Exhibit 2.1
ASSET PURCHASE AGREEMENT
AMONG
OVERLAND DATA, INC.
TECMAR ACQUISITION CORPORATION
TECMAR TECHNOLOGIES INTERNATIONAL, INC.
TECMAR TECHNOLOGIES, INC.
AND
DITTO, INC.
January 7, 2000
TABLE OF CONTENTS
PAGE
1. DEFINITIONS.............................................................................................1
2. BASIC TRANSACTION.......................................................................................5
(a) Purchase and Sale of Assets....................................................................5
(b) Assumption of Liabilities......................................................................5
(c) Payment of the Purchase Price..................................................................5
(d) Payment of Certain Taxes.......................................................................5
(e) The Closing....................................................................................5
(f) Deliveries at the Closing......................................................................5
(g) Filing of Voluntary Bankruptcy Petition........................................................6
(h) Approval of Court..............................................................................6
(i) Third Party Agreements.........................................................................6
(j) Allocation.....................................................................................7
(k) Guaranty by Overland...........................................................................7
(l) Resale Certificate.............................................................................7
3. OVERBID PROCEDURES......................................................................................7
(a) Overbid Terms..................................................................................7
(b) Break-Up Fee...................................................................................7
4. REPRESENTATIONS AND WARRANTIES OF THE TARGETS...........................................................7
(a) Organization of the Targets....................................................................8
(b) Authorization of Transaction...................................................................8
(c) Noncontravention...............................................................................8
(d) Brokers' Fees..................................................................................8
(e) Title to Assets................................................................................8
(f) Financial Statements...........................................................................8
(g) No Material Adverse Change.....................................................................9
(h) Legal Compliance...............................................................................9
(i) Tax Matters....................................................................................9
(j) Intellectual Property.........................................................................10
(k) Condition of Acquired Assets..................................................................12
(l) Inventory.....................................................................................12
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TABLE OF CONTENTS
(CONTINUED)
PAGE
(m) Contracts.....................................................................................12
(n) Litigation....................................................................................12
(o) Product Warranty..............................................................................13
(p) Product Liability.............................................................................13
(q) Environment, Health and Safety................................................................13
(r) Certain Business Relationships among the Targets..............................................14
(s) Disclosure....................................................................................14
5. REPRESENTATIONS AND WARRANTIES OF BUYER................................................................14
(a) Organization of Buyer.........................................................................14
(b) Authorization of Transaction..................................................................14
(c) Noncontravention..............................................................................14
(d) Brokers' Fees.................................................................................14
6. PRE-CLOSING COVENANTS..................................................................................15
(a) General.......................................................................................15
(b) Inventory Statement...........................................................................15
(c) Notices and Consents..........................................................................15
(d) Operation of Business.........................................................................15
(e) Preservation of Business......................................................................16
(f) Full Access...................................................................................16
(g) Financial Statements..........................................................................16
(h) Notice of Developments........................................................................16
(i) Key Employee Agreement........................................................................16
(j) Delivery of Bankruptcy Pleadings..............................................................16
(k) Termination of Joint Development Agreement....................................................16
7. CONDITIONS TO OBLIGATION TO CLOSE......................................................................16
(a) Conditions to Obligation of Buyer.............................................................16
(b) Conditions to Obligation of the Targets.......................................................18
8. POST-CLOSING COVENANTS.................................................................................19
(a) General.......................................................................................19
(b) Litigation Support............................................................................19
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TABLE OF CONTENTS
(CONTINUED)
PAGE
(c) Transition....................................................................................19
(d) Targets' Employees............................................................................20
9. TERMINATION............................................................................................20
(a) Termination of Agreement......................................................................20
(b) Effect of Termination.........................................................................20
10. MISCELLANEOUS..........................................................................................20
(a) Press Releases and Public Announcements.......................................................20
(b) No Third-Party Beneficiaries..................................................................21
(c) Entire Agreement..............................................................................21
(d) Succession and Assignment.....................................................................21
(e) Time of Essence...............................................................................21
(f) Headings......................................................................................21
(g) Notices.......................................................................................21
(h) Governing Law.................................................................................22
(i) Amendments and Waivers........................................................................22
(j) Severability..................................................................................23
(k) Expenses......................................................................................23
(l) Construction..................................................................................23
(m) Incorporation of Exhibits and Schedules.......................................................23
(n) Specific Performance..........................................................................23
(o) Submission to Jurisdiction....................................................................23
(p) Representation by Counsel.....................................................................24
(q) Counterparts..................................................................................24
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EXHIBIT A -- Acquired Assets
EXHIBIT B -- Assumed Agreements
EXHIBIT C -- Allocation Schedule
EXHIBIT D -- Terms of Bridge Loan
EXHIBIT E -- Disclosure Schedule -- Exceptions to Representations and
Warranties
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ASSET PURCHASE AGREEMENT
This Agreement (this "AGREEMENT") is made and entered into as of
January 7, 2000 by and among Overland Data, Inc., a California corporation
("OVERLAND"), Tecmar Acquisition Corporation, a Delaware corporation ("BUYER"),
Tecmar Technologies International, Inc., a Delaware corporation ("TTI"), TECMAR
Technologies, Inc., a Delaware corporation and wholly-owned subsidiary of TTI
("TECMAR"), and Ditto, Inc., a Delaware corporation and wholly-owned subsidiary
of TTI ("DITTO") (TTI, Tecmar and Ditto are referred to collectively herein as
the "TARGETS"). Buyer and the Targets are referred to collectively herein as the
"PARTIES."
This Agreement contemplates a transaction in which Buyer will purchase
certain of the assets (and assume certain of the liabilities) of the Targets in
return for cash.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties hereby agree as follows.
