Exhibit 2.1
ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement (this
“ Agreement ”) is made and entered into
as of this 15th day of October, 2004, by and among Spectrum
Control, Inc. , a Pennsylvania corporation (“
Buyer ”) and REMEC, Inc. , a California
corporation (“ Seller ”).
RECITALS
A. Seller carries on the business of
manufacturing and selling radio frequency and microwave components
through its unincorporated components business unit (the “
Business ”) and desires to sell, on a going
concern basis, certain of the assets and liabilities of the
Business.
B. Buyer desires to purchase such
assets and liabilities from Seller on the terms and conditions set
forth in this Agreement.
C. Seller and Buyer further desire
to contemporaneously enter into at the Closing (i) a Manufacturing
Agreement whereby Seller shall manufacture certain components and
Buyer shall purchase such products pursuant to the terms of such
agreement, (ii) a Sublease Agreement whereby Buyer will sublease
certain premises at Buyer’s facilities in Milpitas,
California pursuant to the terms of such agreement, (iii) a License
Agreement whereby Buyer would license to Seller certain
intellectual property comprised within the Assets and (iv) an
Information Technology Services Agreement whereby Seller provides
certain short-term information technology services to
Buyer.
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants set forth below, and subject
to the terms and conditions set forth herein, the parties agree as
follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the
following terms shall have the meanings indicated below:
“ 2004 Orders
” shall have the meaning set forth in Section
2.4(b)(i) .
“ 2005 Orders
” shall have the meaning set forth in Section
2.4(b)(ii) .
“ Accrued
Benefits ” shall have the meaning set forth in
Section 2.3(a)(ii) .
“ Affiliate
” shall mean, in respect of any specified Person, any other
Person that, directly or indirectly, controls, is controlled by or
is under common control with, such specified Person.
“ Affiliated
Parties ” shall have the meaning set forth in
Section 8.2 .
“ Agreement
” shall have the meaning set forth in the
Preamble.
“ Ancillary
Agreements ” shall have the meaning set forth in
Section 2.7(a)(vi) .
“ Assets ”
shall have the meaning set forth in Section 2.1 .
“ Assignment and
Assumption Agreement ” shall have the meaning set
forth in Section 2.7(a)(iii) .
“ Assumed
Contracts ” shall have the meaning set forth in
Section 2.1(e) .
“ Assumed
Liabilities ” shall have the meaning set forth in
Section 2.3(a) .
“ Assumed
Payables ” shall mean the obligations and liabilities
of Seller relating exclusively to the Business under purchase
orders or other Contracts as of the Closing Date that are not past
due more than 60 days beyond the payment terms due date (but, for
clarification, not any obligations, costs or expenses of Seller
relating to the transactions provided for in this Agreement) as
well as Seller’s obligations and liabilities for ad valorem
real and tangible personal property taxes that have accrued or are
accruing but are not past due more than 60 days beyond payment
terms due date (the aggregate amount the tax bill for such real
estate taxes for 2003 was $32,411.84 and for personal property
taxes for 2003 was $47,047).
“ Audited
Financials ” shall have the meaning set forth in
Section 3.7 .
“ Balance Sheet
” shall have the meaning set forth in Section 4.3
.
“ Balance Sheet
Date ” shall mean June 30, 2004.
“ Benefit
Arrangement ” shall have the meaning set forth on
Section 4.14(a) .
“Benefit
Plan” shall
have the meanings set forth in Section 4.14(a) .
“ Bill of Sale
” shall have the meaning set forth in Section
2.7(a)(ii) .
“ Bulk Sales
Laws ” shall have the meaning set forth in Section
2.9 .
“ Business
” shall have the meaning set forth in the Recitals;
provided , however , that for purposes of
clarification, the term “ Business ”
shall not include Seller’s ODU/TRX business unit,
Seller’s Power Amplifier business unit, nor the current
activities of Seller’s components business unit relating to
the manufacture of products exclusively for Seller’s ODU/TRX
business unit or its Power Amplifier business unit.
“ Business Material
Adverse Effect ” shall mean any change or effect that
is, individually or in the aggregate, materially adverse to the
business, operations, assets, condition (financial or otherwise) or
results of operations of the Business other than any
change or effect (a) relating to the economy of the United States
of America in general, (b) relating to the industry in which the
Business operates in general and not specifically relating to the
Business, (c) arising out of the announcement or pendency of the
transactions contemplated by this Agreement, (d) arising out of
compliance by Seller with the terms of this Agreement, (e) arising
out of any action taken or announced by Buyer or taken or announced
by Seller at the request or direction of Buyer, or any inaction or
failure to act by Seller at the request or direction of Buyer, (f)
arising out of any failure of the Business to achieve projected
revenue or operating results ( provided , however ,
that in the event a separate event that independently qualifies as
a Business Material Adverse Effect caused such failure, such
independent event shall remain a Business Material Adverse Effect),
(g) resulting from any outbreak or escalation of hostilities or the
occurrence of any terrorist acts, in each case involving or in the
United States of America or any other country in which the Business
operates or has facilities (except as directed specifically at the
Business) or (h) relating to any adverse change or effect arising
from any change in GAAP.
“ Buyer ”
shall have the meaning set forth in the Preamble.
“ Buyer
Indemnitees ” shall have the meaning set forth in
Section 8.2 .
“ Buyer Losses
” shall have the meaning set forth in Section 8.2
.
