STOCK PURCHASE AGREEMENT

Exhibit 2.1

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “ Agreement ”), dated as of this 27 ^th day of December, 2004, is by and among MTC Technologies, Inc., an Ohio corporation (the “ Buyer) , and Dr. Paul Hsu and Majes Hsu, husband and wife (each a “Shareholder” , together, the “Shareholders” ).

 

RECITALS

 

A. The Shareholders are the registered owners of all of the issued and outstanding shares (the “ Shares ”) of common stock, no par value (“ Common Stock ”), of Manufacturing Technology, Inc., a Florida corporation (the “ Company ”); and

 

B. The Shareholders desire to sell to the Buyer, and the Buyer desires to purchase from the Shareholders, all of the Shares, subject to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

ARTICLE I : DEFINITIONS

 

“ Accrued Dividend ” has the meaning set forth in Section 2.2(b)(ii) .

 

“ Adjustment Amount ” has the meaning set forth in Section 2.2(b)(i) .

 

“ Affiliate ” of any Person means any person directly or indirectly controlling, controlled by, or under common control with, any such Person and any officer, director or controlling person of such Person. The term “ Affiliate ” also includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, of such Person.

 

“ Agreement ” has the meaning set forth in the preamble.

 

“ Ancillary Agreements ” means the Shareholder Noncompete Agreement, the Noncompete Agreements, the Employment Agreements, the Escrow Agreement, and each agreement, document, instrument or certificate contemplated by this Agreement or to be executed by Buyer, certain of the Company’s employees or the Shareholders, as applicable in connection with the consummation of the transactions contemplated by this Agreement, in each case only as applicable to the relevant party or parties to such Ancillary Agreement, as indicated by the context in which such term is used.

 

“ Arbitration Firm ” has the meaning set forth in Section 2.2(b)(ii) .

 

“ Audited Financial Statements ” has the meaning set forth in Section 4.19(a) .

 

“ Buyer ” has the meaning set forth in the preamble.

 

“Cash Payment” has the meaning set forth in Section 2.2(a)(i) .

 

“ Claims Notice ” has the meaning set forth in Section 7.2(a) .

 

“ Closing ” has the meaning set forth in Section 2.3 .

 

“ Closing Balance Sheet ” has the meaning set forth in Section 2.2(c)(i) .

 

“ Closing Date ” has the meaning set forth in Section 2.3 .

 

“ Closing Tangible Net Worth ” has the meaning set forth in Section 2.2(b)(i) .

 

“ Code ” means the Internal Revenue Code of 1986, as amended.

 

“ Common Stock ” has the meaning set forth in the recitals.

 

“ Company ” has the meaning set forth in the recitals.

 

“ Company Intellectual Property ” shall mean any Intellectual Property or rights thereto, owned by the Company or used or held for use in connection with the Ordinary Course of Business.

 

“ Consents ” means any consent, approval, authorization, qualification, or waiver of, or notice to, any third party or Governmental Authority.

 

“ Contracts ” means all contracts, agreements (including, without limitation, employment, non-disclosure, teaming, subcontracting and non-competition agreements), leases (whether real or personal property), commitments, instruments, guarantees, and orders (whether written or oral) that are legally binding.

 

“ Controlled Group ” has the meaning set forth in Section 4.13(a) .

 

“ Dispute ” has the meaning set forth in Section 8.14 .

 

“ Dispute Notice ” has the meaning set forth in Section 6.1 .

 

“ Effective Time ” has the meaning set forth in Section 2.3 .

 

“ Employee Plans ” has the meaning set forth in Section 4.13(a) .

 

“ Employment Agreements ” has the meaning set forth in Section 3.1(e) .

 

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“ Environment ” means soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata, ambient air, indoor air or indoor air quality.

 

“ Environmental Condition ” means any condition of the Environment with respect to the Real Property, or with respect to any other real property at which any Hazardous Material generated by the operation of the business of the Company prior to the Closing Date has been treated, stored or disposed of, which violates any Environmental Law, or even though not violative of any Environmental Law, nevertheless results in any Release, or Threat of Release, damage, loss, cost, expense, claim, demand, order or liability, alleged or imposed by any Person (including, without limitation, any Governmental Authority).

 

“ Environmental Law ” means any federal, state or local law, regulation, rule, ordinance, policy or guideline relating to the Environment implementing or otherwise dealing with the subject matter thereof.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ Escrow Account ” has the meaning set forth in Section 2.2(a)(ii) .

 

“ Escrow Agent ” has the meaning set forth in Section 2.2(a)(ii) .

 

“ Escrow Agreement ” has the meaning set forth in Section 2.2(a)(ii) .

 

“ Escrow Amount ” has the meaning set forth in Section 2.2(a)(ii) .

 

“ Excluded Representations ” has the meaning set forth in Section 7.3(a) .

 

“ Expiration Date ” has the meaning set forth in Section 7.3(a) .

 

“ Federal Acquisition Regulations ” means the Federal Acquisition Regulations as codified in the Code of Federal Regulations at 48 C.F.R. Section 1 et seq.

 

“ Financial Statements ” has the meaning set forth in Section 4.19(a) .

 

“ GAAP ” means U.S. generally accepted accounting principles, applied on a basis consistent with the Company’s past practice, provided, however that such past practice complies with GAAP.

 

“ Governmental Authority ” means any government or political subdivision or regulatory authority, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision or regulatory authority, or any federal state, local or foreign court or arbitrator.

 

“ Guarantee ” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing or otherwise supporting in whole or in part the payment of any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such

 

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Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligations of the payment of such Indebtedness or to protect such obligee against loss related to such Indebtedness (in whole or in part); provided , however , that the term Guarantee shall not include endorsements for deposit or collection in the Ordinary Course of Business. The term “ Guarantee ” used as a verb has a correlative meaning.

 

“ Hazardous Material ” means any pollutant, toxic substance, including, without limitation, asbestos and asbestos-containing materials, hazardous waste, hazardous material, hazardous substance, contaminant, petroleum or petroleum-containing materials as defined in or the subject of any Environmental Law.