1. DEFINITIONS.
"ACQUIRED ASSETS" means all right, title and interest in and to all of
the following assets of each of the Targets (as further described in EXHIBIT A):
(a) the Closing Inventory;
(b) the Fixed Assets;
(c) non-capitalized supplies and other assets used in the
Targets' respective businesses excluding accounts receivable, cash,
investments, deposits and prepaids;
(d) the Intellectual Property; and
(e) all right, title, and interest in and to any and all
domain names, Internet addresses and/or Uniform Resource Locators
("URLS"), world wide web sites, and any and all contractual rights,
including without limitation, linkage rights, owned or controlled by
any of the Targets, including any and all content therein and any and
all intellectual property rights embodied therein, including without
limitation, patents, patent applications, copyrights, copyright
applications, trade secrets, trademarks and/or service marks and
associated applications therefore, trade dress, including any and all
goodwill associated therewith, in connection with any such domain name,
Internet address and/or URL, world wide web site, or contractual right.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AGREEMENT" has the meaning set forth above in the preamble to this
Agreement.
"ASSUMED AGREEMENTS" has the meaning set forth below in Section 2(i).
"BANK" has the meaning set forth below in Section 7(b)(v).
"BANKRUPTCY CODE" has the meaning set forth below in Section 2(g).
"BANKRUPTCY COURT" has the meaning set forth below in Section 2(g).
"BANKRUPTCY FILING DATE" has the meaning set forth below in Section
2(g).
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could form the basis for any
specified consequence.
"BUYER" has the meaning set forth above in the preamble to this
Agreement.
"CASH FLOW FORECAST" means a forecast of the Targets' aggregate cash
flow requirements for the period from and including the Bankruptcy Filing Date
through and including the Closing Date.
"CLOSING" has the meaning set forth below in Section 2(e).
"CLOSING DATE" has the meaning set forth below in Section 2(e).
"CLOSING INVENTORY" has the meaning set forth below in Section
6(b)(ii).
"CLOSING INVENTORY STATEMENT" has the meaning set forth below in
Section 6(b)(ii).
"CODE" means the Internal Revenue Code of 1986, as amended.
"DISCLOSURE SCHEDULE" has the meaning set forth below in Section 4.
"DITTO" has the meaning set forth above in the preamble to this
Agreement.
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and
charges thereunder) of federal, state, local and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety or employee health and safety, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or chemical, industrial, hazardous or toxic materials or wastes
into ambient air, surface water, ground water or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or chemical, industrial,
hazardous or toxic materials or wastes.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
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"FIXED ASSETS" means each of the fixed assets of the Targets as further
described in EXHIBIT A.
"FUTURE FINANCIAL STATEMENTS" has the meaning set forth below in
Section 6(g).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"INTELLECTUAL PROPERTY" means, as further described in EXHIBIT A:
(a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all
patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof;
(b) all trademarks, service marks, trade dress, logos, trade
names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals
in connection therewith;
(c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith;
(d) all mask works and all applications, registrations and
renewals in connection therewith;
(e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and
marketing plans and proposals);
(f) all computer software (including data and related
documentation);
(g) all other proprietary rights; and
(h) all copies and tangible embodiments thereof (in whatever
form or medium).
"INVENTORY" or "INVENTORIES" means all inventories of the of each of
the Targets, including any prepaid inventories.
"INVENTORY STATEMENT" has the meaning set forth below in Section
6(b)(i).
"KNOWLEDGE" means actual knowledge after reasonable investigation.
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"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within
the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" means the Targets' unaudited
consolidated balance sheets and statement of operations and cash flow as of and
for the 10 months ended November 30, 1999.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity,
frequency and pricing) but recognizing that Targets do not have adequate
operating capital and further subject to the effects of bankruptcy on operations
and sales.
"PARTY" has the meaning set forth above in the preamble to this
Agreement.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department, agency or political
subdivision thereof).
"PURCHASE PRICE" has the meaning set forth below in Section 2(c).
"SALE ORDER" has the meaning set forth below in Section 7(a)(i).
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanic's, materialmen's and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"TARGET" or "TARGETS" has the meaning set forth above in the preamble
to this Agreement.
"TAX" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, 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 amendment thereof.
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"TECMAR" has the meaning set forth above in the preamble to this
Agreement.
"TTI" has the meaning set forth above in the preamble to this
Agreement.
2. BASIC TRANSACTION.
(a) PURCHASE AND SALE OF ASSETS. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from the Targets, and
each of the Targets agrees to sell, transfer, convey and deliver to Buyer, all
of the Acquired Assets at the Closing for the consideration specified below in
Section 2(c).
(b) ASSUMPTION OF LIABILITIES. Except for product warranty claims that
arise in the Ordinary Course of Business, any third party agreements assumed by
Targets and assigned to Buyer as provided in Section 2(i) below, Buyer shall
neither assume nor be responsible for any Liability or obligation of any of the
Targets, regardless of amount, character or description, whether accrued,
contingent or otherwise.
(c) PAYMENT OF THE PURCHASE PRICE. Subject to the conditions to the
Closing set forth in Section 7 below, Buyer agrees to pay to the Targets at the
Closing, by delivery of cash payable by wire transfer or delivery of other
immediately available funds, the following amounts (collectively, in the
aggregate, the "PURCHASE PRICE"):
(i) 50% of the aggregate net book value on the Closing Date of
the Closing Inventory of the Targets; plus
(ii) 25% of the net book value on the Closing Date of the
Fixed Assets; less
(iii) $250,000.
(d) PAYMENT OF CERTAIN TAXES. All Taxes arising from or relating to the
Acquired Assets to be transferred hereunder shall be paid by the Targets;
PROVIDED, HOWEVER, that Buyer agrees to pay its prorated portion, to be
calculated on the Closing Date, of personal property taxes relating to the
Acquired Assets and payable to the State of Colorado for the period from the
Closing Date through December 31, 2000 and thereafter.