“ Buyer Material Adverse
Effect ” shall mean any change or effect that is,
individually or in the aggregate, materially adverse to the
business, operations, assets, condition (financial or otherwise) or
results of operations of Buyer other than any change
or effect (a) relating to the economy of the United States of
America in general, (b) relating to the industry in which Buyer
operates in general and not specifically relating to Buyer, (c)
arising out of the announcement or pendency of the transactions
contemplated by this Agreement, (d) arising out of compliance by
Buyer with the terms of this Agreement, (e) arising out of any
action taken or announced by Seller or taken or announced by Buyer
at the request or direction of Seller, or any inaction or failure
to act by Buyer at the request or direction of Seller, (f)
resulting from any outbreak or escalation of hostilities or the
occurrence of any terrorist acts, in each case involving or in the
United States of America or any other country in which the Business
operates or has facilities (except as directed specifically at the
Business) or (g) relating to any adverse change or effect arising
from any change in GAAP.
“ Buyer’s Employee
Plans ” shall have the meaning set forth in
Section 3.3(i) .
“ Buyer’s Pension
Plans ” shall have the meaning set forth in
Section 3.3(i) .
“ CERCLA ”
shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
“ Closing
” shall have the meaning set forth in Section 2.5
.
“ Closing Date
” shall have the meaning set forth in Section 2.5
.
“ Closing
Payment ” shall have the meaning set forth in
Section 2.4(a) .
“ COBRA
” shall mean the requirements of Part 6 of Subtitle B
of Title I of ERISA, Section 4980B of the Code, and all applicable
regulations thereunder.
“ Code ”
shall mean the Internal Revenue Code of 1986, as
amended.
“ Confidential
Information ” shall have the meaning set forth in
Section 10.2 .
“ Contracts
” shall mean any agreement, contract, instrument, obligation,
promise or undertaking (whether written or oral) that is legally
binding and to which Seller is a party or is bound and that relates
solely to the Business.
“ Controlling
Party ” shall have the meaning set forth in
Section 8.4(b) .
“ Defense & Space
Supply Agreement ” shall mean that certain Agreement
for the Supply of Components between REMEC, Inc. and REMEC Space
& Defense, Inc. dated as of July 1, 2004.
“ Disclosure
Schedules ” shall mean the schedules containing lists
required by, and disclosing exceptions or qualifications to,
Seller’s representations and warranties, which are being
delivered by Seller to Buyer concurrently with the execution and
delivery of this Agreement.
“ Dispute
” shall have the meaning set forth in Section 11.5
.
“ Dispute Notice
” shall have the meaning set forth in Section 11.5
.
“ Effective Time
” shall be 11:59 pm Pacific time on the Closing
Date.
“ Employee
” shall mean each employee of Seller employed for the
Business.
“ Encumbrance
” means any mortgage, deed of trust, lien, pledge, easement,
hypothecation, assignment or security interest.
“ Endorsements
” shall have the meaning set forth in Section 6.7
.
“ Environmental
Condition ” shall mean the existence or threat of any
release into the environment of any Hazardous Substance at
concentrations requiring investigation, removal and/or remediation
under any Environmental Law, or exposure to Hazardous Substances at
concentrations above levels permissible under applicable
Environmental Laws. As used in this Agreement, the terms “
release , ” “
removal ,” “ remediation,
” “ remedial action” and “
response action ” include the types of
activities covered by CERCLA.
“Environmental
Claim” shall
mean any accusation in writing, allegation in writing, notice of
violation, claim in writing, suit, action, demand in writing or
written order by any Person or Governmental Entity directed to or
against Buyer or any Buyer Indemnitee for any damage (including,
but not limited to, personal injury, tangible or intangible
property damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, environmental remediation
costs, nuisance, pollution, contamination or other adverse effects
on the environment or for fines, penalties or restrictions)
resulting from (i) an Environmental Condition at, in, by or from
the Real Property and/or any improvements thereon that existed
prior to the Closing Date and during Seller’s operation of
the Business, (ii) the use, handling, transportation, storage,
treatment or disposal of any Hazardous Substance by Seller in the
operation of the Business at any location or in connection with the
operation of the Real Property and/or any improvement thereon prior
to the Closing Date, or (iii) the violation, or alleged violation,
of any Environmental Laws by Seller relating to any operations of
the Business at or in connection with the Real Property and/or any
improvement thereon prior to the Closing Date.
“ Environmental
Laws ” shall mean all Laws concerning (a) public
health and safety relating to toxic or Hazardous Substances or (b)
pollution or protection of the environment or natural resources.
Without limiting the generality of the foregoing, Environmental
Laws shall include (a) CERCLA, the Toxic Substances Control Act, as
amended, the Hazardous Materials Transportation Act, as amended,
the Resource Conservation and Recovery Act, as amended, the Clean
Water Act, as amended, the Safe Drinking Water Act, as amended, the
Clean Air Act, as amended, the Atomic Energy Act of 1954, as
amended, the Occupational Safety and Health Act, as amended, and
all analogous laws enacted, promulgated or lawfully issued by the
United States of America or the state of Florida the United States
of America.
“ ERISA ”
shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time, and the rules and
regulations issued pursuant to that Act.
“ERISA
Affiliate ”
shall mean any entity under common control or affiliated with
Seller within the meaning of ERISA Section 4001 or Code Sections
414(b), (c), (m) or (o).
“ Excluded
Assets ” shall have the meaning set forth in
Section 2.2 .
“ Facility Security
Clearance ” shall mean the RCI U.S. Government
Facility Security Clearance.
“ Financials
” shall have the meaning set forth in Section 4.3
.