 

“HSR Act” means the Hart Scott Rodino Antitrust Improvements Act of 1976 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

 

“Indebtedness ” of any Person means: either (a) any liability of said Person (i) for borrowed money (including the current portion thereof), or (ii) under any reimbursement obligation relating to a letter of credit, bankers’ acceptance or note purchase facility, or (iii) evidenced by a bond, note, debenture or similar instrument (including a purchase money obligation), or (iv) for the payment of money relating to leases that are required to be classified as a capitalized lease obligation in accordance with GAAP, or (v) for all or any part of the deferred purchase price of property or services (other than trade payables), including any earn-out, contingent or non-compete payments, or (vi) any obligations owed to employees or affiliates outside of the Ordinary Course of Business, (b) any liability of others described in the preceding clause (a) that such Person has Guaranteed, that is recourse to such Person or any of its assets or that is otherwise its legal liability or that is secured in whole or in part by the assets of such Person. For purposes of this Agreement, Indebtedness includes any and all accrued interest, success fees, prepayment premiums, make-whole premiums or penalties and fees or expenses actually incurred (including attorneys’ fees) associated with the prepayment of any Indebtedness.

 

“ Indemnified Party ” has the meaning set forth in Section 7.2(a) .

 

“ Indemnifying Party ” has the meaning set forth in Section 7.2(a) .

 

“ Initiating Party ” has the meaning set forth in Section 8.14(a) .

 

“ Intellectual Property ” shall mean any of the following: (i) U.S. and non-U.S. patents, and with respect to either applications and statutory invention registrations, including reissues, divisions, continuations, continuations in part, extensions and reexaminations thereof; (ii) registered and unregistered trademarks, service marks and other indicia of origin, pending trademark and service mark registration applications, and intent-to-use registrations or similar reservations of marks; (iii) registered and unregistered copyrights and mask works, and applications for registration of either; (iv) internet domain names, applications and reservations therefor, universe resource locators and the corresponding Internet sites and webpages and all intellectual property related thereto (collectively, “ Sites ”); (v) trade secrets and proprietary

 

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information not otherwise listed in (i) through (iv) above, including unpatented inventions, invention disclosures, moral and economic rights of authors and inventors (however denominated), confidential information, technical data, customer lists, corporate and business names, trade names, trade dress, brand names, know-how, show-how, mask works, formulae, methods (whether or not patentable), designs, processes, procedures, technology, source codes, object codes, computer software programs, databases, data collections and other proprietary information or material of any type, and all derivatives, improvements and refinements thereof, howsoever recorded, or unrecorded; and (vi) any good will associated with any of the foregoing.

 

“ Interim Financial Statements ” has the meaning set forth in Section 4.19(a) .

 

“ Investment ” means any debt or equity interest, directly or indirectly, in any Person.

 

“ IRS ” means the Internal Revenue Service.

 

“ Law ” means common law and any law, statute, code, ordinance, regulation or other requirement of any Governmental Authority.

 

“ Leased Real Property ” has the meaning set forth in Section 4.7(b) .

 

“ Liability Claim ” has the meaning set forth in Section 7.2(a) .

 

“ Lien ” has the meaning set forth in Section 2.1 .

 

“ Litigation Conditions ” has the meaning set forth in Section 7.2(b) .

 

“ Losses ” has the meaning set forth in Section 7.1 .

 

“ Material Customers ” has the meaning set forth in Section 4.25(a) .

 

“ Material Suppliers ” has the meaning set forth in Section 4.25(b) .

 

“ MTI Internal Tools ” has the meaning set forth in Schedule 4.17(a) .

 

“ Noncompete Agreements ” has the meaning set forth in Section 3.1(e) .

 

“ Order ” means any order, judgment, injunction, award, decree, ruling, charge or writ of any Governmental Authority.

 

“ Ordinary Course of Business ” means the Company’s ordinary course of business consistent with past custom and practice.

 

“ Permit ” means any permit, license, approval, consent or authorization issued by a Governmental Authority.

 

“ Permitted Liens ” means (a) Liens for current Taxes, assessments, fees and other charges by Governmental Authorities that are not due and payable as of the Closing Date, and (b) those matters that are set forth on Schedule 1.1 .

 

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“ Person ” means any individual, sole proprietorship, partnership, corporation, limited liability company, unincorporated society or association, trust or other entity.

 

“ Post-Closing Tax Period ” means any Tax period (or portion thereof) beginning after the Closing Date.

 

“ Pre-Closing Tax Period ” means any Tax period (or portion thereof) ending on or before the Closing Date.

 

“ Purchase Price ” has the meaning set forth in Section 2.2(a) .

 

“ Real Property ” means any and all real property and interests in real property of the Company, including the Leased Real Property, any real property leaseholds and subleaseholds, purchase options, easements, licenses, rights to access and rights of way and any other real property otherwise owned, occupied or used by the Company.

 

“ Real Property Leases ” has the meaning set forth in Section 4.7(b) .

 

“ Receiving Party ” has the meaning set forth in Section 8.14(a) .

 

“ Release ” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of a Hazardous Material into the Environment.

 

“ Returns ” means all Tax returns (and schedules thereto), statements, reports or other information (including estimated Tax or information returns and reports) required to be supplied to any Taxing Authority in connection with any Tax.

 

“ Service Contract Act ” means the Service Contract Act of 1965, as amended, as codified in the United States Code at 41 U.S.C. Section 351 et seq.

 

“ Shares ” has the meaning set forth in the recitals.

 

“ Shareholder Noncompete Agreement ” has the meaning set forth in Section 3.1(d) .

 

“ Shareholder ” has the meaning set forth in the preamble.

 

“ Shareholder Representative ” has the meaning set forth in Section 2.2(c)(i) .

 

“ Sites ” has the meaning set forth in the definition of Intellectual Property in this Section 1 .