(e) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Baker & McKenzie in
San Diego, California, at 9:00 a.m. local time on the business day upon which
all conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) are satisfied or waived, or
such other date and location as the Parties may mutually determine (the "CLOSING
DATE").
(f) DELIVERIES AT THE CLOSING. At the Closing:
(i) each of the Targets shall deliver to Buyer the various
certificates, instruments and documents referred to below in Section 7(a);
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(ii) Buyer will deliver to the Targets the various
certificates, instruments and documents referred to below in Section 7(b);
(iii) each of the Targets will execute, acknowledge (if
appropriate), and deliver to Buyer (A) assignments (including Intellectual
Property transfer documents) in form and substance satisfactory to Buyer, (B)
bills of sale in form and substance satisfactory to Buyer and (C) such other
instruments of sale, transfer, conveyance and assignment as Buyer and its
counsel may reasonably request; and
(iv) Buyer will deliver to the Targets the Purchase Price.
(g) FILING OF VOLUNTARY BANKRUPTCY PETITION. On or before January 18,
2000 (the "BANKRUPTCY FILING DATE"), each of the Targets shall file a voluntary
petition under Title 11, Chapter 11 of the United States Code (the "BANKRUPTCY
CODE") in the United States Bankruptcy Court for the District of Delaware (the
"BANKRUPTCY COURT").
(h) APPROVAL OF COURT.
(i) As soon as reasonably practicable after filing the
voluntary petitions discussed in Section 2(g) above, the Targets shall serve and
file a motion seeking the approval of the Bankruptcy Court for the sale of the
Acquired Assets as contemplated by the Agreement free and clear of any liens,
claims and encumbrances authorized pursuant to 11 U.S.C. Sections 363(f) and
105(a). Such approval shall be obtained after the Targets have provided notice
to (A) all the Targets' respective creditors and equity security holders
(excluding contingent warranty claimants) and (B) Buyer in accordance with
Bankruptcy Rules 2002(a), (c), 6004, 9006 and 9008 and any applicable local
bankruptcy rules, providing for such limited notice as the Bankruptcy Court may
order. Such notice of hearing shall be in a form and substance satisfactory to
the Bankruptcy Court and to Buyer and shall be published at least once in a
publication satisfactory to Buyer;
(ii) each of the Targets shall provide to the Bankruptcy Court
any and all information required to obtain such approval in a timely manner;
(iii) each of the Targets shall make adequate disclosures to
(A) the Bankruptcy Court and (B) the Targets' respective creditors and equity
security holders of any contemplated transactions relating to the sale of the
Acquired Assets involving insiders of any of the Targets within the meaning of
Bankruptcy Code Section 101, regardless of whether such transactions are
included in the sale of the Acquired Assets.
(i) THIRD PARTY AGREEMENTS. The Parties acknowledge that the agreements
designated on EXHIBIT B (the "ASSUMED AGREEMENTS") are executory contracts or
unexpired leases subject to the requirements of Section 365 of the Bankruptcy
Code. After the Targets have filed for bankruptcy protection pursuant to Section
2(g) above, each of the Targets shall seek Bankruptcy Court approval to assume
the Assumed Agreements, and to assign the Assumed Agreements to Buyer at the
Closing. If Section 365 of the Bankruptcy Code precludes assumption and
assignment of any of the Assumed Agreements, such precluded Assumed Agreements
shall not be included in the Acquired Assets, and the Purchase Price shall be
adjusted downward
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accordingly. Buyer hereby agrees to assume and become responsible for all
continuing obligations of the Targets under each of the Assumed Agreements from
and after the Closing Date.
(j) ALLOCATION. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule attached hereto as EXHIBIT C.
(k) GUARANTY BY OVERLAND. Overland hereby agrees to guaranty the
financial obligations of Buyer set forth in Section 2(c) above and Section
7(b)(v) below.
(l) RESALE CERTIFICATE. On or before the Closing Date, Buyer will
provide to the Targets a resale certificate related to the Closing Inventory.
3. OVERBID PROCEDURES.
(a) OVERBID TERMS. This Agreement is made subject to overbid at the
hearing on the Bankruptcy Court's approval of this Agreement. The Targets shall
give notice of their application for approval of the sale of the Acquired Assets
to Buyer to overbid, and shall immediately following the Bankruptcy Filing Date
seek the Bankruptcy Court's approval of the overbid procedures and the break-up
fee as set forth below. The overbid provisions shall be as follows: the initial
minimum overbid shall be $150,000, with additional overbids in minimum
increments thereafter of $50,000. Prospective overbidders will be notified that
they will be required to pre-qualify with Targets forty-eight (48) hours prior
to the hearing in order to demonstrate their financial capacity to close the
transactions contemplated hereby. As part of the pre-qualification process, each
overbidder shall deliver to Tecmar forty-eight (48) hours prior to the hearing a
deposit of a minimum $500,000 cashier's check or other immediately available
funds made payable to Tecmar. Such deposit shall be nonrefundable if the bid of
such overbidder is accepted by the Bankruptcy Court and such overbidder fails to
consummate the transactions contemplated hereby due to such overbidder's
default. The balance of the Purchase Price shall be paid as set forth above in
Section 2(c). Any and all overbids shall be on the same terms and conditions in
all material respects to those set forth herein. In the event a prospective
overbidder pre-qualifies with Tecmar, Tecmar shall immediately notify and inform
Buyer of the pre-qualification and the identity or identities of the prospective
overbidder(s).
(b) BREAK-UP FEE. In the event that a Person other than Buyer acquires
the Acquired Assets, the Targets shall pay to Buyer a break-up fee in the amount
of $50,000 plus all reasonable out-of-pocket expenses, including reasonable
attorneys' fees, incurred by Buyer in connection with the proposed acquisition
of the Acquired Assets and this Agreement, provided that such fee and expenses
shall not exceed $100,000 in the aggregate.
