Exhibit 2.1
ASSET PURCHASE AGREEMENT
dated as of
November 28, 1997
among
GENERAL SCANNING INC.
and
REEL-TECH, INC.
and
DATA I/O CORPORATION
TABLE OF CONTENTS
Page
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Section 1. PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Acquired Assets. . . . . . . . . . . . . . . . . 1
Section 1.2 Excluded Assets. . . . . . . . . . . . . . . . . 4
Section 2 ASSUMPTION OF CERTAIN OBLIGATIONS. . . . . . . . . . . . . . . 5
Section 3. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.1 Delivery of Purchase Price . . . . . . . . . . . 5
Section 3.2 Purchase Price Adjustments . . . . . . . . . . . 6
Section 3.3 Release of Escrowed Funds. . . . . . . . . . . . 9
Section 4. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.1 Time and Place . . . . . . . . . . . . . . . . . 9
Section 4.2 Transactions at Closing. . . . . . . . . . . . . 9
Section 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER . . . . . . . . . 11
Section 5.1 Organization of Selling Group; Authority . . . . 11
Section 5.2 Corporate Approval; Binding Effect . . . . . . . 11
Section 5.3 Non-Contravention. . . . . . . . . . . . . . . . 12
Section 5.4 Subsidiaries . . . . . . . . . . . . . . . . . . 12
Section 5.5 Capitalization . . . . . . . . . . . . . . . . . 12
Section 5.6 Government Consents; Transferability
of Licenses. . . . . . . . . . . . . . . . . . 12
Section 5.7 Financial Statements . . . . . . . . . . . . . . 13
Section 5.8 Absence of Certain Changes . . . . . . . . . . . 13
Section 5.9 Litigation . . . . . . . . . . . . . . . . . . . 13
Section 5.10 Conformity to Law and Contracts. . . . . . . . . 14
Section 5.11 Title to Acquired Assets . . . . . . . . . . . . 14
Section 5.12 Real Property. . . . . . . . . . . . . . . . . . 14
Section 5.13 Equipment. . . . . . . . . . . . . . . . . . . . 15
Section 5.14 Inventories. . . . . . . . . . . . . . . . . . . 16
Section 5.15 Broker . . . . . . . . . . . . . . . . . . . . . 16
Section 5.16 Contracts. . . . . . . . . . . . . . . . . . . . 16
Section 5.17 Employment Matters . . . . . . . . . . . . . . . 16
Section 5.18 Employee Benefit Plans . . . . . . . . . . . . . 17
Section 5.19 Labor Relations. . . . . . . . . . . . . . . . . 17
Section 5.20 Trademarks, Patents. . . . . . . . . . . . . . . 17
Section 5.21 Suppliers and Customers. . . . . . . . . . . . . 18
Section 5.22 No Undisclosed Liabilities . . . . . . . . . . . 18
Section 5.23 Taxes. . . . . . . . . . . . . . . . . . . . . . 18
Section 5.24 Disclosure . . . . . . . . . . . . . . . . . . . 19
Section 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. . . . . . . . . . 19
Section 6.1 Organization of Buyer; Authority . . . . . . . . 19
Section 6.2 Corporate Approval; Binding Effect . . . . . . . 19
Section 6.3 Non-Contravention. . . . . . . . . . . . . . . . 20
Section 6.4 Governmental Consents. . . . . . . . . . . . . . 20
Section 6.5 Broker . . . . . . . . . . . . . . . . . . . . . 20
Section 6.6 Litigation . . . . . . . . . . . . . . . . . . . 20
Section 6.7 Capitalization . . . . . . . . . . . . . . . . . 20
Section 6.8 SEC Reports. . . . . . . . . . . . . . . . . . . 21
Section 7. CONDUCT OF BUSINESS BY SELLING GROUP
PENDING CLOSING. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.1 Full Access. . . . . . . . . . . . . . . . . . . 21
Section 7.2 Carry on in Regular Course . . . . . . . . . . . 21
Section 7.3 No Dividends, Issuances, Repurchases . . . . . . 22
Section 7.4 Insurance. . . . . . . . . . . . . . . . . . . . 22
Section 7.5 Preservation of Organization . . . . . . . . . . 22
Section 7.6 Advice of Change . . . . . . . . . . . . . . . . 22
Section 7.7 No Shopping. . . . . . . . . . . . . . . . . . . 22
Section 7.8 Consents of Third Parties. . . . . . . . . . . . 23
Section 8. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.1 Separate Entity. . . . . . . . . . . . . . . . . 23
Section 8.2 Coyote License Agreement . . . . . . . . . . . . 23
Section 8.3 401(k) Plan. . . . . . . . . . . . . . . . . . . 23
Section 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. . . . . . . . . . 23
Section 9.1 Representations and Warranties True
at Closing . . . . . . . . . . . . . . . . . . 24
Section 9.2 Compliance with Agreement. . . . . . . . . . . . 24
Section 9.3 No Material Adverse Change . . . . . . . . . . . 24
Section 9.4 Closing Certificate. . . . . . . . . . . . . . . 24
Section 9.5 Opinion of Counsel . . . . . . . . . . . . . . . 24
Section 9.6 Approvals; Consents. . . . . . . . . . . . . . . 24
Section 9.7 No Litigation. . . . . . . . . . . . . . . . . . 24
Section 9.8 Non-Competition Agreements . . . . . . . . . . . 25
Section 9.9 License Agreements . . . . . . . . . . . . . . . 25
Section 9.10 Escrow Agreement . . . . . . . . . . . . . . . . 25
Section 9.11 Consents . . . . . . . . . . . . . . . . . . . . 25
Section 9.12 Due Diligence. . . . . . . . . . . . . . . . . . 25
Section 9.13 Registration Rights Agreement. . . . . . . . . . 25
Section 9.14 Arrangements with Hall, Inc. . . . . . . . . . . 25
Section 9.15 Proceedings and Documents Satisfactory . . . . . 25
Section 10. CONDITIONS PRECEDENT TO SELLER'S AND PARENT'S
OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 10.1 Representations and Warranties True
at Closing . . . . . . . . . . . . . . . . . . 26
Section 10.2 Compliance with Agreement. . . . . . . . . . . . 26
Section 10.3 Closing Certificate. . . . . . . . . . . . . . . 26
Section 10.4 Opinion of Counsel . . . . . . . . . . . . . . . 26
Section 10.5 Approvals; Consents. . . . . . . . . . . . . . . 26
Section 10.6 No Litigation. . . . . . . . . . . . . . . . . . 26
Section 10.7 Agreements . . . . . . . . . . . . . . . . . . . 26
Section 10.8 Account Receivable . . . . . . . . . . . . . . . 27
Section 10.9 Non-Competition Agreement. . . . . . . . . . . . 27
Section 10.10 Coyote License Agreement . . . . . . . . . . . . 27
Section 10.11 Stock Certificate and Registration
Rights Agreement . . . . . . . . . . . . . . . 27
Section 10.12 Proceedings and Documents Satisfactory . . . . . 27
Section 10.13 No Material Adverse Change . . . . . . . . . . . 27
Section 11. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . 27
Section 12. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.1 Indemnity by the Seller. . . . . . . . . . . . . 28
Section 12.2 Indemnity by the Buyer . . . . . . . . . . . . . 29
Section 12.3 Claims . . . . . . . . . . . . . . . . . . . . . 29
Section 12.4 Method of Manner of Paying Claims. . . . . . . . 30
Section 12.5 Limitations on Indemnification . . . . . . . . . 30
Section 12.6 General Limitations on Liability . . . . . . . . 31
Section 13. USE OF NAME. . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 14. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 14.1 Survival of Representations and Warranties . . . 32
Section 14.2 Expenses . . . . . . . . . . . . . . . . . . . . 32
Section 14.3 Notices. . . . . . . . . . . . . . . . . . . . . 32
Section 14.4 Entire Agreement . . . . . . . . . . . . . . . . 33
Section 14.5 Governing Law. . . . . . . . . . . . . . . . . . 34
Section 14.6 Sections and Section Headings. . . . . . . . . . 34
Section 14.7 Assigns. . . . . . . . . . . . . . . . . . . . . 34
Section 14.8 Severability . . . . . . . . . . . . . . . . . . 34
Section 14.9 Further Assurances . . . . . . . . . . . . . . . 34
Section 14.10 No Implied Rights or Remedies. . . . . . . . . . 34
Section 14.11 Counterparts . . . . . . . . . . . . . . . . . . 35
Section 14.12 Satisfaction of Conditions Precedent . . . . . . 35
Section 14.13 Public Statements or Releases. . . . . . . . . . 35
Section 14.14 Business Records . . . . . . . . . . . . . . . . 35
Section 14.15 Attorneys' Fees. . . . . . . . . . . . . . . . . 36
Section 15 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . 36
Exhibits:
Exhibit A - Escrow Agreement
Exhibit B - Pro Forma Balance Sheet
Exhibit C - Opinion of Seller's Counsel
Exhibit D - Selling Group Non-Competition Agreement
Exhibit E-1 - 9500 License Agreement
Exhibit E-2 - Coyote License Agreement
Exhibit F- Opinion of Buyer's Counsel
Exhibit G - Buyer Non-Competition Agreement
Exhibit H - Registration Rights Agreement
Schedules:
Schedule 1.1(a)(i) - Equipment
Schedule 1.1(a)(ii) - Personal Property Leases
Schedule 1.1(a)(iii) - Real Property Leases
Schedule 1.1(a)(v) - Employee Agreements
Schedule 1.1(a)(vi)- Other Contracts
Schedule 1.1(a)(viii) - Intangibles
Schedule 1.1(b)(i) - Singapore Equipment
Schedule 1.1(b)(ii) - Singapore Personal Property Leases
Schedule 1.1(b)(iii) - Singapore Real Property Lease
Schedule 1.1(b)(v) - Singapore Employee Agreements
Schedule 1.1(b)(vi)- Singapore Other Contracts
Schedule 1.1(b)(viii) - Singapore Intangibles
Schedule 2(c) - Data I/O GmbH Accounts
Schedule 3.1 - Allocation of Purchase Price
Schedule 4.2(a) - Permitted Encumbrances
Schedule 5.6 - Consents of Government Authorities (Seller)
Schedule 5.7 - Financial Statements
Schedule 5.8 - Changes
Schedule 5.9 - Litigation
Schedule 5.10 - Compliance with Law
Schedule 5.11 - Required Consents
Schedule 5.12 - Real Property Lease Issues
Schedule 5.18 - Employee Benefit Plans
Schedule 5.19 - Labor Matters
Schedule 5.20 - Intellectual Property
Schedule 5.21 - Suppliers and Customers
Schedule 5.23 - Tax Matters
Schedule 7.3 - Distributions
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 28th day of November, 1997
by and among (i) GENERAL SCANNING INC., a Massachusetts corporation (the
"BUYER"), (ii) REEL-TECH, INC., a Washington corporation (the "SELLER"), and
(iii) DATA I/O CORPORATION, a Washington corporation (the "PARENT"). The
Seller, the Parent and Reel-Tech Singapore (as defined below) are referred to
herein collectively, as the "SELLING GROUP".
WHEREAS, the Seller is engaged, directly and through its subsidiary
Reel-Tech Singapore, in the semi-conductor equipment business (the "BUSINESS");
and
WHEREAS, the Buyer desires to purchase the Business by acquiring
substantially all of the assets owned by the Seller and Reel-Tech Singapore as
well as certain assets of the Parent related to the Business, subject to certain
obligations, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the Buyer and the Seller and the Parent hereby agree as follows:
SECTION 1. PURCHASE AND SALE.