 

“ Subsidiary ” means any Person of which at least 20% of the outstanding shares or other equity interests having ordinary voting power for the election of directors or comparable managers of such Person are at the time owned by the Company, by one or more directly or indirectly wholly or partially owned subsidiaries of the Company or by the Company and one or more such subsidiaries, whether or not at the time the shares of any other class or classes or other

 

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equity interests of such Person shall have or might have voting power by reason of the happening of any contingency.

 

“ Tangible Net Worth ” means the total assets of the Company minus the total liabilities of the Company as determined in accordance with GAAP, reduced by the amount of any intangible assets, as determined in accordance with GAAP (which shall not have a value greater than Two Million Five Hundred Thousand Dollars ($2,500,000)). All Tangible Net Worth determinations shall be calculated in the same manner as the example set forth on Exhibit A hereto.

 

“ Tangible Personal Property ” has the meaning set forth in Section 4.7(c) .

 

“ Target Tangible Net Worth ” has the meaning set forth in Section 2.2(b)(i) .

 

“ Tax ” means (a) any income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, license, withholding on amounts paid to or by the Company, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed by any Taxing Authority, whether disputed or not, (b) any liability of the Company for the payment of any amounts of any of the foregoing types as a result of being a member of an affiliated, consolidated, combined or unitary group or being a party to any agreement or arrangement whereby liability of the Company for payment of such amounts was determined or taken into account with reference to the liability of any other Person and (c) any liability of the Company for the payment of any amounts as a result of being a party to any Tax sharing agreements or arrangements (whether or not written) binding on the Company or with respect to the payment of any amounts of any of the foregoing types as a result of any express or implied obligation to indemnify any other Person.

 

“ Tax Matter ” has the meaning set forth in Section 6.4 .

 

“ Taxing Authority ” means any Governmental Authority responsible for the imposition of any Tax.

 

“ Threat of Release ” means a substantial likelihood of a Release that requires action to prevent or mitigate damage to the Environment that might result from such Release.

 

“ Transaction Expenses ” means all costs, fees and expenses of outside professionals incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, all legal fees, accounting, tax, broker and investment banking fees and other related expenses.

 

“ Truth in Negotiations Act ” means the Truth in Negotiations Act of 1962, as codified in the United States Code at 10 U.S.C. Section 2306 et seq.

 

ARTICLE II : PURCHASE AND SALE

 

2.1 Purchase and Sale of the Shares . At the Closing (as defined in Section 2.3 below), the Buyer shall purchase from the Shareholders, and each Shareholder shall sell,

 

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transfer, assign, convey and deliver to the Buyer, all of the Shares, free and clear of any mortgage, pledge, hypothecation, rights of others, claim, security interest, encumbrance, title defect, title retention agreement, voting trust agreement, interest, option, lien, charge or similar restrictions or limitations, including, but not limited to, any restriction on the right to vote, sell or otherwise dispose of the Shares (collectively, “ Liens ”).

 

2.2 Purchase Price .

 

(a) As consideration for the purchase of the Shares, the Buyer shall pay to the Shareholders the sum of Seventy-Five Million Dollars ($75,000,000), subject to adjustment as provided in Section 2.2(a)(i) and Section 2.2(b) (the “ Purchase Price ”). The Purchase Price shall be paid as follows:

 

(i) Seventy-Three Million Dollars ($73,000,000), less the amount of all Indebtedness (computed in accordance with pay-off letters obtained from the obligees thereunder, if applicable) and other items reflected on Schedule 2.2(a) attached hereto, shall be paid to the Shareholders and the holders of such Indebtedness in accordance with such payoff letters at the Closing by wire transfer of immediately available funds (“ Cash Payment ”) to an account designated in writing by the recipient thereof, in accordance with Schedule 2.2(a)(i) , attached hereto; and

 

(ii) Two Million Dollars ($2,000,000) ( “Escrow Amount” ) shall be deposited at Closing with National City Bank as escrow agent ( “Escrow Agent” ), and shall be held in an interest-bearing escrow account ( “Escrow Account”) for the benefit of the Shareholders in accordance with an Escrow Agreement among the Buyer, the Shareholders, and the Escrow Agent in substantially the form set forth as Exhibit B (the “ Escrow Agreement ”).

 

(b) Adjustment Amount .

 

(i) The Purchase Price shall be decreased dollar-for-dollar, as set forth in this Section 2.2(b) and Section 2.2(c) , by the amount that the Closing Tangible Net Worth is less than the Target Tangible Net Worth, and such adjustment shall be referred to as the “ Adjustment Amount .” The “Target Tangible Net Worth” is defined as Nine Million Two Hundred Thousand Dollars ($9,200,000.00). The “Closing Tangible Net Worth” is defined as the Tangible Net Worth of the Company calculated in accordance with Exhibit A , and based on the final Closing Balance Sheet prepared in accordance with GAAP and the procedures set forth in Section 2.2(c)(i) below. If the Closing Tangible Net Worth is less than the Target Tangible Net Worth, then the Purchase Price shall be adjusted by decreasing the Purchase Price dollar-for-dollar by the amount by which the Target Tangible Net Worth exceeds the Closing Tangible Net Worth. Upon the final determination and agreement to the Adjustment Amount in accordance with Section 2.2(c)(i) , the Buyer and the Shareholders shall deliver joint written instructions to the Escrow Agent directing payment to the Buyer from the Escrow Account of an amount equal to such Adjustment Amount, if any, and the balance of such Escrow Amount, if any, to the Shareholders, as provided in such Section 2.2(c)(i) . The parties agree that there shall be no capital contributions or distributions from October 31, 2004 through the Closing.

 

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(ii) If the Closing Tangible Net Worth equals or is greater than the Target Tangible Net Worth, the amount of such excess shall be accrued on the Closing Balance Sheet as a dividend payable to the Shareholders ( “Accrued Dividend” ). Upon the final determination that the Closing Tangible Net Worth equals or is greater than the Target Tangible Net Worth in accordance with Section 2.2(c)(i) , the Buyer and the Shareholders shall deliver joint written instructions to the Escrow Agent directing payment to the Shareholders from the Escrow Account of the Escrow Amount. In addition, if the Closing Tangible Net Worth is greater than the Target Tangible Net Worth, the Buyer shall take all actions necessary, and to meet all requirements under Part 607.06401 of the 2004 Florida Statutes, to enable and cause the Company to pay to the Shareholders at the time of such final determination, the amount of the Accrued Dividend, including any necessary cash contributions to the Company.

