
Seller and Corporation to be Sold, and Purchaser shall have no
obligation or liability in connection therewith.
Seller and Corporation to be Sold shall not effect any amendment to
the Certificate of Incorporation or the Bylaws of Corporation to be
Sold and shall not cause or permit the issuance of any additional
shares of the capital stock or equity interest (or options, warrants
or other rights to acquire capital stock or equity securities) of
Corporation to be Sold.
Seller and Corporation to be Sold shall use best efforts to operate
and maintain, or to cause to be operated and maintained, the Business
and the Assets in such a manner so that the representations and
warranties of Seller and Corporation to
-32-
be Sold contained herein shall continue to be true and correct in all
material respects on and as of the Effective Time of Closing as if
made on and as of the Effective Time of Closing.
Seller and Corporation to be Sold shall advise Purchaser promptly in
writing of any condition or circumstance, known to Seller, occurring
from the date hereof up to and including the Effective Time of Closing
that would cause the respective representations and warranties of
Seller and Corporation to be Sold contained herein to become untrue in
any material respect. Seller shall deliver to Purchaser a Supplement
to the Seller and Corporation to be Sold's Disclosure Letter promptly
after Seller becomes aware of any event which changes any
representation or warranty made by Seller and Corporation to be Sold
in this Agreement or any statement made in the Seller and Corporation
to be Sold's Disclosure Letter or in any Supplement.
3.03 Consents. Seller and Corporation to be Sold shall use their respective
--------
reasonable efforts to obtain any consents of Governmental Bodies,
suppliers, distributors, and other Persons required in order for Seller and
Corporation to be Sold to sell and transfer the Business pursuant to this
Agreement. Purchaser agrees to use its best efforts to assist Seller and
Corporation to be Sold in obtaining such consents. If any of the foregoing
shall require the consent of any party thereto other than Corporation to be
Sold, then this Agreement shall not constitute an agreement to assign the
same, and such items shall not be assigned to or assumed by Purchaser if an
actual or attempted assignment thereof would constitute a breach or default
thereunder. Corporation to be Sold shall use its reasonable efforts to
obtain such consents to the extent required of such other parties. If any
such consent cannot be obtained, Corporation to be Sold will cooperate in
any reasonable arrangement designed to obtain for Purchaser all benefits
and privileges of the applicable instrument, contract, license, document or
permit while protecting Corporation to be Sold from continuing liabilities
or obligations thereunder.
3.04 No Public Announcements or Negotiation with Others.
--------------------------------------------------
(a) The parties hereto shall not issue any press release or make any
public statement regarding the transactions contemplated by this
Agreement without obtaining the prior consent of the other party,
which consent shall not be unreasonably withheld.
(b) Unless and until this Agreement shall have been terminated by
Purchaser or Seller and Corporation to be Sold pursuant to Section
5.02, neither Shareholder,
-33-
Corporation to be Sold nor any of the officers or directors of
Corporation to be Sold, nor any Affiliates of any of them whom they
are able to influence, without the consent of Purchaser shall:
(1) directly or indirectly, encourage, solicit, initiate or
participate in any discussions or negotiations with any
corporation, partnership, Person or other entity or group (other
than to Purchaser or an affiliate or an associate of Purchaser)
concerning any merger, sale of substantial assets, business
combination, sale of shares of capital stock or similar
transactions involving the business of Corporation to be Sold or
any Asset, whether by providing non-public information or
otherwise; or
(2) disclose, directly or indirectly, any information not customarily
disclosed to any Person concerning their business and properties,
afford to any other Person access to their properties, books or
records or otherwise assist or encourage any Person in connection
with any of the foregoing.
In the event Seller and Corporation to be Sold shall receive any
offer for a transaction of the type referred to in this Section
3.04, Seller and Corporation to be Sold shall promptly inform
Purchaser as to any such offer.
3.05 Best Efforts to Satisfy Conditions. Seller and Corporation to be Sold
----------------------------------
shall use their respective reasonable efforts to cause the conditions to
the obligations of Purchaser contained in Section 4.01 to be satisfied to
the extent that the satisfaction of such conditions is reasonably in the
control of Seller and Corporation to be Sold, and Purchaser shall use its
best efforts to cause the conditions to the obligations of Seller and
Corporation to be Sold contained in Section 4.02 to be satisfied to the
extent that the satisfaction of such conditions is in the control of
Purchaser.
3.06 [INTENTIONALLY OMITTED]
3.07 Payment of Taxes. Seller shall pay when due any sales, transfer or
----------------
similar Taxes which may become applicable in respect of Seller's sale of the
Business or any of the Assets to Purchaser.
