UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 1, 2004
PAR TECHNOLOGY CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-09720 16-1434688
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
PAR Technology Park, 8383 Seneca Turnpike, New Hartford, NY 13413-4991
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (315) 738-0600
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Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.01. Completion of Acquisition or Disposition of Assets.
On October 1, 2004, PAR Technology Corporation (the "Company") and its
wholly-owned subsidiary, PAR Springer-Miller Systems, Inc. (f/k/a PSMS
Acquisition Inc.) (the "Subsidiary"), completed its previously-announced
transaction with Springer-Miller Systems, Inc. ("Springer-Miller") and John
Springer-Miller pursuant to which the Subsidiary acquired substantially all of
the assets (including the equity interests in each of Springer-Miller
International, LLC and Springer-Miller Canada, ULC), and assumed certain
liabilities, of Springer-Miller. The purchase price of the assets was $16.1
million plus approximately [$3.2 Million] (an amount equal to the cash and cash
equivalents held by Springer-Miller and its subsidiaries at the closing), which
purchase price consisted of $3 million worth of Company common stock and the
remainder in cash.
Springer-Miller, based in Stowe, Vermont, is a developer of software for
hotel and restaurant management.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Financial statements will be filed by amendment not later than 71 calendar
days after the date on which this initial report on Form 8-K is required to be
filed.
(b) Exhibits.
10.1 Asset Purchase Agreement, dated as of September 10, 2004, by and among
PAR Technology Corporation, a Delaware corporation, PAR-Springer
Miller Systems, Inc. (f/k/a PSMS Acquisition Inc.), a Delaware
corporation, Springer-Miller Systems, Inc., a Vermont corporation, and
John Springer-Miller.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PAR TECHNOLOGY CORPORATION
Date: October 7, 2004
By: /s/ Ronald J. Casciano
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Ronald J. Casciano
Vice President, Chief Financial
Officer and Treasurer
EXHIBIT INDEX
Exhibit No. Description
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10.1 Asset Purchase Agreement, dated as of September 10, 2004, by and among
PAR Technology Corporation, a Delaware corporation, PAR-Springer
Miller Systems, Inc. (f/k/a PSMS Acquisition Inc.), a Delaware
corporation, Springer-Miller Systems, Inc., a Vermont corporation, and
John Springer-Miller.
Exhibit 10.1
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ASSET PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 10, 2004
BY AND AMONG
PAR TECHNOLOGY CORPORATION
PSMS ACQUISITION INC.,
SPRINGER-MILLER SYSTEMS, INC.,
AND
JOHN SPRINGER-MILLER
================================================================================
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.................................................1
Section 1.1 Certain Defined Terms.......................................1
Section 1.2 Other Defined Terms.........................................9
Section 1.3 Construction...............................................10
ARTICLE 2 PURCHASE AND SALE OF ASSETS................................11
Section 2.1 Transfer of Assets.........................................11
Section 2.2 Assumption of Liabilities..................................12
Section 2.3 Excluded Liabilities.......................................13
Section 2.4 Purchase Price.............................................13
Section 2.5 Purchase Price Adjustment..................................15
Section 2.6 Closing Costs and Fees.....................................16
ARTICLE 3 CLOSING....................................................16
Section 3.1 Closing....................................................16
Section 3.2 Conveyances at Closing.....................................16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLERS..............17
Section 4.1 Organization and Qualification of Seller
and the Subsidiaries.......................................18
Section 4.2 Authorization..............................................18
Section 4.3 Subsidiaries...............................................18
Section 4.4 No Conflict................................................19
Section 4.5 Consents and Governmental Approvals........................19
Section 4.6 Financial Statements; Undisclosed Liabilities..............19
Section 4.7 Absence of Certain Changes or Events.......................20
Section 4.8 Absence of Litigation......................................22
Section 4.9 Compliance with Laws.......................................22
Section 4.10 Licenses...................................................22
Section 4.11 Computer Programs..........................................23
Section 4.12 Material Contracts.........................................24
Section 4.13 Government Contracts.......................................26
Section 4.14 Machinery and Equipment and Other Property.................27
Section 4.15 Real Property..............................................27
Section 4.16 Intellectual Property Rights...............................28
Section 4.17 Sufficiency of Purchased Assets............................29
Section 4.18 Employee Benefit Plans and Other Agreements................29
Section 4.19 Labor Matters..............................................32
Section 4.20 Product Liability, Warranty and Product Recalls............34
Section 4.21 Environmental Matters......................................34
Section 4.22 Tax Matters................................................35
Section 4.23 Insurance..................................................36
Section 4.23 Customers and Suppliers....................................37
Section 4.25 Affiliate Transactions.....................................37
Section 4.26 Accounts Receivable........................................37
Section 4.27 Inventory..................................................38
Section 4.28 Brokers....................................................38
Section 4.29 The Principal..............................................38
Section 4.30 Full Disclosure............................................38
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PTC AND BUYER............39
Section 5.1 Incorporation and Authority of PTC and Buyer...............39
Section 5.2 No Conflict................................................39
Section 5.3 Consents and Approvals.....................................40
Section 5.4 Legal Proceedings..........................................40
Section 5.5 Brokers....................................................40
Section 5.6 Reports and Financial Statements...........................40
Section 5.7 Validity of PTC Common Stock...............................41
Section 5.8 Absence of Certain Changes or Events.......................41
Section 5.9 Disclosure.................................................41
ARTICLE 6 ADDITIONAL AGREEMENTS......................................41
Section 6.1 Conduct of Business Prior to the Closing...................41
Section 6.2 Access to Information......................................43
Section 6.3 Confidentiality............................................43
Section 6.4 Regulatory and Other Authorizations, Consents..............44
Section 6.5 Further Action.............................................44
Section 6.6 Notification of Certain Matters............................44
Section 6.7 Exclusivity................................................44
Section 6.8 Pre-Closing Taxes..........................................45
Section 6.9 Employee and Employee Benefit Matters......................45
Section 6.10 Books and Records..........................................46
Section 6.11 Noncompetition.............................................47
Section 6.12 Trademarks; Tradenames.....................................47
Section 6.13 Investment Canada..........................................47
ARTICLE 7 CONDITIONS TO CLOSING......................................48
Section 7.1 Joint Conditions to the Obligations of each
of PTC, Buyer, the Principal, Parent,
SMC, and SMI ..............................................48
Section 7.2 Conditions to Obligations of Sellers and
the Principal..............................................48
Section 7.3 Conditions to Obligations of PTC and Buyer.................49
ARTICLE 8 INDEMNIFICATION............................................51
Section 8.1 Survival...................................................51
Section 8.2 Indemnification............................................51
ARTICLE 9 TAX MATTERS................................................54
Section 9.1 Conveyance Taxes...........................................54
Section 9.2 Treatment of Indemnity Payments............................54
ARTICLE 10 TERMINATION, AMENDMENT AND WAIVER..........................54
Section 10.1 Termination................................................54
Section 10.2 Effect of Termination......................................55
ARTICLE 11 GENERAL PROVISIONS.........................................55
Section 11.1 Expenses...................................................55
Section 11.2 Notices....................................................55
Section 11.3 Public Announcements.......................................56
Section 11.4 Headings...................................................57
Section 11.5 Severability...............................................57
Section 11.6 Entire Agreement...........................................57
Section 11.7 Assignment.................................................57
Section 11.8 No Third-Party Beneficiaries...............................57
Section 11.9 Waivers and Amendments.....................................57
Section 11.10 Specific Performance.......................................57
Section 11.11 Governing Law..............................................58
Section 11.12 Counterparts...............................................58
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of September 10, 2004 (this
"Agreement"), is entered into by and among PAR Technology Corporation, a
Delaware corporation ("PTC"), PSMS Acquisition Inc., a Delaware corporation
("Buyer"), Springer-Miller Systems, Inc., a Vermont corporation ("Seller"), and
John Springer-Miller (the "Principal").
RECITALS
A. Seller, along with its Subsidiaries conducts a business which provides
enterprise-wide and point-of-sale software systems, products and services to the
hospitality industry (the "Business").
B. Buyer desires to purchase and assume from Seller, and Seller desires to
sell and transfer to Buyer, certain of the assets and liabilities of Seller all
as more specifically set forth in this Agreement, upon the terms and subject to
the conditions of this Agreement (the "Transaction").
C. Certain capitalized terms used herein have the meanings ascribed to such
terms in Article 1 hereof.
AGREEMENT
In order to consummate the Transaction, and in consideration of the mutual
agreements hereinafter contained, PTC, Buyer, Seller and the Principal agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
following terms have the following meanings:
"2003 Audit" means the audited consolidated balance sheet of Seller and its
consolidated Subsidiaries as of December 31, 2003, and the related audited
statements of income, cash flows and changes in stockholder's equity for the
twelve-month period then ended, together with the notes thereto and the report
of Seller's independent auditors thereon.
"Action" means any claim, action, suit, arbitration, investigation, audit
or proceeding by or before any Governmental Authority or arbitrator.
"Affiliate" means, when used with respect to a specified Person, another
Person that, either directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified. With respect to any Person who is a natural person, such Person's
Affiliates shall include such Person's spouse and their respective siblings,
parents and lineal descendents.
"Ancillary Agreements" means the Escrow Agreement and the Investment
Agreements.
"Assets" means all of Seller's and its Subsidiaries' right, title and
interest in and to all properties, assets and rights of any kind, whether
tangible or intangible, real or personal, contingent or existing, owned by
Seller or any of its Subsidiaries or in which any Seller or any of its
Subsidiaries has any interest whatsoever.
"Audited Financial Statements" means the audited consolidated balance
sheets of Seller and its consolidated Subsidiaries as of December 31, 2003,
December 31, 2002, and December 31, 2001, and the related audited statements of
income, cash flows and changes in stockholder's equity for the twelve-month
periods then ended, together with the notes thereto and the report of Seller's
independent auditors thereon.
"Benefit Arrangement" means any employment, consulting, severance, change
in control or other similar contract, arrangement or policy and each plan,
arrangement (written or oral), program, agreement or commitment providing for
insurance coverage (including without limitation any self-insured arrangements),
workers' compensation, disability benefits, unemployment benefits, severance,
vacation benefits, retirement benefits, life, health, disability or accident
benefits (including without limitation any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the same
or other benefits), fringe benefits or for deferred compensation, profit-sharing
bonuses, stock options, stock appreciation rights, phantom stock rights, stock
purchases, annual or long-term cash incentive compensation, base pay or other
forms of incentive compensation or post-retirement insurance, compensation or
benefits which is not a Multiemployer Plan, Pension Plan or Welfare Plan and
which is sponsored, administered, entered into, maintained, contributed to, has
been contributed to or required to be contributed to, as the case may be, by
Seller or any of its Subsidiaries or any ERISA Affiliate of Seller or any of its
Subsidiaries.
"Books and Records" means all books of account and other financial records
(including Tax records) pertaining to Seller and its Subsidiaries.
"Business Day" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in New York, New
York.
"Closing Date Purchased Net Assets" means (i) the Purchased Assets as of
the Closing Date (other than cash and cash equivalents), minus (ii) the
collective liabilities of the Seller and its Subsidiaries as of the Closing
Date, in each case, as reflected on the final Closing Balance Sheet.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computer Program(s)" means (i) any and all computer programs (consisting
of sets of statements or instructions to be used directly or indirectly in a
computer in order to bring about a certain result) and portions thereof, and
(ii) all associated data and compilations of data, regardless of their form or
embodiment. "Computer Programs" shall include, without limitation, all source
code, object code, natural language code, all versions, all screen displays and
designs, all component modules, all descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, and all
documentation, including without limitation user manuals and training materials,
relating to any of the foregoing.
"Confidentiality Agreement" means the confidentiality agreement dated as of
March 3, 2004 between PTC and Seller.
"Contract" means any agreement, contract, lease, note, loan, evidence of
Indebtedness, accepted purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation, commitment, purchase and sale order or other executory commitment to
which Seller or any of its Subsidiaries is a party or which relates to Seller's
or any of its Subsidiaries' businesses or any of their respective Assets,
whether oral or written, express or implied, and which pursuant to its terms has
not expired, terminated or been fully performed by the parties thereto,
including, without limitation, Government Contracts, Real Property Leases and
Personal Property Leases.
"December 31 Balance Sheet" means the audited consolidated balance sheet of
Seller and its consolidated Subsidiaries as of December 31, 2003.
"Disclosure Schedule" means the disclosure schedules attached hereto.
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
hypothec, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, encumbrance or other right of third
parties, whether voluntarily incurred or arising by operation of law, and
includes, without limitation, any agreement to give any of the foregoing in the
future, and any contingent or conditional sale agreement or other title
retention agreement or lease in the nature thereof.
"Environmental Law" means any Law, now in effect and as amended, and any
judicial, legislative or administrative interpretation thereof, including any
Governmental Order relating to the environment, the effect of Hazardous
Materials on the environment or human safety or health, emissions, discharges or
releases of Hazardous Materials into the environment, including without
limitation into ambient air, surface water, groundwater or land, occupational
safety and health, or otherwise relating to the handling of Hazardous Materials
or the clean-up or other remediation of Hazardous Materials.
"Equity Securities" of any Person means (i) shares of capital stock,
limited liability company interests, unlimited liability company interests,
partnership interests or other equity securities of such Person, (ii)
subscriptions, calls, warrants, options or commitments of any kind or character
relating to, or entitling any Person to purchase or otherwise acquire, any
capital stock, limited liability company interests, unlimited liability company
interests, partnership interests or other equity securities of such Person,
(iii) securities convertible into or exercisable or exchangeable for shares of
capital stock, limited liability company interests, unlimited liability company
interests, partnership interests or other equity securities of such Person, and
(iv) equity equivalents, interests in the ownership or earnings of, or equity
appreciation, phantom stock or other similar rights of, or with respect to, such
Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person which is (or at any relevant time was) a
member of a "controlled group of corporations" within the meaning of Section
414(b) of the Code, a member of a group of trades or businesses which is under
"common control" within the meaning of Sections 414(c) or (o) of the Code, or a
member of an "affiliated service group" within the meaning of Section 413(m) of
the Code.
"Escrow Agent" means MBT Bank, N.A.
"Excluded Assets" means (any other provision of this Agreement
notwithstanding) the following Assets of Seller:
(a) the Principal Promissory Notes, including all interest and fees accrued
thereon;
(b) all rights of Seller under this Agreement and the Ancillary Agreements;
(c) tangible assets held by Seller and not included on Schedule 2.1 hereto;
(d) all trade credits described in Schedule 1.1 hereto;
(e) any Purchased Assets sold or otherwise disposed of in the ordinary
course of operation of the Business by Seller and not in violation of any of the
provisions of this Agreement during the period from the date hereof until the
Closing Date; and
(f) Confidentiality Agreements listed in Section 4.3 of the Disclosure
Schedule as being not assignable.
"Facility" means any real property or facility owned, leased, operated or
used at any time by Seller or any of its Subsidiaries or by any predecessor of
Seller or any of its Subsidiaries.
"GAAP" means United States generally accepted accounting principles in
effect from time to time applied consistently throughout the period involved.
"Government Contract" means any Contract to which Seller or any of its
Subsidiaries is a party or by which any of them are bound, the ultimate
contracting party of which is a Governmental Authority (including any
subcontract with a prime contractor or other subcontractor who is a party to any
such Contract).
"Government-Furnished Property" shall mean all machinery, equipment, tools,
dies, spare parts and all other personal property and fixtures loaned, bailed or
otherwise furnished by the United States Government to Seller or any of its
Subsidiaries pursuant to the Government Contracts.
"Governmental Authority" means any government, any governmental entity,
department, commission, board, agency or instrumentality, and any court,
tribunal, or judicial or arbitral body, whether federal, state, local or
foreign.
"Governmental Order" means any order, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"Handling of Hazardous Materials" means the production, use, generation,
storage, treatment, recycling, disposal, discharge, release or other handling or
disposition of Hazardous Materials.
"Hazardous Materials" means: (a) petroleum, waste oil, crude oil, asbestos,
urea formaldehyde or polychlorinated biphenyl; (b) any waste, gas or other
substance or material that is explosive, radioactive or infectious; (c) any
"hazardous substance," "pollutant," "contaminant," "hazardous waste," "regulated
substance," "hazardous chemical," "toxic chemical" or "toxic substance" as
designated, listed or defined (whether expressly or by reference) in any Law
(including the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq. and any other so-called "superfund" or
"superlien" law, the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air
Act, 42 U.S.C. Section 7401 et seq., and the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq., and the respective regulations promulgated
thereunder, or any analogous Laws); and (d) any compound, mixture, solution,
product or other substance or material that contains any substance or material
referred to in clauses (a), (b) or (c) above.
"Improvements" means any buildings, facilities, other structures and
improvements, building systems and fixtures located on or under any real
property leased by Seller or any of its Subsidiaries.
"Indebtedness" means (i) indebtedness of Seller or any of its Subsidiaries
for borrowed money (including the aggregate principal amount thereof, the
aggregate amount of any accrued but unpaid interest thereon and any prepayment
penalties or other similar amounts payable in connection with the repayment
thereof on or prior to the Closing Date), (ii) obligations of Seller or any of
its Subsidiaries evidenced by bonds, notes, debentures, letters of credit or
similar instruments, (iii) obligations of any Seller under capitalized leases,
(iv) obligations of Seller or any of its Subsidiaries under conditional sale,
title retention or similar agreements or arrangements creating an obligation of
Seller or any of its Subsidiaries with respect to the deferred purchase price of
property (other than customary trade credit), (v) obligations in respect of
interest rate and currency obligation swaps, hedges or similar arrangements and
(vi) all obligations of Seller or any of its Subsidiaries to guarantee any of
the foregoing types of obligations on behalf of any Person other than Seller or
any of its Subsidiaries.