4. REPRESENTATIONS AND WARRANTIES OF THE TARGETS. Each of the Targets jointly
and severally represents and warrants to Buyer that the statements contained in
this Section 4 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the disclosure schedule
accompanying this Agreement and initialed by the Parties (attached hereto as
EXHIBIT E, the
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"DISCLOSURE SCHEDULE"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
4.
(a) ORGANIZATION OF THE TARGETS. Each of the Targets is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
(b) AUTHORIZATION OF TRANSACTION. Each of the Targets has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors (or similar
body) of each of the Targets has duly authorized the execution, delivery and
performance of this Agreement by the respective Targets. This Agreement
constitutes the valid and legally binding obligation of each of the Targets,
enforceable in accordance with its terms and conditions; subject, however, to
limitations on enforcement imposed by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally and the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which any of the Targets is subject or any
provision of the charter or bylaws of any of the Targets or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel, or
require any notice under any agreement, contract, lease, license, instrument or
other arrangement to which any of the Targets is a party or by which it is bound
or to which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets), except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice, or Security Interest would not have a material adverse effect on
the business, financial condition, operations, results of operations, or future
prospects of Targets or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. None of the Targets needs to give
any notice to, make any filing with, or obtain any authorization, consent or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) BROKERS' FEES. None of the Targets has any Liability or obligation
to pay any fees or commissions to any broker, finder or agent with respect to
the transactions contemplated by this Agreement for which Buyer could become
liable or obligated.
(e) TITLE TO ASSETS. Upon entry of the Sale Order and by the Closing
Date, the Targets will have good and marketable title to all of the Acquired
Assets, free and clear of any Security Interest; provided, however, that nothing
herein shall constitute or be implied to constitute an opinion by Targets of the
validity of any patent, trademark or other Intellectual Property.
(f) FINANCIAL STATEMENTS. The Most Recent Financial Statements and all
Future Financial Statements have been prepared in accordance with GAAP subject,
in the case of such unaudited financial statements, to year-end audit
adjustments and the absence of notes and, in the case of Future Financial
Statements, to the presentation of the Targets on a going concern basis
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notwithstanding the GAAP requirements which would require a liquidation basis,
applied on a consistent basis throughout the periods covered thereby, fairly
present, in all material respects, the financial condition of the Targets as of
such dates and the results of operations of the Targets for such periods, are
correct and complete in all material respects, and are consistent with the books
and records of the Targets (which books and records are correct and complete in
all material respects).
(g) NO MATERIAL ADVERSE CHANGE. Since January 7, 2000:
(i) none of the Targets has sold, leased, transferred or
assigned any of the Acquired Assets to any Person other than in the Ordinary
Course of Business;
(ii) no Person (including any of the Targets) has accelerated,
terminated, modified or cancelled any agreement, contract, lease or license (or
series of related agreements, contracts, leases and licenses) involving more
than $25,000 or outside the Ordinary Course of Business, to which any of the
Targets is a party or by which any of them is bound;
(iii) none of the Targets has imposed any Security Interest
upon any of the Acquired Assets;
(iv) none of the Targets has cancelled, compromised, waived or
released any right or claim (or series of related rights and claims) outside the
Ordinary Course of Business;
(v) none of the Targets has granted any license or sublicense
of any rights under or with respect to any Intellectual Property;
(vi) none of the Targets has experienced any material damage,
destruction or loss (whether or not covered by insurance) to any of the Acquired
Assets;
(vii) except for matters or events relating to or caused by
the Targets' bankruptcy, there has not been any other material occurrence,
event, incident, action, failure to act or transaction outside the Ordinary
Course of Business involving any of the Targets; and
(viii) none of the Targets has committed to any of the
foregoing.
(h) LEGAL COMPLIANCE. Each of the Targets and their respective
predecessors and Affiliates has complied with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings and charges thereunder) of federal, state, local and foreign governments
(and all agencies thereof) except where noncompliance would not have a material
adverse effect on the business, financial condition, operations, results of
operations, or future prospects of Targets or on the ability of the Parties to
consummate the transactions contemplated by this Agreement, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against any of them alleging any failure so to
comply.
(i) TAX MATTERS. There are no Security Interests on any of the Acquired
Assets that arose in connection with any failure (or alleged failure) to pay any
Tax.
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(j) INTELLECTUAL PROPERTY.
(i) To the Knowledge of each Target, each of the Targets owns
or has the right to use pursuant to license, sublicense, agreement or permission
all Intellectual Property necessary for the operation of the businesses of such
Target as presently conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by any of the Targets immediately
prior to the Closing hereunder will be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the Closing hereunder
(except with respect to any Intellectual Property which cannot be assumed and
assigned under Section 365 of the Bankruptcy Code). Each of the Targets has
taken commercially reasonable action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) To the Knowledge of each Target and subject to the
current state of the patent and trademark application prosecution, none of the
Targets has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of third parties, and none
of the directors or officers (or employees with responsibility for Intellectual
Property matters) of any of the Targets has ever received any charge, complaint,
claim, demand or notice alleging any such interference, infringement,
misappropriation or violation (including any claim that any of the Targets must
license or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of any of the Targets' respective directors or officers
(or employees with responsibility for Intellectual Property matters), no third
party has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of any of the Targets.