“ GAAP ”
shall mean accounting principles generally accepted in the United
States of America.
“ Governing
Documents ” shall mean (a) the articles or
certificate of incorporation and the bylaws of a corporation; (b)
any charter or similar document adopted or filed in connection with
the creation, formation or organization of any other entity; and
(c) any amendment or supplement to any of the foregoing.
“ Governmental
Authorization ” shall mean any consent, license,
registration or permit issued, granted, given or otherwise made
available by or under the authority of any Governmental Entity or
pursuant to any Legal Requirement.
“ Governmental
Entity ” shall mean any government or any agency,
bureau, board, commission, court, department, official, political
subdivision, tribunal or other instrumentality of any government,
whether federal, state or local, domestic or foreign.
“ Hazardous
Substance ” shall mean any substance that is defined
or listed in, or otherwise classified pursuant to, any applicable
Environmental Laws as “hazardous substances,”
“hazardous materials,” “hazardous wastes”
or “toxic substances.”
“ Indemnified
Party ” shall have the meaning set forth in
Section 8.4(a) .
“ Indemnifying
Party ” shall have the meaning set forth in
Section 8.4(a) .
“Inspection
Period ” shall mean October 6, 2004.
“ Intellectual
Property ” shall have the meaning set forth in
Section 4.12(a) .
“ IRS ”
shall mean the Internal Revenue Service.
“ Knowledge
” - an individual will be deemed to have “
Knowledge ” of a particular fact or other
matter if such individual is actually aware of such fact or other
matter. “ Knowledge ” of Seller means the
Knowledge of Mr. William Cole, currently employed by Buyer as Vice
President, Components.
“ Law ” or
“ Laws ” shall mean any constitutional
provision, statute, ordinance or other law, rule or regulation of
any Governmental Entity.
“ Legal
Requirements ” shall mean any federal, provincial,
state, local, municipal, foreign, international, multinational or
other administrative order, constitution, law, ordinance, principle
of common law, regulation, statute or treaty applicable to the
Business.
“ Liability
” shall mean with respect to any Person, any liability or
obligation of such Person of any kind, character or description,
whether known or unknown, absolute or contingent, accrued or
unaccrued, disputed or undisputed, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or
otherwise, and whether or not the same is required to be accrued on
the financial statements of such Person.
“ Licenses
” shall have the meaning set forth in Section 4.12(b)
.
“ Logos ”
shall have the meaning set forth in Section 2.2(d)
.
“ Marked
Materials ” shall have the meaning set forth in
Section 3.4(b) .
“ Material
Contracts ” shall have the meaning set forth in
Section 4.15(a) .
“ Names ”
shall have the meaning set forth in Section 2.2(d)
.
“ Novation
Agreement ” shall have the meaning set forth in
Section 2.7(a)(iv) .
“ Novation
Contracts ” shall mean each of (i) the Lockheed
Martin Corp. RF Devices Project RFP# DC – RF – 03-05
Memorandum of Understanding (with Remec Magnum), (ii) the Lockheed
Martin Corp. RF Devices Project RFP# DC – RF – 03-05
Memorandum of Understanding (with Q-BIT Corp.), (iii) the BAE
Systems North America Long Term Supply Agreement, (iv) the Rockwell
Collins Enterprise Sourcing Agreement No. CW19B05 and (v) the
Defense & Space Supply Agreement.
“ Original
Survey ” shall have the meaning set forth in
Section 6.7(b) .
“ Pension Plans
” shall have the meaning set forth in Section 4.14(a)
.
“ Permitted
Encumbrance ” means (i) any Encumbrance for Taxes
either not yet due and payable or being contested; (ii)
mechanic’s, materialmen’s, workmen’s,
warehousemen’s and other similar Encumbrances incurred in the
ordinary course of business with respect to obligations which are
not past due or which are being contested ( provided that
Seller shall pay all such obligations when due); (iii) any
Permitted Title Encumbrance; (iv) Encumbrances arising pursuant to
Assumed Contracts and (v) Encumbrances set forth at Schedule
4.5 of the Disclosure Schedules.
“Permitted Title
Encumbrance” shall have the meaning set forth in Section
6.7 .
“ Person ”
shall mean any individual, corporation, partnership, limited
liability company, joint venture or other entity.
“Prepaids
” shall mean all prepaid Liabilities of the
Business and all unused deposits of the Business.
“ Purchase Price
” shall have the meaning set forth in Section 2.4(a)
.
“ Purchased Intellectual
Property ” shall have the meaning set forth in
Section 2.1(i) .
“ Real Property
” shall mean that certain real property, and all improvements
thereto, located at 2144 Franklin Drive, Palm Bay,
Florida.
“ Remedial Work
” shall have the meaning set forth in Section 8.4(b)
.
“ Restricted
Activity ” shall have the meaning set forth in
Section 10.1(a) .
“ Retained
Liabilities ” shall have the meaning set forth in
Section 2.3(b) .
“ RCI ”
means REMEC Components, Inc., a California corporation.
“ Securities Act
” shall mean the Securities Act of 1933, as the same may be
amended from time to time, and the rules and regulations issued
pursuant to that Act.
“ Seller ”
shall have the meaning set forth in the Preamble.
“ Seller
Indemnitees ” shall have the meaning set forth in
Section 8.3 .
“Seller
Losses ” shall have the meaning set forth in Section
8.3 .
“ Subsequent
Survey ” shall have the meaning set forth in
Section 6.7(b) .