3.08 [INTENTIONALLY OMITTED]
-34-
3.09 [INTENTIONALLY OMITTED]
3.10 [INTENTIONALLY OMITTED]
3.11 [INTENTIONALLY OMITTED]
3.12 Update Seller's Disclosure Letter. Seller shall deliver to Purchaser a
---------------------------------
Supplement to the Seller's Disclosure Letter promptly after Seller becomes
aware of any event which changes any representation or warranty made by
Seller in this Agreement or any previous statement made in the Seller's
Disclosure Letter or in any Supplement, and a supplement titled "Closing
Date Disclosure Statement", dated the Closing Date affirmatively stating
that all disclosures not updated or supplemented, as of the Closing Date,
remain true, do not omit from such Disclosure, any material fact or
circumstance and otherwise conform to the requirements of this Agreement.
ARTICLE IV
CONDITIONS OF CLOSING
---------------------
4.01 Conditions of Obligations of Purchaser. The obligations of Purchaser to
--------------------------------------
consummate the purchase and sale under this Agreement are subject to the
satisfaction of the following conditions, each of which may be waived in
writing by Purchaser:
(a) Representations and Warranties, Performance of Obligations.
----------------------------------------------------------
(1) The representations and warranties of Seller and Corporation
to be Sold set forth in Section 2.01 hereof and in each
certificate, agreement, document or instrument delivered
pursuant hereto on or before the Closing Date or in connection
with the transactions contemplated hereby, subject to such
changes as contemplated herein on the Closing Date, shall have
been and shall be true and correct in all material respects on
and as of the date of this Agreement and shall be true and
correct in all material respects on and of the Closing Date,
as though made on and as of the Closing Date.
(2) Seller and Corporation to be Sold shall have performed in all
material respects the covenants, agreements and obligations
required to be performed by it under this Agreement prior to
and on the Closing Date.
-35-
(3) Seller and Corporation to be Sold shall have delivered to
Purchaser its certificate confirming the satisfaction of the
conditions set forth in subparagraphs (1) and (2) above and
such other matters that Purchaser may reasonably request.
(b) Delivery of Instruments. Seller shall have delivered to Purchaser
-----------------------
(i) the certificate or certificates evidencing ownership of all of
the issued and outstanding shares of the Corporation to be Sold,
(ii) the duly authorized and executed General Conveyance, Transfer
and Assignment, (iii) letters of resignation from all of the
officers and directors of the Corporation to be Sold, and (iv) such
other conveyance documents that Purchaser may reasonably request to
effect the transfer and conveyance of control of Corporation to be
Sold to Purchaser.
(c) Opinion of Counsel to Seller. Purchasers shall have received the
----------------------------
opinion of Seller's counsel, dated the Closing Date, in the form of
Exhibit 4.01-1 hereto [FORM ATTACHED].
(d) Purchaser accepts the condition of the Assets and the Business as
reflected in the Disclosure Letter and the Supplements.
(e) Consents, Notices and Approvals. All consents and approvals of all
-------------------------------
Persons necessary for the consummation of the Transaction under
Seller's Certificate of Incorporation or bylaws or any agreement,
permit, law or regulation shall have been received and delivered to
Purchaser, all notices to any Person required by any of the
foregoing to be given in respect of the Transaction prior to
Closing shall have been duly given, and all necessary action shall
have been taken to permit Purchaser to exercise the rights, as
owner of all of the issued and outstanding shares of the
Corporation to be Sold.
(f) [INTENTIONALLY OMITTED]
(g) Non-Competition Agreement. Seller and its shareholders shall have
-------------------------
delivered the duly authorized and executed Non-Competition
Agreement pursuant to Section 1.02(e).
(h) Other Matters. Seller shall have delivered to Purchaser, in form
-------------
and substance reasonably satisfactory to counsel for Purchaser,
such certificates and other evidence as Purchaser may reasonably
request as to the satisfaction of the conditions contained in this
Section 4.01.
-36-
4.02 Conditions of Obligations of Seller. The obligations of Seller to
-----------------------------------
consummate the sale and purchase under this Agreement are subject to the
satisfaction of the following conditions, each of which may be waived in
writing by Seller:
(a) Representations and Warranties, Performance of Obligations.
----------------------------------------------------------
(1) The representations and warranties of Purchaser set forth in
Section 2.02 hereof and in each certificate, agreement,
document or instrument delivered pursuant hereto on or before
the Closing Date or in connection with the transactions
contemplated hereby on the Closing Date shall have been and be
true and correct in all material respects on and as of the
date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date.
(2) Purchaser shall have performed in all material respects the
covenants, agreements and obligations necessary to be
performed by it under this Agreement prior to the Closing
Date.
(3) Purchaser shall have delivered to Seller its certificate
confirming the satisfaction of the conditions set forth in
subparagraphs (1) and (2) above and such other matters that
Seller may reasonably request.
(b) Payment. Purchaser shall have delivered the shares representing the
-------
Purchase Price and other instruments required to be made or
delivered on the Closing Date.
(c) Opinion of Counsel to Purchaser. Seller shall have received the
-------------------------------
opinion of ▇▇▇▇ ▇▇▇▇▇▇▇, dated the Closing Date, in the form of
Exhibit 4.02(c) hereto [FORM ATTACHED].
---------------
(d) Other Matters. Purchaser shall have delivered to Seller, in form
-------------
and substance reasonably satisfactory to Seller's counsel, such
certificates and other evidence as Seller may reasonably request as
to the satisfaction of the conditions contained in this Section
4.02.