"Intellectual Property Rights" means all (i) domestic and foreign
registrations of trademarks, service marks, logos, corporate names, domain
names, protected models, designs, created works, trade names or other trade
rights of Seller or any of its Subsidiaries, (ii) pending applications by Seller
or any of its Subsidiaries for any such registrations, (iii) rights in or to
patents and copyrights (whether or not registered) and pending applications
therefor of Seller or any of its Subsidiaries, (iv) Sellers' and each of its
Subsidiaries' rights to other trademarks, service marks, logos, corporate names,
domain names, protected models, designs, data, software, created works, trade
names and other trade rights and all other trade secrets, designs, plans,
specifications, technology, know-how, methods, designs, concepts, other
proprietary rights (including, without limitation, associated goodwill and
remedies against infringements thereof and rights of protection of an interest
therein under the Laws of all jurisdictions) and other intellectual property,
whether or not registered, and (v) rights under any licenses of Seller or any of
its Subsidiaries to use any of the intellectual property described in clauses
(i) to (iv) above.
"Interim Financial Statements" means the unaudited consolidated balance
sheet of Seller and its consolidated Subsidiaries as of July 31, 2004, and the
related unaudited consolidated statements of income, cash flows and changes in
stockholder's equity of Seller and its consolidated Subsidiaries for the seven
month period then ended.
"Inventory" means all of the inventory of Seller and its Subsidiaries held
for resale, and all of Seller's and its Subsidiaries' raw materials, works in
process, finished products and supply items, in each case wherever the same may
be located.
"IRS" means the United States Internal Revenue Service.
"Knowledge" or "Known" means, with respect to Seller, those facts or
circumstances actually known by any of the Specified Officers of Seller, or any
facts or circumstances which would be known after due inquiry by a person
holding a comparable office or job or with comparable experience or
responsibilities, and with respect to Buyer, those facts or circumstances
actually known by any of the Specified Officers of Buyer and PTC, or any facts
or circumstances which would be known after due inquiry by a person holding a
comparable office or job or with comparable experience or responsibilities. For
purposes of this definition, the term "Specified Officers" means: (a) with
respect to Seller, the Principal, Tina Springer-Miller, Susan Beattie, Andrew
Weaver, Richard Stone and Karen Stewart; and (b) with respect to Buyer or PTC,
Dr. John W. Sammon, Jr. and Ronald J. Casciano.
"Law" means any federal, state, local or foreign statute, law, legislation,
constitution, ordinance, regulation, rule, code, edict, order, directive,
pronouncement, judgment, decree, or rule of common law.
"Leasehold Improvements" shall mean all leasehold improvements situated in
or on the real property covered by the Real Property Leases and owned by Seller
or its Subsidiaries.
"Licenses" means all of the licenses, permits, certificates, exemptions and
other authorizations from any Government Authority or other third party for the
use, occupancy or operation of the Business as conducted as of the date of this
Agreement and as of the Closing Date.
"Loss Bid" means any outstanding offer by Seller or any of its Subsidiaries
to provide goods or services to any customer at a quoted price which Seller
reasonably expects, based on Seller's knowledge as of the date hereof and as of
the Closing Date, to result in a loss.
"Loss Contract" means any Contract for which Seller has accrued a loss on
the Audited Financial Statements or Interim Financial Statements or which Seller
or its applicable Subsidiary reasonably expects, based on such Person's
knowledge as of the date hereof and as of the Closing Date, to result in a loss.
"Losses" of a Person means any and all losses, liabilities, damages,
claims, awards, judgments, diminution of value, fines, penalties, costs and
expenses (including, without limitation, the costs of reasonable investigation,
remediation and attorneys' fees) actually suffered or incurred by such Person.
"Material Adverse Effect" or "Material Adverse Change" or a similar phrase
means, with respect to any Person, any material adverse effect on or material
adverse change with respect to the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations or prospects of such
Person and its Subsidiaries, taken as a whole.
"Multiemployer Plan" means any "multiemployer plan," as defined in Section
3(37) or 4001(a)(3) of ERISA, which Sellers and any of its Subsidiaries or any
ERISA Affiliate of Seller and any of its Subsidiaries sponsors, maintains or
administers or to which Seller and any of its Subsidiaries or any ERISA
Affiliate of Seller and any of its Subsidiaries contributes, has contributed or
is, or was obligated to contribute.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which Seller and any of
its Subsidiaries or any ERISA Affiliate of Seller and any of its Subsidiaries
sponsors, maintains or administers or to which Seller and any of its
Subsidiaries or any ERISA Affiliate of Seller and any of its Subsidiaries
contributes, has contributed or is, or was obligated to contribute.
"Permits" shall mean all licenses, permits, approvals, authorizations or
consents of any Governmental Authority, whether foreign, federal, state or
local, necessary for the conduct of the Business as currently conducted.
"Permitted Encumbrances" means (a) liens for Taxes or governmental charges
or claims not yet due and payable or being contested in good faith, if, in each
case, a reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor, (b) statutory liens of landlords, liens of
carriers, warehouse persons, mechanics and material persons and other liens
imposed by law incurred in the ordinary course of business for sums not yet due
and payable or being contested in good faith, if, in each case, a reserve or
other appropriate provision, if any, as shall be required by GAAP shall have
been made therefor, (c) liens incurred or deposits made in connection with
workers' compensation, unemployment insurance and other similar types of social
security programs or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return of money bonds and similar obligations, in each case in
the ordinary course of business, consistent with past practice, and (d)
easements, rights-of-way, restrictions and other similar charges or Encumbrances
on real property which, in each case, do not, individually or in the aggregate,
materially interfere with the ordinary conduct of the Business and do not,
individually or in the aggregate, materially detract from the value of the
property to which such Encumbrance relates.
"Person" means any natural person, corporation, limited partnership,
general partnership, limited liability company, unlimited liability company,
joint stock company, joint venture, association, company, trust or other
organization or any Governmental Authority.
"Personal Property Leases" shall mean all of the existing leases with
respect to the personal property of Seller and any of its Subsidiaries.
"Personnel" means all employees, officers, directors and independent
contractors of, employed by or contracting with Seller or any of its
Subsidiaries.
"Potential Loss" means any and all losses, liabilities, damages, claims,
awards, judgments, diminution of value, fines, penalties, costs and expenses
(including, without limitation, the costs of reasonable investigation,
remediation and attorneys' fees.)
"Pre-Closing Tax Period" shall mean all taxable periods ending on or prior
to the Closing Date and the portion of any taxable period ending on the Closing
Date that includes but does not end on the Closing Date.
"Principal Promissory Notes" means each of (i) that certain promissory
note, dated as of July 31, 1998, issued by the Principal in favor of Seller in
the original principal amount of $940,000 and (ii) that certain promissory note,
dated as of December 1, 2002, issued by the Principal in favor of Seller in the
original principal amount of $250,000.
"Real Property Leases" means all leases entered into by Seller or any
Subsidiary in respect of the Real Property.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" of any Person means any other Person (i) of which such first
Person (either alone or through or together with any other Subsidiary) owns,
directly or indirectly, at least 50% of the stock or other Equity Securities of
such other Person or (ii) the operations of which are consolidated with such
first Person, pursuant to GAAP, for financial reporting purposes.
"Tax" or "Taxes" means any federal, state, local or foreign net or gross
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, offer, registration, value added,
alternative or add-on minimum, estimated or other tax, governmental fee or like
assessment or charge of any kind whatsoever (including any liability for Taxes
imposed on another Person, whether incurred or borne as a transferee or
successor or by contract or otherwise), including any interest, penalty or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendments thereof.
"Transaction Related Expenses" means the (i) fees and disbursements of
counsel to Seller and the Principal or their independent accountants or
financial or other advisors incurred by Seller or any of its Subsidiaries or the
Principal in connection with the transactions contemplated hereby, and (ii) any
expenses incurred by Seller or any of its Subsidiaries or the Principal in
connection with the transactions contemplated hereby or for which any of them
may have any liability.
"Transferred Subsidiaries" shall mean, collectively, Springer-Miller
International, LLC and Springer-Miller Canada, ULC.
"Transferred Subsidiary Interests" means all of the Equity Securities of
the Transferred Subsidiaries held beneficially or of record by Seller or another
Transferred Subsidiary.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
Section 3(1) of ERISA (other than a Multiemployer Plan) which Seller or any of
its Subsidiaries or any ERISA Affiliate of Seller or any of its Subsidiaries
sponsors, maintains or administers or to which Seller or any of its Subsidiaries
or any ERISA Affiliate of Seller or any of its Subsidiaries contributes, has
contributed or is, or was obligated to contribute.
Section 1.2 Other Defined Terms. The following terms have the meanings
defined for such terms in the Sections set forth below:
Term Section
---- ---------
Adjustment Amount ....................................... 2.4(c)
Agreement ............................................... Preamble
Applicable Rate ......................................... 2.3(b)(ii)
Assumed Liabilities ..................................... 2.2
Auditor ................................................. 2.4(b)
Business ................................................ Preamble
Buyer ................................................... Preamble
Buyer Indemnified Parties ............................... 8.2(a)
Buyer Threshold Amount .................................. 8.2(e)
CERCLA .................................................. 4.20(d)
Claim ................................................... 8.2(c)
Claim Notice ............................................ 8.2(c)
Closing ................................................. 3.1
Closing Balance Sheet ................................... 2.4(a)
Closing Date ............................................ 3.1
Commission .............................................. 5.6
Determination Date ...................................... 2.4(b)
Employment Laws ......................................... 4.19
Escrow Agreement ........................................ 2.4(b)(ii)
Escrow Amount ........................................... 2.4(b)(ii)
Excluded Liabilities .................................... 2.3
Indemnifying Party ...................................... 8.2(c)
Machinery and Equipment ................................. 4.14
Material Contracts ...................................... 4.12 (a)
Principal ............................................... Preamble
Purchase Price .......................................... 2.3(a)
Purchased Assets ........................................ 2.1(a)
PTC ..................................................... Preamble
PTC Common Stock ........................................ 2.3(b)(ii)
Real Property ........................................... 4.15(a)
Related Party Transaction ............................... 4.25
Reports ................................................. 5.6
S Corporation State ..................................... 4.22(f)
Seller .................................................. Preamble
Seller Software ......................................... 4.11
Seller Indemnified Party ................................ 8.2(b)
Seller Threshold Amount ................................. 8.2(d)
Software Contract ....................................... 4.11
Subsidiary Equity Securities ............................ 4.3
Taxpayers ............................................... 4.22(a)
Third Party Notice ...................................... 8.2(c)
Transaction ............................................. Recitals
Transferred Employees ................................... 6.9
Section 1.3 Construction.
(a) Unless the context of this Agreement otherwise requires, (i) words of
any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; (iv) the terms "Article" or "Section" refer to the specified
Article or Section of this Agreement; (v) the word "including" shall mean
"including, without limitation;" and (vi) the word "or" shall be disjunctive but
not exclusive.
(b) References to agreements and other documents shall be deemed to include
all subsequent amendments and other modifications thereto.
(c) References to statutes shall include all regulations promulgated
thereunder and references to statutes or regulations shall be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(d) The language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
(e) The annexes, schedules and exhibits to this Agreement are a material
part hereof and shall be treated as if fully incorporated into the body of the
Agreement.
(f) Whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless Business Days are specified and shall be counted
from the day immediately following the date from which such number of days are
to be counted.
(g) All accounting terms used herein and not expressly defined herein shall
have the meanings given to them under GAAP.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
Section 2.1 Transfer of Assets.
(a) Transfer of Parent's Assets. Upon the terms and subject to the
conditions contained herein, at the Closing, Seller will sell, convey, transfer,
assign and deliver to Buyer, and Buyer will purchase from Parent, all of the
rights, title and interest of Seller in and to all Assets except for the
Excluded Assets, including without limitation, all of Seller's right, title and
interest in the following to the extent they are not Excluded Assets (the
"Purchased Assets");
(i) cash and cash equivalents;
(ii) accounts and notes receivable (whether current or noncurrent),
refunds, deposits, prepayments or prepaid expenses;
(iii) Contracts;
(iv) Leasehold Improvements;
(v) Machinery and Equipment;
(vi) Inventory;
(vii) Books and Records;
(viii) Intellectual Property Rights;
(ix) Permits;
(x) Seller Software;
(xi) rights under or pursuant to all warranties, representations and
guarantees made by suppliers in connection with Purchased Assets or
services furnished to Seller;
(xii) tangible assets necessary or useful in the conduct of the
Business as set forth in Schedule 2.1 hereto;
(xiii) the Transferred Subsidiary Interests
(xiv) claims, causes of action, chooses in action, rights of recovery
and rights of set-off of any kind relating to Purchased Assets or the
Assumed Liabilities, against any Person (other than against the Principal
or Tina Springer-Miller), including, without limitation any liens, security
interests, pledges, or other rights to payment or to enforce payment in
connection with products delivered by Seller on or prior to the Closing
Date; and
(xv) rights relating to Government-Furnished Property.
Section 2.2 Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees, effective at the Closing, to assume
only the following liabilities of Seller except to the extent that such
liabilities relate to any Taxes other than Assumed Sales Tax Liabilities (the
"Assumed Liabilities"):
(i) all liabilities of Seller accrued on the Interim Financial
Statements and not discharged as of the Closing Date;
(ii) all liabilities arising out of or relating to Seller's operation
of the Business and incurred in the ordinary course of business since the
date of the Interim Financial Statements, but only to the extent listed on
the Closing Balance Sheet;
(iii) all liabilities of Seller arising under any of the Contracts to
which it is a party;
(iv) all warranty claims or expenses of Seller in respect of products
sold or services rendered by Seller in the operation of the Business
through the Closing Date;
(v) any liability of Seller for sales or use taxes solely to the
extent that they relate to a sale (regardless of the date of the sale) by
Seller or its Subsidiaries to a Person that purchased products or services,
including maintenance services, from Seller or its Subsidiaries within the
twelve (12) months immediately preceding the Closing Date (the "Assumed
Sales Tax Liabilities"); and
(vi) all liabilities and obligations relating to the Purchased Assets,
whether or not arising after the Closing Date.
Section 2.3 Excluded Liabilities. Any provisions in this Agreement or any
writing to the contrary notwithstanding, Buyer is assuming only the Assumed
Liabilities and through its acquisition of the Transferred Subsidiaries, the
liabilities thereof, and is not assuming any other liability or obligation of
Seller or any Affiliate of Seller (or any predecessor owner of all or part of
any of the business or assets of Seller or any Affiliate of Seller), of whatever
nature, whether presently in existence or arising or asserted hereafter. All
such other liabilities and obligations shall be retained by and remain
obligations and liabilities of the applicable Seller or its Affiliates, (all
such liabilities and obligations not being assumed being herein referred to as
the "Excluded Liabilities"). Without limiting the foregoing, none of the
following shall be Assumed Liabilities for purposes of this Agreement:
(a) all liabilities and obligations of Seller or any of its Subsidiaries
for or in respect of Taxes (including any Taxes that arise as a result of the
transactions contemplated by this Agreement), except as set forth in Section
2.2(v);
(b) all other liabilities and obligations of Seller under this Agreement
and the Ancillary Agreements;
(c) any liability or obligation under any Environmental Law incurred in or
attributable to any Facility or the operation of the Business on or before the
Closing Date;
(d) that certain guarantee, dated as of October 20, 2000, granted to Union
Bank to secure a personal loan of the Principal; and
(e) any liability or obligation relating to an Excluded Asset (whether or
not arising prior to, on or after the Closing Date).
Section 2.4 Purchase Price.
(a) Purchase Price. Upon the terms and subject to the conditions set forth
herein, Buyer shall pay to Seller for the sale, transfer, assignment, conveyance
and delivery of the Purchased Assets, a base purchase price in an aggregate
amount equal to Sixteen Million One Hundred Thousand Dollars ($16,100,000) plus
an amount equal to the amount of cash and cash equivalents held by Seller and
its Subsidiaries immediately prior to the Closing (the "Purchase Price"),
subject, however, to the adjustments set forth in Section 2.5. The Purchase
Price (including the Assumed Liabilities) shall be allocated among the Purchased
Assets as determined by Buyer, and such allocation shall be the allocation which
is used by the parties in preparing (i) Internal Revenue Service Form 8594,
Asset Acquisition Statement, (ii) all other Tax Returns and (iii) for all other
Tax purposes. Seller and Buyer shall each file Internal Revenue Service Form
8594 with their U.S. federal income tax returns for the tax period including the
Closing Date. All allocations made pursuant to this Section 2.4 shall be binding
upon the parties and upon each of their successors and assigns, and the parties
shall report the transactions contemplated hereby in accordance with such
allocations. The parties hereto shall not make any written statements or take
any position on any Tax Return, in any refund claim, during the course of any
Tax audit, for any financial or regulatory purpose in any litigation or
investigation or otherwise that are inconsistent with the allocations made
pursuant to this Section 2.4. Each party shall notify the other parties if it
receives notice that any Tax authority proposes any allocation different from
that made pursuant to this Section 2.4.
(b) Payment of the Purchase Price. The Purchase Price shall be paid on the
Closing Date as follows:
(i) Buyer will pay to Seller the Purchase Price less the Escrow
Amount, by wire transfer of immediately available funds to an account
designated by Seller.