(iii) Section 4(j)(iii) of the Disclosure Schedule identifies
each patent or registration which has been issued to any of the Targets with
respect to any of its Intellectual Property, identifies each pending patent
application or application for registration which any of the Targets has made
with respect to any of its Intellectual Property, and identifies each license,
agreement or other permission which any of the Targets has granted to any third
party with respect to any of its Intellectual Property (together with any
exceptions). As of the Closing Date, the Targets have delivered to Buyer or made
available to Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements and permissions (as amended to
date) and have made available to Buyer correct and complete copies of all other
written documentation evidencing ownership and prosecution (if applicable) of
each such item. Section 4(j)(iii) of the Disclosure Schedule also identifies
each trade name or unregistered trademark used by any of the Targets in
connection with any of businesses. With respect to each item of Intellectual
Property required to be identified in Section 4(j)(iii) of the Disclosure
Schedule and subject to the current state of the patent and trademark
application prosecution:
(A) On the Closing Date, the Targets will possess all
right, title and interest in and to the item, free and clear of any Security
Interest, license or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or, to the
Knowledge of any of the Targets' respective directors or
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officers (or employees with responsibility for Intellectual Property matters),
threatened which challenges the legality, validity, enforceability, use or
ownership of the item; and
(D) none of the Targets has ever agreed to indemnify
any Person for or against any interference, infringement, misappropriation or
other conflict with respect to the item.
(iv) Section 4(j)(iv) of the Disclosure Schedule identifies
each item of Intellectual Property that any third party owns and that any of the
Targets uses pursuant to license, sublicense, agreement or permission. By the
Closing Date, each of the Targets shall have delivered or made available to
Buyer correct and complete copies of all such licenses, sublicenses, agreements
and permissions (as amended to date). With respect to each item of Intellectual
Property required to be identified in Section 4(j)(iv) of the Disclosure
Schedule and subject to the approval of the Bankruptcy Court of the assignment
to Buyer of any relevant agreements subject to Section 365 of the Bankruptcy
Code:
(A) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable and in full force and
effect;
(B) the license, sublicense, agreement or permission
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby;
(C) no party to the license, sublicense, agreement or
permission is in breach or default and no event has occurred which with notice
or lapse of time would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(D) no party to the license, sublicense, agreement or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A) through (D) above
are true and correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is
not subject to any outstanding injunction, judgment, order, decree, ruling or
charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or, to the
Knowledge of any of the Targets' respective directors or officers (or employees
with responsibility for Intellectual Property matters), threatened which
challenges the legality, validity or enforceability of the underlying item of
Intellectual Property; and
(H) none of the Targets has granted any sublicense or
similar right with respect to the license, sublicense, agreement or permission.
(v) To the Knowledge of any of the Targets' respective
directors or officers (or employees with responsibility for Intellectual
Property matters), none of the Targets will
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interfere with, infringe upon, misappropriate or otherwise come into conflict
with, any Intellectual Property rights of third parties as a result of the
continued operation of its businesses as presently conducted and as presently
proposed to be conducted.
(k) CONDITION OF ACQUIRED ASSETS. Each of the Acquired Assets, other
than the Closing Inventory and the Intellectual Property, has been maintained in
accordance with normal industry practice, is in reasonable operating condition
and repair (subject to normal wear and tear) and is suitable for the purposes
for which it presently is used.
(l) INVENTORY. The Inventory of the Targets consists of raw materials
and supplies, manufactured and purchased parts, goods in process and finished
goods, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, and none of which is obsolete, defective or damaged
beyond commercially reasonable repair, subject only to the reserve for inventory
write down set forth on the face of the Most Recent Balance Sheet (rather than
in any notes thereto) as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Targets. The
Targets' perpetual inventory systems accurately report and will accurately
report the type and quantity of the Inventories on or before the Closing Date.
(m) CONTRACTS. Section 4(m) of the Disclosure Schedule lists the
following contracts and other agreements to which any of the Targets is a party:
(i) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year, result in a material
loss to any of the Targets , or involve consideration in excess of $10,000;
As of the Closing Date, the Targets have delivered or made available to
Buyer a correct and complete copy of each written agreement listed in Section
4(m) of the Disclosure Schedule (as amended to date) and a written summary
setting forth the terms and conditions of each oral agreement referred to in
Section 4(m) of the Disclosure Schedule. With respect to each such agreement and
subject to the approval of the Bankruptcy Court of an assignment of any such
agreement to Buyer pursuant to Section 365 of the Bankruptcy Code: (A) the
agreement is legal, valid, binding, enforceable and in full force and effect;
(B) the agreement will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to above in Section 2); (C) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification or acceleration, under the
agreement; and (D) no party has repudiated any provision of the agreement.
(n) LITIGATION. Section 4(n) of the Disclosure sets forth each instance
in which any of the Targets (i) is subject to any outstanding injunction,
judgment, order, decree, ruling or charge or (ii) is a party or, to the
Knowledge of any of the Target's respective directors or officers (or employees
with responsibility for litigation), is threatened to be made a party to any
action, suit, proceeding, hearing or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator.
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(o) PRODUCT WARRANTY. Each product manufactured, sold, leased or
delivered by any of the Targets has been in material conformity with all
applicable contractual commitments and all express and implied warranties, and,
to the Knowledge of the directors or officers (or employees with responsibility
for warranty matters), none of the Targets has any Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against any of them giving
rise to any Liability) for replacement or repair thereof or other damages in
connection therewith, subject only to the reserve for product warranty claims
set forth on the face of the Most Recent Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Targets. No product
manufactured, sold, leased or delivered by any of the Targets is subject to any
guaranty, warranty or other indemnity beyond the applicable standard terms and
conditions of sale or lease. Section 4(o) of the Disclosure Schedule includes
copies of the standard terms and conditions of sale or lease for each of the
Targets (containing applicable guaranty, warranty and indemnity provisions).
(p) PRODUCT LIABILITY. None of the Targets has any Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against any of them giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession or use of any product manufactured, sold,
leased or delivered by any of the Targets.
(q) ENVIRONMENT, HEALTH AND SAFETY
(i) To the Knowledge of the officers and directors of the
Targets, each of the Targets and its respective predecessors and Affiliates has
complied with all Environmental, Health and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding sentence, each of the
Targets and its respective predecessors and Affiliates has obtained and been in
compliance with all of the terms and conditions of all permits, licenses and
other authorizations which are required under, and has complied with all other
material limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables which are contained in, all
Environmental, Health and Safety Laws.