4.03 [INTENTIONALLY OMITTED]
4.04 Opportunity to Cure. In the event that Purchaser shall notify Seller, or
-------------------
Seller shall notify Purchaser, of its decision not to consummate the
sale and purchase of the Business hereunder due to the failure of any of
the conditions contained in Section 4.01 or 4.02
-37-
hereof to be satisfied, Seller, or Purchaser, as the case may be, shall
have the opportunity for a reasonable period of time to take such
actions as may be necessary to remedy the circumstances which have
resulted in the failure of such condition or conditions to be satisfied.
ARTICLE V
CLOSING DATE AND TERMINATION OF AGREEMENT
-----------------------------------------
5.01 Closing Date.
------------
(a) Subject to the right of (1) Seller and (2) Purchaser to terminate
this Agreement pursuant to Section 5.02 hereof, the closing for the
consummation of the purchase and sale contemplated by this
Agreement (the "Closing") shall, unless another date or place is
agreed to in writing by Seller and Purchaser, take place at the
offices of Purchaser at 10:00 a.m., local time on December 18,
1996, or such other date as the parties may agree upon (the
"Closing Date").
(b) For all purposes hereof, the term "the Effective Time of Closing"
shall occur upon the delivery to Purchaser of the (i) Shares, (ii)
the General Conveyance, Transfer and Assignment, (iii) the Closing
Date Disclosure Statement, and (iv) the other Operative Documents
as contemplated herein on the Closing Date.
5.02 Termination of Agreement.
------------------------
(a) This Agreement may, by written notice given at or prior to Closing
in the manner hereinafter provided, be terminated or abandoned:
(1) In the event that the Closing shall not have occurred on or
before December 18, 1996, by Seller or by Purchaser;
(2) By Purchaser, if a material default or breach shall be made by
Seller with respect to the due and timely performance of any
of their covenants and agreements contained herein, or with
respect to the correctness of or due compliance with any of
their representations and warranties contained in Article II
hereof, and such default cannot be cured and has not been
waived; if Seller shall notify Purchaser of any default or
breach by Seller hereunder and Purchaser chooses not to
terminate this Agreement, Purchaser shall be deemed to have
waived such default or breach;
-38-
(3) By Seller if a material default or breach shall be made by
Purchaser with respect to the due and timely performance of
any of its covenants and agreements contained herein, or with
respect to the correctness of or due compliance with any of
its representations and warranties contained in Article III
hereof, and such default cannot be cured and has not been
waived; if Purchaser shall notify Seller of any default or
breach by Purchaser and Seller chooses not to terminate this
Agreement, Seller shall be deemed to have waived such default
or breach;
(4) By mutual consent of Seller and Purchaser; or
(5) By Purchaser if any Supplement to the Disclosure Letter
contains disclosures of any fact or condition which makes
untrue, or shows to have been untrue, any representation or
warranty by Seller in this Agreement or any statement made in
the Disclosure Letter, unless concurrently with the delivery
of the Supplement Seller represents and warrants that the
disclosed fact or condition can and will be corrected at
Seller's expense prior to Closing, or such supplemental
disclosure is otherwise materially significant and adverse as
regards the value of the Shares, the Assets or the Business.
(b) In the event this Agreement is terminated pursuant to Section
5.02(a), all further obligations of the parties hereunder shall
terminate, except that the obligations set forth in Sections
------
3.01(b), 7.02 and 7.03 shall survive; provided, however, that if
this Agreement is so terminated by one party because one or more
of the conditions to such party's obligation hereunder is not
satisfied as a result of the other party's failure to comply with
Section 3.05 or any of its obligations under any other provision
of this Agreement, it is expressly agreed and understood that the
terminating party's right to pursue all legal remedies for breach
of contract and damages shall also survive such termination
unimpaired.
ARTICLE VI
INDEMNIFICATION
---------------
6.01 Indemnity.
---------
(a) Seller's Indemnification to Purchase. Subject to Section 6.01(b)
------------------------------------
and (d) hereof, Seller and Corporation to be Sold agree to
indemnity and hold Purchaser and Purchaser's officers and directors
("Purchaser Indemnitees") harmless from any
-39-
and all actual damages, losses, liabilities (joint or several),
payments, obligations, penalties, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements or
expenses (including without limitation, fees, disbursements and
expenses of attorneys, accountants and other professional advisors
and of expert witnesses and costs of investigation and preparation)
of any kind or nature whatsoever (collectively "Damages"),
resulting from, relating to or arising out of.