SECTION 1.1. ACQUIRED ASSETS. (a) Subject to the terms and conditions set
forth in this Agreement, at the Closing referred to in Section 4 hereof, the
Seller shall sell, assign, transfer and deliver to the Buyer, and the Buyer
shall purchase, acquire and take assignment and delivery of, all of the assets
(other than the Excluded Assets specified in Section 1.2 hereof) of the Seller
(all of which assets are hereinafter referred to collectively, with the
Singapore Assets, as the "ACQUIRED ASSETS"), including, without limitation, the
following assets:
(i) any and all plants, fixtures, machinery, installations,
equipment, furniture, tools, spare parts, supplies, materials and other personal
property used in conjunction with the Seller's operations, including without
limitation, those items described on SCHEDULE 1.1(a)(i) attached hereto, with
such additions thereto and deletions therefrom as may hereafter arise in the
ordinary course of business prior to the Closing consistent with Section 7
hereof (the "EQUIPMENT");
(ii) all of the Seller's title to, interest in and rights under
the leases of personal property described on SCHEDULE 1.1(a)(ii) attached hereto
(the "PERSONAL PROPERTY LEASES");
(iii) all of the Seller's title to, interest in and rights under
the leases for the real property located in Indianapolis, Indiana and Kent,
Washington and described on SCHEDULE 1.1(a)(iii) attached hereto (the "REAL
PROPERTY LEASES");
(iv) all of the Seller's inventories, including raw materials,
parts, work in process and finished goods (the "INVENTORIES");
(v) all of the Seller's rights under the Contracts with respect
to employees including commission and bonus agreements, in each case listed on
SCHEDULE 1.1(a)(v) attached hereto (collectively, the "EMPLOYEE AGREEMENTS"),
PROVIDED that the Parent shall be permitted to retain copies of all such
Contracts;
(vi) all of the Seller's rights (i) under all purchase orders and
Contracts for the purchase or sale of utilities, goods, materials and services,
including, without limitation, the Contracts described on SCHEDULE 1.1(a)(vi)
attached hereto which provide for payments in excess of $25,000, and (ii) under
all other Contracts of the Seller entered into in the ordinary course of
business prior to the Closing (the Contracts referred to in this paragraph (vi),
including without limitation, those described on SCHEDULE 1.1(a)(vi), being
referred to collectively as the "OTHER CONTRACTS");
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(vii) all of the Seller's transferable rights under its
governmental licenses, permits and approvals (the "PERMITS");
(viii) all of the Seller's trademarks, trade names, trade secrets,
corporate names (including without limitation the name "Reel-Tech"), copyrights,
designs, patents, licenses (as licensee or licensor), other Contracts and
applications with respect to the foregoing, production records, technical
information, manufacturing know-how, processes, trade secrets, customer lists,
telephone numbers and other intangible assets, including without limitation
those described on SCHEDULE 1.1(a)(viii) attached hereto (the "INTANGIBLES");
and
(ix) all of the Seller's employment and personnel records for all
employees of the Seller and all other documents and records relating to the
Acquired Assets; PROVIDED that the Parent shall be permitted to retain copies of
all such employment and personnel records.
(b) Subject to the terms and conditions set forth in this Agreement, at
the Closing referred to in Section 4 hereof, the Parent and Seller shall cause
Reel-Tech Singapore Pte Ltd., a corporation organized under the laws of
Singapore ("REEL-TECH SINGAPORE"), to sell, assign, transfer and deliver to the
Buyer, and the Buyer shall purchase, acquire and take assignment and delivery
of, all of the assets (other than the Excluded Assets specified in Section 1.2
hereof) of Reel-Tech Singapore (the "SINGAPORE ASSETS"), including, without
limitation the following assets:
(i) any and all plants, fixtures, machinery, installations,
equipment, furniture, tools, spare parts, supplies, materials and other personal
property used in conjunction with Reel-Tech Singapore's operations, including
without limitation, those items described on SCHEDULE 1.1(b)(i) attached hereto,
with such additions thereto and deletions therefrom as may hereafter arise in
the ordinary course of business prior to the Closing consistent with Section 7
hereof (the "SINGAPORE EQUIPMENT");
(ii) all of Reel-Tech Singapore's title to, interest in and
rights under the leases of personal property described on SCHEDULE 1.1(b)(ii)
attached hereto (the "SINGAPORE PERSONAL PROPERTY LEASES");
(iii) all of Reel-Tech Singapore's title to, interest in and
rights under the lease for the real property located in Singapore and described
on SCHEDULE 1.1(b)(iii) attached hereto (the "SINGAPORE REAL PROPERTY LEASE");
(iv) all of Reel-Tech Singapore's inventories, including raw
materials, parts, work in process and finished goods (the "SINGAPORE
INVENTORIES");
(v) all of Reel-Tech Singapore's rights under the Contracts with
respect to employees including commission and bonus agreements, in each case
listed on SCHEDULE 1.1(b)(v) attached hereto (collectively, the "SINGAPORE
EMPLOYEE AGREEMENTS"), PROVIDED that the Parent shall be permitted to retain
copies of all such Contracts;
(vi) all of Reel-Tech Singapore's rights (i) under all purchase
orders and Contracts for the purchase or sale of utilities, goods, materials and
services, including, without limitation, the Contracts described on SCHEDULE
1.1(b)(vi) attached hereto which provide for payments in excess of $25,000, and
(ii) under all other Contracts of Reel-Tech Singapore entered into in the
ordinary course of business prior to the Closing (the Contracts referred to in
this paragraph (vi) including, without limitation, those described on SCHEDULE
1.1(b)(vi), being referred to collectively as the "SINGAPORE OTHER CONTRACTS");
(vii) all of Reel-Tech Singapore's transferable rights under its
governmental licenses, permits and approvals (the "SINGAPORE PERMITS");
(viii) all of Reel-Tech Singapore's trademarks, trade names, trade
secrets, corporate names (including without limitation the name "Reel-Tech
Singapore"), copyrights, designs, patents,
3
licenses (as licensee or licensor), other Contracts and applications with
respect to the foregoing, production records, technical information,
manufacturing know-how, processes, trade secrets, customer lists, telephone
numbers and other intangible assets, including without limitation those
described on SCHEDULE 1.1(b)(viii) attached hereto (the "INTANGIBLES"); and
(ix) all of Reel-Tech Singapore's employment and personnel
records for all employees of Reel-Tech Singapore and all other documents and
records relating to the Singapore Acquired Assets; PROVIDED that the Parent
shall be permitted to retain copies of all such employment and personnel
records.
(c) Subject to the terms and conditions set forth in this Agreement, at
the Closing referred to in Section 4 hereof, the Parent shall sell, assign,
transfer and deliver to the Buyer, and the Buyer shall purchase, acquire and
take assignment and delivery of, any and all rights the Parent may have in and
to any of the Acquired Assets.
SECTION 1.2. EXCLUDED ASSETS. Notwithstanding the foregoing, the Selling
Group is not selling and the Buyer is not purchasing pursuant to this Agreement,
and the term "ACQUIRED ASSETS" shall not include, any of the following assets
(the "EXCLUDED ASSETS"):
(a) the consideration received by the Seller pursuant to this
Agreement;
(b) the Seller's cash, commercial paper and cash equivalents, on hand
or in bank accounts;
(c) the Seller's trade accounts receivable, notes receivable and
miscellaneous receivables;
(d) the name "Data I/O";
(e) the 9500-Specific Handler Technology (as defined in the 9500
License Agreement);
(f) the Coyote-Specific Handler Technology (as defined in the Coyote
License Agreement);
(g) the rights of the Seller under this Agreement; and
(h) the outstanding shares of capital stock of Reel-Tech Singapore.
SECTION 2. ASSUMPTION OF CERTAIN OBLIGATIONS. At the Closing, the Buyer
shall assume, and agree to pay, perform, fulfill and discharge, the following
obligations of the Seller and of Reel-Tech Singapore (the "ASSUMED
OBLIGATIONS"):
(a) all of the obligations of the Seller under the Personal Property
Leases referred to in Section 1.1(a)(ii) hereof, the Real Property Leases
referred to in Section 1.1(a)(iii) hereof, the Employee Agreements referred to
in Section 1.1(a)(v) hereof, the Other Contracts referred to in Section
1.1(a)(vi) hereof and the licenses referred to in Section 1.1(a)(viii) hereof,
in each case only to the extent that such obligations arise or accrue from and
after the Closing Date or are included in the Final Closing Statement;
(b) all of the obligations of Reel-Tech Singapore under the Singapore
Personal Property Leases referred to in Section 1.1(b)(ii) hereof, the Singapore
Real Property Lease referred to in Section 1.1(b)(iii) hereof, the Singapore
Employee Agreements referred to in Section 1.1(b)(v) hereof, the Singapore Other
Contracts referred to in Section 1.1(b)(vi) hereof and the licenses referred to
in Section 1.1(b)(viii) hereof, in each case only to the extent that such
obligations arise or accrue from and after the Closing Date or are included in
the Final Closing Statement;
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(c) all of the obligations of the Seller to Data I/O GmbH under that
certain Agreement dated October 1, 1996 between the Seller and Data I/O GmbH for
commissions relating to the potential orders on which Data I/O GmbH expects to
consummate sales on or before December 31, 1997 as described on SCHEDULE 2(c)
attached hereto; and
(d) the Seller's obligation under the first two sentences of Section
3.1 of the 1995 Asset Purchase Agreement solely as it relates to maintaining
certain operations in Indianapolis, Indiana and the surrounding area until
December 31, 1998 and the Seller's obligation to pay Earn-Out Payment 1 under
Section 2.4 of the 1995 Asset Purchase Agreement.
Anything in this Agreement to the contrary notwithstanding the Buyer shall not
assume, and shall not be deemed to have assumed, (i) any liability or obligation
of the Seller or Reel-Tech Singapore whatsoever, other than as specifically set
forth in this Section 2 or (ii) any obligation of the Parent (with all such
unassumed liabilities and obligations referred to herein as the "EXCLUDED
LIABILITIES").
SECTION 3. PURCHASE PRICE.
SECTION 3.1. DELIVERY OF PURCHASE PRICE. At the Closing, the Buyer shall
pay to the Seller, as the aggregate purchase price for the Acquired Assets,
$13,300,000, subject to adjustment as provided in Section 3.2 hereof (the
"PURCHASE PRICE"), to be paid as follows: (a) cash in an amount equal to
$10,550,000 shall be paid by the Buyer to the Seller, (b) cash in an amount
equal to $750,000 (the "ESCROWED FUNDS") shall be deposited by the Buyer in
escrow in an interest-bearing account with State Street Bank and Trust Company,
as escrow agent (the "ESCROW AGENT"), pursuant to an escrow agreement to be
entered into among the Buyer, the Seller and the Escrow Agent substantially in
the form of EXHIBIT A attached hereto (the "ESCROW AGREEMENT") for the purposes
of satisfying the Seller's indemnification obligations described in Section 12
hereof and (c) the number of shares (the "SHARES") of the common stock of the
Buyer, par value $0.01 per share, having a value of $2,000,000 based upon the
average of the closing price of such common stock on the NASDAQ National Market
System at the close of trading on the trading day immediately before the Closing
Date and each of the four next preceding trading dates (with any fractional
Shares rounded up to one Share) shall be delivered by the Buyer to the Seller
(or an undertaking to deliver such Shares within three (3) business days). The
fees and expenses of the Escrow Agent shall be shared equally between the Buyer
and the Seller. The cash portion of the Purchase Price will be paid by the
Buyer to the Seller and the Escrow Agent as set forth above by wire transfer of
immediately available funds or by delivery of one or more certified or bank
checks. The Purchase Price shall be allocated among the Acquired Assets, which
include intangible assets, in the manner set forth on SCHEDULE 3.1 attached
hereto. The Buyer, the Seller and the Parent shall treat and report the
transactions contemplated by this Agreement in all respects consistently for
purposes of any federal, state or local tax, including without limitation with
respect to calculation of gain, loss and basis with reference to the allocations
of the Purchase Price set forth on SCHEDULE 3.1 hereto. Both the Buyer and the
Seller agree to file with the Internal Revenue Service an IRS Form 8594 (Asset
Acquisition Statement under Section 1060) with respect to the acquisition by the
Buyer of the Acquired Assets, with their respective federal income tax returns
for the year in which the Closing Date occurs, consistent with the allocations
made pursuant to this Section 3.1.
SECTION 3.2. PURCHASE PRICE ADJUSTMENTS.
(a) As used herein, (i) "GAAP" means generally accepted accounting
principles applied on a basis consistent with the Financial Statements and (ii)
"TRUE-UP AMOUNT" means the difference, if any, obtained by subtracting the total
liabilities of the Seller and Reel-Tech Singapore on the Final Closing Statement
from the total assets of the Seller and Reel-Tech Singapore on the Final Closing
Statement.
(b) Not later than the close of business one business day prior to
the Closing Date, the Seller shall estimate in good faith the True-Up Amount and
shall notify the Buyer of such estimated True-Up Amount (the "ESTIMATED TRUE-UP
AMOUNT") in writing. If the Estimated True-Up Amount is positive, the Buyer
shall pay to the Seller on the Closing Date, by wire transfer of immediately
available
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funds or by delivery of one or more certified or bank checks, 66-2/3% of the
Estimated True-Up Amount. If the Estimated True-Up Amount is negative, the
Seller shall pay to the Buyer on the Closing Date, by wire transfer of
immediately available funds or by delivery of one or more certified or bank
checks, 66-2/3% of the Estimated True-Up Amount (or the Buyer may reduce the
amount of the Purchase Price payable to the Seller in cash pursuant to Section
3.1(a) hereof by the Estimated True-Up Amount).
(c) Within twenty (20) days after the Closing Date, the Parent shall
prepare and deliver to the Buyer a consolidating and consolidated balance sheet
of the Seller and Reel-Tech Singapore as of the Closing Date (the "FINAL CLOSING
STATEMENT") immediately prior to giving effect to the Closing, together with
copies of all working papers and supporting documents for the balance sheet
accounts, prepared in accordance with GAAP applied in a manner consistent with
the preparation of the Pro Forma Balance Sheet (M & A view) attached as EXHIBIT
B to the letter of intent dated as of July 28, 1997 among the Buyer, the Seller
and the Parent.