(ii) A portion of the Purchase Price equal to $3,300,000 (the "Escrow
Amount") shall be paid by Buyer to the Escrow Agent to be held in escrow in
accordance with the terms of the Escrow Agreement in the form agreed to by
the parties thereto (the "Escrow Agreement") to serve as a source of
payment for any Claim for indemnification of any Buyer Indemnified Party
pursuant to Article 8 hereof and the Purchase Price adjustment pursuant to
Section 2.5 hereof. The Escrow Amount shall be held, invested and
distributed in accordance with the terms of the Escrow Agreement. Of the
Escrow Amount, $300,000 shall be deposited in cash and the remainder shall
be deposited by delivering to the Escrow Agent that number of shares of
PTC's Common Stock, par value $0.02, ("PTC Common Stock") derived by
dividing $3,000,000 by the average of the last reported sale price of the
Common Stock of PTC on the New York Stock Exchange for the 20 trading days
ending on the third trading day immediately preceding the Closing Date. No
fractional shares of PTC Common Stock shall be issued; the number of shares
to be delivered to the Escrow Agent shall be rounded down to the nearest
whole number. The delivery of the PTC Common Stock into escrow will be made
on behalf of Seller with the same effect as if such shares had been
delivered directly by Buyer to Seller, and shall serve, pursuant to the
Escrow Agreement, along with the cash so deposited pursuant to this Section
2.4(b)(ii) and Section 2.5(d), as the first source, but not the sole
source, of indemnification payments that may become due pursuant to Section
8.2 hereof. In connection with the issuance of the PTC Common Stock, each
of Seller and the Principal shall execute and deliver an Investment
Agreement in the form agreed to by the parties thereto.
Section 2.5 Purchase Price Adjustment.
(a) As soon as reasonably practicable following the Closing Date, and in
any event within ninety (90) calendar days thereof, Buyer shall prepare and
deliver to the Seller (i) a consolidated balance sheet of Seller and its
Subsidiaries immediately prior to the Closing on the Closing Date (the "Closing
Balance Sheet"), and (ii) a calculation of the Closing Date Purchased Net Assets
as reflected on the Closing Balance Sheet. The Closing Balance Sheet shall be
prepared in accordance with GAAP consistent with the preparation of the December
31 Balance Sheet, and shall fairly present the consolidated financial position
of Seller and its consolidated Subsidiaries as of the Closing Date; provided,
that all Transaction Related Expenses incurred by Seller or any of its
Subsidiaries at or prior to the Closing shall not be accrued on the Closing
Balance Sheet whether or not such accrual would be required in accordance with
GAAP. Without limiting the generality of the foregoing, the parties acknowledge
that, for the purpose of determining the Closing Date Purchased Net Assets, the
consolidated assets and consolidated liabilities of Seller and its consolidated
Subsidiaries shall not reflect the value of any Tax deductions resulting from
the transactions contemplated hereby.
(b) Seller may dispute the calculation of the Closing Date Purchased Net
Assets or any element of the Closing Balance Sheet relevant thereto by notifying
Buyer of such disagreement in writing, setting forth in detail the particulars
of such disagreement, within thirty (30) days after its receipt of the Closing
Balance Sheet; provided, that the basis of any such dispute shall be limited to
the failure of the calculation of Closing Date Purchased Net Assets or any
amount reflected on the Closing Balance Sheet to have been determined in
accordance with GAAP applied on a basis consistent with Section 2.5(a). In the
event that Seller do does not provide such a notice of disagreement within such
thirty (30) day period, Seller shall be deemed to have accepted the Closing
Balance Sheet and the calculation of the Closing Date Purchased Net Assets
delivered by Buyer, which shall be final, binding and conclusive for all
purposes hereunder. In the event any such notice of disagreement is timely
provided, Buyer and Seller shall use their commercially reasonable efforts for a
period of thirty (30) days (or such longer period as they may mutually agree) to
resolve any disagreements with respect to the calculation of the Closing Date
Purchased Net Assets. If, at the end of such period, Buyer and Seller are unable
to resolve such disagreements then, Deloitte & Touche LLP (or such other
independent accounting firm of recognized national standing as may be mutually
selected by Buyer and the Sellers) (the "Auditor") shall resolve any remaining
disagreements. The Auditor shall determine as promptly as practicable, but in
any event within thirty (30) days of the date on which such dispute is referred
to the Auditor, whether the Closing Balance Sheet was prepared in accordance
with the standards set forth in Section 2.5(a) and (only with respect to the
remaining disagreements submitted to the Auditor) whether and to what extent (if
any) the Closing Date Net Purchased Assets requires adjustment. The fees and
expenses of the Auditor shall be paid one-half by Seller and the Principal,
jointly and severally liable therefor, and one-half by Buyer. The determination
of the Auditor shall be final, conclusive and binding on the parties. For
purposes of this Agreement, the date on which the Closing Date Purchased Net
Assets are finally determined in accordance with this Section 2.5(b) shall be
the "Determination Date."
(c) The "Adjustment Amount," which may be positive or negative, shall mean
(i) the Closing Date Purchased Net Assets, minus (ii) negative $4,397,101. If
the Adjustment Amount is a positive number in excess of $100,000, then the
Purchase Price will be increased by the sum of the Adjustment Amount, less
$100,000. If the Adjustment Amount is a negative number less than negative
$100,000, the Purchase Price will be decreased by the absolute value of the sum
of the Adjustment Amount plus $100,000.
(d) If the Purchase Price is increased or decreased pursuant to Section
2.5(c), then promptly following the Determination Date, and in any event within
five (5) Business Days of the Determination Date, Buyer shall pay to Seller in
cash (in the case of a Purchase Price increase) the amount of such increase or
Seller and the Principal, jointly and severally (in the case of a Purchase Price
decrease) shall pay, to Buyer in PTC Common Stock released from escrow, such
shares to have the per share value assigned to them at the time of deposit into
escrow in accordance with Section 2.4(b)(ii), any changes in the market value of
PTC Common Stock subsequent to the time of deposit notwithstanding, the amount
of such decrease. In the event that the Purchase Price is decreased by more than
$800,000.00 pursuant to this Subsection, Seller shall, within five (5) days of
such adjustment, deposit into escrow an amount in cash equal to the amount in
excess of $800,000.00 by which the Purchase Price was decreased, so that at such
time, the Escrow Amount shall be not less than $2,500.000.00.
Section 2.6 Closing Costs and Fees. The cost of the recording or filing of
all applicable conveyancing instruments incurred by reason of the transfer of
Purchased Assets hereunder (including documentary and transfer taxes in
connection therewith) will be paid by Seller.
ARTICLE 3
CLOSING
Section 3.1 Closing. The Closing of the transactions contemplated herein
(the "Closing") shall be held at 10:00 a.m. Boston time on the date which is the
later of (i) October 1, 2004 or (ii) three (3) Business Days after the date on
which all conditions to the Transaction set forth in Sections 7.1, 7.2 and 7.3
of this Agreement shall have been satisfied (the "Closing Date") at the offices
of Testa, Hurwitz & Thibeault, LLP, 125 High Street, Boston, Massachusetts 02110
or at such other time or at such other place as Seller and Buyer may mutually
agree in writing.
Section 3.2 Conveyances at Closing.
(a) Instruments and Possession. To effect the sale and assumption referred
to in Article 2, Seller will, at the Closing, execute and deliver to Buyer:
(i) one or more bills of sale conveying in the aggregate all of
Seller's tangible personal property included in the Purchased Assets;
(ii) an assignment of lease with respect to Seller's Personal Property
Leases and Real Property Leases, and the New Lease Agreement;
(iii) an assignment of contracts with respect to Seller's Contracts
included in the Purchased Assets;
(iv) assignments of Seller's Intellectual Property Rights included in
the Purchased Assets, in recordable form to the extent necessary to
assign such rights;
(v) the Ancillary Agreements;
(vi) stock powers and other documents conveying to Buyer the
Transferred Subsidiary Interests; and
(vii) such other instruments as shall be reasonably requested by Buyer
to vest in Buyer such right, title or interest in and to the Purchased
Assets in accordance with the provisions hereof.
(b) Assumption and Other Documents. To effect the sale and assumption
referred to in Article 2, at the Closing, Buyer shall execute and deliver to
Seller:
(i) an instrument of assumption evidencing Buyer's assumption,
pursuant to Section 2.2, of the Assumed Liabilities (the "Assumption
Document");
(ii) the Ancillary Agreements; and
(iii) such other instruments as shall be reasonably requested by
Seller to evidence Buyer's assumption of the Assumed Liabilities in
accordance with the provisions hereof.
(c) Form of Instruments. To the extent that a form of any document to be
delivered hereunder is not attached as an Exhibit hereto, such documents shall
be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to the party or parties in whose favor the document
runs.
(d) Certificates; Opinions. Buyer and Seller shall deliver the
certificates, opinions of counsel and other documents described in Article 7.
(e) Consents. Seller shall deliver all governmental and other third party
consents and waivers required pursuant to Sections 7.1 (a) and 7.3 (e) (or
otherwise obtained by Seller) as have been obtained, plus such other documents
related thereto as Seller and Buyer shall have agreed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedule, Seller and the Principal,
jointly and severally, represent and warrant to PTC and Buyer as follows. Any
information disclosed in the Disclosure Schedule in reference to any section
number herein shall be deemed to be disclosed in reference to any other section
to which it is cross-referenced, or where it is apparent that such disclosure
would be appropriate.
Section 4.1 Organization and Qualification of Seller and the Subsidiaries.
Seller and each of its Subsidiaries is a limited liability company, unlimited
liability company or a corporation, duly incorporated or organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has the requisite corporate, unlimited
liability company or limited liability company power and authority to own,
operate or lease the properties and assets now owned, operated or leased by it
and to carry on its business as currently conducted by such Seller or such
Subsidiary. Seller and each of its Subsidiaries is duly qualified to do business
as a foreign corporation, foreign unlimited liability company, or foreign
limited liability company and is in good standing in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary except where the failure to be so
qualified would not result in a Material Adverse Effect with respect to Seller
or such Subsidiary. True and complete copies of the certificate of incorporation
and bylaws or certificate of formation, unlimited liability company operating
agreement and limited liability company operating agreement (or equivalent
organizational documents) of Seller and each of its Subsidiaries (in each case,
as amended to the date of this Agreement), have been made available by Seller
for review by Buyer.
Section 4.2 Authorization. Seller and each of its Subsidiaries has all
necessary corporate or organizational power and authority to execute and deliver
this Agreement and each Ancillary Agreement to which it is party and to perform
its obligations hereunder and thereunder. The execution and delivery by Seller
of this Agreement and each Ancillary Agreement to which it is party and the
performance of its obligations hereunder and thereunder have been duly and
validly authorized by the board of directors and stockholders of Seller, and no
other action on the part of Seller or its stockholders is necessary. This
Agreement has been, and each Ancillary Agreement to which the Seller or any of
its Subsidiaries is a party will be, duly and validly executed and delivered by
Seller or such Subsidiary, as appropriate, and is, or will be, a legal, valid
and binding obligation of Seller or any of such Subsidiary, as appropriate,
enforceable against Seller in accordance with its terms, except as the
enforceability may be limited by (i) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of creditors' rights generally; or (ii) general
principles of equity.
Section 4.3 Subsidiaries. Section 4.3 of the Disclosure Schedule sets forth
the name of each Subsidiary of Seller, the jurisdiction of incorporation or
organization of each such Subsidiary, the number and type of its authorized
Equity Securities (collectively, the "Subsidiary Equity Securities"), the number
of each class of Equity Securities that are issued and outstanding, and the
identity of all record and beneficial holders of Subsidiary Equity Securities.
The Transferred Subsidiaries are the only Subsidiaries of Seller and each such
Subsidiary is consolidated with Seller for purposes of preparing financial
statements of Parent in accordance with GAAP. The Subsidiary Equity Securities
described on the Disclosure Schedule constitute all the issued and outstanding
Equity Securities of the respective Subsidiaries. The Subsidiary Equity
Securities have been duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any pre-emptive rights. None
of the respective Subsidiaries has issued or granted any outstanding options,
warrants, rights or other securities convertible into or exchangeable or
exercisable for shares of Subsidiary Equity Securities; there are no commitments
or obligations of any kind or character for the issuance of Subsidiary Equity
Securities or for the repurchase, redemption or other acquisition of any
Subsidiary Equity Securities; either Seller or another Subsidiary owns the
Subsidiary Equity Securities, free and clear of all Encumbrances; there are no
agreements of any kind which may obligate any of the Subsidiaries listed on the
Disclosure Schedule to issue, purchase, register for sale, redeem or otherwise
acquire any Subsidiary Equity Securities; (v) there are no voting trusts,
stockholder agreements, proxies or other agreements in effect with respect to
the voting or transfer of the Subsidiary Equity Securities held by Seller or any
of its Subsidiaries or, to the knowledge of Seller, the Subsidiary Equity
Securities held by any other Person; and neither Seller nor any of its
Subsidiaries own of record or beneficially any Equity Securities of any Person
or any right (contingent or otherwise) to acquire the same.
Section 4.4 No Conflict. The execution, delivery and performance of this
Agreement and each Ancillary Agreement to which it is a party by Seller and the
consummation of the transactions contemplated hereby and thereby do not and will
not (a) violate or conflict with the certificate of incorporation, memorandum of
association, articles of association, bylaws, limited liability company
operating agreement or other organizational documents of Seller or any of its
subsidiaries, (b) conflict with or violate any Law or Governmental Order
applicable to any Seller or any of its Subsidiaries, or (c) violate or conflict
with in any material respect, result in any breach of, or constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, or result in or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Encumbrance on any of the Purchased Assets or any of the Assets
of any Subsidiaries of Seller pursuant to, any Contract or License to which any
of Seller or any of its Subsidiaries is a party or by which any of their Assets
are bound.
Section 4.5 Consents and Governmental Approvals. Except as set forth on
Section 4.5 or 4.12 (b) of the Disclosure Schedule, no consent, approval,
authorization, license, order or permit of, or declaration, filing or
registration with, or notification to, any Governmental Authority, or any other
Person, is required to be made or obtained by Seller or its Subsidiaries or any
of their respective Affiliates in connection with the execution, delivery and
performance of this Agreement and each Ancillary Agreement to which Seller is a
party and the consummation of the transactions contemplated hereby and thereby.
Section 4.6 Financial Statements; Undisclosed Liabilities.
(a) Attached as Section 4.6(a) of the Disclosure Schedule are true and
complete copies of (i) the Audited Financial Statements and (ii) the Interim
Financial Statements. Except as set forth in the notes thereto or as disclosed
in Section 4.6 of the Disclosure Schedule, all such financial statements
(including the footnotes thereto) were prepared in accordance with GAAP and
fairly present in all material respects the consolidated financial condition,
results of operations and changes in cash flows and stockholder's equity of
Seller and its consolidated Subsidiaries as of the respective dates thereof and
for the respective periods covered thereby, subject to, in the case of the
Interim Financial Statements, normal recurring year-end adjustments to the
extent consistent with GAAP (the effect of which is not expected to be material
individually or in the aggregate) and the absence of footnotes.
(b) Neither Seller nor any Subsidiary has any liabilities or obligations of
any nature (whether absolute, accrued, contingent or otherwise, liquidated or
unliquidated, or due or to become due) other than (i) liabilities reflected and
reserved against on the balance sheet included in the Interim Financial
Statements, (ii) liabilities disclosed in Section 4.6(b) of the Disclosure
Schedule, or (iii) current liabilities incurred since June 30, 2004 in the
ordinary course of business, consistent with Seller's past practice.
(c) The projections prepared by Seller with respect to Seller and its
Subsidiaries and delivered by Seller to Buyer were prepared in good faith and
based on assumptions believed by Seller to be reasonable as of the date of such
projections and reflect all costs related to all amounts due under any Benefit
Arrangement; provided, however, that Seller and the Principal make no
representation or warranty that the actual performance and results described in
such projections will be achieved.
Section 4.7 Absence of Certain Changes or Events. Since January 1, 2004,
except as disclosed in the Disclosure Schedule, there has been no:
(a) Material Adverse Change with respect to Seller or any of its
Subsidiaries;
(b) (i) except for normal periodic increases in the ordinary course of
business consistent with past practice, increase in the compensation payable or
to become payable by Seller or any of its Subsidiaries to any of their
respective Personnel, (ii) bonus, incentive compensation, severance, deferred
compensation, service award or other like benefit granted, made or accrued,
contingently or otherwise, for or to the credit of any of the Personnel of
Seller or any of its Subsidiaries, except in the ordinary course of business
consistent with past practices, (iii) employee welfare, pension, insurance,
retirement, profit-sharing or similar payment or arrangement made or agreed to
by Seller or any of its Subsidiaries for any of their Personnel except pursuant
to the existing Employee Plans described in Section 4.18 of the Disclosure
Schedule or (iv) new employment or severance agreement to which any Seller or
any of its Subsidiaries is a party;
(c) addition to or modification of the Employee Plans other than (i)
contributions made in accordance with the normal practices of Seller and any of
its Subsidiaries or (ii) the extension of coverage to Personnel who became
eligible after January 1, 2004;
(d) sale, assignment or transfer of any assets of Seller or its
Subsidiaries other than in the ordinary course of business consistent with prior
practices, or the imposition of any Encumbrance thereon;
(e) cancellation of any Indebtedness or waiver of any rights of substantial
value to Seller or any of its Subsidiaries;
(f) cancellation, termination or material amendment of any Material
Contract, material License or other instrument material to Seller or any of its
Subsidiaries that adversely affects Seller or any of its Subsidiaries;
(g) capital expenditure or any incurring of liability therefor by Seller or
any of its Subsidiaries, other than capital expenditures involving payments that
do not, individually or in the aggregate, exceed $5,000;
(h) failure to operate the Business in the ordinary course so as to use
reasonable efforts to preserve the Business intact, to keep available the
services of the Personnel, and to preserve the goodwill of Seller's suppliers,
customers and others having business relations with Seller or any of its
Subsidiaries;
(i) change in Tax or accounting methods, principles or practices by Seller
or any of its Subsidiaries or the making of any Tax election or the change of an
existing election;
(j) revaluation by Seller or any of its Subsidiaries of any of their
respective assets or properties, including without limitation, writing off notes
or accounts receivable;
(k) damage, destruction or loss (whether or not covered by insurance) and
adversely affecting the assets, properties, business or prospects of Seller or
any of its Subsidiaries;
(1) Indebtedness incurred by Seller or any of its Subsidiaries for borrowed
money or any commitment to incur Indebtedness entered into by Seller or any of
its Subsidiaries, or any loans made or agreed to be made by Seller or any of its
Subsidiaries (other than the advancement of expenses to Personnel of Seller or
any of its Subsidiaries in the ordinary course of business);
(m) declaration, setting aside for payment or payment of dividends or
distributions in respect of any Equity Securities of Seller or any redemption,
purchase or other acquisition by Seller or any of its Subsidiaries of any of
Seller's or any of its Subsidiaries' Equity Securities;
(n) issuance or reservation for issuance by Seller or any of its
Subsidiaries of, or commitment to issue or reserve for issuance of, any Equity
Securities of Seller or any of its Subsidiaries;
(o) execution, termination, or material amendment of any lease for real or
personal property involving annual payments in excess of $5,000;
(p) to the Knowledge of Seller, change in relations between Seller or any
of its Subsidiaries and the Personnel that adversely affects Seller or any of
its Subsidiaries;
(q) change in collection policies or payment terms applicable to any of the
suppliers or customers of Seller;
(r) action which, if it had been taken or had occurred after execution of
this Agreement, would have required the consent of Buyer pursuant to Section
6.1(a); or
(s) agreement by Seller or any of its Subsidiaries to do any of the
foregoing.