(1) any breach of or inaccuracy in any representation or warranty
of Seller contained in Section 2.01 of this Agreement or a
representation or warranty contained in any Operative
Document;
(2) any breach or non-performance, partial or total, by either
Seller or Corporation to be Sold of any covenant or agreement
of Seller (or any affiliate or subsidiary thereof) contained
in this Agreement or in any Operative Document;
(3) any actual violation of or non-compliance with, or remedial
obligation arising under, any Environmental Laws arising from
any event, condition, circumstance, activity, practice,
incident, action or plan existing or occurring prior to the
Effective Time of Closing relating in any way to the assets or
the business of Corporation to be Sold (including without
limitation the ownership, operation or use of the Assets and
the conduct of the business of Corporation to be Sold prior to
the Effective Time of Closing; the products manufactured or
sold by Corporation to be Sold prior to the Effective Time of
Closing; the presence of any Materials of Environmental
Concern other than in compliance with Environmental Laws on,
in, under or affecting all or any portion of Corporation to be
Sold's properties or any surrounding areas, and any Release or
threatened Release with respect to such underground storage
tanks or Materials of Environmental Concern; and the storage,
disposal or treatment, or transportation for storage, disposal
or treatment, of Materials of Environmental Concern; but
excluding any violation of or non-compliance with, or remedial
---------
obligation arising under, any Environmental Laws that is
attributable to a change by Purchaser in the structure, use or
condition of any of the Assets after the Effective Time of
Closing). "Materials of Environmental Concern" as used herein
means any solid or hazardous waste, hazardous substance,
pollutant, contaminant, oil, petroleum product, commercial
product or other substance (x) which is listed, regulated or
designated as toxic or hazardous (or words of similar meaning
-40-
and regulatory effect), or with respect to which remedial
obligations may be imposed, under any Environmental Laws or
(y) exposure to which may pose a health or safety hazard;
(4) the ownership, management or use of the Assets prior to the
Effective Time of Closing; the conduct of the Business prior
to the Effective Time of Closing; the products manufactured or
sold by Corporation to be Sold prior to the Effective Time of
Closing (other than Damages attributable to defects that are
in Products in Inventory at the Effective Time of Closing to
the extent the defects resulted from Purchaser's negligence
after the Effective Time of Closing); all contracts,
agreements, obligations, commitments and liabilities of
Corporation to be Sold of every kind of character relating in
any way to the assets or the business of Corporation to be
Sold; and, all pension, retirement, bonuses, severance pay,
salaries and all other compensation and benefits of whatsoever
nature (including all liabilities to any Person under ERISA
and all liabilities to any Governmental Body) attributable to
service or to employment by Corporation to be Sold prior to
the Effective Time of Closing;
(5) any losses or costs of defending against any claims which may
be made against Purchaser or against the Corporation to be
Sold by any Person claiming violations of any local, state, or
federal laws relating to the employment relationship,
including, but not limited to, wages, hours, concerted
activity, discrimination, occupational health and safety, the
payment and withholding of Taxes, or claims related to any
affiliated person, predecessors-in-ownership of the Assets or
Business where such claims arise out of circumstances
occurring prior to the Closing Date.
(b) Purchaser's Indemnities to Seller. Subject to Section 6.01(d)
---------------------------------
hereof, Purchaser shall indemnify and hold Seller and its
respective officers, directors and shareholders ("Seller
Indemnitees") harmless from, any and all Damages resulting from or
arising out of:
(1) any breach of any representation or warranty of Purchaser
contained in Section 2.02;
(2) the non-performance, partial or total, of any covenant or
agreement of Purchaser contained in this Agreement, any
Operative Document or any instrument or agreement delivered
pursuant to this Agreement.
-41-
(c) Known Matters. In no event shall any party be able to assert a
-------------
claim for indemnification hereunder or bring any action of any kind
or nature, whether as a claim for indemnification pursuant to this
Agreement or otherwise, with respect to any matter for which
indemnification might otherwise be available which was a matter
known by or brought to the attention of an officer or director of
Purchaser or Seller, as applicable, prior to the Closing Date.
6.02 Notice, Participation and Duration.
----------------------------------
(a) If a claim by a third party is made against a party indemnified
pursuant to this Article VI ("Indemnitee"), and if such Indemnitee
intends to seek indemnity with respect thereto under this Article
VI, the Indemnitee shall promptly, and in any event within 90 days
after the assertion of any claim or the discovery of any fact upon
which Indemnitee intends to base a claim for indemnification under
this Agreement ("Claim"), notify the party or parties from whom
indemnification is sought ("Indemnitor") of such Claim. In the
event of any Claim, Indemnitor, at its option, may assume (with
legal counsel reasonably acceptable to the Indemnitee) the defense
of any claim, demand, lawsuit or other proceeding in connection
with the Indemnitee's Claim, and may assert any defense of
Indemnitee or Indemnitor, provided that Indemnitee shall have the
right at its own expense to participate jointly with Indemnitor in
the defense of any claim, demand, lawsuit or other proceeding in
connection with the Indemnitee's Claim and provided further that
failure to give such notice shall not preclude Indemnitee making
any Claim thereon if the failure or delay in giving such notice did
not prejudice Indemnitee. In the event that Indemnitor elects to
undertake the defense of any Claim hereunder, Indemnitee shall
cooperate with Indemnitor to the fullest extent possible in regard
to all matters relating to the Claim (including, without
limitation, corrective actions required by applicable law,
assertion of defenses and the determination, mitigation,
negotiation and settlement of all amounts, costs, actions,
penalties, damages and the like related thereto) so as to permit
Indemnitor's management of same with regard to the amount of
Damages payable by the Indemnitor hereunder. Neither Purchaser nor
Seller shall be entitled to settle any Claim without the prior
written consent of the other, which consent shall not unreasonably
be withheld or delayed.