(d) When the Parent delivers the Final Closing Statement, the Parent
shall also deliver a certificate (i) certifying that the Final Closing Statement
was prepared in accordance with GAAP in compliance with the procedures set forth
in paragraph (c) above and (ii) containing the Parent's calculations, based on
the Final Closing Statement (the "PARENT'S PROPOSED CALCULATIONS"), of the
True-Up Amount. Within twenty (20) days after receipt of the Final Closing
Statement and the accompanying certificate, the Buyer shall notify the Parent in
writing of its agreement or disagreement with the Final Closing Statement and
the accuracy of any of the Parent's Proposed Calculations. If the Buyer
disputes any aspect of the Final Closing Statement or the Parent's Proposed
Calculations, then the Buyer shall have the right to direct its independent
accountants, at the Buyer's expense, to review and test the Final Closing
Statement. The Seller and the Parent shall fully cooperate with the reasonable
requests of the Buyer's accountants in any such review and test. The Buyer's
accountants shall complete their review and test within twenty (20) days after
the date the Buyer notifies the Parent that the Buyer disagrees with the Final
Closing Statement and/or the Parent's Proposed Calculations, and the Parent
shall have twenty (20) days thereafter to accept or reject the Buyer's proposed
alternative calculations of the True-Up Amount (the "BUYER'S PROPOSED
CALCULATIONS"). If the Buyer and its independent accountants, after such review
and test, still disagree with the Parent's Proposed Calculations, and the Parent
does not accept the Buyer's Proposed Calculations, then the Parent and the Buyer
shall within twenty (20) days by mutual agreement select another nationally
recognized independent accounting firm (other than the Parent's independent
accountants and the Buyer's independent accountants) (the "THIRD ACCOUNTANTS")
to resolve the remaining disputed items (the "REMAINING DISPUTED ITEMS"). The
Seller and the Parent shall instruct the Third Accountants to conduct their own
review and test of the Final Closing Statement and to select either the Buyer's
Proposed Calculations of the Remaining Disputed Items or the Parent's Proposed
Calculations of the Remaining Disputed Items or an amount in between the two.
The Seller and the Parent shall fully cooperate with the reasonable requests of
the Third Accountants in any such review and test. Each of the Buyer, the
Parent and the Seller shall be bound by the Third Accountants' determination of
the Remaining Disputed Items. The fees and expenses of the Third Accountants
shall be paid in equal shares by the Buyer and the Seller.
(e) Upon the determination pursuant to paragraph (d) of this Section
3.2 of the Final Closing Statement:
(i) if a payment in respect of the Estimated True-Up Amount was
previously made by the Buyer to the Seller under Section 3.2(b) hereof (the
"INTERIM PAYMENT") then:
(A) if the True-Up Amount is positive and exceeds the
Interim Payment, the Buyer shall pay to the Seller an amount equal to
the difference of the True-Up Amount MINUS the Interim Payment;
(B) if the True-Up Amount is positive but is less than the
Interim Payment, the Seller and the Parent, jointly and severally,
shall pay to the Buyer an amount equal to the difference of the
Interim Payment MINUS the True-Up Amount;
6
(C) if the True-Up Amount is negative, the Seller and the
Parent, jointly and severally, shall pay to the Buyer an amount equal
to the sum of the True-Up Amount PLUS the Interim Payment; and
(D) if the True-Up Amount is zero, the Seller and the
Parent, jointly and severally, shall pay to the Buyer an amount equal
to the Interim Payment;
(ii) if the Interim Payment was previously made by the Seller to
the Buyer then:
(A) if the True-Up Amount is positive, the Buyer shall pay
to the Seller an amount equal to the sum of the True-Up Amount PLUS
the Interim Payment;
(B) if the True-Up Amount is negative and exceeds the
Interim Payment, the Seller and the Parent, jointly and severally,
shall pay to the Buyer an amount equal to the difference of the
True-Up Amount MINUS the Interim Payment;
(C) if the True-Up Amount is negative and is less than the
Interim Payment, the Buyer shall pay to the Seller an amount equal to
the difference of the Interim Payment MINUS the True-Up Amount; and
(D) if the True-Up Amount is zero, the Buyer shall pay to
the Seller an amount equal to the Interim Payment; and
(iii) if no Interim Payment was previously made then:
(A) if the True-Up Amount is positive, the Buyer shall pay
to the Seller an amount equal to the True-Up Amount;
(B) if the True-Up Amount is negative, the Seller and the
Parent, jointly and severally, shall pay to the Buyer an amount equal
to the True-Up Amount; and
(C) if the True-Up Amount is zero, there shall be no payment
made pursuant to this Section 3.2(e).
Any such payment shall be made by wire transfer of immediately available funds
or by delivery of one or more certified or bank checks.
SECTION 3.3. RELEASE OF ESCROWED FUNDS. The Escrowed Funds shall be held
by the Escrow Agent and released to the Seller or the Buyer as provided in the
Escrow Agreement.
SECTION 4. CLOSING.
SECTION 4.1. TIME AND PLACE. The closing of the transfer and delivery of
all documents and instruments necessary to consummate the transactions
contemplated by this Agreement (the "CLOSING") shall be held at the offices of
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts on a mutually
acceptable date, not later than December 31, 1997, or at such other place as the
Buyer, the Parent and the Seller may agree. The date on which the Closing is
actually held hereunder is sometimes referred to herein as the "CLOSING DATE".
SECTION 4.2. TRANSACTIONS AT CLOSING. At the Closing:
(a) The Seller shall duly execute and deliver to the Buyer or its
nominee or nominees such deeds, certificates of title or other instruments of
assignment and transfer with respect to the Acquired Assets as the Buyer may
reasonably request and as may be necessary or convenient to vest in the Buyer
good and marketable title to all of the Acquired Assets, in each case subject to
no
7
Encumbrance except for the Encumbrances specified on SCHEDULE 4.2(a) attached
hereto (the "PERMITTED ENCUMBRANCES").
(b) The Parent shall duly execute and deliver to the Buyer or its
nominee or nominees such deeds, certificates of title or other instruments of
assignment and transfer with respect to the Parent's interest, if any, in the
Acquired Assets as the Buyer may reasonably request.
(c) The Buyer shall duly execute and deliver to the Seller and to
Reel-Tech Singapore such instruments of assumption and other documents with
respect to the Assumed Obligations as the Seller may reasonably request.
(d) The Buyer shall pay the Purchase Price to the Seller (or to such
other entity or entities as the Seller shall designate in writing to the Buyer)
and the Escrow Agent as provided in Section 3.1 hereof.
(e) Each of the Parent and the Seller shall duly execute and deliver
to the Buyer the Selling Group Non-Competition Agreement.
(f) The Buyer shall duly execute and deliver to the Parent the Buyer
Non-Competition Agreement.
(g) The Buyer, the Seller and the Parent shall execute and deliver
each of the License Agreements.
(h) The Buyer and the Seller shall execute and deliver the Escrow
Agreement to the Escrow Agent for signature.
(i) Reel-Tech Singapore shall duly execute and deliver to the Buyer
or its nominee or nominees, such deeds, certificates of title or other
instruments of assignment and transfer (all such documents, collectively, the
"Singapore Bill of Sale") as the Buyer may reasonably request and as may be
necessary or convenient to vest in Buyer or its designee good and marketable
title to the Singapore Assets, in each case subject to no Encumbrance except for
Permitted Encumbrances.
(j) The Buyer and the Parent shall execute and deliver the
Registration Rights Agreement.
(k) The Buyer shall have duly executed and delivered to the Parent a
stock certificate or certificates, as requested by the Parent, representing the
Shares or an undertaking as provided in Section 3.1 hereof.
(l) The Seller shall have notified the Buyer of the Estimated True-Up
Amount pursuant to Section 3.2(b) hereof and the Seller or the Buyer, as
applicable, shall have paid the Interim Payment in accordance with Section
3.2(b) hereof.
(m) The Parent shall have duly executed and delivered a letter
concerning its investment in the Shares, and such letter shall be satisfactory
to the Buyer in all respects.
(n) The Parent shall have duly executed and delivered a letter
concerning the Savings Plan, and such letter shall be satisfactory to the Buyer
in all respects.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer as set forth in this Section 5 below. All
representations as to the Business and its conduct relate to periods after the
closing under the 1995 Asset Purchase Agreement.
SECTION 5.1. ORGANIZATION OF SELLING GROUP; AUTHORITY. Each member of the
Selling Group is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of
8
incorporation. Each member of the Selling Group is duly qualified and in good
standing as a foreign corporation in all jurisdictions in which the character of
the properties owned or leased or the nature of the activities conducted by it
makes such qualification necessary. The Seller has all requisite power and
authority to own and hold the Acquired Assets owned or held by it and to carry
on the Business as such business is now conducted. Reel-Tech Singapore has all
requisite power and authority to carry on its business as such business is now
conducted and to own and hold the Singapore Assets. Each of the Seller, the
Parent and/or Reel-Tech Singapore, as appropriate, has all requisite power and
authority to execute and deliver this Agreement, the License Agreements, the
Escrow Agreement, the Selling Group Non-Competition Agreement, the Buyer
Non-Competition Agreement, the Singapore Bill of Sale, the Registration Rights
Agreement and the other documents, instruments and agreements contemplated
hereby or thereby (collectively, the "TRANSACTION DOCUMENTS") to which it is a
party and to carry out all actions required of it pursuant to the terms of the
Transaction Documents.
SECTION 5.2. CORPORATE APPROVAL; BINDING EFFECT. Each member of the
Selling Group has obtained all necessary authorizations and approvals from its
Board of Directors and stockholders required for the execution and delivery of
the Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby. Each of the Transaction Documents
to which a member of the Selling Group is a party has been, or at the Closing
shall be duly, executed and delivered by such entity, and constitutes or upon
such execution and delivery will constitute the legal, valid and binding
obligation of such entity, enforceable against it in accordance with its terms,
except as enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors' rights generally
or by general principles of equity.
SECTION 5.3. NON-CONTRAVENTION. The execution and delivery by each member
of the Selling Group of the Transaction Documents to which it is a party and the
consummation by each member of the Selling Group of the transactions
contemplated hereby and thereby will not (a) violate or conflict with any
provision of its Articles of Incorporation or Bylaws (or such similar
organizational documents of Reel-Tech Singapore), each as amended to date; or
(b) constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any Encumbrance upon
any of its property (including without limitation any of the Acquired Assets)
pursuant to (i) any Contract to which it is a party or by which it or any of its
properties (including without limitation any of the Acquired Assets) is bound or
to which it or any of such properties is subject, or (ii) any Government Mandate
to which it is subject.
SECTION 5.4. SUBSIDIARIES. The Seller does not have any subsidiaries
other than Reel-Tech Singapore and does not own or hold of record and/or
beneficially any shares of any class in the capital of any corporation other
than the capital stock of Reel-Tech Singapore. Reel-Tech Singapore does not
have any subsidiaries and does not own or hold of record and/or beneficially any
shares of any class in the capital of any corporation. Neither the Seller nor
Reel-Tech Singapore owns any legal and/or beneficial interests in any
partnerships, business trusts or joint ventures or in any other unincorporated
trade or business enterprises.
SECTION 5.5. CAPITALIZATION. The authorized capital of Reel-Tech
Singapore consists of 10,000 shares of common stock, par value Singapore $10 per
share, two shares of which are issued and outstanding on the date hereof. All
of the issued and outstanding shares of the capital stock of Reel-Tech Singapore
are owned of record and beneficially by the Seller.
SECTION 5.6. GOVERNMENT CONSENTS; TRANSFERABILITY OF LICENSES. Except as
set forth on SCHEDULE 5.6 attached hereto, no consent, approval or authorization
of, or registration, qualification or filing with, any Government Authority is
required for the execution and delivery by any member of the Selling Group of
the Transaction Documents to which it is a party or for the consummation by any
member of the Selling Group of the transactions contemplated hereby or thereby.
Each of the Seller and Reel-Tech Singapore has and maintains all licenses,
permits and other authorizations from all Government Authorities as are
necessary for the conduct of the Business or in connection with the ownership or
use of the Acquired Assets. Except as expressly designated on SCHEDULE 5.6
attached hereto, all of the Permits and Singapore Permits which are material to
the operation of the Business are transferable to the Buyer and will remain in
full force and effect upon their transfer to the Buyer. No proceedings to
terminate, suspend or materially modify any Permits or Singapore Permits which
are material to the operation of the Business are pending nor, to the
9
knowledge of the Seller, have any such proceedings been threatened, or is there
any basis for any such proceeding.
SECTION 5.7. FINANCIAL STATEMENTS. The Parent and the Seller have
delivered the following financial statements (the "FINANCIAL STATEMENTS") to the
Buyer, and there are attached as SCHEDULE 5.7 hereto: (a) the unaudited
consolidating balance sheet of the Seller and Reel-Tech Singapore as of December
26, 1996 (such balance sheet being referred to herein as the "BALANCE SHEET"),
and the related unaudited consolidating statement of income of the Seller and
Reel-Tech Singapore for the 12 month period then ended (collectively, the
"FINANCIALS") and (b) the unaudited consolidated balance sheet of the Seller and
Reel-Tech Singapore as of September 25, 1997 and the related consolidated
statement of income of the Seller and Reel-Tech Singapore for the 9 month period
then ended (collectively, the "INTERIM FINANCIALS"). Each of the Financial
Statements is true and correct and has been prepared in accordance with GAAP
(subject, in the case of the Interim Financials, to normal year-end
adjustments); each of such balance sheets fairly and accurately presents the
financial condition of the Seller and Reel-Tech Singapore on a consolidated
basis as of its respective date (other than intercompany reporting of
commissions and expenses which will be completed by the Closing); and such
statements of income fairly and accurately present the results of operations for
the periods covered thereby.