“ Target ”
shall have the meaning set forth in Section 2.4(b)(i)
.
“ Tax ” or
“ Taxes ” shall mean any and all taxes
imposed or required to be collected by any federal, state or local
taxing authority under any statute or regulation, including all
income, gross receipts, sales, use, personal property, occupancy,
business occupation, mercantile, ad valorem, transfer, license,
withholding, payroll, employment, excise, real estate,
environmental, capital stock, franchise, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including
any interest, penalties and other additions thereto.
“ Tax Benefit
” shall have the meaning set forth in Section 8.5(c)
.
“ Tax Returns
” shall mean any and all tax returns or reports required to
be filed with the applicable federal, state or local tax authority
in connection with payment of Taxes.
“
Title Commitment
” shall have the meaning set forth in Section
6.7(a) .
“
Title Company
” shall have the meaning set forth in Section
6.7(a) .
“
Title Policy
” shall have the meaning set forth in Section
6.7(a) .
“ Transferred
Employees ” shall have the meaning set forth in
Section 3.3(b) .
“Warranty
Obligations” shall have the meaning set forth in Section
3.2 .
“ Welfare Plans
” shall have the meaning set forth in Section 4.14(a)
.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
AND ASSUMED LIABILITIES
2.1 Assets to be Sold. Upon the terms
and subject to the conditions set forth in this Agreement, at the
Closing and effective as of the Effective Time, Seller shall sell
and deliver to Buyer and Buyer shall acquire from Seller, free and
clear of all Encumbrances other than Permitted Encumbrances, all of
Seller’s right, title and interest in and to the
following:
(a) the equipment, machinery, masks,
products under research and development, demonstration equipment,
parts, repair materials, packaging materials and other accessories
related thereto listed on Exhibit 2.1(a) ;
(b) the inventory of raw materials,
work-in-progress and finished goods listed or provided for on
Exhibit 2.1(b) ;
(c) the furniture and other tangible
personal property listed on Exhibit 2.1(c) ;
(d) all accounts receivable arising
pursuant to the Assumed Contracts;
(e) Seller’s rights and,
subject to the Retained Liabilities, obligations under the
Contracts listed or provided for on Exhibit 2.1(e) (the
“ Assumed Contracts ”);
(f) to the extent transferable, the
Governmental Authorizations held by Seller for the benefit of the
Business and listed on Exhibit 2.1(f) ;
(g) the Real Property and fixtures
listed on Exhibit 2.1(g) ;
(h) all records related exclusively
to the Assets or Assumed Liabilities, including research and
development reports, production reports, equipment logs, operating
guides and manuals, advertising materials, promotional materials,
correspondence and other similar documents and records and, subject
to Legal Requirements, copies of all personnel records for each
Transferred Employee;
(i) all Intellectual Property rights
in the materials referred to in Section 2.1(h) , and all
customer and referral information, trade secrets and designs
related exclusively to the Business, including but not limited to
any and all rights to the trademarks and trade names
“Q-Bit”, “Magnum” and “Radian”
except to the extent such may be considered an Excluded Asset (the
“ Purchased Intellectual Property”
);
(j) the goodwill associated with the
Business including the goodwill associated with the trademarks
included in the Purchased Intellectual Property but excluding any
goodwill associated with any Excluded Asset; and
(k) the Prepaids.
All of the property and assets to be transferred
to Buyer pursuant to this Section 2.1 are herein referred to
collectively as the “ Assets
.”
2.2 Excluded Assets. Other than the
Assets, no other asset or property of Seller shall be transferred
to Buyer pursuant to this Agreement, including, without limitation,
the following assets (collectively, the “ Excluded
Asset s”):
(a) all Contracts other than the
Assumed Contracts;
(b) all accounts receivable arising
pursuant to Contracts other than Assumed Contracts;
(c) all personnel records and other
records that Seller is required by law to retain in its possession
(provided that to the extent consistent with law copies relating to
the Transferred Employees shall be provided to Buyer);
(d) all of the Intellectual Property
and other intangible rights and property of Seller other than
Intellectual Property used exclusively in the Business, including
without limitation, all names, marks, trade names, trademarks,
service names and service marks (collectively “
Names ”) incorporating “REMEC” and
all symbols or logos (collectively, “ Logos
”) incorporating REMEC and all trade secrets and know-how
used by Seller in the design and manufacture of wireless
telecommunication products; and
(e) all assets of any other business
unit of Seller (other than the Business), including but not limited
to (i) the machinery, masks and equipment used to manufacture in
Costa Rica, the Philippines and Palm Bay, Florida products for
Seller’s
Power Amplifier business unit, (ii) the masks
used to manufacture products on behalf of Seller’s ODU/TRX
business unit and (iii) all books and records, designs, trade
secrets, know how and other Intellectual Property or intangible
assets related exclusively to the products manufactured as of the
Closing Date by the Business exclusively for any other business
unit of Seller.
2.3 Liabilities.
(a) Assumed Liabilities . On
the Closing Date, and effective as of the Effective Time, Buyer
will assume and agree to discharge only the following Liabilities
of the Business as of the Closing Date, whether or not disclosed in
the Financials:
(i) any Liability arising under any
of the Assumed Contracts, other than (A) Liabilities arising from
performance of the Assumed Contracts prior to the Closing Date
(including but not limited to Liabilities relating to products
delivered prior to the Closing Date) or (B) any Liability for
overpayments or prepayments by customers under any such Assumed
Contract; but including the Liabilities provided for Section
2.3(a)(iv) and Section 3.2 as well as any credits
provided in the ordinary course of business of the Business for
RMA’s (returned merchandize authorizations);
(ii) Liabilities owed by Seller to
the Transferred Employees for accrued vacation, accrued sick leave
and accrued severance benefits attributable to all periods prior to
the Closing Date (“ Accrued Benefits ”),
as well as the Liabilities referenced in Section 3.3(f) .