 

(c) Determination and Payment of Adjustment Amount .

 

(i) Within 60 days following the Closing, the Shareholders (or Dr. Paul Hsu as the representative of the Shareholders, and who shall have the authority to deliver and receive communications on behalf of both of the Shareholders in connection with the sale of the Shares) (the “Shareholder Representative” ) shall deliver to the Buyer an audited balance sheet as of the Closing Date (the “ Closing Balance Sheet ”) and the Shareholders’ calculation of the Adjustment Amount or the Accrued Dividend determined in accordance with GAAP, based upon the Closing Balance Sheet, and including sufficient detail to allow the Buyer to analyze the accuracy thereof. Following the Closing, the Buyer shall cause the Company and the Company’s officers and employees to give access to Company records to, and to cooperate fully with, the Shareholder Representative and his representatives in connection with his preparation of the Closing Balance Sheet. The Buyer and the Buyer’s accounting firm shall have 60 days after receiving the Closing Balance Sheet and Adjustment Amount or Accrued Dividend to review and notify the Shareholder Representative of the Buyer’s approval or disapproval of same. Failure of the Buyer to notify the Shareholder Representative of Buyer’s approval or disapproval thereof within such 60-day period shall be deemed approval of the Buyer, and the Closing Balance Sheet shall be deemed to be the final Closing Balance Sheet. If, within such 60-day period, the Buyer requests reasonable additional information to complete the analysis of the Adjustment Amount or Accrued Dividend or the Closing Balance Sheet, the Buyer shall request such information from the Shareholder Representative, who will deliver such information to the Buyer. If, within such 60-day period, the Buyer notifies the Shareholder Representative of the Buyer’s disapproval of all or any portion of the Closing Balance Sheet and the Adjustment Amount or Accrued Dividend, and Buyer and the Shareholders are unable to agree upon a resolution, then the issue in dispute shall be resolved in accordance with Section 2.2(c)(ii) . On or before the fifth business day after the Buyer’s approval of the Closing Balance Sheet and Adjustment Amount or Accrued Dividend, or the final determination of the Adjustment Amount or Accrued Dividend in accordance with Section 2.2(b)(ii) , the Buyer and the Shareholders, or a member of the Arbitration Firm (if applicable), shall deliver joint written instructions to the Escrow Agent directing payment to the Buyer from the Escrow Account of an amount equal to such Adjustment Amount to the extent that the Purchase Price is decreased in accordance with Section 2.2(b)(i) , or directing payment to the Shareholders in the event that there is an Accrued Dividend in accordance with Section 2.2(b)(ii) . The Escrow Agent shall make any such payments in immediately available funds by wire transfer to such bank account as the receiving party shall specify to the Escrow Agent in writing. In the event that the amount in the Escrow

 

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Account is insufficient to pay the entire Adjustment Amount, the Buyer shall notify the Shareholders of same, and the Shareholders shall, within five (5) business days of such notice, pay to the Buyer the remaining balance of such Adjustment Amount. Payments shall be made in immediately available funds by wire transfer to such bank account as the Buyer shall specify to the Shareholders in writing. The Shareholders shall remain jointly and severally liable for any portion of the Adjustment Amount not paid from the Escrow Account. All amounts remaining in the Escrow Account after final determination and payment of the Adjustment Amount in accordance with this Section 2.2(c)(i) , if any, shall be released to the Shareholders within ten (10) days thereafter. The Buyer and the Shareholders shall deliver joint written instructions to the Escrow Agent directing such payment, and the Escrow Agent shall make any such payment in immediately available funds by wire transfer to such bank account as the Shareholders shall specify to the Escrow Agent in writing.

 

(ii) Disputes . If the Buyer objects to the Closing Balance Sheet, Adjustment Amount or the Accrued Dividend, the Buyer shall, simultaneously with such objection, appoint a national accounting firm which, in cooperation with the Shareholders’ accounting firm, will determine the Adjustment Amount within 30 days of such objection. If the Shareholders’ accounting firm and Buyer’s accounting firm cannot agree on the Adjustment Amount within such 30-day period, the respective accounting firms shall mutually select a “Big Four” accounting firm (the “ Arbitration Firm ”) to determine the Adjustment Amount, and the decision of the Arbitration Firm shall be binding and conclusive on all parties. Buyer, on the one hand, and the Shareholders, on the other hand, shall each pay one-half of the costs and expenses of the Arbitration Firm.

 

2.3 Closing . Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated hereby (the “ Closing ”) shall take place at 10:00 a.m. as soon as the parties agree shall be practical after the termination of the applicable waiting period under the HSR Act occurs, or such other date as Buyer and the Shareholders may agree (the “ Closing Date ”); provided , however , that notwithstanding any other provision of this Agreement, the Closing shall occur not later than January 31, 2005. Moreover, the Closing shall occur only upon payment of the Purchase Price (as herein defined, and in the manner herein described), and the exchange of signature pages to this Agreement and all Ancillary Agreements via facsimile transmission, provided that the attorneys for the parties hereto hold in their possession, in escrow, original signature pages to such Closing documents and deliver such originals to the other by overnight delivery, or at such other time and in such other manner as the parties may agree. The Closing will be effective as of 12:01 A.M. EDST on the Closing Date (the “Effective Time” ).