SECTION 5.8. ABSENCE OF CERTAIN CHANGES. Except as set forth on
SCHEDULE 5.8 attached hereto, since December 26, 1996, each of the Seller and
Reel-Tech Singapore has carried on its business only in the ordinary course, and
without limiting the generality of the foregoing there has not been (a) any
change in the assets, liabilities, sales, capital stock, income or business of
the Seller or Reel-Tech Singapore or in their relationships with suppliers,
customers or lessors, other than changes which were both in the ordinary course
of business and have not been, either in any case or in the aggregate,
materially adverse; (b) any declaration, setting aside or payment of any
dividend or any other distributions in respect of the Seller's or Reel-Tech
Singapore's capital stock; or (c) any increase in the compensation, pension or
other benefits payable or to become payable by the Seller or Reel-Tech Singapore
to any of its officers or employees, or any bonus payments or arrangements made
to or with any of them, other than pursuant to the terms of the Employee
Agreements or the Singapore Employee Agreements and other than in the ordinary
course of business.
SECTION 5.9. LITIGATION. Except as set forth on SCHEDULE 5.9 attached
hereto, no judicial or administrative action, proceeding or investigation is
pending or, to the knowledge of the Seller, threatened, relating to or affecting
any of the Acquired Assets or against or involving the Seller or Reel-Tech
Singapore, or which questions the validity of the Transaction Documents or
challenges any of the transactions contemplated hereby or thereby, nor, to the
knowledge of the Seller, is there any basis for any such action, proceeding or
investigation.
SECTION 5.10. CONFORMITY TO LAW AND CONTRACTS. Except as set forth on
SCHEDULE 5.10 attached hereto and except for circumstances in which
noncompliance would not have a material adverse effect on the Business or the
Acquired Assets, each of the Seller and Reel-Tech Singapore has complied with,
and is in compliance with, (a) all Government Mandates applicable to it, the
Real Property or any of the Acquired Assets (including, without limitation, any
labor, environmental, occupational health, zoning or other Government Mandate)
and (b) all unwaived terms and provisions of all Contracts to which it is a
party, or to which it or any of the Acquired Assets is subject. Except as set
forth in SCHEDULE 5.10 attached hereto, neither the Seller nor Reel-Tech
Singapore is subject to any judicial or administrative action, proceeding or
investigation relating to any actual or, to the Seller's knowledge, alleged
violation of any Government Mandate.
SECTION 5.11. TITLE TO ACQUIRED ASSETS. The Seller or Reel-Tech
Singapore, as applicable, is lawful owner of and has good and valid record and
marketable title to all of the Acquired Assets, and has the full right to sell,
convey, transfer, assign and deliver the Acquired Assets, without the need to
obtain the consent or approval of any third party except as set forth on
SCHEDULE 5.11 attached hereto (the "REQUIRED CONSENTS"). Except for Permitted
Encumbrances, all of the Acquired Assets are entirely free and clear of any
Encumbrances. At and as of the Closing, upon the delivery of the instruments
described in Section 4.2(a),
10
(b) and (i) hereof, the Buyer will have good and valid record and marketable
title to all of the Acquired Assets, free and clear of all Encumbrances other
than Permitted Encumbrances.
SECTION 5.12. REAL PROPERTY.
(a) Neither the Seller nor Reel-Tech Singapore owns any real
property. SCHEDULES 1.1(a)(iii) and 1.1(b)(iii) attached hereto set forth all
leases for real property leased by the Seller or Reel-Tech Singapore (the "REAL
PROPERTY"). The Real Property Leases and the Singapore Real Property Lease
include all leases and other Contracts pursuant to which the Seller or
Reel-Tech Singapore occupies or has the use of any space or Real Property. The
buildings, plants, improvements and fixtures included as part of the Real
Property are in good condition and repair for their present use in the Business.
To the Seller's knowledge, all Real Property Leases and the Singapore Real
Property Lease are in full force and effect. SCHEDULE 5.12 lists (i) any
material notices given or received by the Seller, the Parent, or Reel-Tech
Singapore since January 1, 1996 under any Real Property Lease or the Singapore
Real Property Lease, and (ii) any material dispute since January 1, 1996
relating to any Real Property Lease or the Singapore Real Property Lease.
(b) Except as set forth on SCHEDULE 5.12 attached hereto, the Real
Property is free from contamination of every kind, including without limitation,
groundwater, surface water, soil, sediment and air contamination, and no Real
Property contains asbestos in any form, urea formaldehyde foam insulation,
transformers or other equipment containing polychlorinated biphenyls or any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any Government Mandate pertaining to environmental matters or
public health or safety (hereinafter, "ENVIRONMENTAL LAWS"), or which poses a
hazard to the health and safety of the occupants of such Real Property or those
adjacent thereto ("HAZARDOUS MATERIALS"). None of the Seller, the Parent or
Reel-Tech Singapore has received any notice from any Government Authority with
respect to any release, investigation or clean-up of Hazardous Materials
relating to any of the Real Property.
(c) Attached hereto as part of SCHEDULE 5.12 is a list of all
documents, reports, site assessments, data, communications or other materials,
in the Parent's, the Seller's or Reel-Tech Singapore's possession or control or
to which any such entity has access, which contain any material information with
respect to potential environmental liabilities associated with any Real Property
or relating to compliance with Environmental Laws or the environmental condition
of any Real Property or adjacent properties. The Seller has furnished to the
Buyer complete and accurate copies of all of the documents, reports, site
assessments, data, communications and other materials listed on SCHEDULE 5.12
attached hereto. The Parent joins in the representation and warranty set forth
in this Section 5.12(c).
SECTION 5.13. EQUIPMENT. SCHEDULES 1.1(a)(i) and 1.1(b)(i) attached
hereto set forth a complete and accurate list of all of the Equipment and the
Singapore Equipment other than (a) items having a value individually of less
than $5,000, (b) items acquired by the Seller or Reel-Tech Singapore in the
ordinary course of business from the date hereof through the Closing Date, and
(c) items disposed of in the ordinary course of business from the date hereof
through the Closing Date. The Seller will identify in writing to the Buyer,
prior to the Closing, each item so acquired or disposed of and which has a value
of $10,000 or more. The Personal Property Leases and the Singapore Personal
Property Leases listed on SCHEDULES 1.1(a)(ii) and 1.1(b)(ii) attached hereto
include all leases by the Seller or Reel-Tech Singapore of any item of personal
property used by the Seller or Reel-Tech Singapore in the Business. The
Equipment, and all personal property held by the Seller under the Personal
Property Leases, are utilized by the Seller in the ordinary course of business
and are in good condition and repair (subject to normal wear and tear) for their
present use in the Business. The Singapore Equipment, and all personal property
held by Reel-Tech Singapore under the Singapore Personal Property Leases, are
utilized by Reel-Tech Singapore in the ordinary course of business and are in
good condition and repair (subject to normal wear and tear) for their present
use in the Business. To the Seller's knowledge, each Personal Property Lease
and Singapore Personal Property Lease is in full force and effect.
SECTION 5.14. INVENTORIES. The Inventories and the Singapore Inventories
consist solely of material and goods of a quality and quantity which are usable
or saleable in the normal course of the businesses
11
carried on by the Seller and Reel-Tech Singapore, net of any reserve for
excessive or obsolete inventories reflected on the Final Closing Statement.
SECTION 5.15. BROKER. Except for Needham & Co., none of the Parent and
the Seller has retained, utilized or been represented by any broker, agent,
finder or intermediary in connection with the negotiation or consummation of the
transactions contemplated by this Agreement. The Parent joins in the
representation and warranty set forth in this Section 5.15.
SECTION 5.16. CONTRACTS. SCHEDULES 1.1(a)(vi) and 1.1(b)(vi) attached
hereto set forth a complete and accurate list of all Contracts for goods or
services involving payments or receipts in excess of $25,000 to which the Seller
or Reel-Tech Singapore is a party or by which the Seller or Reel-Tech Singapore
is bound or to which the Seller or Reel-Tech Singapore or any of the Acquired
Assets is subject, except (a) Contracts entered into in the ordinary course of
business after the date hereof and prior to the Closing, and (b) Contracts
specifically identified in other Schedules hereto. The Seller has delivered to
the Buyer true, correct and complete copies of all such Contracts for goods or
services involving payments or receipts in excess of $25,000, together with all
modifications and supplements thereto. To the Seller's knowledge, each of the
Contracts listed on SCHEDULES 1.1(a)(vi) and 1.1(b)(vi) attached hereto or any
of the other Schedules hereto, including without limitation the Other Contracts
and the Singapore Other Contracts, is in full force and effect. Each of the
Seller and Reel-Tech Singapore has in all material respects performed all
obligations required to be performed by it to date under each such Contract to
which it is a party.
SECTION 5.17. EMPLOYMENT MATTERS. Except for the Employee Agreements and
Singapore Employee Agreements listed in SCHEDULES 1.1(a)(v) and 1.1(b)(v)
attached hereto, neither the Seller nor Reel-Tech Singapore has an employment
Contract, written or oral, with any currently active employee, including without
limitation any Contract to provide any bonus or benefit to any such employee.
To the Seller's knowledge, each of the Employee Agreements and the Singapore
Employee Agreements is in full force and effect.
SECTION 5.18. EMPLOYEE BENEFIT PLANS.
(a) Except as set forth on SCHEDULE 5.18 attached hereto, none of the
Seller, Reel-Tech Singapore, or any trade or business (whether or not
incorporated) that is a member of a group described in Section 414(b) or Section
414(c) of the United States Internal Revenue Code of 1986, as amended (the
"CODE"), of which the Seller or Reel-Tech Singapore is a member (a "RELATED
ENTITY") maintains or has any obligation to make contributions to any employee
benefit plan (an "ERISA PLAN") within the meaning of Section 3(3) of the United
States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
any other retirement, profit sharing, deferred compensation, stock option,
bonus, share appreciation right, severance, group or individual health, dental,
medical, life insurance, survivor benefit or other written benefit program (a
"NON-ERISA PLAN") for officers, employees, consultants or directors, current or
former.
(b) None of the Seller, Reel-Tech Singapore nor any Related Entity
has ever contributed to a multiemployer plan within the meaning of Section 3(37)
of ERISA or a plan subject to Title IV of ERISA. Each ERISA Plan which is a
"group heath plan" for purposes of Sections 4980B and 4980D of the Code has been
operated in all material respects in compliance with the health care
continuation and other health plan requirements of said Sections (and comparable
provisions of ERISA) including any such requirements arising as a result of the
transactions contemplated by this Agreement.
SECTION 5.19. LABOR RELATIONS. There is no labor strike, dispute,
slow-down or work stoppage actually pending or, to the Seller's knowledge,
threatened against or involving the Seller or Reel-Tech Singapore. Except as
set forth on SCHEDULE 5.19 attached hereto, no one has petitioned since January
1, 1996, and no one is now petitioning, for union representation of any of the
Seller's or Reel-Tech Singapore's employees. Except as described on
SCHEDULE 5.19 attached hereto, none of the employees of the Seller or Reel-Tech
Singapore is covered by any collective bargaining agreement, and no collective
bargaining agreement is currently being negotiated by the Seller or Reel-Tech
Singapore. Except as fully described
12
on SCHEDULE 5.19 attached hereto, neither the Seller nor Reel-Tech Singapore has
experienced any work stoppage since January 1, 1996.
SECTION 5.20. TRADEMARKS, PATENTS. SCHEDULE 5.20 attached hereto sets
forth a complete and accurate list of (a) all patents, trademarks and trade
names registered in the name of the Seller or Reel-Tech Singapore or used by the
Seller or Reel-Tech Singapore, all applications therefor, and all licenses (as
licensee or licensor) and other Contracts relating thereto, and (b) all
Contracts relating to other technology, know-how and processes which the Seller
or Reel-Tech Singapore is licensed or authorized by others to use and that is
material to the conduct of the Business or which the Seller or Reel-Tech
Singapore has licensed or authorized for use by others. Except to the extent
set forth in SCHEDULE 5.20 attached hereto, the Seller or Reel-Tech Singapore,
as applicable, owns or has the right to use all patents, trademarks and trade
names, and has the right to use all technology, know-how and processes, used or
necessary for the ordinary course of business as presently conducted and that is
material to the conduct of the Business. Except as set forth on SCHEDULE 5.20
attached hereto, no consent or authorization is required for the transfer by the
Seller or Reel-Tech Singapore to the Buyer of the patents, trademarks and trade
names listed on SCHEDULE 5.20 attached hereto. No claims have been asserted,
and no claims are pending, by any person or entity regarding the use by the
Seller or Reel-Tech Singapore of any patents, trademarks, trade names,
copyrights, technology, know-how or processes, or challenging or questioning the
validity or effectiveness of any license or Contract, and to the knowledge of
the Seller there is no basis for such claim. To the Seller's knowledge, all of
the Contracts listed on SCHEDULE 5.20 attached hereto are in full force and
effect. To the Seller's knowledge, the use by the Seller and Reel-Tech
Singapore of such patents, trademarks, trade names, copyrights, technology,
know-how or processes does not infringe on the rights of any person or entity.