For clarification, (A) Buyer is not assuming any obligation to pay
out any severance benefits included in the Accrued Benefits to
Transferred Employees that arises immediately upon termination of
their employment with Seller; (B) Buyer shall grant vacation and
sick time benefits included in the Accrued Benefit to each
Transferred Employee or pay each Transferred Employee the value
thereof upon such Transferred Employee’s termination of
employment with Buyer; and (C) Buyer shall pay accrued severance
included in the Accrued Benefits to a Transferred Employee only
upon the termination of such Transferred Employee with
Buyer;
(iii) the Assumed
Payables;
(iv) the Warranty Obligations;
and
(v) any Liability for product or
strict liability claims, general liability claims or other
negligent acts or omissions relating to products of the Business
sold on or after the Closing Date.
All of the liabilities and obligations to be
transferred to and assumed by Buyer pursuant to this Section
2.3(a) are herein referred to collectively as the “
Assumed Liabilities .”
(b) Retained Liabilities . It
is expressly understood and agreed that other than the Assumed
Liabilities, Buyer shall not assume, nor shall it be liable for,
any
Liability or Contract of Seller (or any
Affiliate thereof of any kind whatsoever), all of which shall be
retained by Seller and are hereafter referred to as the “
Retained Liabilities ” whether or not disclosed
in the Financials. The Retained Liabilities shall remain the sole
responsibility of Seller. Without limiting the foregoing, “
Retained Liabilities ” shall
include:
(i) any Liability under any Contract
other than an Assumed Contract;
(ii) any Liability owed to, or
accrued for the benefit of, the Employees attributable to all
periods prior to the Closing Date, other than as assumed by Buyer
pursuant to Section 2.3(a)(ii) , including but not limited
to (A) wages, salaries, employment Taxes and other statutory
withholding obligations, (B) any liability of Seller or any ERISA
Affiliate arising out of any Benefit Plan maintained, or
contributed to, by Seller or any ERISA Affiliate, (C) any Liability
resulting from failure to provide continuation coverage required by
COBRA, (D) any Liabilities arising out of any stay bonus, retention
or similar agreements between Seller and the Employees effective as
of or prior to the Effective Time and (E) workers compensation
obligations for any Employee or former Employee of the Business
arising prior to the Closing Date;
(iii) any Liability of Seller
relating to the Excluded Assets;
(iv) any Liability of Seller for any
indebtedness, whether for borrowed money or otherwise, to any bank,
bondholder, trade or non-trade creditor, customer, employee,
financial institution, Government Entity, trust company or other
Person, either directly or by reason of any guaranty (other than
the Assumed Liabilities);
(v) any Liabilities arising from the
non-compliance by Seller with any Legal Requirements applicable to
the Business prior to the Closing Date;
(vi) any Liability for product or
strict liability claims, general liability claims or any other
negligent acts or omissions of Seller, arising out of products sold
prior to the Closing Date; and
(vii) any Liability of Seller for
any Taxes other than any Taxes to be assumed or paid by Buyer
pursuant to Section 2.3(a)(iii) or 2.9 .
2.4 Purchase
Price.
(a) The aggregate purchase price for
the sale of the Assets and assumption of the Assumed Liabilities
(the “ Purchase Price ”) shall be
US$8,000,000 payable at Closing (the “ Closing
Payment ”) plus the payments, if any, provided for in
Section 2.4(b) .
(b) As partial consideration for the
Assets being sold by Seller to Buyer hereunder and in addition to
the Closing Payment, Buyer agrees that:
(i) if the aggregate gross sales
price for bona fide, accepted orders for products of the Business
during the fourth calendar quarter of 2004 (the “ 2004
Orders ”) exceeds $2,500,000 (the “
Target ”), Buyer shall pay to Seller an amount
equal to 50% of the amount by which such aggregate gross sales
price for 2004 Orders exceeds the Target; and
(ii) if the aggregate gross sales
price for bona fide accepted orders taken by Buyer for products of
the Business during the first calendar quarter of 2005 (the “
2005 Orders ”) exceeds the Target then Buyer
shall pay to Seller an amount equal to 50% of the amount by which
such aggregate gross sales price for 2005 Orders exceeds the
Target.
Buyer shall pay any amount owing
pursuant to this Section 2.4(b) to Seller within thirty (30)
days after the end of each such calendar quarter in which the
Target is met. Such payment shall be accompanied with a statement,
with supporting documents, showing the calculation of 2004 Orders
and 2005 Orders, as applicable. The “ aggregate gross
sales price ” for products hereunder shall be the
amount which would be booked on the records of the Company as
“net revenue” in accordance with GAAP consistently
applied as of the date of this Agreement.
Seller shall be given reasonable
access upon reasonable notice to all relevant books and records of
Buyer in order to review orders, sales and the calculation of
amounts due pursuant to this Section 2.4(b) as well as any
other reasonably related reason.