 

ARTICLE III : DELIVERIES AND OTHER ACTIONS

 

3.1 Deliveries by the Shareholders . At the Closing, the Shareholders shall deliver, or cause to be delivered, to the Buyer the following items (provided, however, that if the Shareholders are unable to deliver all of such items as of the time for Closing, the parties shall agree to extend the date of Closing for a period of ten (10) days to allow for the delivery of such items):

 

(a) copies of a certificate of the Shareholders with regard to wiring instructions for each Shareholder;

 

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(b) copies of an executed receipt by each Shareholder evidencing each Shareholder’s receipt of the amount of the Purchase Price specified on Schedule 2.2(a)(i) hereof;

 

(c) (i) stock certificates representing all of the Shares with duly executed stock powers attached in proper form for transfer to the Buyer, and (ii) any other documents that are necessary to transfer to the Buyer good and valid title to the Shares, with any necessary transfer tax stamps affixed or accompanied by evidence that all stock transfer taxes have been paid;

 

(d) copies of a mutually agreeable non-competition agreement of each of the Shareholders in substantially the form attached hereto as Exhibit C (the “Shareholder Noncompete Agreement”) ;

 

(e) copies of mutually agreeable employment agreements containing non-competition agreements from the individuals identified on Schedule 3.1(e)(i) in substantially the form attached hereto as Exhibit D (the “Employment Agreements” ), and copies of mutually agreeable non-competition agreements from the individuals identified on Schedule 3.1(e)(ii) in substantially the form attached hereto as Exhibit E (the “Noncompete Agreements” );

 

(f) copies of a release, in substantially the form attached hereto as Exhibit F , duly executed by each Shareholder;

 

(g) copies of a current good standing certificate for the Company issued by the Secretary of State of the State of Florida and each state in which the Company is qualified to do business as a foreign corporation;

 

(h) copies of the Articles of Incorporation of the Company, certified by the Secretary of State of the State of Florida and copies of the Bylaws of the Company certified by an officer of the Company;

 

(i) copies of an Incumbency Certificate executed by the Secretary of the Company;

 

(j) the original corporate record books and stock record books of the Company;

 

(k) authorization to Buyer to extinguish all security interests related to interest-bearing Indebtedness of the Company;

 

(l) copies of all of the Consents listed on Schedule 4.6 and Schedule 4.7(b) ;

 

(m) copies of written resignations of each director and officer of the Company listed on Schedule 3.1(m) ;

 

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(n) copies of the Escrow Agreement executed by the Shareholders and the Escrow Agent;

 

(o) copies of a non-foreign person affidavit that complies with the requirements of Section 1445 of the Code, executed by the Shareholders;

 

(p) copies of an opinion letter containing the opinions attached hereto as Exhibit G from the law firm of Holland & Knight, LLP; and

 

(q) copies of the bringdown certificates described in Section 3.5 hereto.

 

3.2 Deliveries by the Buyer . At the Closing, the Buyer shall deliver to the Shareholders the following items (provided, however, that if the Buyer is unable to deliver all of such items as of the time for Closing, the parties shall agree to extend the date of Closing for a period of ten (10) days to allow for the delivery of such items):

 

(a) the Purchase Price, payable as set forth in Section 2.2(a) and Schedule 2.2(a)(i) .

 

(b) copies of the Shareholder Noncompete Agreement, the Noncompete Agreements, and the Employment Agreements, duly executed by the Buyer;

 

(c) copies of the resolutions of the Board of Directors of the Buyer authorizing the execution, delivery and performance of this Agreement and the Ancillary Agreements, certified by an appropriate officer of the Buyer;

 

(d) copies of the Escrow Agreement executed by Buyer and the Escrow Agent;

 

(e) copies of any consents required for Buyer to execute and deliver this Agreement and to consummate the transactions hereunder;

 

(f) copies of the bringdown certificates described in Section 3.6 hereto; and

 

(g) copies of an opinion letter containing the opinions attached hereto as Exhibit H from the law firm of Coolidge, Wall, Womsley & Lombard Co., L.P.A.

 

3.3 Covenants of the Shareholders Prior to Closing .

 

(a) Access and Investigation . Between the date of this Agreement and the Closing Date, and upon reasonable advance notice received from Buyer, the Shareholders shall (a) afford Buyer and its representatives full and free access, during regular business hours, to the Company’s personnel, properties, Contracts, Permits, books and records and other documents and data; (b) furnish such persons with copies of all such Contracts, Permits, books and records and other existing documents and data, and such additional financial, operating and other relevant data and information as such persons may reasonably request; and (c) otherwise

 

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cooperate and assist with Buyer’s investigation of the properties, assets, business, and financial condition of the Company. In addition, Buyer and its representatives shall have the right to perform such inspections of the Real Property and Tangible Personal Property as deemed necessary by Buyer and Buyer’s representatives for purposes of determining the physical condition and legal characteristics of such Real Property and Tangible Personal Property.

 

(b) Operation of the Business of the Company . Between the date of this Agreement and the Closing, the Shareholders shall:

 

(i) conduct the business of the Company only in the Ordinary Course of Business, including, but not limited to, making all payments and collections in accordance with past practice;

 

(ii) preserve intact the Company’s current business organization, keep available the services of its officers, employees and agents, and maintain its relations and goodwill with suppliers, customers, landlords, creditors, employees, agents and others having business relationships with it;

 

(iii) report periodically to Buyer concerning the status of its business, operations and finances;

 

(iv) make no material changes in operations, management personnel, or otherwise in the business of the Company without prior consultation with Buyer;

 

(v) maintain the Tangible Personal Property in good repair and condition, ordinary wear and tear excepted, and in such state that complies with all applicable Laws and is consistent with the requirements and normal conduct of the Company’s business;

 

(vi) keep in full force and effect, and otherwise maintain and protect all Company Intellectual Property;

 

(vii) keep in full force and effect, without amendment, all material rights relating to the Company’s business;

 

(viii) comply with all applicable Laws and contractual obligations applicable to the operations of the Company’s business;

 

(ix) continue in full force and effect the Company’s insurance policies;

 

(x) except as required to comply with ERISA or to maintain qualification under Section 401(a) of the Code, not amend, modify or terminate any Employee Plan without the express written consent of Buyer, and except as required under the provisions of any Employee Plan, not make any contributions to or with respect to any Employee Plan without the express written consent of Buyer, provided that the Company shall contribute that amount of cash to each Employee Plan necessary to fully fund all of the benefit liabilities of such Employee Plan on a plan-termination basis as of the Closing Date;

 

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(xi) cooperate with Buyer and assist Buyer in identifying the Permits by Buyer to operate the business from and after the Closing Date and either transferring existing Permits of the Company to Buyer, where permissible, or obtaining new Permits for Buyer;

 

(xii) upon request from time to time, execute and deliver all documents, make all truthful oaths, testify in any proceedings and do all other acts that may be reasonably necessary or desirable in the opinion of Buyer to consummate the contemplated transactions, all without further consideration; and

 

(xiii) maintain all books and records of the Company relating to the Company’s business in the Ordinary Course of Business.