SECTION 5.21. SUPPLIERS AND CUSTOMERS. Except as set forth on
SCHEDULE 5.21 attached hereto, during the last twelve (12) months no supplier or
customer of material importance to the Seller or Reel-Tech Singapore has
cancelled or otherwise terminated, or threatened to cancel or otherwise to
terminate, its relationship with the Seller or Reel-Tech Singapore.
SECTION 5.22. NO UNDISCLOSED LIABILITIES. Except to the extent (a)
reflected or reserved against in the Balance Sheet, (b) incurred in the ordinary
course of business after the date of the Balance Sheet and either discharged
prior to Closing or reflected or reserved against on the Final Closing Statement
or (c) described on any Schedule hereto, neither the Seller nor Reel-Tech
Singapore has material liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise (including without limitation as
guarantor or otherwise with respect to obligations of others), other than
performance obligations with respect to Contracts that would not be required to
be reflected or reserved against on a balance sheet prepared in accordance with
GAAP or in the footnotes thereto.
SECTION 5.23. TAXES. (a) Each of the Seller and Reel-Tech Singapore has
timely filed with each appropriate Government Authority all tax returns required
to be filed and has timely paid in full all taxes shown to be due thereon. All
tax returns filed by each of the Seller and Reel-Tech Singapore are true,
correct and complete in all material respects. The Parent and the Seller have
delivered to the Buyer correct and complete copies of all of the schedules
relating to the Seller from the tax returns of the Parent for the most recently
completed taxable year for which tax returns have been filed, all examination
reports by any Government Authority, and any statements of deficiencies proposed
or assessed against or agreed to by the Seller or Reel-Tech Singapore. Except
as set forth on SCHEDULE 5.23 attached hereto, since January 1, 1996, there has
not been an examination or notice of potential examination of the tax returns of
the Seller or Reel-Tech Singapore by any Government Authority, and there is not
outstanding any waiver of any statute of limitations with respect to, or, except
as set forth on SCHEDULE 5.23 attached hereto, any extension of a period for the
assessment or collection of, any taxes. Except as set forth on SCHEDULE 5.23
attached hereto, since January 1, 1996 no claim has ever been made in writing by
any Government Authority with which the Seller or Reel-Tech Singapore does not
file tax returns that the Seller or Reel-Tech Singapore is or may be subject to
taxation by such Government Authority.
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(b) All taxes that are required to have been withheld or collected by
the Seller or Reel-Tech Singapore have been duly withheld or collected and, to
the extent required, have been paid to the proper Government Authority or
properly deposited as required by applicable Government Mandates.
SECTION 5.24. DISCLOSURE. No representation or warranty by the Seller in
this Agreement or in any exhibit, schedule, written statement, certificate or
other document delivered or to be delivered to the Buyer pursuant hereto or in
connection with the consummation of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading or necessary in order to
provide the Buyer with proper and complete information as to the Seller,
Reel-Tech Singapore and the identity, value and usability of the Acquired
Assets. There is no fact relating to the Acquired Assets or the Seller or
Reel-Tech Singapore which is likely to materially adversely affect the same and
which has not been disclosed to the Buyer in writing by the Parent or the
Seller.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Parent and the Seller as follows:
SECTION 6.1. ORGANIZATION OF BUYER; AUTHORITY. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. The Buyer has all requisite power and authority
to execute and deliver the Transaction Documents to which it is a party and to
carry out all of the actions required of it pursuant to the terms of such
Transaction Documents, including, without limitation, the issuance to the Parent
of the Shares as set forth in Section 4.2(k) hereof.
SECTION 6.2. CORPORATE APPROVAL; BINDING EFFECT. The Buyer has obtained
all necessary authorizations and approvals from its Board of Directors and
stockholders required for the execution and delivery of the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the issuance to
the Parent of the Shares as set forth in Section 4.2(k) hereof. Each of the
Transaction Documents to which the Buyer is a party has been, or at the Closing
shall be duly executed and delivered by the Buyer and constitutes or upon such
execution and delivery will constitute the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms, except
as enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors' rights generally
or by general principles of equity.
SECTION 6.3. NON-CONTRAVENTION. The execution and delivery by the Buyer
of the Transaction Documents to which it is a party and the consummation by the
Buyer of the transactions contemplated hereby and thereby will not (a) violate
or conflict with any provisions of the Articles of Organization or By-Laws of
the Buyer, each as amended to date; or (b) constitute a violation of, or be in
conflict with, or constitute or create a default under (i) any Contract to which
the Buyer is a party or by which the Buyer or any of its properties is bound or
to which the Buyer or any of its properties is subject, or (ii) any Government
Mandate to which the Buyer is subject.
SECTION 6.4. GOVERNMENTAL CONSENTS. Assuming the accuracy of the
representations and warranties of the Parent set forth in the letter to be
delivered to the Buyer pursuant to Section 4.2(m) hereof, no consent,
approval or authorization of, or registration, qualification or filing with,
any Government Authority is required for the execution and delivery by the
Buyer of the Transaction Documents to which it is a party or for the
consummation by the Buyer of the transactions contemplated hereby or thereby,
including, without limitation, the issuance to the Seller of the Shares as
set forth in Section 4.2(k) hereof.
SECTION 6.5. BROKER. Except for Hambrecht & Quist LLC, the Buyer has not
retained, utilized or been represented by any broker, agent, finder or other
intermediary in connection with the negotiation or consummation of the
transactions contemplated by this Agreement.
SECTION 6.6. LITIGATION. No judicial or administrative action, proceeding
or investigation is pending or, to the knowledge of the Buyer, threatened,
against or involving the Buyer which questions the validity of the
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Transaction Documents or challenges any of the transactions contemplated hereby
or thereby, nor, to the knowledge of the Buyer, is there any basis for any such
action, proceeding or investigation.
SECTION 6.7. CAPITALIZATION. The authorized capital stock of the Buyer
consists of 15,000,000 shares of common stock, par value $0.01 per share (the
"BUYER COMMON STOCK"). As of November 24, 1997, there were 12,332,437 shares of
Buyer Common Stock issued and outstanding. The Shares shall be, when issued,
duly authorized and validly issued, fully paid, non-assessable and free of
pre-emptive rights with respect thereto.
SECTION 6.8. SEC REPORTS. None of the Buyer's annual report for its
fiscal year ended December 31, 1996 on Form 10-K or any of its quarterly reports
for the fiscal quarters ended March 31, 1997, June 30, 1997 or September 30,
1997 on Form 10-Q contain any untrue statement of material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 7. CONDUCT OF BUSINESS BY SELLING GROUP PENDING CLOSING.
Each of the Parent and the Seller shall perform and observe the following
covenants from the date of this Agreement through the Closing Date (or such
other date expressly set forth herein).
SECTION 7.1. FULL ACCESS. Each of the Parent and the Seller shall, and
the Parent and the Seller shall cause Reel-Tech Singapore to, afford to the
Buyer and its authorized representatives full access during its normal business
hours to all properties, books, records, Contracts and documents of the Seller
and Reel-Tech Singapore and a full opportunity to make such reasonable
investigations as they shall desire to make of the Seller and Reel-Tech
Singapore or with respect to the Acquired Assets, and each of the Parent and the
Seller shall furnish or cause to be furnished to the Buyer and its authorized
representatives all such information with respect to the affairs and businesses
of the Seller and Reel-Tech Singapore and with respect to the Acquired Assets as
the Buyer may reasonably request.
SECTION 7.2. CARRY ON IN REGULAR COURSE. The Seller shall, and the Parent
shall cause the Seller to, maintain the Acquired Assets (other than sales of
inventory in the ordinary course of business), and the Parent and the Seller
shall cause Reel-Tech Singapore to maintain the Singapore Acquired Assets (other
than sales of Singapore inventory in the ordinary course of business), in good
operating condition and repair (normal wear and tear excepted), and make all
necessary renewals, additions and replacements thereto. The Seller shall, and
the Parent shall cause the Seller to, and the Parent and the Seller shall cause
Reel-Tech Singapore to, carry on its business diligently and substantially in
the same manner as heretofore and the Seller shall not, the Parent shall not
permit the Seller to, and the Parent and the Seller shall not permit Reel-Tech
Singapore to, make or institute any unusual or novel methods of manufacture,
purchase, sale, lease, management, accounting or operation, engage in any
transactions not in the usual and ordinary course of business, or grant any
general or uniform increase in the rates of pay of its employees or in the
benefits under any bonus or pension plan or other Contract to, for or with any
such employees. Without limiting the generality of the foregoing, the Parent
and the Seller shall not, and shall not permit Reel-Tech Singapore to, enter
into any Contract for the purchase or sale of, or issue any options, warrants or
other rights to subscribe for or purchase, any securities of the Seller or
Reel-Tech Singapore.
SECTION 7.3. NO DIVIDENDS, ISSUANCES, REPURCHASES. The Seller shall not,
the Parent shall not permit the Seller to, and the Parent and the Seller shall
not permit Reel-Tech Singapore to, declare or pay any dividends (whether in
cash, shares of stock or otherwise) on, or make any other distribution in
respect of, any shares of its capital stock, or issue, purchase, redeem or
acquire for value any shares of its capital stock except as set forth on
SCHEDULE 7.3 attached hereto.
SECTION 7.4. INSURANCE. The Seller shall maintain, the Parent shall cause
the Seller to maintain, and the Parent and the Seller shall cause Reel-Tech
Singapore to maintain, insurance policies as the Seller reasonably believes are
consistent with prudent business practice.
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SECTION 7.5. PRESERVATION OF ORGANIZATION. The Seller and the Parent
shall use commercially reasonable efforts to (a) preserve the business
organization of the Seller and Reel-Tech Singapore intact, (b) keep available to
the Buyer the present key officers and employees of the Seller and Reel-Tech
Singapore and (c) preserve for the Buyer the present relationships of the
suppliers and customers of the Seller and Reel-Tech Singapore. The Seller shall
not, the Parent shall not permit the Seller to, and the Parent and the Seller
shall not permit Reel-Tech Singapore to, amend any provision of its Articles of
Incorporation or Bylaws (or such similar organizational documents of Reel-Tech
Singapore).
SECTION 7.6. ADVICE OF CHANGE. The Parent and the Seller will promptly
advise the Buyer in writing of any material adverse change in the condition of
any of the Acquired Assets or the Business.
SECTION 7.7. NO SHOPPING. During the period commencing on the date of
this Agreement and ending on the Closing Date, the Parent and the Seller shall
not, and shall not permit Reel-Tech Singapore to, negotiate for, solicit,
respond to solicitations or enter into any Contract (oral or written) with
respect to the sale or other disposition of the Business, any equity securities
of the Seller or Reel-Tech Singapore, any substantial portion of the Acquired
Assets (other than sales of inventory in the ordinary course of business), or
any merger or other business combination of the Seller or Reel-Tech Singapore,
to or with any person or entity other than the Buyer.
SECTION 7.8. CONSENTS OF THIRD PARTIES. The Parent and the Seller will
employ commercially reasonable efforts to secure, before the Closing Date, the
consent, in form and substance reasonably satisfactory to the Buyer and the
Buyer's counsel, to the consummation of the transactions contemplated by this
Agreement by each party to any of the Personal Property Leases, Singapore
Personal Property Leases, Real Property Leases, Singapore Real Property Lease,
Employee Agreements, Singapore Employee Agreements, Other Contracts, Singapore
Other Contracts, Permits and Singapore Permits under which such transactions
would constitute a default, would accelerate obligations of the Seller or
Reel-Tech Singapore, as applicable, or would permit cancellation of any such
Contract or Permit.
SECTION 8. COVENANTS.
SECTION 8.1. SEPARATE ENTITY. The Buyer covenants and agrees that, from
and after the Closing Date until the last day of the Earn-Out Period (as defined
in the 1995 Asset Purchase Agreement), it shall (a) maintain the Business as a
separate corporate entity or as a separate division of the Buyer and shall
prepare quarterly and annual income statements and balance sheets for such
corporate entity or division in accordance with GAAP, and (b) upon reasonable
prior notice and during normal business hours, provide the Parent with full
access to or, at the Parent's option, copies of such income statements and
balance sheets in order to permit the Parent to calculate the second and third
earn-out payments to be made by the Parent pursuant to the 1995 Asset Purchase
Agreement.
SECTION 8.2. COYOTE LICENSE AGREEMENT. The Buyer hereby covenants and
agrees that it shall abide by all of the terms and conditions of the Coyote
License Agreement.