Section 4.8 Absence of Litigation. (a) There are no Actions pending or, to
Sellers' Knowledge, threatened against Seller or any of its Subsidiaries or
involving any of the Assets of Seller or any of its Subsidiaries; (b) neither
Seller nor any of its Subsidiaries nor any of their respective Assets are
subject to any Governmental Order; (c) neither Seller nor any of its
Subsidiaries are the subject of any pending, or to the Knowledge of Seller,
threatened investigation by any Governmental Authority; and (d) to the Knowledge
of Seller, no event has occurred and no condition exists on the basis of which
any litigation, proceeding or investigation might reasonably be expected to be
instituted.
Section 4.9 Compliance with Laws. Seller and each of its Subsidiaries are,
and at all times during the past five (5) years has been, in compliance in all
material respects with all applicable Laws and Governmental Orders. Neither of
Seller nor any of its Subsidiaries has received any notice to the effect that
Seller or any Subsidiary is not or may not be in compliance with any applicable
Laws or Governmental Orders. Neither Seller nor any of its Subsidiaries have,
during the past five (5) years, conducted any internal investigation with
respect to any actual, potential or alleged material violation of any Law or
Governmental Order by Seller, any of its Subsidiaries or any of their Personnel.
Section 4.10 Licenses. Section 4.10 of the Disclosure Schedule sets forth a
true and correct list of each of the Licenses (other than Licenses to Computer
Programs) held by Seller or any of its Subsidiaries or issued by any
Governmental Authority with respect to any of their Assets. Such Licenses
(together with the Licenses to Computer Programs) constitute all of the Licenses
required to permit Seller and its Subsidiaries to own, operate, use and maintain
their Assets in the manner in which they are now operated and maintained and to
conduct the Business as presently conducted. Each License is valid, binding and
in full force and effect (and the continuing validity and effectiveness of such
Licenses will not be affected by the consummation of the transactions
contemplated hereby) and neither Seller nor any of its Subsidiaries are in
default (or with the giving of notice or lapse of time or both, would be in
default) under any such License in any material respect. There are no
proceedings pending, nor to the Knowledge of Seller, threatened, that seek the
revocation, cancellation, suspension, failure to renew or adverse modification
of any such License. All required filings with respect to such Licenses have
been timely made and all required applications for renewal thereof have been
timely filed.
Section 4.11 Computer Programs.
(a) Set forth in Section 4.11 of the Disclosure Schedule is a list and
brief description of the Computer Programs (other than generally available
commercial off-the-shelf or downloadable Computer Programs used internally by
Seller or its Subsidiaries in accordance with the applicable license agreement)
which are in whole or in part owned, licensed, distributed, copied, modified,
displayed, sublicensed or otherwise used by Seller or its Subsidiaries in
connection with the operation of the Business as now conducted or as now
proposed to be conducted in its written business documents (such Computer
Programs, together with the generally available Computer Programs described
above, being referred to herein as the "Seller Software"), identifying with
respect to each such Computer Program whether it is owned or licensed by Seller
or its Subsidiaries.
(b) Each and every Computer Program included in whole or in part in the
Seller Software is either: (i) owned by Seller or its Subsidiaries, (ii)
currently in the public domain or otherwise available for use, modification and
distribution by Seller or its Subsidiaries without a license from or the
approval or consent of any third party, or (iii) licensed or otherwise used by
Seller or its Subsidiaries pursuant to the terms of a valid, binding written
agreement ("Software Contract"). Section 4.11 of the Disclosure Schedule
identifies all Software Contracts (other than generally available commercial
off-the-shelf or downloadable Computer Programs used internally by Seller or any
of its Subsidiaries in accordance with the applicable license agreement). No
Software Contract creates, or purports to create, obligations or immunities with
respect to any Intellectual Property Rights of any Seller, including but not
limited to, obligations requiring the disclosure or distribution of all or a
portion of the source code for Seller Software. For example, except as set forth
on Section 4.11 of the Disclosure Schedule, no portion of the Seller Software is
licensed to Seller or its Subsidiaries pursuant to any version of the General
Public License, Lesser General Public License, or Common Public License.
(c) No portion of Seller Software:
(i) sold or licensed by Seller or its Subsidiaries directly or
indirectly to end users contained, on the date of shipment by Seller or its
Subsidiaries;
(ii) currently for sale or license directly or indirectly to end users
contains; and,
(iii) other than that specified in the preceding (i) and (ii) in this
sentence, to the Knowledge of Seller contains;
any software routines or hardware components designed to permit
unauthorized access; to disable or erase software, hardware or data; or to
perform any other similar actions. Seller and its Subsidiaries use industry
standard methods to detect and prevent viruses and other code covered by
the preceding sentence (and subsequently to correct or remove such viruses)
that may be present in the Seller Software. The Seller Software does not
include or install any spyware, adware, or other similar software which
monitors the use of any remote computer without the knowledge and express
consent of the users of such remote computer.
(d) Seller and its Subsidiaries have adopted policies or procedures to
control the use of (i) Computer Programs including without limitation object
code and source code portions thereof available for download on the internet;
and (ii) any other Computer Programs not introduced into Seller's or its
Subsidiaries' development environment through a formal procurement process and
pursuant to a license agreement determined to be appropriate for establishing
Seller's and its Subsidiaries' rights and obligations with respect to Computer
Programs.
Section 4.12 Material Contracts.
(a) Section 4.12 of the Disclosure Schedule lists the following Contracts
(other than Software Contracts disclosed in Section 4.11 of the Disclosure
Schedule) to which Seller or any of its Subsidiaries is a party or by which any
of them or their Assets may be bound (collectively, the "Material Contracts"):
(i) any Contract (other than purchase orders entered into in the
ordinary course of the business) that Seller reasonably anticipates will
involve aggregate payments to Seller or any of its Subsidiaries of more
than $5,000 or by Seller or any of its Subsidiaries of more than $5,000 and
subsequent to January 1, 2004;
(ii) any lease, rental or occupancy agreement, license, installment
and conditional sale agreement and any other contract or agreement
affecting the ownership of, leasing of, title to, use of, or any leasehold
or other interest in, any real property or personal property involving
annual lease payments in excess of $5,000;
(iii) any Contract containing covenants limiting the freedom of Seller
or any of its Subsidiaries or the Principal to engage in any line of
business or compete with any Person;
(iv) any material distribution, franchise, license, sales, commission,
consulting agency or advertising Contracts which are not cancelable on
thirty (30) calendar days' notice without payment or penalty;
(v) any Contract relating to Indebtedness or any indebtedness for
borrowed money of any other person;
(vi) any Contract relating to the sale or disposition of Assets of
Seller or any of its Subsidiaries (other than the sale of inventory in the
ordinary course of business);
(vii) any Contract of which Seller is aware to which any Personnel is
bound which in any manner purports to (a) restrict such Person's freedom to
engage in any line of business or to compete with any other Person, or (b)
assign to any other Person rights to any material invention, improvement,
or discovery by such employee, officer, director or independent contractor;
(viii) any license agreement or other Contract relating to
Intellectual Property Rights (other than any license agreement or other
Contract for generally available commercial off-the-shelf or downloadable
Computer Programs having a retail price of less than $5,000 used internally
in accordance with the applicable license agreement);
(ix) any joint venture Contract, partnership agreement, limited
liability company or other Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by Seller or any of its Subsidiaries
with any other Person;
(x) any Contract providing for payments to or by any Person or entity
based on sales, purchases or profits, other than direct payments for goods;
(xi) any Contract providing for capital expenditures after the date
hereof in an amount in excess of $5,000 individually or in the aggregate;
(xii) any written warranty, guaranty or other similar undertaking with
respect to contractual performance extended by Seller or any of its
Subsidiaries other than in the ordinary course of business;
(xiii) any Loss Contract or Loss Bid;
(xiv) any Government Contract that a Seller reasonably anticipates
will involve aggregate payments to Seller or any of its Subsidiaries of
more than $5,000;
(xv) any Contract between or among Seller or any of its Subsidiaries
and any Affiliate of Seller;
(xvi) any employment, severance or consulting Contract; and
(xvii) any Contract or other arrangement entered into other than in
the ordinary course of business.
Seller has delivered or made available to Buyer true, correct and complete
copies of all of the Material Contracts, including all amendments and
supplements thereto.
(b) Neither Seller nor any of its Subsidiaries are (and to the Knowledge of
Seller, no other party is), as of the date of this Agreement, in material breach
or violation of, or default under, any of the Material Contracts nor has Seller
or any of its Subsidiaries received any notice (written or oral) of breach or
violation of, or default under, a Material Contract. Each Material Contract is,
as of the date of this Agreement, in full force and effect (and will remain in
full force and effect upon consummation of the transactions contemplated
hereby). Except as specifically noted on Section 4.12 of the Disclosure
Schedule, no consent of any party to any Material Contract is required in
connection with the execution and delivery of this Agreement by Seller or the
consummation of the transactions contemplated hereby.
Section 4.13 Government Contracts.
(a) No payment has been made by Seller or any of its Subsidiaries, or by
any Person authorized to act on their behalf, to any Person in connection with
any Government Contracts in violation of applicable procurement laws or
regulations or in violation of (or requiring disclosure pursuant to) the Foreign
Corrupt Practices Act or other applicable laws.
(b) Each of Seller's and its Subsidiaries' cost accounting and procurement
systems with respect to Government Contracts are in compliance in all material
respects with all applicable governmental regulations.
(c) With respect to each Government Contract, except as set forth on
Section 4.13 of the Disclosure Schedule, (i) Seller and each of its Subsidiaries
have complied with all material terms and conditions of such Government
Contract, including all clauses, provisions and requirements incorporated
expressly, by reference or by operation of Law therein; (ii) Seller and each of
its Subsidiaries have complied with all material requirements of applicable Laws
pertaining to such Government Contract; (iii) all representations and
certifications executed, acknowledged or set forth in or pertaining to such
Government Contract were complete and correct in all material respects as of
their effective date, and Seller and each of its Subsidiaries have complied in
all material respects with all such representations and certifications; (iv)
neither the United States Government nor any prime contractor, subcontractor or
other Person has notified Seller or any of its Subsidiaries, either orally or in
writing, that Seller or any such Subsidiary has breached or violated any
applicable Law, or any material certification, representation, clause, provision
or requirement pertaining to such Government Contract; and (v) no termination
for convenience, termination for default, cure notice or show cause notice is in
effect as of the date hereof pertaining to any Government Contract.
(d) Except as set forth in the Disclosure Schedule, (i) neither Seller nor,
to its knowledge, any of its Subsidiaries nor any of their officers and members
of boards of directors or comparable body are (or during the last five (5) years
have been) under administrative, civil or criminal investigation, or indictment
or audit by any Governmental Authority with respect to any Government Contract;
and (ii) during the last five (5) years, neither Seller nor any of its
Subsidiaries have conducted or initiated any internal investigation or made a
voluntary disclosure to any Governmental Authority, with respect to any alleged
irregularity, misstatement or omission arising under or relating to a Government
Contract.
(e) Except as set forth on Section 4.13 of the Disclosure Schedule, there
exist (i) no outstanding material claims against Seller or any of its
Subsidiaries, either by a Governmental Authority or by any prime contractor,
subcontractor, vendor or other Person, arising under or relating to any
Government Contract; and (ii) no material disputes between Seller or any of its
Subsidiaries and the United States Government under the Contract Disputes Act or
any other statute or between Seller of any of its Subsidiaries and any prime
contractor, subcontractor or vendor arising under or relating to any Government
Contract.
(f) Neither Seller nor any of its Subsidiaries nor, to the Knowledge of
Seller, any of their respective officers and members of boards of directors or
comparable body have been suspended or debarred from doing business with the
United States Government or is, or at any time has been, the subject of a
finding of nonresponsibility or ineligibility for United States Government
contracting.
Section 4.14 Machinery and Equipment and Other Property. Seller or one of
its Subsidiaries owns and has good and marketable title to all items of
machinery, equipment, tools, spare parts, furniture, automobiles and other fixed
assets (other than inventory held for sale in the ordinary course of business)
used in the Business or otherwise reflected as owned by Seller or any of its
Subsidiaries on the Interim Financial Statements in each case free and clear of
any Encumbrances other than Permitted Encumbrances (the "Machinery and
Equipment"). The Machinery and Equipment, taken as a whole, are in good
operating condition and repair (subject to normal wear and tear) and are
suitable for the purposes for which they are presently and have historically
been used. Except as otherwise contemplated by this Agreement, Seller or any of
its Subsidiaries owns, or, in the case of leases and licenses, has valid and
subsisting leasehold interests or licenses in, all of the material assets and
properties of whatever kind (whether real or personal, tangible or intangible
and including, without limitation, all material intellectual property) used in
their business, in each case free and clear of any Encumbrances other than
Permitted Encumbrances.
Section 4.15 Real Property.
(a) Section 4.15 of the Disclosure Schedule describes and lists the name of
the landlord of all real property now leased or licensed for use by Seller (the
"Real Property"). Seller neither owns, nor has ever owned any Real Property.
Schedule 4.15 of the Disclosure Schedule sets forth all leases, subleases and
other agreements pursuant to which Seller derives its rights in the Real
Property (the "Leases"), including, with respect to each such Lease the identity
of the landlord or sublandlord, the date of such Lease and each amendment
thereto, and the aggregate annual rent.
(b) The Leases are in good standing and are valid, binding and enforceable
in accordance with their respective terms, and there does not exist under any
such Lease any default by Seller or, to Seller's Knowledge, by any other Person,
or any event that, with notice or lapse of time or both, would constitute a
default by Seller or, to Seller's Knowledge, by any other Person. Seller has
delivered to Buyer complete and accurate copies of all Leases, including all
amendments and agreements related thereto and the Leases constitute the entire
agreement between Seller and each landlord or sublandlord with respect to the
Real Property. All rent and other charges currently due and payable under the
Leases have been paid.
(c) Seller is the holder of the tenant's interest under the Leases and has
not assigned the Leases nor subleased all or any portion of the premises leased
thereunder. Seller has not made any alterations, additions or improvements to
the premises leased under the Leases that are required to be removed (or of
which any landlord or sublandlord could require removal) at the termination of
the respective Lease terms. Seller owns all trade fixtures, equipment and
personal property located in the premises leased under the Leases and the
landlords thereunder have no Liens thereon or claim thereto except for Permitted
Encumbrances.
(d) The Real Property currently has access to public ways, duly laid out
and accepted by the appropriate local jurisdictions, either directly or over
valid, recorded and insurable easements over private ways or private property
for ingress to and egress from all such Real Property and connections to water
supply, storm and sewer facilities, telephone, gas and electrical connections
and other public utilities (collectively, the "Access Rights"). All of such
Access Rights are of sufficient width and capacity to permit the Business to be
conducted as presently conducted and proposed to be conducted, without
interference, challenge or complaint from any neighbors or abutters to each Real
Property or from any municipal authorities having jurisdiction over such Access
Rights.
(e) The Real Property includes all real property leased by Seller or
otherwise used or held for use in connection with the conduct of the Business as
heretofore conducted.
(f) The Real Property and the present use of the Real Property are not in
violation of or out of conformity with any zoning, subdivision, building,
building code, health, safety, traffic, flood control, wetlands, or other land
use laws, variances, Permits or orders of any Governmental Entity having
jurisdiction over the Real Property, including, without limitation, the
Americans with Disabilities Act of 1990.
(g) The plants, buildings and structures (including, without limitation,
the roofs thereof) located on the Real Property are in good operating condition
and repair and have been reasonably maintained consistent with standards
generally followed in the industry (giving due account to the age and length of
use of same, ordinary wear and tear excepted), are suitable for their present
uses, and are structurally sound.