 

(c) Negative Covenants . Except as otherwise expressly permitted herein, between the date of this Agreement and the Closing Date, the Company shall not, and Shareholders shall not permit the Company to, without the prior written Consent of Buyer, (a) take any affirmative action, or fail to take any reasonable action within its control, as a result of which any of the changes or events listed in Section 4.11 would be likely to occur; (b) make any modification to any material Contract or Permit; (c) allow the levels of raw materials, supplies or other materials included in the Company’s inventories to vary materially from the levels customarily maintained; or (d) enter into any compromise or settlement of any litigation, proceeding or governmental investigation relating to the assets, or the business of the Company.

 

(d) Required Consents and Approvals . As promptly as practicable after the date of this Agreement, Shareholders shall make all filings required by Law to be made by it in order to consummate the contemplated transactions (including all filings under the HSR Act). The Shareholders also shall cooperate with Buyer and its representatives with respect to all filings that Buyer elects to make or, pursuant to Law, shall be required to make in connection with the contemplated transactions. The parties hereto agree that each party shall pay one-half of the filing fee for the necessary filings required under the HSR Act in connection with these transactions. The Shareholders also shall cooperate with Buyer and its representatives in obtaining all Consents (including taking all actions requested by Buyer to cause early termination of any applicable waiting period under the HSR Act).

 

(e) Notification . Between the date of this Agreement and the Closing, the Shareholders shall, or shall cause the CEO of the Company to, promptly notify Buyer in writing of all of the following: (a) any material change in the financial, operating, or other condition of the Company, (b) any material loss to any of the assets or properties of the Company, (c) the institution of, or the threat of institution of, any material legal, administrative, or other proceedings against the Company or the Shareholders, (d) any fact or condition that causes or constitutes a breach of any of the Shareholders’ representations and warranties in this Agreement, or (e) the occurrence, after the date of this Agreement, of any fact or condition that would be reasonably likely to cause or constitute a breach of any such representation or warranty, had that representation or warranty been made as of the time of the occurrence of, or either Shareholders’ discovery of, such fact or condition. During the same period, the Shareholders also shall promptly notify Buyer of the occurrence of any breach of any covenant of the Company or the Shareholders in this Agreement, or of the occurrence of any event that

 

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may make the satisfaction of Buyer’s conditions to the Closing set forth in this Agreement impossible or unlikely.

 

(f) No Negotiation . Until such time as this Agreement shall be terminated pursuant to Section 9 hereof, or until the Closing hereof, neither Shareholder shall directly or indirectly solicit, initiate, encourage or entertain any inquiries or proposals from, discuss or negotiate with, provide any nonpublic information to or consider the merits of any inquiries or proposals from any Person (other than Buyer) relating to any business combination transaction involving the Company, including the sale by the Shareholders of the Shares, the merger or consolidation of the Company or the sale of the Company’s business or any of the assets (other than in the Ordinary Course of Business).

 

(g) Satisfaction of Conditions . The Shareholders shall use their best efforts in good faith to cause the conditions of Buyer to the Closing to be satisfied. As used in this Section 3.3(g) , “best efforts” mean the efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible; provided , however , that the Shareholders’ obligation to use best efforts, as set forth in this Section 3.3(g) , does not require the Shareholders to take actions that would result in a material adverse change in the benefits that the Shareholders are to receive pursuant to this Agreement.

 

(h) Manufacturing Technology Inc. International . The Shareholders agree to cause this entity, formed pursuant to Florida law, to file an amendment or other documentation necessary to change the name of this entity to a name which is dissimilar to the name of the Company, and to take all actions necessary to effectuate such name change, or alternatively to cause a dissolution of this entity.

 

3.4 Covenants of Buyer Prior to Closing .

 

(a) Required Consents . As promptly as practicable after the date of this Agreement, Buyer shall make, or cause to be made, all filings required by Law (including all filings under the HSR Act) to be made by it to consummate the contemplated transactions. Buyer also shall cooperate with the Shareholders (a) with respect to all filings the Shareholders shall be required by Law to make and (b) in obtaining all Consents; provided , however , that Buyer shall not be required to dispose of or make any change to its business, expend any material funds or incur any other burden in order to comply with this Section 3.4(a).

 

(b) Satisfaction of Conditions . Buyer shall use its best efforts in good faith to cause the conditions of the Shareholders to the Closing to be satisfied. As used in this Section 3.4(b) , “best efforts” mean the efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible; provided , however , that the Shareholders’ obligation to use best efforts, as set forth in this Section 3.4(b) , does not require the Shareholders to take actions that would result in a material adverse change in the benefits that the Shareholders are to receive pursuant to this Agreement.

 

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3.5 Conditions Precedent to Buyer’s Obligations to Close . Buyer’s obligation to consummate the transactions contemplated hereby and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part):

 

(a) Accuracy of Representations . All of the Shareholders’ representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually), shall have been accurate in all material respects as of the date of this Agreement, and shall be accurate in all material respects as of the time of the Closing as if then made, without giving effect to any supplemental information provided by the Shareholders after the date of this Agreement, and the Shareholders shall deliver to the Buyer a certificate dated as of the Closing Date to such effect; provided , however , that the accuracy of any such representations that are expressly made as of a particular date shall be evaluated as of said particular date.

 

(b) Shareholders’ Performance . All of the covenants and obligations that Shareholders are required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), shall have been duly performed and complied with in all material respects, and the Shareholders shall deliver to the Buyer a certificate dated as of the Closing Date to such effect.