(b) No Claim for indemnification under this Section 6.02 may be made
after the fifth anniversary of the Effective Time of Closing,
except that Claims for indemnification in respect of breaches of
------
the representations and warranties contained in Section 2.01(g)
hereof (concerning Taxes), or claims under Section
-42-
6.01(a)(6) (concerning Taxes), may be made so long as any claim may be
made in respect of such matters under any applicable statute of
limitations; provided, however, that the foregoing shall not affect
any claim made in good faith prior to the date of such expiration.
6.03 Indemnification in the Event of Negligence of Indemnitee. The
--------------------------------------------------------
indemnification provided in this Article VI shall be applicable whether or
not negligence of the Indemnitee is alleged or proven.
6.04 Reimbursement. In the event that the Indemnitor shall undertake, conduct
-------------
or control the defense or settlement of any Claim and it is later
determined that such Claim was not a Claim for which the Indemnitor is
required to indemnify the Indemnitee under this Article VI, the Indemnitee
shall reimburse the Indemnitor for all its costs and expenses with respect
to such settlement or defense, including reasonable attorneys' fees and
disbursements.
6.05 The Purchaser as Indemnitee pursuant to the provisions of this ARTICLE VI
shall have the right of offset any amounts for which it or any other
Purchaser Indemnitee is entitled to indemnification under this Article IV,
against the shares of Purchaser issued and delivered to Seller as part of
the Purchase Price, the shares value, for purposes of this offset being
valued at the market price of such shares on the day notice of the claim
is made by Purchaser to Seller. In the event Purchaser shall claim such
right of offset, it shall be entitled to cancel such shares issued to
Seller as the Purchase Price and instruct the transfer agent to cancel the
shares recorded as owned by the Seller and the Purchaser and transfer
agent shall record such cancelled shares, thereafter as treasurer shares
of Purchaser. The Seller's execution of this Agreement shall constitute a
stock power of Seller, authorizing Purchaser or its representatives to
effect the herein-described cancellation. The cancellation of shares
shall, in any event, constitute Purchaser's sole remedy as against the
Seller to recover a claim for indemnity.
ARTICLE VII
MISCELLANEOUS
-------------
7.01 Further Actions. From time to time, as and when requested by Purchaser or
---------------
Seller, Seller or Purchaser shall execute and deliver, or cause to be executed
and delivered, such documents and instruments and shall take, or cause to be
taken, such further or other actions as may be reasonably necessary to
effectuate the Transaction, transfer, assign and deliver to Purchaser or its
permitted assigns the Business (or to evidence the foregoing)
-43-
and to consummate and to effect the other transactions expressly required
to be performed by Seller hereunder.
7.02 No Broker. Seller and Purchaser represent and warrant each to the other
---------
that they have no obligation or liability to any broker or finder by
reason of the transactions which are the subject of this Agreement. Each
of (a) Seller and (b) Purchaser agree to indemnity the other against, and
to hold the others harmless from, at all times after the date hereof, any
and all liabilities and expenses (including without limitation legal fees)
resulting from, related to or arising out of any claim by any Person for
brokerage commissions or finder's fees, or rights to similar compensation,
on account of services purportedly rendered on behalf of Seller or
Purchaser, as the case may be, in connection with this Agreement or the
transactions contemplated hereby.
7.03 Expenses. Except as otherwise specifically provided herein, Seller and
-------- ------
Purchaser shall each bear their own legal fees, accounting fees and other
costs and expenses with respect to the negotiation, execution and delivery
of this Agreement and the consummation of the transactions hereunder.
7.04 Entire Agreement. This Agreement, the Exhibits hereto (including without
---------------- --------
limitation the Confidentiality Agreement referred to in Section 3.01
(b), the Seller's Disclosure Letter and any Supplement thereto) contain,
and are intended by the parties as a formal expression of, the entire
agreement between Seller and Purchaser with respect to the transactions
contemplated by this Agreement and, except as provided in Section
------
3.01(b), supersedes all prior oral or written agreements, arrangements or
understandings with respect thereto, including without limitation the
Letter of Intent (except to the extent provided in Section 3.01(b) in
respect of its confidentiality provisions).
7.05 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.