2.5 Closing.
The purchase and sale (the “
Closing ”) provided for in this Agreement will
take place at the offices of Heller Ehrman White & McAuliffe
LLP, 333 Bush Street, San Francisco, California on October 15,
2004, or such later date that the last to be satisfied of the
conditions specified in Sections 7.1 and 7.2 shall
have been satisfied or waived, or at such other date, time or place
as the parties may agree. Subject to the provisions of ARTICLE
9 failure to consummate the purchase and sale provided for in
this Agreement on the date and time and at the place determined
pursuant to this Section 2.5 will not result in the
termination of this Agreement and will not relieve any party of any
obligation under this Agreement. The date and time as of which the
Closing actually takes place is referred to as the “
Closing Date .”
2.6 Delivery of
Inventory. All
inventory included within the Assets and not located at the Real
Property or at Seller’s Milpitas, California facility shall
be held by Seller for Buyer’s account pursuant to the terms
of the manufacturing agreement to be entered into between Buyer and
Seller at Closing, or, at the option of Buyer and upon providing
written notice to Seller, will be delivered to Buyer EXW (Ex works
- INCOTERMS 2000) Seller’s location as reflected on
Exhibit 2.1(b) within 10 days of receipt of such
notice.
2.7 Closing Obligations.
(a) At the Closing, Seller will
deliver:
(i) a certificate executed by Seller
as required by Section 7.2(d) ;
(ii) a bill of sale for all of the
Assets substantially in the form of Exhibit 2.7(a)(ii) (the
“ Bill of Sale ”) duly executed by
Seller;
(iii) an assignment and assumption
agreement substantially in the form of Exhibit 2.7(a)(iii)
(the “ Assignment and Assumption Agreement
”) duly executed by Seller;
(iv) novation agreements
substantially in the form of Exhibit 2.7(a)(iv) (the “
Novation Agreements ”) with respect to each of
the Novation Contracts;
(v) Special Warranty Deed, FIRPTA
certification, Construction Lien Affidavit, Title Commitment and
other reasonably required documentation transferring the Real
Property to Buyer;
(vi) The following agreements duly
executed by Seller: a manufacturing agreement substantially the
form set forth in Exhibit 2.7(a)(vi)-A ; a Sublease in
substantially the form set forth in Exhibit 2.7(a)(vi)-B , a
License Agreement substantially in the form set forth in Exhibit
2.7(a)(vi)-C , an Information Technology Services Agreement
substantially in the form set forth in Exhibit 2.7(a)(vi) -
D and an Agreement Related to Baan License Agreement substantially
in the form set forth in Exhibit 2.7(a)(vi) - E
(collectively, the “ Ancillary Agreements
”) .
(vii) such other deeds, bills of
sale, assignments, certificates of title, documents and other
instruments of transfer and conveyance as may reasonably be
requested by Buyer, each in form and substance reasonably
satisfactory to Buyer and its legal counsel and duly executed and
delivered by Seller and such UCC termination statements, releases
and other documentation as Buyer may reasonably request to evidence
that any Encumbrances other than Permitted Encumbrances on the
Assets have been removed prior to Closing; and
(viii) updated Disclosure Schedules,
if necessary, delivered by Seller, in such form as is acceptable to
Buyer.
(b) At the Closing, Buyer will
deliver:
(i) the Closing Payment, in
immediately available funds to such account as may be specified by
Seller in writing prior to the Closing;
(ii) a certificate executed by Buyer
as required by Section 7.1(d) ;
(iii) the Bill of Sale duly executed
by Buyer;
(iv) the Assignment and Assumption
Agreement duly executed by Buyer;
(v) the Ancillary Agreements duly
executed by Buyer; and
(vi) Novation Agreements with
respect to the Novation Contracts, each duly executed by
Buyer.
2.8 Allocations
. Exhibit 2.8 sets forth the allocation of
the Purchase Price among the Assets and Assumed Liabilities (by
category). After the Closing and subject to any adjustment as
provided for in Section 8.5(c) , the parties shall make
consistent use of the allocation specified in Exhibit 2.8
for all Tax purposes and in all filings, declarations and reports
with the IRS in respect thereof, including the reports required to
be filed under Section 1060 of the Code. Any earn out payable
pursuant to Section 2.4(b) shall be allocated to good
will.
2.9 Transfer Taxes and Fees; Bulk
Sales. Buyer shall be responsible for any transfer, sales
and similar Taxes, including without limitation any Florida
documentary transfer tax or surtax, imposed by reason of the
transfer of the Assets and the Assumed Liabilities provided
hereunder. Seller shall pay all costs of obtaining the necessary
governmental and third party consents to transfer the Assets and
the Assumed Liabilities provided hereunder except those costs
relating to Buyer’s compliance with its representations and
warranties in ARTICLE 5 (including obtaining any necessary
export licenses or facility security clearances) which cost will be
borne by Buyer only. Buyer and Seller hereby waive compliance with
the bulk-transfer provisions of the Uniform Commercial Code
(specifically the California Uniform Commercial Code, the Florida
Uniform Commercial Code and any similar law) (“ Bulk
Sales Laws ”), to the extent applicable, in
connection with transfer of the Assets and Assumed Liabilities as
contemplated by this Agreement.
2.10 Consents. Nothing in this
Agreement shall be construed as an attempt or agreement to assign
any Assumed Contract which is non-assignable without the consent of
the party or parties thereto unless such consent shall have been
obtained. Buyer shall cooperate with Seller to obtain the consents
of any other party required in connection with the transfer of any
Assumed Contract requiring such consent and Seller shall provide
Buyer (to the extent allowed pursuant to the terms of such Assumed
Contract) with all of the benefits enjoyed by Seller under any such
Assumed Contract until consent to the assignment thereof is
obtained.