 

(c) Consents . Each of the Consents listed on Schedule 4.6 and Schedule 4.7(b) shall have been obtained and shall be in full force and effect.

 

(d) No Proceedings . Since the date of this Agreement, there shall not have been commenced or threatened against Buyer, the Shareholders, or the Company any proceeding (a) involving any challenge to, or seeking damages or other relief in connection with, any of the contemplated transactions, or (b) that may have the effect of preventing, delaying, making illegal, imposing limitations or conditions on, or otherwise interfering with, any of the contemplated transactions.

 

(e) No Conflict . Neither the consummation nor the performance of any of the contemplated transactions will, directly or indirectly (with or without notice or lapse of time), materially contravene or conflict with, or result in a material violation of, or cause Buyer to suffer any material adverse consequence under any Laws or order that has been published, introduced or formally proposed by or before any Governmental Authority.

 

(f) Governmental Authorizations . Buyer shall have received the governmental authorizations and Permits necessary for the operation of the Company’s business as such business is conducted as of the date of this Agreement. All of such governmental authorizations and Permits are listed on Schedule 3.6(f) , attached hereto.

 

(g) Ancillary Agreements . The relevant Persons shall have entered into and delivered the Ancillary Agreements.

 

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(h) Additional Conditions . (i) The Company and the Shareholders shall have delivered true, correct, and complete copies of all documents and information required by this Agreement; and (ii) no material adverse change has occurred in the financial or legal condition of the Company, and the Company has carried on its business in the usual, regular, and ordinary course in substantially the same manner as heretofore conducted, and shall have used commercially reasonable efforts consistent with past practices and policies to preserve intact the Company’s current business operations, the services of its current officers and employees, and its relationships with customers, suppliers, and others having a business relationship with the Company.

 

3.6 Conditions Precedent to Shareholders’ Obligations to Close . The Shareholders’ obligations to consummate the transactions contemplated hereby and to take the other actions required to be taken by the Shareholders at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Shareholders in whole or in part):

 

(a) Accuracy of Representations . All of Buyer’s representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually), shall have been accurate in all material respects as of the date of this Agreement and shall be accurate in all material respects as of the time of the Closing as if then made.

 

(b) Buyer’s Performance . All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), shall have been performed and complied with in all material respects.

 

(c) No Injunction . There shall not be in effect any Law or any injunction or other order that prohibits the consummation of the contemplated transactions.

 

(d) Consents . Each of the Consents listed on Schedule 3.6(d) , attached hereto, shall have been obtained and shall be in full force and effect.

 

ARTICLE IV : REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

 

Each Shareholder jointly and severally represents and warrants to the Buyer as follows:

 

4.1 Existence and Good Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Florida and is duly authorized, qualified or licensed to do business, or will be as of the Closing Date duly authorized, qualified, or licensed to do business, as a foreign corporation in each of the jurisdictions set forth on Schedule 4.1 , which are the only jurisdictions in which the Company is required to be so qualified.

 

4.2 Power . The Company has all necessary corporate power and authority to (a) own, operate and lease its properties and assets as and where currently owned, operated and leased, and (b) carry on its business as currently conducted.

 

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4.3 Validity and Enforceability . Each Shareholder has the capacity or the requisite power and authority, as the case may be, to execute, deliver and perform such Shareholder’s obligations under this Agreement and each of the Ancillary Agreements to which he or she is a party. This Agreement has been duly executed and delivered by the Shareholders, and at the Closing, each of the Ancillary Agreements to which a Shareholder is a party shall be duly executed and delivered by such Shareholder. Assuming the due authorization, execution and delivery by the other parties to such agreements, such agreements represent the legal, valid and binding obligation of each Shareholder, enforceable against each Shareholder in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and other similar Laws and principles of equity affecting creditors’ rights and remedies generally. No further corporate or authorizing actions on the part of the Shareholders is or will be required to consummate the transactions contemplated by this Agreement or the Ancillary Agreements.

 

4.4 Capitalization of the Company . The authorized capital stock of the Company consists of 10,000,000 shares of Common Stock, of which 5,000 shares are issued and outstanding and all of which have been duly authorized and validly issued and are fully paid and non-assessable. There are no outstanding options, warrants, rights, calls, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities or other commitments, contingent or otherwise, of any kind obligating the Company to issue, directly or indirectly, any additional shares of its capital stock or other equity securities. The Shares represent the only issued and outstanding shares of capital stock of the Company. Other than this Agreement, there are no agreements, commitments or contracts relating to the issuance, sale, transfer or voting of any equity securities or other securities of the Company. Schedule 4.4 sets forth a true and complete statement of the capitalization of the Company. Except as set forth on Schedule 4.4 , the Company has no Subsidiaries and no Investments.

 

4.5 No Conflict . Neither the execution of this Agreement or the Ancillary Agreements by the Shareholders, nor the performance by each Shareholder of his or her obligations hereunder or thereunder will (a) violate or conflict with the Articles of Incorporation (or equivalent document) or the Bylaws (or equivalent document) of the Company or any Law or Order, including without limitation, the Federal Acquisition Regulations and supplements, and the Truth in Negotiations Act, (b) violate, conflict with or result in a breach or termination of, or otherwise give any Person additional rights or compensation under, or the right to terminate or accelerate, or constitute (with notice or lapse of time, or both) a default under the terms of any note, deed, lease, instrument, security agreement, mortgage, commitment, Contract, agreement, license or other instrument or oral understanding to which the Company or a Shareholder is a party or by which any of the assets or the properties of the Company are bound or (c) result in the creation or imposition of any Lien with respect to, or otherwise have an adverse effect upon, the Shares or any of the assets or properties of the Company.

 

4.6 Consents . Except as set forth on Schedule 4.6 , no Consent, approval or authorization of any third party or Governmental Authority is required in connection with the execution and delivery by the Shareholders of either this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby.

 

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4.7 Property .