Section 4.16 Intellectual Property Rights. Section 4.16 of the Disclosure
Schedule lists each patent, registered copyright, trademark, service mark, mask
work, trade name or domain name, and each application (and renewal) for or to
register any of the foregoing, that is included in the Intellectual Property
Rights owned by Seller or any of its Subsidiaries, including the record owner,
the registration or application number and the expiration date. Seller or one of
its Subsidiaries solely owns free and clear of any Encumbrance, or has the right
to use pursuant to a Material Contract, each of the Intellectual Property
Rights, including without limitation the Intellectual Property Rights listed on
Section 4.16 of the Disclosure Schedule. The Intellectual Property Rights
constitute all of the intellectual property necessary to carry out the
Business's former, current and currently - planned future activities. No other
Person other than a Seller or one of its Subsidiaries (i) has the right to use
any of the Intellectual Property Rights, except pursuant to the Material
Contracts; or (ii) to Seller's Knowledge, is infringing upon or otherwise
violating any Intellectual Property Rights. To Seller's knowledge, neither
Seller's nor any of its Subsidiaries' use of the Intellectual Property Rights,
nor the conduct of Seller's or any of its Subsidiaries' businesses, is
infringing upon or otherwise violating the rights of any other Person. Except as
set forth in Section 4.16 of the Disclosure Schedule, neither Seller nor any of
its Subsidiaries are obligated to provide any consideration (financial or
otherwise) to any third party, nor is any third party otherwise entitled to any
consideration, with respect to any exercise of rights by Seller or any of its
Subsidiaries, or by Buyer as successor to Seller and its Subsidiaries, in the
Intellectual Property Rights. No proceedings are pending against or notices
received by Seller or any Subsidiary that are presently outstanding alleging
that Seller's or any of its Subsidiary's use of the Intellectual Property
Rights, or the conduct of Seller's or any of its Subsidiaries' businesses,
infringes upon or otherwise violates any rights of a third party, or alleging
that any Intellectual Property rights are invalid or unenforceable, nor have any
such allegations been made to Seller's Knowledge. Seller and its Subsidiaries
have taken commercially reasonable steps (including measures to protect secrecy
and confidentiality) to protect Seller's and its Subsidiaries' right, title and
interest in and to all Intellectual Property Rights, and to assure that any
Personnel who have access to confidential or proprietary information of Seller
or its Subsidiaries have a contractual or legal obligation of confidentiality to
Seller or its Subsidiaries with respect to such information, and have an
obligation to transfer rights for no additional consideration in inventions, and
authored works, whether or not patented, patentable, copyrighted or otherwise
protectable under the law, made during the course of their employment using
resources of Seller and its Subsidiaries.
Section 4.17 Sufficiency of Purchased Assets. Seller and its Subsidiaries
have good and marketable and marketable title to, or a valid leasehold interest
in, the Assets. Upon the consummation of the transactions contemplated hereby,
Buyer will acquire good and marketable title to, or a valid leasehold interest
in, all the Purchased Assets, free and clear of any Encumbrances, other than
Permitted Encumbrances. The Purchased Assets include in all material respects
all assets used or held for use in the conduct of the Business as presently
conducted.
Section 4.18 Employee Benefit Plans and Other Agreements.
(a) Disclosure; Delivery of Copies of Relevant Documents and Other
Information. Section 4.18 of the Disclosure Schedule contains a complete list of
each Employee Plan which covers one or more present, former or retired
employees, directors or consultants of Seller or any of its Subsidiaries or any
ERISA Affiliate of Seller or any of its Subsidiaries. True and complete copies
(including any amendments thereto) of all of the following documents have been
made available to Buyer: (i) Employee Plan documents, trust instruments,
insurance contracts, written interpretations and written descriptions forming a
part of any Employee Plan; (ii) the most recent determination or opinion letter
issued by the IRS with respect to each Pension Plan; (iii) for the three (3)
most recent plan years, Annual Reports on Form 5500 Series required to be filed
with any Governmental Authority for each Employee Plan; (iv) all summary plan
descriptions for each Employee Plan required to prepare and distribute summary
plan descriptions, including any summaries of any material modifications to any
Employee Plan; (v) all summaries, if any, furnished to employees, officers and
directors of the Seller and its Subsidiaries of all other plans, incentive
compensation or fringe benefits for which a summary plan description is not
required, including any summaries of any material modifications to any Employee
Plan; (vi) notifications to employees of their rights under Section 4980B of the
Code; (vii) copies of all documents and correspondence relating to any Employee
Plan received from or provided to the IRS or the Department of Labor; (viii)
copies of any investment management agreements or record keeping agreements
relating to any Employee Plan; and (ix) a description setting forth the amount,
if any, of any liability of Seller or any of its Subsidiaries, or any ERISA
Affiliate of any Seller as of the Closing Date, for payments to an Employee Plan
that are more than thirty (30) days past due.
(b) Employee Plans. Except as set forth in the Disclosure Schedule:
(i) Pension Plans.
(A) None of the Seller or any of its Subsidiaries, or any ERISA
Affiliate of any Seller now, or at any time, has (1) sponsored,
administered, maintained, contributed to, or was obligated to
contribute to a defined benefit plan as defined in Section 3(35) of
ERISA or a multiple employer plan as defined in Section 210 of ERISA
or (2) has incurred or reasonably expects to incur any liability with
respect to any transaction described in Section 4069 of ERISA.
(B) Each Pension Plan which covers employees, former or retired
employees of Seller or any of its Subsidiaries or any ERISA Affiliate
and any of its Subsidiaries, has been determined by the IRS to be
qualified and tax-exempt under the provisions of Code Sections 401(a)
(or 403(a), as appropriate) and 501(a) and has been so qualified
during the period from its adoption to date.
(C) Each Pension Plan, related trust agreement, annuity contract
or other funding instrument which covers employees, former or retired
employees of Seller and any of its Subsidiaries or any ERISA Affiliate
of Seller and any of its Subsidiaries is in compliance with, and has
been maintained in compliance with, its terms and, both as to form and
in operation, with the requirements prescribed by any Laws which are
applicable to such plans, including without limitation ERISA and the
Code, except where the failure to so administer any Pension Plan has
been corrected in accordance with the IRS's Employee Plan Compliance
Resolution System and will not result in the disqualification of any
such Employee Plan. None of Seller or any of its Subsidiaries, or any
ERISA Affiliate of Seller or any of its Subsidiaries knows of any fact
or set of circumstances that have adversely affected, or could
reasonably adversely affect, the qualification of any Pension Plan
prior to the Closing Date.
(ii) Multiemployer Plans. None of Seller, any of its Subsidiaries, or
any ERISA Affiliate of Seller or any of its Subsidiaries, sponsors,
administers, maintains, contributes to or is, or was obligated to maintain
or contribute to, or has withdrawn from, a Multiemployer Plan.
(iii) Welfare Plans.
(A) Each Welfare Plan is in compliance with, and has been
maintained in compliance with, its terms and, both as to form and
operation, with the requirements prescribed by any and all Laws which
are applicable to such Welfare Plan, including without limitation
ERISA and the Code. None of Seller or any of its Subsidiaries, or any
ERISA Affiliate of Seller or any of its Subsidiaries knows of any fact
or set of circumstances that have adversely affected, or could
reasonably adversely affect, the qualification of any Welfare Plan
prior to the Closing Date.
(B) Except as disclosed on the Disclosure Schedule, none of
Seller, any of its Subsidiaries, any ERISA Affiliate of Seller or any
of its Subsidiaries, or any Welfare Plan has any present or future
obligation to make any payment to, or with respect to any present,
former or retired employee of Seller, any of its Subsidiaries, or any
ERISA Affiliate of Seller or any of its Subsidiaries, pursuant to, any
retiree medical benefit plan, or other retiree Welfare Plan, and no
condition exists which would prevent Seller from amending or
terminating any such employee plan or Welfare Plan.
(C) Each Welfare Plan which is a "group health plan," as defined
in Section 607(1) of ERISA, has been operated in compliance with
provisions of Part 6 of Title I, Subtitle B of ERISA and Section 4980B
of the Code at all times.
(iv) Benefit Arrangements. Each Benefit Arrangement has been
maintained in compliance with, and is in compliance with, its terms and,
both as to form and operation, with the requirements prescribed by any and
all Laws which are applicable to such Benefit Arrangement, including
without limitation, the Code.
(v) Deductibility of Payments. There is no contract, agreement, plan
or arrangement covering any present, former or retired employee, director
or consultant of Seller or any of its Subsidiaries that, individually or
collectively, provides for the payment by Seller or any of its Subsidiaries
of any amount (i) that is not deductible under Section 162(a)(1) or 404 of
the Code or (ii) that is an "excess parachute payment" pursuant to Section
280G of the Code.
(vi) Fiduciary Duties and Prohibited Transactions. None of Seller, any
of its Subsidiaries, any ERISA Affiliate of Seller or any of its
Subsidiaries, or any plan fiduciary of any Welfare Plan or Pension Plan,
has engaged in any transaction in violation of Sections 404 or 406 of ERISA
or is liable for any "prohibited transaction," as defined in Section
4975(c)(1) of the Code, for which no exemption exists under Section 408 of
ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise violated
the provisions of Part 4 of Title I, Subtitle B of ERISA. None of Seller,
any of its Subsidiaries, or any ERISA Affiliate of Seller or any of its
Subsidiaries, has knowingly participated in a violation of Part 4 of Title
I, Subtitle B of ERISA by any plan fiduciary of any Welfare Plan or Pension
Plan. The Secretary of Labor has not assessed any civil penalty under
Section 502(1) of ERISA that remains unpaid.
(vii) Litigation. There is no action, order, writ, injunction,
judgment or decree outstanding or claim, suit, litigation, proceeding,
arbitral action, governmental audit or investigation relating to or seeking
benefits under any Employee Plan that is pending, threatened or anticipated
against Seller, any of its Subsidiaries, any ERISA Affiliate of Seller or
any of its Subsidiaries, or any Employee Plan. No Employee Plan is, or
within the last three (3) years has been, the subject of examination or
Audit by a Governmental Authority or a participant in a government
sponsored amnesty, voluntary compliance or similar program.
(viii) No Amendments. None of Seller, any of its Subsidiaries, or any
ERISA Affiliate of Seller or any of its Subsidiaries has any announced plan
or legally binding commitment to create any additional Employee Plans which
are intended to cover one or more present, former or retired employees,
directors or consultants of Seller, any of its Subsidiaries or any ERISA
Affiliate of Seller or any of its Subsidiaries or to amend or modify any
existing Employee Plan. Seller, one of its Subsidiaries, or an ERISA
Affiliate of Seller or one of its Subsidiaries may terminate, suspend, or
amend each Employee Plan at any time, (except to the extent otherwise
restricted by ERISA or the Code), without the consent of the participants
or employees covered by the Employee Plan.
(ix) No Other Material Liability. No event has occurred in connection
with which Seller, any of its Subsidiaries, any ERISA Affiliate of Seller
or any of its Subsidiaries, or any Employee Plan, directly or indirectly,
could be subject to any material liability (A) under any Law relating to
any Employee Plan or (B) pursuant to any obligation of a Seller to
indemnify any Person against liability incurred under any such Law as it
relates to the Employee Plans.
(x) Unpaid Contributions. Each of Seller or any of its Subsidiaries,
or an ERISA Affiliate of Seller or any of its Subsidiaries, has made all
required contributions under each Employee Plan, for all periods and proper
accruals have been made and are reflected on the appropriate balance
sheets, books and records. None of Seller, its Subsidiaries, or any ERISA
Affiliate of Seller or any of its Subsidiaries has any liability for unpaid
contributions under Section 515 of ERISA with respect to any Multiemployer
Plan.
(xi) Insurance Contracts. None of Seller, its Subsidiaries or any
Employee Plan (other than a Multiemployer Plan) holds as an asset of any
Employee Plan any interest in any annuity contract, guaranteed investment
contract or any other investment or insurance contract issued by an
insurance carrier that is the subject of bankruptcy, conservatorship or
rehabilitation proceedings.
(xii) No Acceleration or Creation of Rights. Neither the execution and
delivery of this Agreement by Sellers and its Subsidiaries nor the
consummation of the transactions contemplated hereby will result in the
acceleration or creation of any rights of any person to benefits under any
Employee Plan (including, without limitation, the acceleration of the
vesting or exercisability of any stock options, the acceleration of the
vesting of any restricted stock, the acceleration of the accrual or vesting
of any benefits under any Pension Plan or the acceleration or creation of
any rights under any severance, parachute or change in control agreement).
Section 4.19 Labor Matters.
(a) Section 4.19 of the Disclosure Schedule sets forth a true and correct
list of (i) with respect to each employee of Seller as of the date hereof, (A)
his or her name, job title, date of hire and annualized compensation (including,
without limitation, base salary, bonus, and/or commission potential), and (B)
whether such employee is on any leave or layoff status, (ii) all collective
bargaining agreements to which Seller or any of its Subsidiaries is a party,
(iii) all employment Contracts to which Seller or any of its Subsidiaries is a
party with respect to any employee or former employee and which may not be
terminated at will, (iv) all severance Contracts to which Seller or any of its
Subsidiaries is a party, and (v) each individual who, as of the date hereof, is
retained by Seller or any of its Subsidiaries and classified as a consultant or
independent contractor, the compensation for each such individual and any
Contracts with any such individual to which Seller or any of its Subsidiaries is
a party.
(b) The employment of all persons presently employed, and the engagement of
any consultants presently retained, by Seller and its Subsidiaries is terminable
at will.
(c) Neither Seller nor any of its Subsidiaries have entered into any
severance or similar arrangement in respect of any present employee of Seller or
any of its Subsidiaries that will result in any obligation (absolute or
contingent) of Buyer, Seller or any of Seller's Subsidiaries to make any payment
to any present employee of Seller or any of its Subsidiaries following
termination of employment or upon a change of control of a Seller or any of its
Subsidiaries, and neither Seller nor any of its Subsidiaries have a severance
pay plan, practice or policy.
(d) Neither Seller nor any of its Subsidiaries have engaged in any unfair
labor practice and there are no complaints against Seller or any of its
Subsidiaries pending or, to the Knowledge of Seller, threatened before the
National Labor Relations Board or any similar state, local or foreign labor
agency by or on behalf of any employee of Seller or any of its Subsidiaries.
Except as disclosed in Section 4.19 of the Disclosure Schedule, there are no
representation questions, arbitration proceedings, labor strikes, slow downs or
stoppages, grievances or other labor disputes pending or, to the Knowledge of
Seller, threatened with respect to the employees of Seller or any of its
Subsidiaries, and neither Seller nor any of its Subsidiaries have experienced
any attempt by organized labor to cause Seller or any of its Subsidiaries to
comply with or conform to demands of organized labor relating to its employees.
(e) Seller and its Subsidiaries have complied in all material respects with
all applicable foreign, federal, state and local laws, rules and regulations
relating to employment, equal employment opportunity, affirmative action,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment and withholding of social security and other taxes, occupational
safety and health and plant closings (hereinafter collectively referred to as
the "Employment Laws"). Neither Seller nor any of its Subsidiaries are liable
for the payment of material taxes, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing Employment Laws.
(f) All persons presently employed by Seller or any of its Subsidiaries
have been, and currently are, properly classified under the Fair Labor Standards
Act of 1938 and its regulations, both as amended, and under any applicable state
law. Neither Seller nor any of its Subsidiaries have failed to pay any of its
current or former employees for any wages (including overtime), salaries,
commissions, bonuses, benefits or other direct compensation for any services
performed by them to the date hereof or amounts required to be reimbursed to
such individuals.
(g) There are no claims pending, or, to the Knowledge of the Seller,
threatened to be brought, against Seller or any of its Subsidiaries in any
court, administrative agency, arbitral forum or other forum, by or on behalf of
any former or current employees of Seller or any of its Subsidiaries for
compensation, severance benefits, vacation time, vacation pay, benefits,
employment discrimination, harassment, wrongful discharge, breach of contract,
tort, unfair competition or any other claim.
(h) Each of Seller, its Subsidiaries and the employees of such entities is
in compliance with all applicable visa and work permit requirements, and no visa
or work permit held by any such employee will expire during the six (6) month
period beginning on the date of this Agreement.
(i) Seller and its Subsidiaries have provided to Buyer accurate and
complete copies of any and all affirmative action plans or programs, and any
supporting data related thereto, for the current and preceding plan years.
Section 4.20 Product Liability, Warranty and Product Recalls. Neither
Seller nor any of its Subsidiaries have committed any act or omission which
would result in, or has any knowledge of any facts or circumstances which would
give rise to, (a) any material product liability not covered by insurance (other
than deductibles or self-retention amounts under such insurance policies), (b)
any obligation to recall any products produced by Seller or any of its
Subsidiaries or (c) any material liability for breach of warranty in excess of
the reserve established therefor on the December 31 Balance Sheet. Except as set
forth on Section 4.20 of the Disclosure Schedule, neither Seller nor any of its
Subsidiaries have, during the past five (5) years, (x) recalled any products
produced by Seller or any of its Subsidiaries, or (y) received any warranty
claims that individually or in the aggregate exceed $100,000 in any calendar
year.
Section 4.21 Environmental Matters. Except as disclosed in the Disclosure
Schedule:
(a) Seller and each of its Subsidiaries is and at all times has been in
material compliance with all Environmental Laws, and Seller and each of its
Subsidiaries has obtained or caused to be obtained all Licenses under
Environmental Laws necessary for operation of the Business to comply, in all
material respects, with all applicable Environmental Laws.
(b) Neither Seller nor any of its Subsidiaries have received any notice,
report, or other communication regarding any violation, alleged violation, or
potential liability under any Environmental Law, and there are no facts or
circumstances that, to the Knowledge of Seller or its Subsidiaries, would
reasonably be expected to give rise to any such violation of, or liability
under, any Environmental Law.
(c) There are no writs, injunctions, decrees, orders or judgments
outstanding, or any actions, suits, claims, proceedings or investigations
pending, or to the Knowledge of Seller and its Subsidiaries, threatened,
relating to compliance with or liability under any Environmental Law affecting
any of Sellers or any of its Subsidiaries.
(d) Neither Seller nor any of its Subsidiaries have received any request
for information, or been notified that it is a potentially responsible party,
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), or any similar Law. None of the Real Property or
any real property previously owned, leased or operated by Seller or any of its
Subsidiaries, is listed or, to the Knowledge of Sellers and its Subsidiaries,
proposed for listing on the "National Priorities List" under CERCLA, or on the
Comprehensive Environmental Response, Compensation and Liability Information
System maintained by the United States Environmental Protection Agency, as
updated through the Closing Date, or any similar state or foreign list of sites
requiring investigation or cleanup.