7.06 Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and shall be delivered either (i)
personally, or (ii) by telegram, telex, telecopy or similar facsimile
means, and by registered or certified mail (postage prepaid and return
receipt requested), or by express courier or deliver service, addressed as
follows:
-44-
If to Seller:
--------------------------------
--------------------------------
--------------------------------
Telephone:
----------------------
Fax:
----------------------------
If to Purchaser:
Lanstar Semiconductor, Inc.
c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, P.C.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: 1/▇▇▇ ▇▇▇-▇▇▇▇
or at such other address and number as either party shall have previously
designated by written notice given to the other party in the manner hereinabove
set forth. Notices shall be deemed given when received, if sent by telegram,
telex, telecopy or similar facsimile means (confirmation of such receipt by
confirmed facsimile transmission being deemed receipt of communications sent by
telex, telecopy or other facsimile means); and when delivered and receipted for
(or upon the date of attempted delivery where delivery is refused), if hand-
delivered, sent by express courier or delivery service, or sent by certified or
registered mail.
-45-
7.07 Governmental Law. This Agreement shall be governed by and construed in
----------------
accordance with the laws of the State of Texas (other than the choice of
law principles thereof).
7.08 Assignability. This Agreement shall not be assignable otherwise than by
-------------
operation of law by any party without the prior written consent of the
other parties, and any purported assignment by any party without the prior
written consent of the other parties shall be void.
7.09 Waivers and Amendments. Any waiver of any term or condition of this
----------------------
Agreement, or any amendment or supplementation of this Agreement, shall be
effective only if in writing. A waiver of any breach or failure to enforce
any of the terms or conditions of this Agreement shall not in any way
affect, limit or waive a party's rights hereunder at any time to enforce
strict compliance thereafter with every term or condition of this
Agreement.
7.10 Third Party Rights. Notwithstanding any other provision of this Agreement,
------------------
this Agreement shall not create benefits on behalf of any Person who is
not a party to this Agreement (including without limitation any broker or
finder, notwithstanding the provisions of Section 7.02 hereof), and this
Agreement shall be effective only as between the parties hereto, their
successors and permitted assigns; provided, however, that Purchaser
Indemnitees are intended third party beneficiaries hereof to the extent
provided in Sections 6.01 and 6.05.
7.11 Illegalities. In the event that any provision 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 every other resect and the remaining provisions of this
Agreement shall not, at the election of the party for whose benefit the
provision exists, be in any way impaired.
7.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one Agreement.
7.13 Survival; Exclusivity of Remedies. The representations, warranties,
---------------------------------
covenants and agreements of the parties hereto shall survive the Closing,
and the indemnification provided by Section 6.01 shall not be the
exclusive remedy available to the parties hereto.
-46-
7.14 Access to Records.
-----------------
(a) Following the Effective Time of Closing, Purchaser shall give to
Seller free and unrestricted access to (and the right to make copies
at the expense of Seller) the Records and to the extent that such
were purchased by Purchaser hereunder and relate to the Business, its
operations income, expenses or the Assets of the Corporation to be
Sold existing on, accruing or arising prior to or occurring prior to
Effective Time of Closing, but any access pursuant to this Section
7.15 shall be conducted in such manner as not to interfere
unreasonably with the operation of the Business following the
Effective Time of Closing.
(b) Any access to Records pursuant to this Section shall be subject to
the confidentiality obligations stated in Sections 3.01(b) and (c).
7.15 Cost of Litigation. If any legal action or other proceeding is brought for
------------------
the enforcement of this Agreement or because of an alleged dispute,
breach, default or misrepresentation in connection with this Agreement or
the transactions contemplated hereby, the successful or prevailing party
or parties shall be entitled to recover reasonable attorneys' fees and
other costs incurred in connection with such action or proceeding, in
addition to any other relief to which it or they may be entitled, subject
to Section 6.01(b).
IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement as of the date first above written.
PURCHASER: LANSTAR SEMICONDUCTOR, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Chairman/CEO
----------------------------------
SHAREHOLDER: WORLD DATA, LIMITED
By: /s/ ▇. ▇. ▇▇▇▇ President
----------------------------------
CORPORATION TO BE SOLD: SOUTHWEST MEMORY INTERNATIONAL, INC.
By: /s/ ▇. ▇▇▇▇▇▇▇▇ President
----------------------------------
-47-
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT, as of the___ day of_______ 1996, (this
"Non-competition Agreement), among WORLD DATA, LIMITED, a _______________
corporation ("Seller Corp"), ("Seller"), and ▇▇▇▇▇ ▇. ▇▇▇▇ and
_____________________________________________, (collectively called "Promisors")
and LANSTAR SEMICONDUCTOR, INC., a Utah corporation ("Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Stock Purchase Agreement dated the________ day
of _________________, 1996 (the "Purchase Agreement") among Seller Corp.
and Purchaser, Seller Corp. has agreed to sell to Purchaser, and Purchaser
has agreed to purchase from Seller Change Crop., the issued and outstanding
shares of stock in SOUTHWEST MEMORY INTERNATIONAL, INC. and CORPORATION TO
BE SOLD, the business and substantially all of the assets of CORPORATION TO
BE SOLD described therein on the terms and subject to the conditions set
forth therein.