(ii) To the Knowledge of the officers and directors of the
Targets, none of the Targets has any Liability (and none of the Targets or their
respective predecessors and Affiliates has handled or disposed of any substance,
arranged for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any property or
facility in any manner that could form the Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against any of the Targets giving rise to any Liability) for damage to
any site, location or body of water (surface or subsurface), for any illness of
or, personal injury to any employee or other individual, or for any reason under
any Environmental, Health and Safety Law.
(iii) To the Knowledge of the officers and directors of the
Targets, all properties and equipment used in the businesses of the Targets and
their respective predecessors
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and Affiliates have been free of asbestos, PCB's, methylene chloride,
trichloroethylene,1,2-trans-dichloroethylene, dioxins, dibenzofurans and
Extremely Hazardous Substances.
(r) CERTAIN BUSINESS RELATIONSHIPS AMONG THE TARGETS. To the Knowledge
of the officers and directors of the Targets, none of the stockholders of the
Targets and their Affiliates owns any asset, tangible or intangible, which is
used in the business of any of the Targets.
(s) DISCLOSURE. The representations and warranties contained in this
Section 4 as modified by the Disclosure Schedule do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained in this Section 4 not
misleading in light of the circumstances under which they were made.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to the Targets that the statements
contained in this Section 5 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 5), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section 5.
(a) ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.
(b) AUTHORIZATION OF TRANSACTION. Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which Buyer is subject or any provision of its
charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
Buyer is a party or by which it is bound or to which any of its assets is
subject. Buyer does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement.
(d) BROKERS' FEES. Buyer has no Liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which any of the Targets could become liable
or obligated.
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6. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth
below in Section 7).
(b) INVENTORY STATEMENT.
(i) PHYSICAL INVENTORY. Within 45 days of the Closing Date,
but no later than 10 days before the Closing Date, the Targets shall conduct, or
cause to be conducted, in such manner as is acceptable to Buyer, a physical
inventory of the usable Inventory of each of the Targets, and shall adjust the
Targets' accounting records to reflect the results of such physical inventory.
Such physical inventory shall exclude Inventory that is obsolete, defective or
damaged beyond reasonable commercial repair or otherwise not merchantable. No
later than 10 days prior to the Closing Date, the Targets shall deliver to Buyer
a statement (the "INVENTORY STATEMENT") in form and substance reasonably
acceptable to Buyer, which shall set forth, with respect to each of the Targets,
all such items of Inventory, the unit prices of such Inventory and the aggregate
price of all such Inventory listed on the Inventory Statement. Such prices shall
be based on the book value of such Inventory. Buyer shall determine in good
faith no later than five days prior to the Closing whether (or not) an item of
Inventory listed in the Inventory Statement is obsolete, defective or damaged
beyond reasonable commercial repair or otherwise not merchantable, and
appropriate adjustments shall be made to the Purchase Price.
(ii) CLOSING INVENTORY. On the day immediately prior to the
Closing Date, the Targets shall prepare and deliver to Buyer an inventory
statement (the "CLOSING INVENTORY STATEMENT") in form and substance reasonably
acceptable to Buyer reflecting the Inventories of the Targets on such date as
reported by the Targets' perpetual inventory systems (the "CLOSING INVENTORY").
(c) NOTICES AND CONSENTS. Each of the Targets will give any notices to
third parties, and each of the Parties will use its best efforts to obtain any
third party consents, that Buyer may request in connection with the Assumed
Agreements. Each of the Parties will give any notices to, make any filings with
and use its best efforts to obtain any authorizations, consents and approvals of
governments and governmental agencies in connection with the matters referred to
above in Section 4(c) and Section 5(c). Without limiting the generality of the
foregoing, each of the Parties will file any Notification and Report Forms and
related material that it may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the Hart-Scott-Rodino Act, will use its best efforts to obtain an early
termination of the applicable waiting period, and will make any further filings
pursuant thereto that may be necessary, proper or advisable in connection
therewith.
(d) OPERATION OF BUSINESS. None of the Targets will engage in any
practice, take any action or enter into any transaction outside the Ordinary
Course of Business.
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Without limiting the generality of the foregoing, none of the Targets
will engage in any practice, take any action or enter into any transaction of
the sort referred to above in Section 4(g).
(e) PRESERVATION OF BUSINESS. Each of the Targets will use its best
efforts to keep its business and properties substantially intact, including its
present operations, physical facilities, working conditions and relationships
with lessors, licensors, suppliers, customers and employees.
(f) FULL ACCESS. Each of the Targets will permit representatives of
Buyer to have full access to all premises, properties, personnel, books, records
(including Tax records), contracts and documents of or pertaining to each of the
Targets.
(g) FINANCIAL STATEMENTS. No later than January 17, 2000, the Targets
shall provide to Buyer unaudited consolidated financial statements of the
Targets for the period ending December 31, 1999, prepared on a going concern
basis (the "FUTURE FINANCIAL STATEMENTS").
(h) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the other Party of any material adverse development causing a breach of any
of its own representations and warranties in Section 4 and Section 5 above. No
disclosure by any Party pursuant to this Section 6(h), however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
(i) KEY EMPLOYEE AGREEMENT. Buyer and Joseph Daiutolo shall agree to
the principal terms of Mr. Daiutolo's employment with Buyer on or before the
Bankruptcy Filing Date, subject to approval by the respective Boards of
Directors of Buyer and Overland and the execution and delivery of appropriate
documentation.
(j) DELIVERY OF BANKRUPTCY PLEADINGS. The Targets shall ensure that
Buyer receives copies of all pleadings and other documents filed with the
Bankruptcy Court within five days of the date such document is filed with the
Bankruptcy Court. To the extent reasonably practicable, the Targets shall
provide to Buyer copies of each of the pleadings and other documents to be filed
by Targets with the Bankruptcy Court prior to such pleadings or documents being
filed with the Bankruptcy Court.