(e) There is no Hazardous Material that may pose any material risk to
safety, health or the environment on or under any real property owned, leased or
operated by Seller or any of its Subsidiaries, currently or in the past, and
there has heretofore been no spillage, discharge, release, disposal or handling
of any such Hazardous Material on, at or under such property in any amount and
of a nature which could result in material liability.
Section 4.22 Tax Matters. Except as set forth in Section 4.22 of the
Disclosure Schedule:
(a) Seller and its Subsidiaries (Seller and its Subsidiaries are
hereinafter sometimes referred to collectively as the "Taxpayers" or
individually as a "Taxpayer") has filed, or been included in, all Tax Returns
required to be filed through the date hereof and will timely file any such Tax
Returns required to be filed on or prior to the Closing Date, in each case,
subject to any applicable extensions. All such Tax Returns are correct, complete
and accurate in all material respects.
(b) All Taxes that accrue or are payable by a Taxpayer in respect of
Pre-Closing Tax Periods have been or will be timely paid in full on or before
the Closing Date, except to the extent a reserve for the amount of such unpaid
Taxes is set forth on the Closing Balance Sheet (other than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income).
(c) There are no liens for Taxes on the Purchased Assets, (and with respect
to the Transferred Subsidiaries, the assets of the Transferred Subsidiaries)
other than liens for current Taxes not yet due and payable. There is no audit or
other matter in controversy with respect to any Taxpayer and there is no Tax
deficiency or claim assessed that relates to any Taxpayer. No written claim has
ever been made by an authority in a jurisdiction where a Taxpayer does not file
Tax Returns that such Taxpayer is or may be subject to taxation by that
jurisdiction.
(d) None of the Purchased Assets (and with respect to the Transferred
Subsidiaries, the assets of the Transferred Subsidiaries) (i) is required to be
treated as being owned by any other person pursuant to the so-called safe harbor
lease provisions of former Section 168(f)(8) of the Code, (ii) secures any debt
the interest of which is tax-exempt under Code Section 103(a), (iii) is
tax-exempt use property within the meaning of Code Section 168(h) or (iv) is
subject to a 467 rental agreement as defined in Section 467 of the Code.
(e) Each Taxpayer has withheld from its employees, customers and any other
applicable payees (and timely paid to the appropriate person) proper and
accurate amounts for all periods through the date hereof in compliance with all
Tax withholding provisions of applicable federal, state, local and foreign laws
(including, without limitation, income, social security and employment tax
withholding for all types of compensation).
(f) For U.S. federal tax purposes, Seller is an "S Corporation" as defined
in section 1361(a) of the Code.
(g) Each Taxpayer is not a party to or subject to or bound by any contract
or agreement with any other Person relating to Taxes. Each Taxpayer does not
have any liability for the Taxes of any Person (other than Seller) under
Treasury Regulation Section 1.1502-6 (or any corresponding provision of state,
local or foreign Tax law), or as a transferee or successor, or by contract, or
otherwise.
(h) No portion of the Purchase Price is subject to any Tax withholding
provision of federal, state, local or foreign law.
(i) Each Taxpayer is not currently the beneficiary of any extension of time
within which to file any Tax Return, and each Taxpayer has not waived any
statute of limitation with respect to any Tax or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(j) No state of facts exists or has existed that would constitute grounds
for the assessment against Buyer or its Affiliates, whether by reason of
transferee liability or otherwise, of any liability for any Tax of any Taxpayer
as a result of the transactions contemplated by this Agreement.
(k) Section 4.22(l) of the Disclosure Schedule contains a list of all
jurisdictions (whether foreign or domestic) to which any Tax is properly payable
by each Taxpayer.
(l) None of the Purchased Assets are "United States real property
interests" within the meaning of Section 897(c) of the Code.
Section 4.23 Insurance.
(a) Section 4.23 of the Disclosure Schedule contains an accurate and
complete description of all policies of property, fire and casualty, product
liability, general liability, workers' compensation, and other forms of
insurance held by Seller or any of its Subsidiaries. True, correct and complete
copies of such insurance policies have been made available to Buyer.
(b) All policies listed on Section 4.23 of the Disclosure Schedule (i) are
valid, outstanding, and enforceable policies and (ii) provide adequate insurance
coverage for the Assets and the operations of Seller and its Subsidiaries for
all material risks normally insured against by a Person or Entity carrying on
the same businesses as Seller and its Subsidiaries.
(c) Neither Seller nor any of its Subsidiaries have received (i) any notice
of cancellation of any policy listed on Section 4.23 of the Disclosure Schedule
or refusal of coverage thereunder, (ii) any notice that any issuer of such
policy has filed for protection under applicable bankruptcy laws or is otherwise
in the process of liquidating or has been liquidated, or (iii) any other notice
that such policies are no longer in full force or effect or that the issuer of
any such policy is no longer willing or able to perform its obligations
thereunder.
Section 4.24 Customers and Suppliers. Section 4.24 of the Disclosure
Schedule sets forth a complete and accurate list of the names of Seller's and
its Subsidiaries' (i) ten (10) largest customers and/or programs for the three
(3) most recent fiscal years based on sales, showing the approximate aggregate
total sales in dollars by Seller and its Subsidiaries to each such customer
during each such fiscal year; and (ii) five (5) largest suppliers for the three
(3) most recent fiscal years based on purchases, showing the approximate
aggregate total purchases in dollars by Seller and its Subsidiaries from each
such supplier during each such fiscal year. As of the date hereof, neither
Seller nor any of its Subsidiaries have received any written communication since
March 1, 2004 from any customer or supplier named on Section 4.24 of the
Disclosure Schedule of any intention or threat to terminate or materially reduce
purchases from or supplies to Seller or any of its Subsidiaries or to fail to
renew any Contract with Seller or any of its Subsidiaries or, to the Knowledge
of Seller, that any such action is being considered, by any such customer or
supplier.
Section 4.25 Affiliate Transactions. No officer, manager, director, member,
stockholder or Affiliate of Seller or any of its Subsidiaries or any individual
related by blood, marriage or adoption to any such Person or in which any such
Person owns a greater than 10% beneficial interest, is, or during the last
three-year period has been, a party to any agreement, contract, commitment or
transaction with Seller or any of its Subsidiaries or has a material interest in
any material property used by Seller or any of its Subsidiaries (any such
agreement, contract, commitment, transaction or interest, a "Related Party
Transaction").
Section 4.26 Accounts Receivable. The amount of accounts receivable,
unbilled invoices, and other debts due or recorded in the records and books of
account of Seller and its Subsidiaries as being due to Seller and its
Subsidiaries as of the Closing Date will be, subject to the reserves reflected
on the Closing Balance Sheet, to Seller's knowledge good and collectible in full
in the ordinary course of business and none of such accounts receivable or other
debts is subject to any counterclaim or set-off except to the extent of any such
reserve. Since January 1, 2004, Seller has not made any change in its credit
policies, nor has it materially deviated therefrom.
Section 4.27 Inventory. As of the Closing Date, except for any reserve for
obsolete or unsaleable Inventory on the Audited Financial Statements and the
Interim Financial Statements, each item of Inventory reflected thereon (a) was
owned by Seller free and clear of all Encumbrances, except for Permitted
Encumbrances and purchase money liens arising from accounts payable reflected on
such financial statements, (b) existed as of the date of such financial
statements in salable condition, and (c) had a book value as reflected on such
financial statements equal to the lesser of Seller's actual cost for such item
of Inventory and the fair market value for such item of Inventory as of the date
of such financial statements.
Section 4.28 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller or any of its Subsidiaries.
Section 4.29 The Principal.
(a) The Principal is the lawful owner of all of the issued and outstanding
Equity Securities of Seller and has, and on the Closing Date will have, good and
clear title to such Equity Securities free and clear of all Encumbrances.
(b) The Principal has, and on the Closing Date will have, full legal right,
power and authority to enter into this Agreement and any Ancillary Agreements to
be entered into by him. The Principal has duly and validly executed this
Agreement and has, or prior to the Closing will have, duly and validly executed
and delivered all other agreements contemplated hereby, and each of this
Agreement and such other agreements constitutes a valid, binding and enforceable
obligation of the Principal in accordance with its terms.
(c) The execution, delivery and performance of this Agreement and the other
agreements contemplated hereby by the Principal, and the consummation of the
transactions contemplated hereby or thereby, will not require, on the part of
the Principal, any consent, approval, authorization or other order of, or any
filing with, any Governmental Authority, or under any contract, agreement or
commitment to which the Principal is a party or by which the Principal or
property of the Principal is bound, and will not constitute a violation on the
part of the Principal of any law, administrative regulation or ruling or court
decree, or any contract, agreement or commitment, applicable to the Principal or
property of the Principal.
Section 4.30 Full Disclosure. Seller and the Principal have made available
to Buyer all information requested by Buyer in connection with its decision to
consummate the transactions contemplated hereby. No representation or warranty
made by Seller or the Principal in this Agreement, nor any document, exhibit,
statement, certificate or schedule attached to this Agreement or delivered by
Seller or the Principal at the Closing to Buyer nor any other document delivered
by Seller or the Principal to Buyer or its attorneys or agents in connection
with the transactions contemplated hereby contains any untrue statement of
material fact or omits to state any material fact necessary in order to make the
statement contained herein, in light of the circumstances under which they were
made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PTC AND BUYER
Each of PTC and Buyer, jointly and severally, represents and warrants to
Seller as of the date hereof and as of the Closing Date as follows:
Section 5.1 Incorporation and Authority of PTC and Buyer. Each of PTC and
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all necessary
corporate power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
Buyer has all necessary corporate power to enter into each Ancillary Agreement,
to carry out its obligations thereunder and to consummate the transactions
contemplated thereby. The execution and delivery by each of PTC and Buyer of
this Agreement and each Ancillary Agreement, the performance by each of PTC and
Buyer of its obligations hereunder and thereunder and the consummation by each
of PTC and Buyer of the transactions contemplated hereby and thereby have been
duly authorized by all requisite corporate action on the part of each of PTC and
Buyer. This Agreement has been, and each Ancillary Agreement will be, duly
executed and delivered by each of PTC and Buyer and constitutes, or will
constitute, a legal, valid and binding obligation of each of PTC and Buyer,
enforceable against PTC and Buyer in accordance with its terms, except to the
extent such enforceability (a) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally, or (b) is subject to general principles of equity.
Section 5.2 No Conflict. The execution and delivery by each of PTC and
Buyer of this Agreement and each Ancillary Agreement does not and the
consummation of the transactions contemplated hereby and, with respect to Buyer,
thereby will not:
(a) conflict with or violate any of the terms, conditions or provisions of
the certificate of incorporation or bylaws of PTC or Buyer;
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in Section 5.2 of the Disclosure
Schedule, conflict with or result in a material violation or breach of any term
or provision of any Law or Governmental Order applicable to PTC or Buyer, or any
of their assets or properties; or
(c) except as could not, individually or in the aggregate, reasonably be
expected to materially and adversely affect the ability of PTC or Buyer to
consummate the transactions contemplated hereby or, with respect to Buyer, by
the Ancillary Agreements or to perform its obligations hereunder or, with
respect to Buyer, thereunder, (i) conflict with or result in a material
violation or breach of, (ii) constitute (with or without notice or lapse of time
or both) a default under, or (iii) require PTC or Buyer to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of, any material Contract to which PTC or Buyer is a
party or by which any of its assets and properties is bound.
Section 5.3 Consents and Approvals. Except as disclosed in Section 5.3 of
the Disclosure Schedule, no consent, approval or action of, filing with or
notice to any Governmental Authority on the part of PTC or Buyer is required in
connection with the execution, delivery and performance of this Agreement or,
with respect to Buyer, any Ancillary Agreement or the consummation of the
transactions contemplated hereby or, with respect to Buyer, thereby, except
where the failure to obtain any such consent, approval or action, to make any
such filing or to give any such notice could not reasonably be expected to
adversely affect the assets, liabilities, business or condition of PTC or Buyer
or any of their assets in any material respect or the ability of PTC or Buyer to
consummate the transactions contemplated by this Agreement or by the Ancillary
Agreements or to perform its obligations hereunder or thereunder.
Section 5.4 Legal Proceedings. There are no Governmental Orders outstanding
and no Actions pending or, to the knowledge of Buyer, threatened against,
relating to or affecting PTC or Buyer or any of their assets or properties which
could reasonably be expected to result in the issuance of a Governmental Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or by any
of the Ancillary Agreements or which could reasonably be expected to have a
material adverse effect on the validity or enforceability of this Agreement or
any of the Ancillary Agreements or the ability of PTC or Buyer to perform its
obligations hereunder or, with respect to Buyer, thereunder.
Section 5.5 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission for which Seller or the
Principal shall have any obligations in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
PTC or Buyer.
Section 5.6 Reports and Financial Statements. PTC has previously furnished
to Seller and the Principal true and correct copies of its (i) Form 10-K for the
period ended December 31, 2003, (ii) all other reports filed by it with the
Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") since January 1, 2004 and
(iii) PTC hereby agrees to furnish to Seller and the Principal true and correct
copies of all reports filed by it with the Commission after the date hereof
prior to the Closing all in the form (including exhibits) so filed
(collectively, the "Reports"). As of their respective dates, the Reports
complied or will comply in all material respects with the then applicable
published rules and regulations of the Commission with respect thereto at the
date of their issuance and did not or will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the audited consolidated financial
statements and unaudited interim financial statements included in the Reports
has been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly presents the financial position of the entity or
entities to which it relates as at its date or the results of operations,
shareholders' equity or cash flows of such entity or entities (subject, in the
case of unaudited statements, to the absence of footnote disclosure and in the
case of unaudited interim statements to year-end adjustments).
5.7 Validity of PTC Common Stock. The PTC Common Stock to be issued as part
of the Purchase Price have been duly authorized by all necessary corporate
action on the part of PTC and will, when issued, be validly issued, fully paid
and nonassessable.
5.8 Absence of Certain Changes or Events. Since June 30, 2004, there has
not been any Material Adverse Change in PTC or the Buyer.
5.9 Disclosure. No representation or warranty made by PTC or Buyer in this
Agreement, nor any document, exhibit, statement, certificate or schedule
attached to this Agreement or delivered by PTC or Buyer to Seller or the
Principal nor any other document delivered to PTC or Buyer in connection with
the transactions contemplated hereby contains any untrue statement of material
fact or omits to state a material fact necessary in order to make the statement
contained herein, in light of the circumstances under which they were made, not
misleading.
ARTICLE 6
ADDITIONAL AGREEMENTS
Section 6.1 Conduct of Business Prior to the Closing.
(a) Between the date of this Agreement and the Closing Date, Seller shall,
and shall cause each of its Subsidiaries to, conduct its business in the
ordinary course and consistent with past practice. Without limiting the
foregoing, except (i) for such actions as are expressly contemplated by this
Agreement and (ii) as described in Section 6.1 of the Disclosure Schedule,
without the prior written consent of Buyer, Seller shall not, and shall cause
each of its Subsidiaries not to:
(i) change any of Seller's or any of Seller's Subsidiaries' accounting
methods, principles or practices, make any material Tax election, amend any
Tax return, settle or compromise any Tax audit or take any action not in
accordance with past practices that would have the effect of deferring any
Tax liability for a taxpayer from any taxable period ending on or before
the Closing Date to any subsequent taxable period;
(ii) revalue any of the Assets, including, without limitation, writing
off receivables or reserves, other than in the ordinary course of business;
(iii) establish or increase the benefits payable under any Employee
Plan or establish any new bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing or other employee benefit
plan for Personnel of Seller or any of its Subsidiaries, or otherwise
increase the compensation payable or to become payable to any Personnel of
Seller or any of its Subsidiaries, or include any additional Person in any
deferred compensation plan, except as may be required by Law or applicable
collective bargaining agreements;
(iv) enter into or amend any employment or severance agreement with
any Personnel of Seller or any of its Subsidiaries;
(v) declare, pay or make any dividend or distribution with respect to
any Equity Securities of Seller (other than dividends payable solely in
cash);
(vi) change or amend the certificate of incorporation, bylaws, limited
liability company operating agreement or other charter document of Seller
or any of its Subsidiaries;
(vii) enter into, extend, materially modify, terminate or renew any
Material Contract other than in the ordinary course of business;
(viii) sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any material Assets or any interests
therein, except forthe sale of Inventory in the ordinary course of business
consistent with past practices or the disposition of obsolete or worn out
Assets;
(ix) acquire by merger or consolidation with, or merge or consolidate
with, or purchase substantially all of the assets of, or otherwise acquire
any material assets or business of, any Person or any other business
organization or division thereof;
(x) fail to expend funds for capital expenditures or commitments in
accordance with customary practices;
(xi) fail to maintain the Assets in substantially their current state
of repair, excepting normal wear and tear, or fail to replace, consistent
with past practice, inoperable, worn-out or obsolete or destroyed Assets;
(xii) make any material loans or advances to any Person, or, except
for expenses incurred in the ordinary course of business, to any employee
of Seller or any of its Subsidiaries;
(xiii) collect accounts receivable and pay accounts payable other than
in the ordinary course of business;
(xiv) cancel any Indebtedness owed to Seller or its Subsidiaries;
(xv) incur, create, assume or guarantee any Indebtedness;
(xvi) intentionally do any other act which would cause any
representation or warranty of the Principal, Seller or any of Seller's
Subsidiaries in this Agreement to become untrue in any material respect; or
(xvii) enter into any agreement, or otherwise become obligated, to do
any action prohibited hereunder.
(b) Seller agrees that, prior to the Closing, it shall, and it shall cause
each of its Subsidiaries to, use their reasonable best efforts to preserve
substantially intact the business organization of Seller and its Subsidiaries,
keep available to Buyer the services of the key Personnel of Seller and its
Subsidiaries and preserve the current relationships of Seller and its
Subsidiaries with the material customers and suppliers and with any other
Persons with whom Seller and its Subsidiaries have a significant business
relationship.