ARTICLE 3
POST-CLOSING MATTERS AND
COVENANTS
3.1 Accounts Receivable . Each party
agrees that in the event following the Closing such party receives
payment from a customer of the Business on account of a Contract or
account receivable held by the other party, such receiving party
shall promptly notify the other party, hold such amount for the
benefit of the other party and promptly remit such amount to the
other party.
3.2 Warranty Support Services .
Following Closing, Buyer shall perform the warranty services
required pursuant to the Assumed Contracts with respect to products
delivered by the Business prior to the Closing Date in accordance
with the warranty terms contained therein (the “
Warranty Obligations ”). Seller shall pay
Buyer’s costs, without profit, to perform such Warranty
Obligations within 30 days following presentation by Buyer to
Seller of a monthly invoice showing the warranty services rendered
for each claim in the preceding period and including supporting
documentation. Seller reserves the right to audit Buyer’s
invoices and Buyer shall provide to Seller such information and
access to Buyer’s records necessary to complete such
audit.
3.3 Employees.
(a) Buyer will offer employment to
any Employee who, on the Closing Date, works for the Business
pursuant to an offer letter in the form set forth at Exhibit
3.3(a) . If any such employment is accepted, employment will
commence effective as of the Effective Time. Subject to the form of
offer letter set forth at Exhibit 3.3(a) , the terms and
conditions of Buyer’s offers of employment to such Employees
will be determined in Buyer’s sole discretion (subject to
Section 3.3(b) below).
(b) With respect to each Employee
who accepts an offer of employment from Buyer under paragraph (a)
above (“ Transferred Employees ”), Buyer
shall provide continued employment at the same or greater rate of
base salary, in the same general location and for a comparable
position as each had with Seller immediately prior to the Closing.
Buyer will provide Transferred Employees (provided that they
continue to be employed by Buyer), for a period of at least one
year following the Closing Date, benefits that are substantially
equivalent in the aggregate (to the extent commercially
practicable) to those offered by Buyer to its employees generally;
provided , however , that such limitation shall not
apply to, nor restrict Buyer from, increasing the contribution that
Transferred Employees must contribute for medical, dental and other
health care coverage after the later of the Closing Date and the
date offers of employment referenced in Section 3.3(a) have
been made to, and accepted by, the Transferred
Employees.
(c) Buyer will not engage within 90
days after the Closing Date in a “plant closing” or
“mass layoff” (as such terms are defined in the Worker
Adjustment and Retraining Notification Act) with respect to the
Business , nor will it engage in any workforce reductions
that, taken with any such reductions by Seller prior to Closing,
would constitute a “plant closing” or “mass
layoff.”
(d) Except to the extent provided in
Section 2.3(a)(ii) , Buyer will not assume any Benefit Plan
of Seller or any obligation thereunder , but Buyer shall
assume all accrued vacation, sick leave and severance benefits of
the Transferred Employees as of the Effective Time as provided for
in Section 2.3(a)(ii) .
(e) With respect to Transferred
Employees, Buyer and Seller agree to cooperate fully in the
transition of any such employees to employment with Buyer. Nothing
in this Section 3.3 shall be construed as conferring on any
Transferred Employee a continued right to employment. Except as set
forth herein, nothing herein shall restrict Buyer in the exercise
of its independent business judgment, as to the terms and
conditions under which it shall continue to employ any Transferred
Employee, the duration of any such employment, the basis on which
such employment is terminated or the compensation or benefits
provided to any Transferred Employee.
(f) Notwithstanding the foregoing,
with regard to matters occurring after the Closing, Buyer assumes,
to the extent permitted by applicable Legal Requirements, all the
immigration related rights, obligations and liabilities of Seller
in relation to foreign national Transferred Employees in
nonimmigrant status. The terms and conditions of employment of such
Transferred Employees by Buyer, to the extent practicable and
permitted by applicable Legal Requirements, shall remain the same
as the terms and conditions of employment by Seller.
(g) Buyer will, for a period of two
years from and after the Closing Date, refrain from, either alone
or in conjunction with any other Person, or directly or indirectly
through its present or future Affiliates, employing, engaging or
seeking to employ or engage any Person, other than Transferred
Employees, who within the prior 12 months had been an employee of
Seller or any of its Affiliates, unless such employee (A) resigns
voluntarily (without any solicitation from or on behalf of Buyer or
any of its Affiliates) or (B) is terminated by Seller or any of its
Affiliates after the Closing Date.
(h) The covenants contained in
Section 3.3(g) relate to matters which are of a special,
unique and extraordinary character and a violation of any of the
terms of Section 3.3(g) will cause irreparable injury to
Seller, the amount of which will be impossible to estimate or
determine and which cannot be adequately compensated. Therefore,
Seller will be entitled to an injunction, restraining order or
other equitable relief from any court of competent jurisdiction in
the event of any breach of Section 3.3(g) , and Buyer hereby
consents to the granting by any court of an injunction or other
equitable relief, without the necessity of actual monetary loss
being proved, in order
that the breach or threatened breach of such
provisions may be effectively restrained. The rights and remedies
provided by Section 3.3(g) are cumulative and in addition to
any other rights and remedies which Seller may have hereunder or at
law or in equity.