NOW, THEREFORE, in consideration of the transactions pursuant to the
Purchase Agreement, the receipt and sufficiency of which by Purchaser are hereby
acknowledged, Purchaser, Seller and Promisors DO HEREBY agree to the following
(capitalized terms used but not defined herein shall have the respective
meanings assigned thereto in the Purchase Agreement):
1. Non-Competition.
Subject to the provisions of Section 2 below:
a. For a period of three (3) years from the date hereof, Seller and
Promisors agree they will not, directly or indirectly, whether as
an employer, consultant, agent, principal, partner, stockholder or
any other capacity, engage or participate in any business that, at
the Effective Time of Closing, is in competition in any manner
whatsoever with the Business of the CORPORATION TO BE SOLD within
the United States which Seller Corp. does business at the Effective
Time of Closing.
b. Seller and Promisors agree that a breach or violation of this
covenant
-1-
not to compete shall entitle the Purchaser, as a matter of right,
to an injunction issued by any court of competent jurisdiction,
restraining any further or continued breach or violation of this
covenant. Such right to an injunction shall be cumulative and in
addition to, and not in lieu of, any other remedies to which the
Purchaser may show itself justly entitled. Further, during any
period in which Seller and/or Promisors are in breach of this
covenant not to compete, the time period of this covenant shall be
extended for an amount of time that Seller and/or Promisors are in
breach hereof.
c. In addition to the restrictions set forth above, Seller and
Promisors shall not, for a period ending three (3) years from the
date hereof, either directly or indirectly, (i) make known to any
person, firm or corporation the names and addresses of any of the
customers of CORPORATION TO BE SOLD or Purchaser or contacts of
CORPORATION TO BE SOLD or Purchaser within the pharmacy computer
industry or any other information pe g to such person, or (ii)
call on, solicit, or take away, or attempt to call on, solicit or
take away any of such customers.
d. The parties to this Agreement agree that the limitations contained
in this Section 1 with respect to geographic area, duration, and
scope of activity are reasonable. However, if any court shall
determine that the geographic area, duration, or scope of activity
of any restriction contained in this Section 1 is unenforceable, it
is the intention of the parties that such restrictive covenant set
forth herein shall not thereby be terminated but shall be deemed
amended to the extent required to render it valid and enforceable.
Nothing herein shall be construed as preventing Seller or Promisors
from making investments in other businesses or enterprises.
Seller Corp. and Purchaser agree that this Agreement is subject to the terms and
conditions of the Purchase Agreement and that, notwithstanding anything
contained herein to the contrary, this Non-Competition Agreement shall not be
deemed to limit, enlarge or extinguish any obligation of Seller, Promisors or
Purchaser under the Purchase Agreement, all of which obligations shall survive
the delivery of this Non-Competition Agreement in accordance with the terms of
the Purchase Agreement.
-2-
IN WITNESS WHEREOF, the undersigned have executed this Non-Competition
Agreement as of the date first above written.
SELLER CORP: SOUTHWEST MEMORY
WORLD DATA, LIMITED INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇. ▇▇▇▇▇▇▇▇
----------------------------------- ----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, President
THE PURCHASER:
LANSTAR SEMICONDUCTOR, INC.
By: /s/ ▇▇▇▇▇ ▇.▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer and
Chairman of the Board
-3-
GENERAL CONVEYANCE, TRANSFER and ASSIGNMENT
THIS GENERAL CONVEYANCE, TRANSFER and ASSIGNMENT ("▇▇▇▇ of Sale") effective
as of this ______ day of ________________________, 1996, (effective at time of
Closing) is between WORLD DATA, LIMITED, a _______________ corporation
("Grantor") and LANSTAR SEMICONDUCTOR, INC., a Utah corporation ("Grantee")
W I N E S S E T H:
- - - - - - - - -
WHEREAS, Grantor is the seller of all of the Shares of stock issued and
outstanding by SOUTHWEST MEMORY INTERNATIONAL, INC., a Texas corporation
having its principal place of business located at _________________________
________________________________; and
WHEREAS, in order to effectuate the sale and purchase of the Shares,
Assignor is executing and delivering this Assignment.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein and the Acquisition Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby acts and agrees as follow:
1. Conveyance of Shares. Contemporaneously with the execution and
--------------------
delivery of this Agreement, Grantor does deliver Share Certificate(s)
No(s). ___________________________________ which evidence _______
shares of SOUTHWEST MEMORY INTERNATIONAL, INC. ("Corporation to
be Sold"), and the delivery of this General Conveyance, Transfer and
Assignment, and the Shares, conclusively deemed to be a conveyance by
seller of all of the Shares owned by the seller, as evidenced by the
above-numbered Share Certificates. The execution and delivery of this
Agreement and the certificates evidencing the Shares shall further be
conclusively deemed to be an outright conveyance with no reserve
rights, for security or any other purpose.
2. Defined Terms. All TERMS used herein without definitions shall have
-------------
the meaning assigned to them in the Stock Purchase Agreement.
3. Counterparts. This ▇▇▇▇ of Sale may be executed in any number of
-------------
counterparts, and each counterpart hereof shall be deemed to be an
original instrument, but all such counterparts shall constitute but
one (1) ▇▇▇▇ of Sale.