Section 6.2 Access to Information. From the date of this Agreement until
the Closing, upon reasonable notice, Seller shall, and shall cause each of its
Subsidiaries and the officers, employees, auditors and agents of Seller and its
Subsidiaries to, (i) afford the officers, employees and authorized agents and
representatives of Buyer reasonable access, during normal business hours, to the
offices, properties, books and records of Seller and its Subsidiaries, (ii)
furnish to the officers, employees and authorized agents and representatives of
Buyer such additional financial and operating data and other information
regarding the assets, properties, goodwill and business of Seller and its
Subsidiaries (including the work papers prepared by Seller and its independent
auditor in connection with such auditor's audit of the Audited Financial
Statements) and (iii) make available to Buyer the management employees, officers
and directors of Seller and its Subsidiaries, as Buyer may from time-to-time
reasonably request in order to assist Buyer in fulfilling its obligations under
this Agreement and to facilitate the consummation of the transactions
contemplated hereby; provided, however, that Buyer shall not unreasonably
interfere with any of the businesses or operations of Seller or its
Subsidiaries. No investigation by Buyer pursuant to this Section 6.2 shall
affect any representation or warranty given by Principal or any Seller or any of
Seller's Subsidiaries hereunder, or any of Buyer's rights under this Agreement,
including, without limitation, Articles 7 and 8.
Section 6.3 Confidentiality.
(a) The terms of the Confidentiality Agreement are hereby incorporated
herein by reference and shall continue in full force and effect until the
Closing, at which time such Confidentiality Agreement and the obligations of
Buyer thereunder shall terminate. If this Agreement is, for any reason,
terminated prior to the Closing, the Confidentiality Agreement shall continue in
full force and effect.
(b) Seller and its Affiliates have obtained confidential information
relating to the business, operations and assets of Seller and its Subsidiaries.
Following the Closing, for a period of three (3) years, Seller and its
Affiliates shall treat such information as confidential, preserve the
confidentiality thereof, not duplicate or use such information and instruct its
employees and Affiliates who have had access to such information to keep
confidential and not to use any such information unless such information (i) is
now or is hereafter disclosed, through no act or omission of Seller or its
Affiliates, in a manner making it available to the general public; (ii) is
required by law to be disclosed; or (iii) was available from a third-party
source on a non-confidential basis.
(c) PTC and Buyer have obtained confidential information relating to the
Excluded Assets and the Principal. Following the Closing, for a period of three
(3) years, PTC, Buyer and their Affiliates shall treat such information as
confidential, preserve the confidentiality thereof, not duplicate or use such
information and instruct its employees and Affiliates who have had access to
such information to keep confidential and not to use any such information unless
such information (i) is now or is hereafter disclosed, through no act or
omission of PTC, Buyer and their Affiliates, in a manner making it available to
the general public; (ii) is required by law to be disclosed; or (iii) was
available from a third-party source on a non-confidential basis.
Section 6.4 Regulatory and Other Authorizations, Consents. Each party
hereto shall use its commercially reasonable efforts to obtain all
authorizations, consents (including any consents required under the terms of any
Material Contract or material License), orders and approvals of, and to give all
notices to and make all filings with, all Governmental Authorities and other
third parties that may be or become necessary for its execution and delivery of,
and the performance of its obligations pursuant to, this Agreement, and each
party will cooperate fully with the other parties in promptly seeking to obtain
all such authorizations, consents, orders and approvals, giving such notices,
and making such filings.
Section 6.5 Further Action. Subject to the terms and conditions herein
provided, each of the parties hereto covenants and agrees to deliver or cause to
be delivered such documents and other papers, including the Ancillary
Agreements, and to use commercially reasonable efforts to take or cause to be
taken such further actions as, in each case, may be necessary, proper or
advisable under applicable Laws or otherwise to consummate and make effective
the actions contemplated hereby.
Section 6.6 Notification of Certain Matters. From the date hereof through
the Closing, Sellers shall give prompt notice to Buyer and Buyer shall give
prompt notice to Sellers of (a) the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any of Seller's,
Seller's Subsidiaries', the Principal's, PTC's or Buyer's respective
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect and (b) any material failure of Seller or
Buyer to comply with or satisfy any of its respective covenants, conditions or
agreements to be complied with or satisfied by it under this Agreement;
provided, however, that such disclosure shall not be deemed to cure any breach
of a representation, warranty, covenant or agreement, or to satisfy any
condition. Seller shall provide Buyer with an unaudited consolidated balance
sheet and the related statements of income and cash flow for each month from the
date hereof through the Closing Date within 15 calendar days after the end of
each such month.
Section 6.7 Exclusivity. From the date hereof through the Closing Date or
earlier termination of this Agreement pursuant to Article 11, neither Seller nor
its Subsidiaries shall nor shall any of them knowingly permit their respective
Affiliates, stockholders, officers, directors, employees, representatives and
agents to, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
Person or group of Persons (other than Buyer or any of its Affiliates) in
furtherance of any merger, sale of assets, sale of shares of capital stock or
similar transactions involving Seller or any of its Subsidiaries. Seller shall
(a) immediately notify Buyer (orally and in writing) if any discussions or
negotiations are sought to be initiated, any inquiry or proposal is made, any
information is requested with respect to the transactions contemplated hereby or
any offer is made with respect to Seller, any of its Subsidiaries, the Seller
Common Stock, any Equity Securities of any of Seller's Subsidiaries, or any of
the material Assets of Seller or any of its Subsidiaries, (b) include in such
notification the terms of any such proposal or offer that it may receive with
respect thereto (and provide Buyer with a copy thereof in writing), including
the identity of the soliciting party and (c) keep Buyer informed with respect to
the status of the foregoing.
Section 6.8 Pre-Closing Taxes. Seller shall promptly pay after the Closing
any unpaid Taxes (other than Assumed Sales Tax Liabilities) arising in any
Pre-Closing Tax Period that have given rise to, or could give rise to, a lien on
the Purchased Assets in the hands of Buyer or a lien on the Assets of the
Transferred Subsidiaries or otherwise cause Buyer to be liable therefor. All
real property Taxes, personal property Taxes and similar ad valorem obligations
levied with respect to the Purchased Assets for a taxable period which includes
(but does not end on) the Closing Date shall be apportioned between Seller and
Buyer as of the Closing Date based on the number of days of such taxable period
included in the Pre-Closing Tax Period and the number of days of such taxable
period following the Closing Date. Seller shall be liable for the proportionate
amount of such Taxes that is attributable to the Pre-Closing Tax Period, and
shall promptly pay such Taxes to the appropriate Governmental Authority or
promptly reimburse Buyer for such Taxes (if required to be paid by Buyer);
provided, however, that to the extent liabilities for Taxes are reflected in the
Closing Balance Sheet, such Taxes shall be Assumed Liabilities of Buyer
hereunder. In addition, Seller shall, in a timely manner, provide Buyer with (i)
certificates of Tax good standing issued with respect to each Taxpayer from all
jurisdictions in which each Taxpayer is qualified to do business or is otherwise
subject to taxation; and (ii) a clearance certificate or similar document(s)
which may be required by any Governmental Authority in order to relieve Buyer of
(x) any obligation to withhold any portion of the Purchase Price and (y) any
liability for Taxes (determined without regard to the provisions of this
Agreement assigning responsibility therefor) for which relief is available by
reason of the filing of an appropriate certificate.
Section 6.9 Employee and Employee Benefit Matters.
(a) Buyer shall extend offers of employment on an at-will basis effective
as of the Closing Date to any Personnel who are employees of Seller as of the
close of business on the Closing Date, and all such employees who accept Buyer's
offers are "Transferred Employees." However, nothing in this Agreement shall be
construed as granting any of the Personnel any rights under this Agreement,
including the right to employment by any Person. As part of such offers, Buyer
shall offer employment contracts to the Principal and Tina Springer-Miller,
respectively; the employment offers made by Buyer to all others will be on such
terms and conditions as Buyer shall, in its sole discretion, deem appropriate,
provided that such terms and conditions shall be substantially similar to their
current employment terms. Transferred Employees other than the Principal and
Tina Springer-Miller shall be eligible to receive grants of options to acquire
PTC Common Stock in accordance with Buyer's practices and consistent with PTC
standard practices under its stock option plans.
(b) Buyer will provide or cause to be provided employee benefits that are
at least substantially equivalent, in the aggregate, to the benefits that were
provided to Transferred Employees under the Employee Plans immediately prior to
the Closing Date. If requested by Buyer, Seller shall seek to assign to Buyer
any administrative agreements or third party contracts, if any, that Seller has
executed in connection with the provision of benefits under any Employee Plan.
(c) As soon as practicable after Buyer's 401(k) Plan is determined to be
tax qualified, Seller shall direct the trustees of Seller's 401(k) Plan to
transfer to the trustees of Buyer's 401(k) Plan the cash value of the account
balances (determined as of the valuation date next following receipt of notice
by Seller of the qualification of Buyer's 401(k) Plan) of Seller's 401(k) Plan
attributable to the Transferred Employees.
(d) For purposes of any Welfare Plan in which any Transferred Employee may
participate following the Closing Date, Buyer will recognize service credit
accrued prior to the Closing Date provided that the crediting of service does
not result in the duplication of benefits. Buyer shall waive any pre-existing
condition exclusion or restriction, any waiting period limitation or any
evidence of insurability requirements for the any Transferred Employees.
(e) Buyer shall not assume responsibility for any Transferred Employee
until such employee commences employment with Buyer, but in no event whatsoever
shall Buyer assume any responsibility for any commitment, obligation, duty or
liability whatsoever (i) of Seller or any of its Subsidiaries to any Transferred
Employee, or (ii) to any Transferred Employee that arose prior to and through
the Closing Date, except as expressly set forth herein. Buyer shall not assume
responsibility for any employee of Seller or any of its Subsidiaries who is not
a Transferred Employee.
(f) Notwithstanding the other provisions of this Section 6.9, the severance
obligations, if any, of Seller to any employees of Seller who reject Buyer's
offer of employment shall be shared equally among Buyer and Seller.
Section 6.10 Books and Records. Each of Buyer and PTC agrees that it will
cooperate with and make available to Seller, during normal business hours and
upon reasonable notice, all Books and Records, information and employees
(without substantial disruption of employment) which are necessary or useful in
connection with any Tax inquiry, audit, investigation or dispute, any litigation
or investigation or any other matter requiring any such Books and Records,
information or employees for any reasonable business purpose; it being
understood that all Books and Records shall be maintained by Buyer and PTC for
seven (7) years following the Closing. Seller shall bear all of the
out-of-pocket costs and expenses (including, without limitation, attorneys'
fees, but excluding reimbursement for salaries and employee benefits) reasonably
incurred in connection with providing such Books and Records, information or
employees. All information received pursuant to this Section 6.10 shall be
subject to the confidentiality provisions of Section 6.3.
Section 6.11 Noncompetition.
(a) Seller, its Subsidiaries, and the Principal each agree that for a
period of three full years from the Closing Date, neither it nor any of its
Affiliates shall:
(i) engage, either directly or indirectly, as a principal or for its
own account, solely or jointly with others, or through any form of
ownership in another Person, or otherwise, in any business that competes
with the Business as it exists on the Closing Date; or
(ii) employ or solicit, or receive or accept the performance of
services for compensation by, any Personnel;
(iii) advise any customer or supplier of the Business with respect to
its business relationship with the Business.
(b) If any provision contained in this Section shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Section, but this
Section shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. It is the intention of the parties
that if any of the restrictions or covenants contained herein is held to cover a
geographic area or to be for a length of time which is not permitted by
applicable law, or in any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Seller, its Subsidiaries, and the Principal acknowledge that Buyer would be
irreparably harmed by any breach of this Section and that there would be no
adequate remedy at law or in damages to compensate Buyer for any such breach.
Seller, its Subsidiaries, and the Principal agree that Buyer shall be entitled
to injunctive relief requiring specific performance of this Section, and Seller,
its Subsidiaries, and the Principal consent to the entry thereof.
Section 6.12 Trademark; Tradenames. As soon as practicable after the
Closing Date, Seller shall eliminate the use of all of the trademarks,
tradenames, service marks and service names used in the Business, in any of
their forms or spellings, on all advertising, stationery, business cards,
checks, purchase orders and acknowledgments, customer agreements and other
contracts and business documents. Seller shall change its corporate name so as
to bear no resemblance to the current name.
Section 6.13 Investment Canada. Within thirty (30) days following Closing
and in any event in accordance with the time periods required by the Investment
Canada Act (Canada), Buyer shall make necessary filings with Investment Canada
with respect to the purchase of the equity interest in Springer-Miller Canada,
ULC.
Section 6.14 Co-operation. Several of the provisions of this Agreement
allocate liabilities to one party while assigning to the other party contract
rights under which a third party may be responsible for such liabilities. In
such situations, the parties shall reasonably co-operate to enable the
enforcement of any third party payment, contribution or indemnity rights.
ARTICLE 7
CONDITIONS TO CLOSING
Section 7.1 Joint Conditions to the Obligations of each of PTC, Buyer, the
Principal, and Seller. The obligations of each of PTC, Buyer, the Principal, and
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or waiver, at the Closing, of each of the following
conditions:
(a) Governmental Consents. All consents, approvals and actions of, filings
with and notices to any Governmental Authority necessary to permit PTC, Buyer,
the Principal and Seller to perform their respective obligations under this
Agreement and to consummate the transactions
contemplated hereby shall have been duly obtained, made or given and shall be in
full force and effect, and all terminations or expirations of waiting periods
imposed by any Governmental Authority necessary for the consummation of the
transactions contemplated by this Agreement shall have occurred; and
(b) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Governmental Order which is in effect and
has the effect of making the transactions contemplated by this Agreement or any
of the Ancillary Agreements illegal or otherwise prohibiting consummation of
such transactions.
Section 7.2 Conditions to Obligations of Seller and the Principal. In
addition to the satisfaction or waiver of each of the conditions set forth in
Section 7.1, the obligations of Seller and the Principal to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
or waiver, at the Closing, of each of the following conditions:
(a) Representations and Warranties, Covenants. (i) The representations and
warranties of PTC and Buyer contained in this Agreement shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made as of the Closing; (ii) the covenants and agreements contained
in this Agreement to be complied with by PTC and Buyer at or prior to the
Closing shall have been complied with in all material respects; and (iii) Seller
shall have received a certificate of each of PTC and Buyer as to the matters set
forth in clauses (i) and (ii) above, signed by a duly authorized officer of PTC
and Buyer, as applicable;
(b) Ancillary Agreements. Buyer, PTC, and the other parties to the
Ancillary Agreements (other than Seller and the Principal) shall have executed
and delivered to Seller and the Principal the Ancillary Agreements.
(c) Resolutions. Seller shall have received true and complete copies,
certified by the Secretary or an Assistant Secretary (or similar officers) of
each of Buyer and PTC of the resolutions duly and validly adopted by the boards
of directors of each of Buyer and PTC evidencing their authorization of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby;
(d) Incumbency Certificate. Seller shall have received a certificate of the
Secretary or an Assistant Secretary (or equivalent officer) of each of Buyer and
PTC certifying the names and signatures of the officers of Buyer and PTC
authorized to sign this Agreement and the other documents to be delivered
hereunder;
(e) Legal Opinion. Buyer shall have delivered the opinion of Testa, Hurwitz
& Thibeault, LLP, counsel to Buyer, a form reasonably acceptable to Seller;
(f) Employees. Either at least 80% of the employees of Seller as of the
date hereof shall have accepted Buyer's offer of at-will employment made in
connection with Section 6.9 hereof or Buyer has agreed to assume
the severance obligations, if any, of that number of employees of Seller such
that Seller shall not have severance obligations to more than 10% of its
employees as of the date hereof.
(g) Employment Agreements. Buyer shall have executed and delivered to the
Principal and Tina Springer-Miller employment agreements on terms and conditions
agreed to by the parties thereto;
(h) Lease. Buyer shall cause to be delivered to the Principal a lease on
Seller's current premises in Stowe, Vermont, in a form satisfactory to the
parties thereto (the "New Lease Agreement"); and
(i) General. The form and substance of all instruments and documents
executed and delivered by PTC and Buyer in connection with the Closing shall be
reasonably acceptable to Seller and its counsel.
Section 7.3 Conditions to Obligations of PTC and Buyer. In addition to the
satisfaction or waiver of each of the conditions set forth in Section 7.1, the
obligations of PTC and Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at the Closing, of each
of the following conditions:
(a) Representations and Warranties; Covenants. (i) The representations and
warranties of Seller and the Principal contained in this Agreement shall be true
and correct in all material respects as of the Closing, with the same force and
effect as if made as of the Closing, subject to updates for changes in the
ordinary course of business and subject to such other changes that do not,
either individually or in the aggregate, cause the occurrence of a Material
Adverse Change of the character described in Section 7.3(k); (ii) the covenants
and agreements contained in this Agreement to be complied with by Seller and the
Principal at or prior to the Closing shall have been complied with in all
material respects; and (iii) Buyer shall have received a certificate from Seller
as to the matters set forth in clauses (i) and (ii) above signed by a duly
authorized officer;
(b) Ancillary Agreements. Seller and the Principal and the other parties to
the Ancillary Agreements (other than PTC and Buyer) shall have executed and
delivered to Buyer the Ancillary Agreements.