SECTION 8.3. 401(K) PLAN. The Parent will retain all liability and
responsibility for the disposition of interests under the Data I/O Corporation
Tax Deferral Retirement Plan and Trust (the "SAVINGS PLAN"), with respect to all
of the currently active employees of the Seller (the "ASSUMED EMPLOYEES") (or
their beneficiaries) who, as of the Closing Date, are participants in the
Savings Plan. With respect to the Savings Plan, the Parent agrees it will, not
later than March 15, 1998, contribute or cause to be contributed to the Savings
Plan all such amounts as may be required under the terms of the Savings Plan on
behalf of the Assumed Employees through the Closing Date in accordance with the
terms of the Savings Plan.
SECTION 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of
the Buyer to consummate the Closing shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions (to the extent
noncompliance is not waived in writing by the Buyer):
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SECTION 9.1. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by the Seller in or pursuant to this
Agreement shall be true and correct at and as of the Closing Date with the same
effect as though such representations and warranties had been made or given at
and as of the Closing Date.
SECTION 9.2. COMPLIANCE WITH AGREEMENT. Each of the Parent and the Seller
shall have performed and complied with all of its obligations under this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
SECTION 9.3. NO MATERIAL ADVERSE CHANGE. Since the date hereof, there
shall not have occurred any (a) material adverse change in the condition
(financial or otherwise), operations, business, prospects or assets of the
Seller or Reel-Tech Singapore or (b) imposition of any Government Mandate which
would materially adversely affect the condition (financial or otherwise),
operations, business, prospects or assets of the Seller or Reel-Tech Singapore.
SECTION 9.4. CLOSING CERTIFICATE. Each of the Parent and the Seller shall
have delivered to the Buyer in writing, at and as of the Closing, a certificate
duly executed by each of the Parent and the Seller, in form and substance
satisfactory to the Buyer and the Buyer's counsel, certifying that the
conditions in each of Sections 9.1, 9.2 and 9.3 hereof have been satisfied.
SECTION 9.5. OPINION OF COUNSEL. Heller Ehrman White & McAuliffe, counsel
to the Parent and the Seller, shall have delivered to the Buyer a written
opinion, addressed to the Buyer and dated the Closing Date, substantially in the
form of EXHIBIT C attached hereto.
SECTION 9.6. APPROVALS; CONSENTS. All corporate and other approvals in
connection with the transactions contemplated by the Transaction Documents and
the form and substance of all certificates and other documents delivered
hereunder shall be satisfactory in form and substance to the Buyer and its
counsel. The Buyer shall have obtained all necessary consents to the
transactions contemplated by the Transaction Documents.
SECTION 9.7. NO LITIGATION. No restraining order or injunction shall
prevent the transactions contemplated by any of the Transaction Documents and no
judicial or administrative action, proceeding or investigation shall be pending
or threatened before any Government Authority in which it will be or is sought
to restrain or prohibit or obtain damages or other relief in connection with any
of the Transaction Documents or the consummation of the transactions
contemplated hereby or thereby.
SECTION 9.8. NON-COMPETITION AGREEMENTS. Each of the Seller and the
Parent shall have executed and delivered to the Buyer a non-competition
agreement in the form of EXHIBIT D attached hereto (the "SELLING GROUP
NON-COMPETITION AGREEMENT"), and such Selling Group Non-Competition Agreement
shall be in full force and effect.
SECTION 9.9. LICENSE AGREEMENTS. The Seller and the Parent shall have
executed and delivered to the Buyer (a) a license agreement in the form of
EXHIBIT E-1 attached hereto (the "9500 LICENSE AGREEMENT") and (b) a license
agreement in the form of EXHIBIT E-2 attached hereto (the "COYOTE LICENSE
AGREEMENT") (the 9500 License Agreement and the Coyote License Agreement shall
be referred to herein, collectively, as the "LICENSE AGREEMENTS"), and each such
License Agreement shall be in full force and effect.
SECTION 9.10. ESCROW AGREEMENT. Each of the Seller, the Parent and the
Escrow Agent shall have executed and delivered to the Buyer the Escrow
Agreement, and the Escrow Agreement shall be in full force and effect.
SECTION 9.11. CONSENTS. The Seller will have obtained all Required
Consents in form and substance reasonably satisfactory to the Buyer and the
Buyer's counsel.
SECTION 9.12. DUE DILIGENCE. The Buyer shall have completed to its
satisfaction its due diligence with respect to the Seller, Real-Tech Singapore
and the Acquired Assets.
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SECTION 9.13. REGISTRATION RIGHTS AGREEMENT. The Parent shall have
executed and delivered to the Buyer a Registration Rights Agreement in the form
of EXHIBIT H attached hereto (the "REGISTRATION RIGHTS AGREEMENT"), and such
agreement shall be in full force and effect.
SECTION 9.14. ARRANGEMENTS WITH HALL, INC. The amendments to the
employment agreements with Douglas Hall and Norris Hall referred to on
SCHEDULE 1.1(a)(v) and entered into in connection with the Closing shall be
in form and substance satisfactory to the Buyer. There shall have been no
amendments to the 1995 Asset Purchase Agreement provisions to be assumed by
the Buyer that are not acceptable to the Buyer.
SECTION 9.15. PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Buyer in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory in
all respects to the Buyer and the Buyer's counsel, and the Buyer shall have
received the originals or certified or other copies of all such records and
documents as the Buyer may reasonably request.
SECTION 10. CONDITIONS PRECEDENT TO SELLER'S AND PARENT'S OBLIGATIONS.
The obligations of the Seller and the Parent to consummate the Closing shall be
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (to the extent noncompliance is not waived in writing by
the Seller and the Parent):
SECTION 10.1. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by the Buyer in or pursuant to this
Agreement shall be true and correct at and as of the Closing Date with the same
effect as though such representations and warranties had been made or given at
and as of the Closing Date.
SECTION 10.2. COMPLIANCE WITH AGREEMENT. The Buyer shall have performed
and complied with all of its obligations under this Agreement that are to be
performed or complied with by it at or prior to the Closing.
SECTION 10.3. CLOSING CERTIFICATE. The Buyer shall have delivered to the
Seller in writing, at and as of the Closing, a certificate duly executed by a
duly authorized officer of the Buyer, in form and substance satisfactory to the
Seller and the Seller's counsel, to the effect that the conditions in each of
Sections 10.1 and 10.2 hereof have been satisfied.
SECTION 10.4. OPINION OF COUNSEL. Bingham Dana LLP, counsel to the Buyer,
shall have delivered to the Seller a written opinion, dated the Closing Date and
addressed to the Seller, substantially in the form of EXHIBIT F attached hereto.
SECTION 10.5. APPROVALS; CONSENTS. All corporate and other approvals in
connection with the transactions contemplated by the Transaction Documents and
the form and substance of all certificates and other documents delivered
hereunder shall be satisfactory in form and substance to each of the Seller and
the Parent and their counsel. Each of the Seller and the Parent shall have
obtained all necessary consents to the transactions contemplated by the
Transaction Documents.
SECTION 10.6. NO LITIGATION. No restraining order or injunction shall
prevent the transactions contemplated by any of the Transaction Documents and no
judicial or administrative action, proceeding or investigation shall be pending
or threatened before any Government Authority in which it will be or is sought
to restrain or prohibit or obtain damages or other relief in connection with any
of the Transaction Documents or the consummation of the transactions
contemplated hereby or thereby.
SECTION 10.7. AGREEMENTS. The Buyer shall have executed and delivered the
Transaction Documents to which it is a party (including the Selling Group
Non-Competition Agreement and the Escrow Agreement), and such agreements shall
be in full force and effect.
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SECTION 10.8. ACCOUNT RECEIVABLE. On or before the Closing Date, the
outstanding $25,000 account receivable of the Buyer's View Engineering division
shall have been resolved and paid in cash to the satisfaction of the Seller and
the Parent.
SECTION 10.9. NON-COMPETITION AGREEMENT. The Buyer shall have executed
and delivered to the Parent a Non-Competition Agreement in the form of EXHIBIT G
attached hereto (the "BUYER NON-COMPETITION AGREEMENT"), and such agreement
shall be in full force and effect.
SECTION 10.10. COYOTE LICENSE AGREEMENT. The Buyer shall have executed
and delivered to the Seller and the Parent the Coyote License Agreement, and the
Coyote License Agreement shall be in full force and effect.
SECTION 10.11. STOCK CERTIFICATE AND REGISTRATION RIGHTS AGREEMENT. The
Buyer shall have executed and delivered to the Parent (a) a stock certificate
or the stock certificates, as the case may be, representing the Shares (or an
undertaking as provided in Section 3.1), and (b) the Registration Rights
Agreement, and such agreement shall be in full force and effect.
SECTION 10.12. PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Parent and the Seller in connection
with the transactions contemplated by this Agreement shall be reasonably
satisfactory in all respects to the Parent and the Seller and their counsel, and
the Parent and the Seller shall have received the originals or certified or
other copies of all such records and documents as they may reasonably request.
SECTION 10.13. NO MATERIAL ADVERSE CHANGE. Since the date hereof, there
shall not have occurred any (a) material adverse change in the condition
(financial or otherwise), operations, business, prospects or assets of the Buyer
or (b) imposition of any Government Mandate which would materially adversely
affect the condition (financial or otherwise), operations, business, prospects
or assets of the Buyer.
SECTION 11. CONFIDENTIAL INFORMATION. The Buyer shall continue to abide
by the terms of that certain letter agreement between the Buyer and the
Parent dated April 9, 1997 (the "NONDISCLOSURE AGREEMENT") regarding the
confidentiality and non-disclosure of all Evaluation Material (as defined
therein) through the Closing. If the Closing does not take place for any
reason on or before December 31, 1997, the Buyer shall, within five (5) days
after a request of the Parent or the Seller for a return of all of its
Evaluation Material, (a) either redeliver to the appropriate entity or
destroy all tangible Evaluation Material, (b) delete all Evaluation Material
from any electronic data storage device, and (c) certify in writing to the
Parent and the Seller that the terms of this Section 11 have been satisfied.
SECTION 12. INDEMNIFICATION.
SECTION 12.1. INDEMNITY BY THE SELLER. Subject to the overall
limitations, minimum amounts and time limitations set forth in Section 12.5
hereof, the Seller shall indemnify and hold the Buyer harmless from and with
respect to any and all claims, liabilities, losses, damages, costs and expenses,
including without limitation the reasonable fees and disbursements of counsel
(collectively, the "LOSSES"), related to or arising directly or indirectly out
of any of the following:
(i) any breach by any member of the Selling Group of any
representation or warranty, covenant, obligation or undertaking made by
such member of the Selling Group in or pursuant to this Agreement
(including the Schedules and Exhibits hereto), any other Transaction
Document or any other statement, certificate or other instrument delivered
pursuant hereto or thereto;
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(ii) any claim, liability, obligation or damage with respect to
the Excluded Liabilities, including without limitation the following:
(A) any actual or alleged liability for the cleanup or removal
of, or for death or injury to person or property (to the extent not
covered by insurance) as a result of the release, emission or
discharge of, any Hazardous Materials relating to or affecting the
Acquired Assets or the Business, to the extent such liability arises
out of any matter that occurred or existed on or before the Closing
Date;
(B) any actual or alleged liability for death or injury to
person or property, to the extent not covered by insurance, as a
result of any actual or alleged defect in any product sold or
manufactured by the Seller or Reel-Tech Singapore on or prior to the
Closing Date;
(C) any contractual product warranty claims arising out of
defects in any product sold or manufactured by the Seller or Reel-Tech
Singapore Prior to the Closing Date; or
(D) any claim, obligation or liability arising in connection
with the employment or termination of employment of any persons on or
before the Closing Date, including any workmen's compensation claims,
any employee grievances, any liabilities with respect to pension,
medical or other employment benefits and any liabilities for accrued
vacation, bonus or severance payments arising as a result of the
consummation of the transactions contemplated by this Agreement (but
excluding any claim, obligation or liability arising in connection with
the Buyer's employment of, or failure to employ, any such persons).
(iii) except for the Assumed Obligations, any claim or liability
arising under the bulk sales laws of the States of Indiana or Washington in
connection with transactions contemplated by this Agreement (in view of
such indemnification obligation the Buyer hereby waives compliance by the
Seller and by Reel-Tech Singapore with any such bulk sales laws as a
condition to the Closing hereunder); and
(iv) any liability with respect to any of the items disclosed on
the Schedules hereto that is not an Assumed Obligation.
SECTION 12.2. INDEMNITY BY THE BUYER. Subject to the overall limitations,
minimum amounts and time limitations set forth in Section 12.5 hereof, the Buyer
shall indemnify and hold the Parent and the Seller harmless from and with
respect to any and all Losses, related to or arising directly or indirectly out
of (a) any breach by the Buyer of any representation or warranty, covenant,
obligation or undertaking made by the Buyer in or pursuant to this Agreement
(including the Schedules and Exhibits hereto) or any other statement,
certificate or other instrument delivered pursuant hereto (including, without
limitation, the Assumed Obligations), or (b) the Buyer's operation of the
Business or the Acquired Assets after the Closing Date.
SECTION 12.3. CLAIMS.