(i) For the purposes of satisfying
the service requirements, if any, to participate in Buyer’s
employee pension and welfare benefit plans (“
Buyer’s Employee Plans ”), Buyer will
treat service by each of the Transferred Employees with Seller as
service with Buyer. For purposes of vesting in benefits payable
under Buyer’s employee pension benefit plans (“
Buyer’s Pension Plans ”), and for
purposes of computing the amount of the benefits or the existence
of a benefit under Buyer’s Pension Plans, Buyer will not
treat service by each of the Transferred Employees with Seller as
service with Buyer.
3.4 Use of Business Names by
Buyer.
(a) Subject to Section 3.4(b)
, Buyer acknowledges that Seller has the absolute and exclusive
proprietary right to all Names incorporating “REMEC” or
any similar Name and to all Logos incorporating REMEC or any
similar name. All rights of Seller and its Affiliates to the same
and the goodwill represented thereby and pertaining thereto are
being retained by Seller. Buyer agrees that it will not use the
REMEC Name or any similar Names or Logos incorporating such Names
or any similar Names in any manner, including in connection with
the sale of any products or services or otherwise in the conduct of
the Business.
(b) Buyer is acquiring as part of
the Assets certain inventory, fixtures, tools and dies and
Seller’s stock of product literature, warranty statements,
advertising and other materials that carry a Name, Logo or other
trademark of Seller (collectively, the “ Marked
Materials ”). Notwithstanding Section 3.4(a) ,
Buyer agrees that, in connection with its use of such inventory and
Marked Materials, it will sticker or otherwise change or cover the
Name, Logo or Seller mark to the reasonable satisfaction of Buyer
prior to sale, distribution or publication thereof, and Seller
agrees that subject to such change, stickering or covering
occurring, use of such inventory or Marked Materials by Buyer will
not violate any rights of Seller. With respect to (a) Marked
Materials in paper form, and (b) products bearing a Name, Logo or
Seller mark, in each case where stickering is not practicable,
Buyer shall, in good faith, use its commercially reasonable efforts
to discontinue their use as soon as reasonably possible and,
subject to the foregoing, Buyer shall have the right to use such
inventory and Marked Materials, for a six month period following
the Closing Date; provided , however , that
notwithstanding the foregoing, no inventory or Marked Materials
that carry a Name, Logo or other trademark of Seller may be shipped
or distributed by Buyer following the Closing with respect to any
shipment, sale or purchase order for which an export license is
required to fulfill such shipment, sale or purchase order unless
such inventory or Marked Materials are stickered or otherwise
changed to the satisfaction of Buyer.
3.5 Retention of Records . After the
Closing Date, Buyer shall retain for a period consistent with
Buyer’s current record-retention policies and practices those
records of Seller delivered to Buyer as part of the Assets. Buyer
shall also provide Seller and its representatives reasonable access
thereto, during normal business hours and on at least three
days’ prior written notice, to enable Seller to prepare
financial statements or tax returns or to act with respect to tax
audits, to prosecute or defend third party claims or litigation as
well as for any other reason reasonably related to this Agreement.
After the Closing Date, Seller shall provide Buyer and its
representatives reasonable access to records relating to the
Business not included in the Assets, during normal business hours
and on at least three days’ prior written notice, for any
reasonable business purpose relating to the Business specified by
Buyer in such notice.
3.6 Removal of Excluded Assets .
Seller agrees that, prior to or within 30 days after the Closing
Date, Seller will, at its expense, remove from the Real Property
all Excluded Assets without causing any material interference or
disruption of the business or operations of Buyer or resulting in
any cost to Buyer. Seller will provide Buyer with two days notice
prior to removing any Excluded Assets.
3.7 SEC Audit . Seller acknowledges
that Buyer may be required under Law to prepare audited financial
statements for the Business in accordance with the rules and
regulations of the Securities and Exchange Commission (collectively
the “ Audited Financials ”) within 75
days after the Closing Date. With respect to the foregoing, Seller
and Buyer agree as follows:
(a) In connection with Buyer’s
efforts to prepare, complete and file the Audited Financials in a
timely manner, pursuant to applicable Law, Seller will provide
reasonable assistance to make available to Buyer and its
accountants and other representatives at all reasonable times and
upon reasonable notice all financial and other books and records of
Seller, and cause its accountants to make available all of their
work papers, which relate to the Business but do not constitute an
Asset and are relevant, necessary or reasonably advisable in order
for Buyer to complete and file the Audited Financials.
(b) Buyer shall pay or reimburse
Seller for all direct, out-of-pocket costs and expenses incurred by
Seller or its accountants and other representatives in assisting
and cooperating with Buyer as provided for in Paragraph (a) hereof.
Seller shall not pay, reimburse or otherwise be responsible for any
costs and expenses of any kind whatsoever that may be incurred by
Buyer or its Representatives in connection with their completion of
the Audited Financials.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF SELLER
Except as set forth in the
Disclosure Schedules, Seller hereby represents and warrants to
Buyer that the following statements set forth in this ARTICLE
4 are true and correct.
4.1 Organization and Good Standing.
Seller is a corporation duly organized, validly existing and in
good standing under the laws of California, with full corporate
power and authority to own or lease its properties and to conduct
its business as currently conducted. Seller is qualified to do
business and is in good standing in Florida and each other
jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by
it, requires such qualification, except where the failure to be so
qualified would not have a Business Material Adverse
Effect.
4.2 Authority; No Conflict.
(a) This Agreement constitutes the
legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms. Seller has the absolute and
unrestricted right, power, authority and capacity to execute and
deliver this Agreement and to perform its obligations under this
Agreement. Seller has all necessary authority and power to enter
into this Agreement and to carry out the transactions contemplated
by this Agreement. Delivery an
