EXHIBIT 2.1 - ASSET PURCHASE AGREEMENTAsset Purchase Agreement |
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by and between REMEC, INC. and SPECTRUM CONTROL, INC. October 15, 2004
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: 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. 3 " 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) . 4 " 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 . 5 " 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). 6 " 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. 7 " 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. 8 "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) . 9 " 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 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) ; 10 (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" ); 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; (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 11 (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: 12 (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 . 13 (b) As partial consideration for the Assets being sold by Seller to Buyer hereunder and in addition to the Closing Payment, Buyer agrees that: 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. 14 (a) At the Closing, Seller will deliver: (i) a certificate executed by Seller as required by Section 7.2(d) ; (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: 15 (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. 16 ARTICLE 3 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. (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. 17 (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. 18 (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. 19 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 S EC 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: 20 ARTICLE 4 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. (i) violate any provision of the Governing Documents of Seller; (iii) result in a violation or any breach of any material Contract, except for those violations that would not have a Business Material Adverse Effect. 4.3 Financial Statements . Attached as Schedule 4.3 to the Disclosure Schedules is a pro forma balance sheet of the Business as of July 30, 2004 (the " Balance Sheet "), and the related statement of income for the 12 month period then ended. Such financial statements (the " Financials ") fairly present the financial condition, the results of operations and changes in cash flows of the Business as at the respective dates of and for the period referred to in such financial statements, all in accordance with GAAP except that the Financials are not prepared on a standalone basis and are subject to normal year-end adjustments. 21 |
AGREEMENTS / CONTRACTS
CLAUSES
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