(a) NOTICE. Any party seeking indemnification hereunder (the
"INDEMNIFIED PARTY") shall promptly notify in writing the other party hereto
(the "INDEMNIFYING PARTY") of any suit, action or other proceeding (a "CLAIM")
with respect to which the Indemnified Party claims indemnification hereunder,
PROVIDED that failure of the Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations under this Section 12 except
to the extent, if at all, that such Indemnifying Party shall have been
materially prejudiced thereby.
(b) THIRD PARTY CLAIMS. If any Claim relates to any action
instituted against the Indemnified Party by a third party (a "THIRD PARTY
CLAIM"), the Indemnifying Party shall be entitled to assume the defense of such
Third Party Claim, in which case the Indemnifying Party shall have the authority
to defend such Third Party Claim, if and only if the following conditions are
satisfied:
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(i) the Indemnifying Party shall have within thirty (30) days
after the notice of the Third Party Claim under Section 12.3(a) given the
Indemnified Party a notice undertaking to defend the Third Party Claim and
confirming that the Indemnifying Party is unconditionally obligated
hereunder to indemnify the Indemnified Party with respect to such Third
Party Claim; and
(ii) the Indemnified Party shall not have given the Indemnified
Party written notice that it has determined, in the exercise of its
reasonable discretion, that matters of corporate or management policy or a
conflict of interest make separate representation by the Indemnified
Party's own counsel advisable.
The Indemnified Party shall retain the right to employ its own counsel and to
participate in the defense of any Third Party Claim, the defense of which has
been assumed by the Indemnifying Party pursuant hereto, but the Indemnified
Party shall bear and shall be solely responsible for its own costs and expenses
in connection with such participation. The Indemnifying Party shall not settle
or consent to any settlement of any Third Party Claim without the prior approval
of the Indemnified Party. If the Indemnifying Party does not assume the defense
of any Third Party Claim as provided in this Section 12.3, the Indemnified Party
may defend the Third Party Claim as it determines in its sole discretion at the
expense and risk of the Indemnifying Party.
SECTION 12.4. METHOD OF MANNER OF PAYING CLAIMS. Payment of any amount
required to be paid by the Seller to the Buyer under this Section 12 shall, at
the Buyer's option, be made from the Escrowed Funds as provided in the Escrow
Agreement. Any unpaid balance of a Claim that is not paid within thirty (30)
days of written demand therefor shall bear interest at a rate per annum equal to
the rate announced by BankBoston, N.A. as its "Base Rate" PLUS two percent (2%)
from the date written notice thereof is given by the Indemnified Party to the
Indemnifying Party.
SECTION 12.5. LIMITATIONS ON INDEMNIFICATION.
(a) No Indemnifying Party shall be required to indemnify an Indemnified
Party hereunder except to the extent that the aggregate amount of Losses for
which the Indemnified Party is otherwise entitled to indemnification pursuant to
this Section 12 exceeds $50,000, whereupon the Indemnified Party shall be
entitled to be paid the aggregate amount of such Losses to the extent in excess
of $50,000, subject to the limitations on maximum amount of recovery set forth
in Section 12.6 hereof.
(b) No Indemnifying Party shall be liable for any Losses pursuant to this
Section 12 unless a notice under Section 12.3(a) hereof or a written claim for
indemnification is given by the Indemnified Party to the Indemnifying Party with
respect thereto or to the Claim to which such Losses relate on or before the
first anniversary of the Closing Date.
SECTION 12.6. GENERAL LIMITATIONS ON LIABILITY.
(a) Except as otherwise provided in this Section 12.6, (i) the maximum
amount payable under this Agreement and the other Transaction Documents by the
Seller and/or the Parent shall not exceed in the aggregate $750,000 plus
interest accruals as provided in the Escrow Agreement, and (ii) the maximum
amount payable under this Agreement and the other Transaction Documents by the
Buyer shall not exceed in the aggregate $750,000.
(b) The limitation on liability set forth in Section 12.6(a) shall not
apply to any of the following:
(i) any amounts payable under or in respect of any breach of
Sections 1, 2, 3, 4, 5.12(c), 5.15, 7.2, 7.7, 8.3, 11, 13, or 14.2 of this
Agreement;
(ii) any amounts payable by the Buyer under Section 3(b) of the
Registration Rights Agreement;
21
(iii) any amounts payable under Section 14.15 hereof or any
corresponding provision of any other Transaction Document;
(iv) any amounts payable under the letters to be delivered by the
Parent as provided in Section 4.2(m) and Section 4.2(n) hereof; and
(v) any amounts payable under any Transaction Document that
expressly provides that it is not subject to this Section 12.6.
(c) This Section 12.6 shall not limit the right of any party to seek
equitable relief for any breach of this Agreement or any other Transaction
Document, including, without limitation, injunctive relief against any actual,
threatened, or apparent violation of the terms of this Agreement or any other
Transaction Document.
(d) In no event shall any party be liable for indirect, punitive, special,
or consequential damages under this Agreement or any other Transaction Document.
SECTION 13. USE OF NAME. The Buyer is purchasing all of the Seller's and
Reel-Tech Singapore's rights to the business names of the Seller and Reel-Tech
Singapore used in the Business and therefore the Parent and Seller shall not be
entitled to, and shall not permit Reel-Tech Singapore to, use the name
"Reel-Tech" or variations thereof as corporate and business names or titles
anywhere in the world from and after the Closing. The Seller shall,
simultaneously with the Closing, (a) undertake and promptly pursue all necessary
action to change its business and corporate names to new names which do not
include the name "Reel-Tech" or any substantially similar name, and (b) cause
Reel-Tech Singapore to undertake and promptly pursue all necessary action to
change its business and corporate names to new names which do not include the
name "Reel-Tech" or any substantially similar name, in each case so as to permit
the use of such names by the Buyer.
SECTION 14. GENERAL.
SECTION 14.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties hereto contained in this Agreement
or otherwise made in writing in connection with the transactions contemplated
hereby (in each case except as affected by the transactions contemplated by this
Agreement) shall be deemed material and, notwithstanding any investigation by
the Buyer, shall be deemed to have been relied on by the Buyer and shall survive
the Closing, and the consummation of the transactions contemplated hereby, until
the expiration of one year from the Closing Date and any Claim based upon such
representations and warranties shall thereupon be of no further force and effect
(except to the extent the claiming party shall have asserted the Claim prior to
the expiration of such rights in accordance with Section 12.5 hereof).
SECTION 14.2. EXPENSES. All transfer and sales taxes payable with respect
to the sale and conveyance of the Acquired Assets to the Buyer shall be paid by
the Buyer. All expenses of the preparation, execution and consummation of this
Agreement and of the transactions contemplated hereby, including without
limitation attorneys', accountants' and outside advisers' fees and
disbursements, shall be borne by the party incurring such expenses. The Parent
and the Seller are responsible for paying all fees, brokerage commissions and
expenses of Needham & Co., and the Buyer is responsible for paying all fees,
brokerage commissions and expenses of Hambrecht & Quist LLC.
SECTION 14.3. NOTICES. All notices, demands and other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally or if mailed by certified
mail, return receipt requested, postage prepaid, or if sent by overnight
courier, or sent by written telecommunication, as follows:
22
If to the Parent or the Seller, to:
Data I/O Corporation
P.O. Box 97046
10525 Willows Road N.E.
Redmond, WA 98073-9746
Attention: William C. Erxleben
with a copy sent contemporaneously to:
Data I/O Corporation
P.O. Box 97046
10525 Willows Road N.E.
Redmond, WA 98073-9746
Attention: Thomas M. Hogan, General Counsel
If to the Buyer, to:
General Scanning Inc.
500 Arsenal Street
Watertown, MA 02172
Attention: Charles Winston
with a copy sent contemporaneously to:
Gordon Greer, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when receipted for, (c) if mailed,
three (3) days after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched, PROVIDED that a copy of such notice is sent
on the same day as described above with an indication that the original was sent
by telecommunication and the date of its transmittal.
SECTION 14.4. ENTIRE AGREEMENT. This Agreement and the Nondisclosure
Agreement contain the entire understanding of the parties, supersede all prior
agreements and understandings relating to the subject matter hereof and shall
not be amended except by a written instrument hereafter signed by all of the
parties hereto. To the extent of any conflict between this Agreement and any
other Transaction Document with respect to a matter within the scope of such
Transaction Document, such Transaction Document shall control.
SECTION 14.5. GOVERNING LAW. The validity and construction of this
Agreement shall be governed by the laws of the State of Washington without
regard to any choice of law rules that would require or permit the application
of the laws of any other jurisdiction.
SECTION 14.6. SECTIONS AND SECTION HEADINGS. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
SECTION 14.7. ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any party
hereunder shall be assignable or transferable by such party without the prior
written consent of the other party hereto; PROVIDED, HOWEVER, that nothing
contained in this Section 14.7 shall prevent a party, without the consent of the
other parties, (a) from transferring or assigning this Agreement or its rights
or obligations hereunder to another entity controlling, under the control of, or
under common
23
control with such party, or (b) from assigning all or part of its rights or
obligations hereunder by way of collateral assignment to any bank or
financing institution providing financing for the acquisition contemplated
hereby or (c) from assigning this Agreement or its rights and obligations
hereunder to a third party in connection with the sale of all or
substantially all of its assets, business or capital stock, or pursuant to a
merger, consolidation or reorganization (PROVIDED, HOWEVER, that is the case
of either (a) or (c) that the assignee shall first agree in writing to assume
all of the assigning party's rights and obligations hereunder), but no such
transfer or assignment made pursuant to clauses (a) or (b) shall relieve such
party of its obligations under this Agreement.
SECTION 14.8. SEVERABILITY. In the event that any covenant, condition, or
other provision herein contained is held to be invalid, void, or illegal by any
court of competent jurisdiction, the same shall be deemed to be severable from
the remainder of this Agreement and shall in no way affect, impair, or
invalidate any other covenant, condition, or other provision contained herein.
SECTION 14.9. FURTHER ASSURANCES. The parties agree to take such
reasonable steps and execute such other and further documents as may be
necessary or appropriate to fully evidence and effect the sale of the Acquired
Assets hereunder or to otherwise cause the terms and conditions contained herein
to be carried into effect.
SECTION 14.10. NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise
expressly provided herein, nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any person, firm or corporation,
other than the Seller, the Parent and the Buyer and their respective
shareholders, any rights or remedies under or by reason of this Agreement.
SECTION 14.11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 14.12. SATISFACTION OF CONDITIONS PRECEDENT. Each of the Parent,
the Seller and the Buyer will use commercially reasonable efforts to cause the
satisfaction of the conditions precedent contained in this Agreement; PROVIDED,
HOWEVER, that nothing contained in this Section 14.12 shall obligate either
party hereto to waive any right or condition under this Agreement.
SECTION 14.13. PUBLIC STATEMENTS OR RELEASES. Each of the parties hereto
agrees that prior to the consummation of the Closing no party to this Agreement
will make, issue or release any public announcement, statement or acknowledgment
of the existence of, or reveal the status of, this Agreement or the transactions
provided for herein, without first obtaining the consent of the other party
hereto which shall not be unreasonably withheld. Nothing contained in this
Section 14.13 shall prevent either party from making such disclosures as such
party may consider necessary in order to obtain financing for the transactions
contemplated hereby or to satisfy such party's legal or contractual obligations.
SECTION 14.14. BUSINESS RECORDS. The Buyer acknowledges that business
records of the Seller relating to the Seller's operations prior to the Closing
will be conveyed to the Buyer as part of the Acquired Assets, and that the
Seller may from time to time require copies of such records in connection with,
among other things, tax matters, governmental investigations, legal proceedings
and claims arising with respect to the Seller's operations prior to the Closing,
and the Buyer agrees that upon reasonable prior notice from the Seller, it will
provide the Parent and the Seller with copies of such records as required for
such purposes. In particular, the Buyer will upon reasonable prior notice
provide the Parent and the Seller with copies of all tax returns and supporting
papers therefor relating to the Business and the Acquired Assets for periods
prior to the Closing Date, and furnish and request the independent accountants
and legal counsel of the Buyer to furnish the Parent and the Seller such
additional tax and other information and documents in their possession as the
Parent and the Seller may from time to time reasonably request. Each of the
Parent and the Seller agrees to hold any records so provided in confidence and
to use such records only for the purposes described above. The Buyer agrees
that it will not within five (5) years after the Closing Date destroy any
material business records of the Seller prepared prior to the Closing without
first notifying the Parent and affording it the opportunity to remove or copy
them, at the Parent's option. For purposes of the
24
preceding sentence, any notice from the Buyer delivered in accordance with
Section 14.3 hereof shall be deemed to be adequate notice if not responded to in
writing by the Parent within thirty (30) days.
SECTION 14.15. ATTORNEYS' FEES. In the event that any dispute arising
hereunder is finally adjudicated by a court of a competent jurisdiction after
completion of all appeals or expiration of the period for filing the same, the
party that is awarded the greater amount of damages or that obtains equitable
relief restraining or enjoining violation of this Agreement shall be entitled to
recover from the other party reasonable attorneys' fees and costs incurred in
connection with such adjudication and any appeals relating thereto.