(c) Resolutions. Buyer shall have received a true and complete copy,
certified by the Secretary or an Assistant Secretary (or similar officer) of
Seller of the resolutions duly and validly adopted by the board of directors and
shareholders of Seller evidencing the authorization of the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby;
(d) Incumbency Certificate. Buyer shall have received a certificate of the
Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying
the names and signatures of the officers of Seller authorized to sign this
Agreement and the other documents to be delivered hereunder;
(e) Third Party Consents. The consents, approvals, permissions or
acknowledgments or notices identified by Buyer to Seller in writing shall have
been obtained or made, and Buyer shall have received reasonably acceptable
written evidence thereof;
(f) Legal Opinion. Seller shall have delivered the opinion of Gesmer
Updegrove, LLP, counsel to Seller, in a form reasonably acceptable to Buyer;
(g) Employment Agreements. The Principal and Tina Springer-Miller each
shall have executed and delivered to the Buyer an employment agreement on terms
and conditions satisfactory to the parties thereto;
(h) FIRPTA Certificate. Seller shall deliver, or cause to be delivered, to
Buyer an executed affidavit, dated not more than thirty (30) days prior to the
Closing Date, in accordance with Code Section 1445(b)(2) and Treasury Regulation
section 1.1445-2(b), which statement certifies that Seller is not a foreign
person and sets Seller's name, taxpayer identification number and address
Seller;
(j) Lease. Seller shall cause to be delivered to Buyer the New Lease
Agreement;
(k) Material Adverse Change. Between the date hereof and the Closing Date,
there shall not have occurred any Material Adverse Change with respect to Seller
that could reasonably be expected to result in a Potential Loss to Seller (on or
before the Closing Date) or Buyer and/or the Transferred Subsidiaries (following
the Closing Date until the first anniversary of the Closing Date) in an amount
equal to or greater than $2,000,000;
(l) Resignation of Officers and Directors of Transferred Subsidiaries. Each
member of the board of directors (or similar body) and each officer of the
Transferred member of the board of directors (or similar body) and each officer
of the Transferred Subsidiaries shall have resigned as elected or appointed
directors or officers (or similar positions) of such Person, effective as of the
Closing Date;
(m) Employees. At least 80% of the employees of Seller as of the date
hereof shall have accepted Buyer's offer of at-will employment made in
connection with Section 6.9 hereof;
(n) Liens. All Encumbrances other than Permitted Encumbrances shall have
been removed from the Purchased Assets, including, without limitation, the
security interests granted by Seller to Union Bank; and
(o) General. The form and substance of all instruments and documents
executed and delivered in connection with the Closing shall be reasonably
acceptable to Buyer and its counsel.
ARTICLE 8
INDEMNIFICATION
Section 8.1 Survival. Subject to the limitations and other provisions of
this Agreement, (x) the representations and warranties of each party contained
herein shall survive the Closing and shall remain in full force and effect,
regardless of any investigation made by or on behalf of the other party, for a
period of eighteen (18) months after the Closing Date; provided, however, that
the (i) representations and warranties set forth in Sections 4.18(b)(vi) and
(x), 4.21 (Environmental Matters) and 4.22 (Tax Matters) shall survive the
Closing for a period ending 180 days after the expiration of the applicable
statute of limitations, (ii) the covenants and agreements of the parties shall
remain in full force and effect for the applicable periods specified in the
respective Sections or Articles or, if no such period is specified, indefinitely
and (iii) the expiration of the representations and warranties and covenants and
agreements of Seller shall not serve to preclude Buyer from asserting a claim
arising out of, resulting from or relating to fraud or intentional
misrepresentation prior to the expiration of the applicable statute of
limitations period.
Section 8.2 Indemnification.
(a) By each of Seller and the Principal. Subject to the provisions of this
Section 8.2, Seller and the Principal shall jointly and severally indemnify,
defend and save and hold harmless, PTC, Buyer, the Transferred Subsidiaries,
their respective Affiliates, and their respective stockholders, members,
partners, officers, directors and employees (the "Buyer Indemnified Parties")
from and against any and all Losses, whether or not involving any third party
claims, arising out of, resulting from or relating to (i) any breach on the date
hereof or the Closing Date of any representation or warranty of Seller contained
in Article 4 hereof or set forth in an officer's certificate delivered by Seller
pursuant to Article 7 hereof, (ii) any breach of any covenant or agreement of
Seller contained herein, and (iii) any Excluded Liabilities.
(b) By Buyer. Subject to the provisions of this Section 8.2, Buyer shall
indemnify, defend and save and hold harmless Seller, its Affiliates, and their
respective stockholders, members, partners, officers, directors and employees
(the "Seller Indemnified Parties") from and against any and all Losses, whether
or not involving any third party claims, arising out of, resulting from or
relating to (i) any breach on the date hereof or the Closing Date of any
representation or warranty of Buyer contained in Article 5 hereof or set forth
in an officer's certificate delivered by Buyer pursuant to Article 7 hereof,
(ii) any breach of any covenant or agreement of Buyer contained herein, or (iii)
from and after the Closing, any Assumed Liabilities.
(c) Claim Procedure. If a claim for Losses (a "Claim") is to be made by an
indemnified party, such indemnified party shall give written notice (a "Claim
Notice") to the indemnifying party (the "Indemnifying Party"), promptly after
such indemnified party becomes aware of any fact, condition or event which may
give rise to Losses for which indemnification may be sought under this Section
8.2. If any lawsuit or other action is filed or instituted against any
indemnified party with respect to a matter subject to indemnity hereunder,
notice thereof (a "Third Party Notice") shall be given to the Indemnifying Party
as promptly as practicable (and in any event within fifteen (15) calendar days
after the service of the citation or summons). The failure of any indemnified
party to give timely notice hereunder shall not affect such indemnified party's
rights to indemnification hereunder, except to the extent such delay or failure
materially prejudices the Indemnifying Party's ability to defend such Claim or
mitigate any Losses resulting therefrom. After receipt of a Third Party Notice,
the Indemnifying Party shall have the right by providing written notice to the
indemnified party to (i) take control of the defense and investigation of such
lawsuit or action, (ii) employ and engage attorneys of its own choice (subject
to the approval of the indemnified party, such approval not to be unreasonably
withheld) to handle and defend the same, at the Indemnifying Party's sole cost,
risk and expense, and (iii) compromise or settle such claim, which compromise or
settlement shall be made only with the written consent of the indemnified party.
The indemnified party shall cooperate in all reasonable respects with the
Indemnifying Party and such attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom (at the cost and expense
of the Indemnifying Party); and the indemnified party may, at its own cost,
participate in the investigation, trial and defense of such lawsuit or action
and any appeal arising therefrom. If the Indemnifying Party fails to assume the
defense of such claim within ten (10) Business Days after receipt of the Third
Party Notice (or such earlier date, if the failure to assume the defense on such
earlier date would materially impair the ability of such indemnified party to
defend such claim), the indemnified party against which such claim has been
asserted will (upon delivering notice to such effect to the Indemnifying Party)
have the right to undertake the defense, compromise or settlement of such claim
(all at the cost and expense of the Indemnifying Party) and the Indemnifying
Party shall have the right to participate therein at its own cost.
Notwithstanding the foregoing, whether or not the Indemnifying Party assumes the
defense of a third party Claim, if the indemnified party determines in good
faith that a third party Claim is likely to have a Material Adverse Effect on
the indemnified party in a manner that may not be adequately compensated by
money damages (it being understood that any third party Claim related to Taxes
shall be deemed to have such a material adverse effect on the Buyer Indemnified
Parties), then the indemnified party may, by written notice to the Indemnifying
Party, assume the exclusive right to defend, compromise, or settle such third
party Claim. Notwithstanding anything to the contrary contained in Section 8.2,
no Claim may be settled by the indemnified party without the written consent of
the Indemnifying Party, such consent not to be unreasonably withheld.
(d) Limitations on Seller's and the Principal's Indemnification.
Notwithstanding the foregoing, no Buyer Indemnified Party shall be entitled to
indemnification pursuant to Section 8.2(a)(i) for any Losses unless and until
the amount of all Losses for which all Buyer Indemnified Parties are entitled to
indemnification pursuant to Section 8.2(a)(i) exceeds $150,000 (the "Seller's
Threshold Amount"), at which time the Buyer Indemnified Parties shall be
entitled to indemnification for all such Losses sustained by such Buyer
Indemnified Parties in excess of the Threshold Amount; provided, however, that
such amount shall not exceed (i) $2,500,000 in respect of Losses as to which a
Claim Notice is given within one year after the Closing Date (the "Initial
Period"), and (ii) an amount equal to the excess, if any, of $1,800,000 over the
sum of Losses as to which Claims are pending plus the amount of Claims paid to
the date a Claim Notice is given, in respect of Losses as to which a Claim
Notice is given during the Period commencing after the Initial Period and ending
eighteen months after the Closing Date. Notwithstanding the foregoing, the
limitation in this Section 8.2(d) shall not apply to any breach of Sections
4.18(b)(vi) and (x), 4.21 (Environmental Matters) and 4.22 (Tax Matters), and
any Loss arising out of, resulting from or relating to fraud or intentional
misrepresentation.
(e) Limitations on Buyer Indemnification. Notwithstanding the foregoing,
(i) no Seller Indemnified Party shall be entitled to indemnification pursuant to
Section 8.2(b)(i) for any Losses unless and until the amount of all Losses for
which all Seller Indemnified Parties are entitled to indemnification pursuant to
Section 8.2(b)(i) exceeds $150,000 (the "Buyer Threshold Amount"), at which time
the Seller Indemnified Parties shall be entitled to indemnification for all
Losses sustained by such Seller Indemnified Parties in excess of the Buyer
Threshold Amount; provided that such amount shall not exceed $2,500,000 in the
aggregate.
(f) Survival. Notwithstanding any provision hereof to the contrary, no
Claim may be asserted for the breach of any representation, warranty, covenant
or agreement contained herein after the expiration of the survival period
applicable to such representation, warranty, covenant or agreement, as specified
in Section 8.1; provided, that this Section 8.2(f) shall not limit the ability
of any indemnified party to recover for any Claim relating to the breach of any
representation, warranty, covenant or agreement asserted prior to the expiration
of the survival period applicable to such representation, warranty, covenant and
agreement.
(g) Indemnification Escrow. In the event that any Buyer Indemnified Party
is entitled to indemnification pursuant to this Section 8.2, the amount of
Losses for which such Buyer Indemnified Party is entitled to indemnification
shall be paid first from the Escrow Amount, in accordance with the terms of the
Escrow Agreement, to the extent funds are available therefor. In such event,
Buyer and Seller shall issue joint written instructions authorizing distribution
of the amount of such Losses to such Buyer Indemnified Party. Seller may direct
whether any release of the Escrow Amount is in the form of cash, shares of PTC
Common Stock, or a combination thereof. Any release of the Escrow Amount in the
form of PTC Common Stock shall be valued by using the per share value of such
shares assigned to them at the time of deposit into escrow in accordance with
Section 2.4(b)(ii). Seller and Buyer agree to jointly instruct the Escrow Agent
promptly after each of the twelve-month, eighteen-month, twenty-four month and
thirty-six month anniversary of the Closing Date to disburse to Seller from the
Escrow Amount an amount equal to (i) at the twelve-month anniversary of the
Closing Date, $700,000 less any pending Claims on such date and any Claim
amounts paid to such date; (ii) at the eighteen-month anniversary, an amount, if
any, equal to one-third of the difference between the amount remaining in escrow
and any then-pending Claims; (iii) at the twenty-four month anniversary, an
amount, if any, equal to one-half of the difference between the amount remaining
in escrow and any then-pending Claims; and (iv) at the thirty-sixth month
anniversary, an amount, if any, equal to the amount remaining in escrow less any
then-pending Claims.
ARTICLE 9
TAX MATTERS
Section 9.1 Conveyance Taxes. Any transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including, without limitation, any
recording or filing fees or other costs or expenses incurred with respect
thereto) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by Seller when due (or promptly reimbursed by
Seller to Buyer, as the case may be), and Seller will, at its own expense file
all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
if required by applicable law.
Section 9.2 Treatment of Indemnity Payments. All amounts paid with respect
to indemnity claims under this Agreement shall be treated by the parties hereto
for all Tax purposes as adjustments to the Purchase Price, unless otherwise
required by law. If amounts paid with respect to indemnity claims under this
Agreement are treated as income to any recipient, then the amount required to be
paid under Article 8 of this Agreement shall be increased so that the recipient
receives the amount it is entitled to receive under this Agreement, net of any
Taxes it is required to pay as a result of the receipt of such payment.
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of the parties hereto;
(b) by either Seller or Buyer, if any Governmental Authority with
jurisdiction over such matters shall have issued a Governmental Order
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby, and such order, decree, ruling or other action
shall have become final and unappealable; provided, however, that the provisions
of this Section 10.1(b) shall not be available to any party unless such party
shall have used its commercially reasonable efforts to oppose any such
Governmental Order or to have such Governmental Order vacated or made
inapplicable to the transactions contemplated by this Agreement;
(c) at any time before the Closing, by notice given by Seller or Buyer (i)
in the event of a material breach of this Agreement by a non-terminating party
if such non-terminating party fails to cure such breach within ten (10) days
following notification thereof by the terminating party or (ii) upon the
satisfaction of any condition to the terminating party's obligations under this
Agreement becoming impossible or impracticable with the use of commercially
reasonable efforts, if the failure of such condition to be satisfied is not
caused by a breach of this Agreement by the terminating party; provided,
however, that for purposes of this Section 10.1(c), Seller and the Principal,
collectively, shall be deemed to constitute a single party and shall not each
have a separate right of termination;
(d) by either Seller or Buyer, if the Closing shall not have occurred prior
to October 15, 2004; provided, however, that the right to terminate this
Agreement under this Section 11.1 (d) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the cause
of, or shall have resulted in, the failure of the Closing to occur prior to such
date.
Section 10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement shall forthwith be of no
force or effect and there shall be no liability on the part of any party hereto
except (a) that the obligations of the parties set forth in Section 6.3 and this
Section 10.2 shall survive such termination, and (b) that nothing herein shall
relieve any party from liability for any breach of this Agreement prior to the
date of termination.
ARTICLE 11
GENERAL PROVISIONS
Section 11.1 Expenses. Each party hereto shall bear its own expenses,
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby, except for the Transaction Related Expenses
(which shall be paid by Seller to the extent paid prior to the Closing or
accrued on the Closing Balance Sheet), whether or not such transactions shall be
consummated.
Section 11.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
11.2:
(a) if to Seller or the Principal:
Springer-Miller Systems, Inc.
782 Mountain Road
P.O. Box 1547
Stowe, VT 05672
Attn: John Springer-Miller
Facsimile: (802) 253-7557
with a copy to:
Gesmer Updegrove, LLP
40 Broad Street
Boston, MA 02109
Attn: William Contente, Esq.
Facsimile: (617) 350-6878
(b) if to PTC or the Buyer:
PAR Technology Park
8383 Seneca Turnpike
New Hartford, New York 13413-4991
Attention: Vi Murdock, Esq.
Facsimile: (315) 735-4191
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, Massachusetts 02110
Attention: Timothy C. Maguire
Facsimile: (617) 248-7100
Section 11.3 Public Announcements. Unless otherwise required by applicable
Law no party to this Agreement shall make any public announcements in respect of
this Agreement or the transactions contemplated hereby or otherwise communicate
with any news media without the prior written consent of the other party, and
the parties shall cooperate as to the timing and contents of any such
announcement.
Section 11.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.5 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the essential economic or legal
substance of the transactions contemplated hereby is not affected. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest
extent possible.
Section 11.6 Entire Agreement. This Agreement (including the Ancillary
Agreements, Disclosure Schedule, and the other Exhibits hereto) constitute the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and undertakings, both written and oral,
other than the Confidentiality Agreement, with respect to the subject matter
hereof and except as otherwise expressly provided herein.
Section 11.7 Assignment. This Agreement shall not be assigned by operation
of Law or otherwise without the consent of Seller and Buyer; provided, however,
that without the consent of Seller, Buyer may, by providing written notice to
Seller, assign this Agreement and Buyer's rights and obligations hereunder in
whole or in part to (a) an Affiliate of Buyer, and (b) to any Person who
acquires all or a portion of the Purchased Assets or the Equity Securities of
PTC or Buyer following the Closing (by merger, recapitalization, sale of stock
or otherwise), provided, in each case, that Buyer remains bound by the terms and
conditions of this Agreement.
Section 11.8 No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other person or
entity any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
Section 11.9 Waivers and Amendments. This Agreement may be amended or
modified, and the terms and conditions hereof may be waived, only by a written
instrument signed by the parties hereto or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder,
nor any single or partial exercise of any other right, power or privilege
hereunder, preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.
Section 11.10 Specific Performance. Seller, its Subsidiaries, and the
Principal agree that Buyer would be irreparably and immediately injured and
could not be made whole by monetary damages if this Agreement is not
specifically enforced after default. Therefore, Buyer shall have the right to
specifically enforce each of Seller's and the Principal's performance of its
obligations under this Agreement, and each of Seller and the Principal agree to
waive the defense in any such suit that Buyer has an adequate remedy at law and
to interpose no opposition, legal or otherwise, as to the propriety of specific
performance as a remedy, and that Buyer shall have the right to obtain specific
performance of the terms of this Agreement without being required to prove
actual damages, post bond or furnish other security. In addition, Buyer shall be
entitled to obtain from Seller and the Principal court costs and reasonable
attorneys' fees incurred by Buyer in enforcing its rights hereunder. As a
condition to seeking specific performance, Buyer shall not be required to have
tendered the Purchase Price.
Section 11.11 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York applicable to
contracts executed in and to be performed entirely in that state. All actions
and proceedings arising out of or relating to this Agreement shall be heard and
determined in a New York state or federal court sitting in the City of New York,
and the parties hereto hereby irrevocably submit to the exclusive jurisdiction
of such courts in any such action or proceeding and irrevocably waive the
defense of an inconvenient forum to the maintenance of any such action or
proceeding.
Section 11.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
PAR TECHNOLOGY CORPORATION
By: ________________________________________________
Name:
Title:
PSMS ACQUISITION INC.
By: ________________________________________________
Name:
Title:
SPRINGER-MILLER SYSTEMS, INC.
By: _________________________________________________
Name:
Title:
_________________________________________________
John Springer-Miller