4. Further Assurances. From time to time, as and when requested by
------------------
Grantee, Grantor shall execute and delivery, or cause to be executed
and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonable and
necessary to carry out the purposes of this ▇▇▇▇ of Sale.
5. Controlling Agreement. It is contemplated that Grantor may, at any
---------------------
time or from
time to time, execute, acknowledge and deliver one or more separate
instruments an assignment or conveyance relating to the Shares. No set
separate instrument of assignment or conveyance shall limit the scope
of effect of this ▇▇▇▇ of Sale and in the event of a conflict between
the terms of this ▇▇▇▇ of Sale and any other separate instrument of
assignment, the terms and provisions of this ▇▇▇▇ of Sale shall govern
and be controlling.
6. Exhibits. Attached hereto is a true copy of each and every of the
--------
certificates conveyed by the Grantor to the Grantee, as evidenced by
this ▇▇▇▇ of Sale, collectively marked as Exhibit A and Stock Powers
also executed by the Grantor pertaining to the certificate or
certificates, collectively marked as Exhibit B. All exhibits
referenced herein are attached hereto, and by such reference and
attachment, incorporated herein for all purposes.
7. Governing Law. The validity of this ▇▇▇▇ of Sale shall be governed by
-------------
and construed in accordance with the laws of the State of Texas.
8. Successors and Assigns. This ▇▇▇▇ of Sale shall bind the Grantor and
----------------------
its successors and assigns and inure to the benefit of the Grantee and
its successors and assigns.
SIGNED as of the date first above written.
WORLD DATA, LIMITED
By: /s/ ▇. ▇. ▇▇▇▇
--------------------------------------
▇. ▇. ▇▇▇▇, President
LANSTAR SEMICONDUCTOR, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer and
Chairman of the Board
--------------------------------------------------------------------------------
GENERAL CONVEYANCE, TRANSFER and ASSIGNMENT Page 2
STOCK POWER
FOR VALUE RECEIVED, WORLD DATA, LIMITED ("WDL"), hereby assigns and
transfers its shares of common stock in SOUTHWEST MEMORY INTERNATIONAL, INC.
("SWMI"), being 1,000 shares, no par value, issued by SWMI (the "Corporation"),
and represented by Share Certificate No. 002 standing in the name of ICT in
the stock transfer records of the Corporation, as follows:
WDL further hereby irrevocably constitutes and appoints ▇▇▇▇▇ ▇. ▇▇▇▇▇ as
its attorney and agent to transfer such securities on the books of the
Corporation with full power to substitute another attorney or agent to complete
such transfer.
DATED, 14th November, 1996.
WORLD DATA, LIMITED
By: /s/ ▇. ▇. ▇▇▇▇
---------------------------------
Its President
--------------------------------------------------------------------------------
STOCK POWER Solo Page
[LETTERHEAD OF WORLD DATA LIMITED APPEARS HERE]
14th. November 1997
LANSTAR SEMICONDUCTOR, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Seller and Corporation to be Sold's Disclosure Letter
Gentlemen:
We refer to the Stock Purchase Agreement (the "Purchase Agreement") to be
entered into among WORLD DATA, LIMITED ("Seller"), SOUTHWEST MEMORY
INTERNATIONAL, INC. ("Corporation to be Sold") and LANSTAR SEMICONDUCTOR, Inc.
("Purchaser") pursuant to which Seller has agreed to sell to Purchaser and
Purchaser has agreed to purchase from Seller all of the issued and outstanding
shares (the "Shares") of the Corporation to be Sold, on the terms and conditions
set forth in the Purchase Agreement.
This letter constitutes the Seller's Disclosure Letter referred to in Section
1.05 of the Purchase Agreement, et seq. The representations and warranties of
Seller and the Corporation to be Sold set forth in Article II of the Purchase
Agreement are made and given subject to the disclosures in this Seller's
Disclosure Letter. The disclosures in this Disclosure Letter are taken as
relating to the representations and warranties of the Seller and Corporation to
be Sold, singly or collectively, set forth in Article II of the Purchase
Agreement, and the genuineness of documents attached to this Disclosure Letter
and the truthfulness, without the omission of any material fact regarding the
information revealed in this Disclosure Letter, all of which is made to the
Purchaser by the Seller and the Corporation to be Sold with full knowledge that
each and every item of disclosure herein shall be relied on by the Purchaser in
connection with its decision to consummate the transactions contemplated by the
Stock Purchase Agreement.
Disclosure Letter
Page Two
The attached documents and disclosures delivered to the Purchaser with this
Disclosure Letter are hereby incorporated herein for all purposes.
Sincerely,
SELLER:
WORLD DATA LIMITED
By /s/ ▇. ▇. ▇▇▇▇
-------------------------------
▇. ▇. ▇▇▇▇, President
CORPORATION TO BE SOLD:
SOUTHWEST MEMORY
INTERNATIONAL, INC.
By /s/ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇. ▇▇▇▇▇▇▇▇, President
Attachments