SECTION 15. CERTAIN DEFINITIONS. As used herein the following terms not
otherwise defined have the following respective meanings:
"1995 ASSET PURCHASE AGREEMENT": That certain Asset Purchase Agreement,
dated as of August 31, 1995, as amended and in effect on the date hereof, among
Hall, Inc. (formerly, Reel-Tech, Inc.), Norris Hall, Douglas Hall and the
Seller.
"9500 LICENSE AGREEMENT": As defined in Section 9.9 hereof.
"ACQUIRED ASSETS": As defined in Section 1.1(a) hereof.
"ASSUMED EMPLOYEES": As defined in Section 8.3 hereof.
"ASSUMED OBLIGATIONS": As defined in Section 2 hereof.
"BALANCE SHEET": As defined in Section 5.7 hereof.
"BUSINESS": As defined in the preamble.
"BUYER": As defined in the preamble.
"BUYER COMMON STOCK": As defined in Section 6.7 hereof.
"BUYER NON-COMPETITION AGREEMENT": As defined in Section 10.9 hereof.
"BUYER'S PROPOSED CALCULATIONS": As defined in Section 3.2(d) hereof.
"CLAIM": As defined in Section 12.3(a) hereof.
"CLOSING": As defined in Section 4.1 hereof.
"CLOSING DATe": As defined in Section 4.1 hereof.
"CODE": As defined in Section 5.18(a) hereof.
"CONTRACT": Any contract, agreement, mortgage, lease, bond, promissory
note, debenture, guaranty, indenture, pledge, power of attorney, proxy, trust,
franchise, option, warrant, instrument, oral or written understanding that is
legally enforceable, or other binding obligation.
"COYOTE LICENSE AGREEMENT": As defined in Section 9.9 hereof.
"EMPLOYEE AGREEMENTS": As defined in Section 1.1(a)(v) hereof.
"ENCUMBRANCES": Any lien, mortgage, security interest, pledge, charge,
lease, beneficial or equitable interest or right, hypothecation, collateral
assignment, conditional sales agreement, title retention agreement, easement,
material defect in title, restriction on transfer or other encumbrance.
25
"ENVIRONMENTAL LAWS": As defined in Section 5.12(b) hereof.
"EQUIPMENT": As defined in Section 1.1(a)(i) hereof.
"ERISA": As defined in Section 5.18(a) hereof.
"ERISA PLAN": As defined in Section 5.18(a) hereof.
"ESCROW AGENT": As defined in Section 3.1 hereof.
"ESCROW AGREEMENT": As defined in Section 3.1 hereof.
"ESCROWED FUNDS": As defined in Section 3.1 hereof.
"ESTIMATED TRUE-UP AMOUNT": As defined in Section 3.2(b) hereof.
"EXCLUDED ASSETS": As defined in Section 1.2 hereof.
"EXCLUDED LIABILITIES": As defined in Section 2 hereof.
"FINAL CLOSING STATEMENT": As defined in Section 3.2(c) hereof.
"FINANCIALS": As defined in Section 5.7 hereof.
"FINANCIAL STATEMENTS": As defined in Section 5.7 hereof.
"GAAP": As defined in Section 3.2(a) hereof.
"GOVERNMENT AUTHORITY": The United States of America or any state,
district, territory, or possession thereof, any local government within the
United States of America or any of its territories and possessions, any foreign
government having appropriate jurisdiction or any province, state, territory,
possession or other political subdivision thereof, or any court, tribunal,
administrative or regulatory agency, or taxing or revenue authority of any of
the foregoing.
"GOVERNMENT MANDATE": Any statute, law, rule, regulation, code, or
ordinance duly adopted by any Government Authority, any treaty or compact
between two (2) or more Government Authorities, and any judgment, order, decree,
ruling, finding, determination, or injunction of any Government Authority.
"HAZARDOUS MATERIALS": As defined in Section 5.12(b) hereof.
"INDEMNIFIED PARTY": As defined in Section 12.3(a) hereof.
"INDEMNIFYING PARTY": As defined in Section 12.3(a) hereof.
"INTANGIBLES": As defined in Section 1.1(a)(viii) hereof.
"INTERIM FINANCIALS": As defined in Section 5.7 hereof.
"INTERIM PAYMENT": As defined in Section 3.2(e) hereof.
"INVENTORIES": As defined in Section 1.1(a)(iv) hereof.
"LICENSE AGREEMENTS": As defined in Section 9.9 hereof.
"LOSSES": As defined in Section 12.1 hereof.
26
"NONDISCLOSURE AGREEMENT": As defined in Section 11 hereof.
"NON-ERISA PLAN": As defined in Section 5.18(a) hereof.
"OTHER CONTRACTS": As defined in Section 1.1(a)(vi) hereof.
"PARENT": As defined in the preamble.
"PARENT'S PROPOSED CALCULATIONS": As defined in Section 3.2(d) hereof.
"PERMITS": As defined in Section 1.1(a)(vii) hereof.
"PERMITTED ENCUMBRANCES": As defined in Section 4.2(a) hereof.
"PERSONAL PROPERTY LEASES": As defined in Section 1.1(a)(ii) hereof.
"PURCHASE PRICE": As defined in Section 3.1 hereof.
"REAL PROPERTY": As defined in Section 5.12(a) hereof.
"REAL PROPERTY LEASES": As defined in Section 1.1(a)(iii) hereof.
"REEL-TECH SINGAPORE": As defined in Section 1.1(b) hereof.
"REGISTRATION RIGHTS AGREEMENT": As defined in Section 9.13 hereof.
"RELATED ENTITY": As defined in Section 5.18(a) hereof.
"REMAINING DISPUTED ITEMS": As defined in Section 3.2(d) hereof.
"REQUIRED CONSENTS": As defined in Section 5.11 hereof.
"SAVINGS PLAN": As defined in Section 8.3 hereof.
"SELLER": As defined in the preamble.
"SELLING GROUP NON-COMPETITION AGREEMENT": As defined in Section 9.8
hereof.
"SELLING GROUP": As defined in the preamble.
"SHARES": As defined in Section 3.1 hereof.
"SINGAPORE ASSETS": As defined in Section 1.1(b) hereof.
"SINGAPORE BILL OF SALE": As defined in Section 4.2(i) hereof.
"SINGAPORE EMPLOYMENT AGREEMENTS": As defined in Section 1.1(b)(v) hereof.
"SINGAPORE EQUIPMENT": As defined in Section 1.1(b)(i) hereof.
"SINGAPORE INTANGIBLES": As defined in Section 1.1(b)(viii) hereof.
"SINGAPORE INVENTORIES": As defined in Section 1.1(b)(iv) hereof.
"SINGAPORE OTHER CONTRACTS": As defined in Section 1.1(b)(vi) hereof.
27
"SINGAPORE PERMITS": As defined in Section 1.1(b)(vii) hereof.
"SINGAPORE PERSONAL PROPERTY LEASES": As defined in Section 1.1(b)(ii)
hereof.
"SINGAPORE REAL PROPERTY LEASE": As defined in Section 1.1(b)(iii) hereof.
"THIRD ACCOUNTANTS": As defined in Section 3.2(c) hereof.
"THIRD PARTY CLAIM": As defined in Section 12.3(b) hereof.
"TRANSACTION DOCUMENTS": As defined in Section 5.1 hereof.
"TRUE-UP AMOUNT": As defined in Section 3.2(a) hereof.
28
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as a sealed
instrument as of the date and year first above written.
GENERAL SCANNING INC.
By:/s/ Victor Woolley
--------------------------
Title: Vice President and
Chief Financial Officer
REEL-TECH, INC.
By:/s/ William C. Erxleben
--------------------------
Title: Chairperson of the Board
DATA I/O CORPORATION
By:/s/ William C. Erxleben
--------------------------
Title: President and Chief
Executive Officer
LIST OF OMITTED SCHEDULES AND OTHER ATTACHMENTS FROM EXHIBIT 2.1
The following schedules and other attachments have been omitted from
Exhibit 2.1 pursuant to item 601(b)(2) of Regulation S-K. Data I/O Corporation
agrees to furnish supplementally to the Securities and Exchange Commission upon
its request a copy of any of the following omitted items.
EXHIBITS:
EXHIBIT A - Escrow agreement dated November 26, 1997, outlining the terms of
escrow between General Scanning Inc., Reel-Tech, Inc., and Data I/O Corporation.
EXHIBIT B - Reel-Tech, Inc., pro forma balance sheet dated May 22, 1997.
EXHIBIT C - Opinion of seller's counsel letter dated November 28, 1997.
EXHIBIT D - Seller's non-competition agreement between General Scanning Inc.,
Reel-Tech, Inc., and Data I/O Corporation.
EXHIBIT E-1 - 9500 Cross License Agreement dated November 28, 1997, between Data
I/O Corporation, Reel-Tech., Inc., and General Scanning.
EXHIBIT E-2 - Coyote cross license and product development agreement dated
November 28, 1997, between Data I/O Corporation, Reel-Tech., Inc., and General
Scanning.
EXHIBIT F- Opinion of buyer's counsel letter dated November 28, 1997.
EXHIBIT G - Buyer's non-competition agreement between Reel-Tech, Inc., Data I/O
Corporation and General Scanning Inc.
EXHIBIT H - Registration Rights Agreement by and between General Scanning Inc.,
and Data I/O Corporation.
SCHEDULES:
SCHEDULE 1.1(a)(i) - List of Reel-Tech, Inc., Indiana tangible sold by Data I/O
Corporation to General Scanning.
SCHEDULE 1.1 (a)(ii) - List of personal property leases for Reel-Tech, Inc.,
Indiana.
SCHEDULE 1.1(a)(iii) - Copy of Real Property Leases between Dugan Realty, L.L.C.
and Reel-Tech, Inc., first lease amendment between Dugan Realty, L.L.C. and
Reel-Tech, Inc., and between SBP General Partnership, Hallwood Commercial Real
Estate, Inc., and Reel-Tech, Inc.
SCHEDULE 1.1(a)(v) - Copies of Reel-Tech., Inc., Indiana employee agreements.
SCHEDULE 1.1(a)(vi)- Copies of customer purchase orders, supply agreements and
outstanding individual supply purchase orders greater than $25,000 as of October
20, 1997. List of Purchasing and Licensing agreements, sales representative
agreements, distributorship/sales representative agreements, confidentiality
agreements, and Asset Purchase Agreement and amendments between Reel-Tech, Inc.,
a Washington Corporation, and Reel-Tech, Inc., an Indiana Corporation.
SCHEDULE 1.1(a)(viii) - List of Reel-Tech, Inc., Indiana intangible assets sold
by Data I/O Corporation to General Scanning. List includes patents, patent
applications, patent registrations, applications for
registration of patents and patent assignments of Seller. Also included is a
list of copyrights, trademarks, trade names, service marks or other intellectual
property rights which are used in the conduct of the SCE business.
SCHEDULE 1.1(b)(i) - List of Reel-Tech, Inc., Singapore tangible assets sold by
Data I/O Corporation to General Scanning.
SCHEDULE 1.1(b)(ii) - List of personal property leases for Reel-Tech, Inc.,
Singapore.
SCHEDULE 1.1(b)(iii) - Copy of Reel-Tech., Inc., Singapore's Tenancy Agreement
dated October 4, 1996, September 12, 1997 and August 21, 1997.
SCHEDULE 1.1(b)(v) - Copies of Reel-Tech., Inc., Singapore employee agreements.
SCHEDULE 1.1(b)(vi)- List of Reel-Tech., Inc., Singapore Other Contracts
SCHEDULE 1.1(b)(viii) - List of Reel-Tech, Inc., Singapore intangible assets
sold by Data I/O Corporation to General Scanning.
SCHEDULE 2(c) - List of Data I/O GmbH customer prospects for Reel-Tech products.
SCHEDULE 3.1 - General Scanning schedule of purchase price allocation.
SCHEDULE 4.2(a) - Reel-Tech, Inc. schedule of permitted encumbrances.
SCHEDULE 5.6 - List of Reel-Tech, Inc. consents of Government Authorities
(Seller).
SCHEDULE 5.7 - Reel-Tech, Inc. financial statement schedules.
SCHEDULE 5.8 - List of Reel-Tech, Inc. changes.
SCHEDULE 5.9 - List of Reel-Tech, Inc. litigation.
SCHEDULE 5.10 - List of Reel-Tech, Inc. compliance with law and contracts.
SCHEDULE 5.11 - List of Reel-Tech, Inc. contracts requiring consent from
Data I/O.
SCHEDULE 5.12 - List of Reel-Tech, Inc. real property lease issues.
SCHEDULE 5.18 - List of Reel-Tech, Inc. employee benefit plans.
SCHEDULE 5.19 - List of Reel-Tech, Inc. labor relations.
SCHEDULE 5.20 - List of Reel-Tech, Inc. intellectual property.
SCHEDULE 5.21 - List of Reel-Tech, Inc. suppliers and customers.
SCHEDULE 5.23 - List of Reel-Tech, Inc. tax matters.
SCHEDULE 7.3 - List of Reel-Tech, Inc. distributions.