(k) TERMINATION OF JOINT DEVELOPMENT AGREEMENT. Each of Overland and
Tecmar hereby agree to terminate, as of the Closing Date, that certain Joint
Development Agreement, dated as of September 1, 1999, by and between Overland
and Tecmar.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the Bankruptcy Court shall have issued an order (the "SALE
ORDER") authorizing and confirming each of the provisions of this Agreement and
the transactions contemplated herein. The Sale Order shall provide that the sale
is a sale of the Acquired Assets free and clear of any liens pursuant to 11
U.S.C. Section 363(f) and subject to and conforms with
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the provisions of 11 U.S.C. Section 363(m), and shall be in form and substance
acceptable to Buyer and its counsel;
(ii) ten days shall have lapsed since the entry of the Sale
Order without any Person filing a notice of appeal with respect to such Sale
Order, and a request for stay shall have been granted or requested;
(iii) Joseph Daiutolo shall have agreed to become an employee
of Buyer under the terms negotiated pursuant to Section 6(i) above;
(iv) the Targets shall have delivered the Inventory Statement
to Buyer no later than 10 days prior to the Closing Date;
(v) the Targets shall have delivered the Closing Inventory
Statement to Buyer on the Closing Date;
(vi) Each of the Targets shall have delivered a copy of the
resolutions of their respective boards of directors authorizing the execution
and delivery of this Agreement and the consummation of the transactions set
forth herein. Such resolutions shall be certified by an authorized officer of
each of the Targets as being true and correct and in full force and effect as of
the Closing Date;
(vii) the representations and warranties set forth in Section
4 above shall be true and correct in all material respects at and as of the
Closing Date;
(viii) each of the Targets shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(ix) each of the Targets shall have procured all of the third
party consents specified in Section 6(c) above;
(x) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (C) affect adversely the right of Buyer to own the
Acquired Assets and to operate the former businesses of the Targets;
(xi) each of the Targets shall have delivered to Buyer a
certificate to the effect that each of the conditions specified above in Section
7(a)(i)-(x) is satisfied in all respects;
(xii) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and the Targets and Buyer shall have received all other
authorizations, consents and approvals of governments and governmental agencies
referred to in Section 4(c) and Section 5(c) above;
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(xiii) all actions to be taken by the Targets in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer;
(xiv) none of the Acquired Assets shall have been adversely
affected in any material way by any act of God, fire, flood, war, legislation
(proposed or enacted) or other event or occurrence, whether or not covered by
insurance;
(xv) the Closing shall have occurred no later than February
28, 2000;
(xvi) each of the Parties shall have executed this Agreement
no later than January 7, 2000;
(xvii) the Targets shall have delivered the Cash Flow Forecast
to Buyer no later than five days prior to the Bankruptcy Filing Date;
Buyer may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE TARGETS. The obligation of the
Targets to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the Bankruptcy Court shall have issued the Sale Order;
(ii) ten days shall have lapsed since the entry of the Sale
Order without any Person filing a notice of appeal with respect to such Sale
Order, and a request for stay shall have been granted or requested;
(iii) the representations and warranties set forth in Section
5 above shall be true and correct in all material respects at and as of the
Closing Date;
(iv) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(v) Buyer shall have provided to the Targets a bridge loan in
the amount of $1.3 million (the "BRIDGE LOAN") to help fund the working capital
requirements of the Targets between the Bankruptcy Filing Date and the Closing
Date. The Bridge Loan shall be made pursuant to Section 364 of the Bankruptcy
Code, and shall be made subject to the terms and conditions set forth in EXHIBIT
D. If the purchase of the Acquired Assets closes as set forth herein, the full
principal amount of the Bridge Loan plus any accrued interest thereon shall be
credited toward the Purchase Price, and the Bridge Loan shall be forgiven by
Buyer;
(vi) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling or charge would (A)
prevent consummation of any of the transactions contemplated by this
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Agreement or (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect);
(vii) Buyer shall have delivered to the Targets a certificate
to the effect that each of the conditions specified above in Section
7(b)(i)-(vi) is satisfied in all respects;
(viii) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated and the Targets and Buyer shall have received all other
authorizations, consents and approvals of governments and governmental agencies
referred to in Section 4(c) and Section 5(c) above; and
(ix) all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to the Targets.
The Targets may waive any condition specified in this Section 7(b) if
each of the Targets executes a writing so stating at or prior to the Closing.
8. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing.
(a) GENERAL. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or prior
to the Closing Date involving any of the Targets, each of the other Parties will
cooperate with the contesting or defending Party and such Party's counsel in the
contest or defense, make available its personnel, and provide such testimony and
access to its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending Party.
(c) TRANSITION. None of the Targets will take any action, or permit any
of their respective officers, directors or employees to take any action, that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier or other business associate of any of the Targets from
maintaining the same business relationships with Buyer after the Closing as it
maintained with any of the Targets prior to the Closing. Without limiting the
generality of the foregoing, none of the Targets shall seek to avoid any
transfers pursuant to Section 547 of the Bankruptcy Code or file a plan of
reorganization that similarly seeks to avoid any such transfers. Each of the
Targets will cause its employees to refer all customer inquiries relating to the
businesses of such Target to Buyer from and after the Closing.
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(d) TARGETS' EMPLOYEES. With respect to each of the employees of the
Targets that Buyer agrees to employ, Buyer hereby agrees to recognize such
employee's tenure with the respective Target in determining such employee's
tenure with Buyer for the purposes of determining the employee benefits that
such employee will be eligible to receive from Buyer after the Closing Date.
9. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate this
Agreement as provided below:
(i) Buyer and the Targets may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written
notice to each of the Targets on or before the 30th day following the date of
this Agreement if Buyer is not satisfied with the results of its continuing
business, legal and accounting due diligence regarding the Targets;
(iii) Buyer may terminate this Agreement by giving written
notice to each of the Targets at any time prior to the Closing (A) in the event
that any of the Targets has breached any material representation, warranty or
covenant contained in this Agreement in any material respect, Buyer has notified
the Targets of the breach, and the breach has continued without cure for a
period of five days after the notice of breach or (B) if the Closing shall not
have occurred on or before February 28, 2000, by reason of the failure of any
condition precedent under Section 7(a) hereof (unless the failure results
primarily from Buyer itself breaching any representation, warranty or covenant
contained in this Agreement); and
(iv) the Targets may terminate this Agreement by giving
written notice to Buyer at any time prior to the Closing (A) in the event Buyer
has breached any material representation, warranty or covenant contained in this
Agreement in any material respect, the Targets have notified Buyer of the
breach, and the breach has continued without cure for a period of five days
after the notice of breach or (B) if the Closing shall not have occurred on or
before February 28, 2000, by reason of the failure of any condition precedent
under Section 7(b) hereof (unless the failure results primarily from one or more
of the Targets itself breaching any representation, warranty or covenant
contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach); provided, however, that
such termination shall not affect the Targets' obligations pursuant to Sections
3(b) and 10(a) hereof.
10. MISCELLANEOUS
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior
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written approval of the other Party; provided, however, that any Party may make
any public disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded securities (in
which case the disclosing Party will use its best efforts to advise the other
Party prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Party; PROVIDED, HOWEVER, that Buyer may (i) assign any or all of its
rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) TIME OF ESSENCE. The Parties hereby acknowledge and agree that time
is strictly of the essence with respect to each and every term, condition,
obligation and provision hereof and that failure to timely perform any of the
terms, conditions, obligations or provisions hereof by any Party shall
constitute a material breach of and a non-curable (but waivable) default under
this Agreement by the Party so failing to perform.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below:
If to the Targets: Tecmar Technologies International, Inc.
1900 Pike Road, Suite E
Longmont, CO 80501 USA
Attention: President
Tel.: (303) 682-3700
Fax: (303) 702-7095
Attn: Robert T. Zeberlein, Chief Financial Officer
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Copy to: Douglas W. Jessop, Esq.
Jessop & Company, P.C.
303 East 17th Avenue, Suite 930
Denver, Colorado 80203
Tel.: (303) 860-7700
Fax: (303) 860-7233
If to Buyer: Tecmar Acquisition Corporation
8975 Balboa Avenue
San Diego, California 92123
Tel.: (858) 571-5555
Fax: (858) 571-0982
Attn: Vern LoForti, Vice President
and Chief Financial Officer
Copy to: Baker & McKenzie
101 West Broadway, 12th Floor
San Diego, California 92101
Attn: Ali M. M. Mojdehi, Esq.
Attn: Carlos D. Heredia, Esq.
Tel.: (619) 235-7774
Fax: (619) 236-0429
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and each of the Targets. Each of the Targets may consent to any such amendment
at any time prior to the Closing with the prior authorization of its board of
directors. No waiver by any Party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
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(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) EXPENSES. Each of Buyer and the Targets will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure Schedule identifies
the exception with particularity and describes the relevant facts in detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). The Parties intend that each representation, warranty and covenant
contained herein shall have independent significance. If any Party has breached
any representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity) which
the Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty or covenant.
(m) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth below in Section
10(p)), in addition to any other remedy to which it may be entitled, at law or
in equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of the Bankruptcy Court in any action or proceeding arising out of
or relating to this Agreement and agrees that all claims in respect of the
action or proceeding may be heard and determined in any such court. Each party
also agrees not to bring any action or proceeding arising out of or relating to
this Agreement in any other court. Each of the Parties waives any defense of
inconvenient
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forum to the maintenance of any action or proceeding so brought and waives any
bond, surety or other security that might be required of any other Party with
respect thereto. Any Party may make service on the other Party by sending or
delivering a copy of the process to the Party to be served at the address and in
the manner provided for the giving of notices in Section 10(h). Nothing in this
Section 10(p), however, shall affect the right of any Party to serve legal
process in any other manner permitted by law or in equity. Each Party agrees
that a final judgment in any action or proceeding so brought shall be conclusive
and may be enforced by suit on the judgment or in any other manner provided by
law or in equity.
(p) REPRESENTATION BY COUNSEL. Each of the Parties represents and
agrees with each other that it has been represented by or had the opportunity to
be represented by, independent counsel of its own choosing, and that it has had
the full right and opportunity to consult with its respective attorney(s), that
to the extent, if any, that it desired, it availed itself of this right and
opportunity, that its authorized officers (as the case may be) have carefully
read and fully understand this Agreement in its entirety and have had it fully
explained to them by such party's respective counsel, that each is fully aware
of the contents thereof and its meaning, intent and legal effect, and that its
authorized officer (as the case may be) is competent to execute this Agreement
and has executed this Agreement free from coercion, duress or undue influence.
(q) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
OVERLAND DATA, INC.
By: /s/ Scott McClendon
--------------------------------------------------------
Scott McClendon, President and Chief Executive Officer
TECMAR ACQUISITION CORPORATION
By: /s/ Scott McClendon
--------------------------------------------------------
Scott McClendon, President and Chief Executive Officer
TECMAR TECHNOLOGIES INTERNATIONAL, INC.
By: /s/ Robert T. Zeberlein
--------------------------------------------------------
Robert T. Zeberlein, Chief Financial Officer
TECMAR TECHNOLOGIES, INC.
By: /s/ Robert T. Zeberlein
--------------------------------------------------------
Robert T. Zeberlein, Chief Financial Officer
DITTO, INC.
By: /s/ Robert T. Zeberlein
--------------------------------------------------------
Robert T. Zeberlein, Chief Financial Officer
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