 

(a) Title . Each Shareholder has good and marketable title to the Shares, free and clear of all Liens. Upon the consummation of the transactions contemplated by this Agreement, the Buyer will acquire good and valid title to the Shares, free and clear of all Liens. Except as set forth on Schedule 4.7(a) , the Company does not have any Real Property owned by a Governmental Authority in its possession or under its direct or indirect control. To the extent the Company has any Real Property owned by a Governmental Authority in its possession or under its direct or indirect control, the Company has possessed, controlled and maintained such Real Property in accordance with any and all requirements of the applicable Governmental Authorities. The Company does not own any Real Property.

 

(b) Real Property Leases . Schedule 4.7(b) sets forth a true and complete description of all real property leased, licensed to or otherwise used or occupied (but not owned) by the Company (collectively, the “ Leased Real Property ”) including the address thereof, the annual fixed rental, the expiration of the term, any extension options and any security deposits. A true and correct copy of each such lease, license or occupancy agreement, and any amendments thereto, with respect to the Leased Real Property (collectively, the “ Real Property Leases ”) has been delivered to the Buyer, and no changes have been made to any Real Property Leases since the date of delivery. All of the Leased Real Property is used or occupied by the Company pursuant to a Real Property Lease. Each Real Property Lease is in full force and effect and, as to the Company, is valid, binding and enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and other similar Laws and principles of equity affecting creditors’ rights and remedies generally. There are no existing defaults by the Company or the lessor under any of the Real Property Leases, and no event has occurred which (with notice, lapse of time or both) could reasonably be expected to constitute a breach or default under any of the Real Property Leases by the Company or any party or give any party the right to terminate, accelerate or modify any Real Property Lease. Except as set forth on Schedule 4.7(b) , (i) no consent is required from the lessor under any of the Real Property Leases in order to consummate the transactions contemplated by this Agreement and the Ancillary Agreements and (ii) no Affiliate of the Company or a Shareholder is the owner or lessor of any Leased Real Property.

 

(c) Tangible Personal Property . Schedule 4.7(c ) sets forth a true and complete list, by category, of all equipment, machinery and other similar tangible personal property, with an individual original cost of $5,000.00 or more, that is owned or leased by the Company (the “ Tangible Personal Property ”). The Company is in possession of all Tangible Personal Property. Except as listed on Schedule 4.7(c) , the Company does not have any tangible personal property owned by a Governmental Authority in its possession or under its direct or indirect control. To the extent the Company has any tangible personal property owned by a Governmental Authority in its possession or under its direct or indirect control, the Company has possessed, controlled and maintained such tangible personal property in accordance with any and all requirements of the applicable Governmental Authorities.

 

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(d) Absence of Violations .

 

(i) None of the Real Property or Tangible Personal Property, nor the leasing, occupancy and/or use of the Real Property or Tangible Personal Property is in violation of any Law, including, without limitation, any building, zoning, environmental or other ordinance, code, rule or regulation.

 

(ii) The condition and use of the Real Property conforms to each applicable certificate of occupancy and all other permits required to be issued in connection with the Real Property. The Company has obtained all permits necessary for the operation of the business of the Company at the Real Property, and all of such permits are listed on Schedule 4.16 hereto.

 

(e) Reassessments . There is not now pending, nor to the knowledge of the Shareholders contemplated, any reassessment of any parcel included in the Real Property that could result in a change in the rent, additional rent or other sums and charges payable by the Company under any agreement relating to the Real Property.

 

(f) No Condemnation . There is no pending, or to the knowledge of the Shareholders, threatened, condemnation, expropriation, eminent domain or similar proceeding affecting all or any portion of the Real Property. Neither the Company nor the Shareholders have received any written notice or oral notice of any such proceeding, and neither Shareholder has knowledge that any such proceeding is contemplated.

 

(g) Condition of Property . There are no material defects in, mechanical failure of, or damage to, the Real Property, and the mechanical, electrical and HVAC systems serving the Real Property are in good working condition, subject to normal wear and tear.

 

4.8 Litigation . There is no instance in which the Company is or has been, prior to the date of this Agreement (a) subject to any unsatisfied Order or (b) a party or, to the knowledge of the Shareholders, threatened to be made a party to, any complaint, action, suit, proceeding, hearing or investigation of any Person or Governmental Authority. No event has occurred or circumstances exist that could give rise to or serve as a legitimate basis for the commencement of any complaint, action, suit, proceeding, hearing or investigation of any Person or Governmental Authority. There are no judicial or administrative actions, proceedings or investigations pending or, to the knowledge of the Shareholders, threatened, that question the validity of this Agreement, the Ancillary Agreements or any of the transactions contemplated hereby or thereby. Without limiting the generality of the foregoing, there are no pending or, to the knowledge of the Shareholders, threatened (a) actions by any Governmental Authority to modify the zoning classification of, or to condemn or take by power of eminent domain (or purchase in lieu thereof), or to classify as a landmark, or otherwise to take or restrict in any way the right to use, develop or alter, all or any part of the Real Property, (b) claims under or pursuant to any warranty, whether express or implied, on products sold by the Company prior to the date of this Agreement, (c) product recalls or post sale warnings, or similar actions by any Governmental Authority, on products sold by the Company, (d) claims against the Company with respect to wrongful termination of any dealer, distributor or any other marketing entity,

 

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discriminatory pricing, price fixing, unfair competition, false advertising or any other claims relating to the violation of any Laws relating to anti-competitive practices or unfair trade practices of any kind, or (e) written notifications of performance or cost issues relating to the Company’s performance in connection with any Contract of any Governmental Authority. Notwithstanding the foregoing, the Company is not, and has not been, prior to the date of this Agreement, subject to any audit or investigation of any Governmental Authority regarding the Company’s Contracts or business that could be reasonably likely to result in, or has resulted in, a finding or determination on the part of the Governmental Authority that was unfavorable to the Company or its interests.

 

4.9 Compliance with Laws . The Company is now, and has been, in material compliance with all Laws and Orders, including, without limitation, those concerning (a) employment practices (including, without limitation, all payroll and payroll withholding practices associated therewith, the Fair Labor Standards Act, the Service Contract Act and the Office of Federal Contract Compliance Programs), (b) zoning, (c) delivery practices and procedures (including, without limitation, testing, inspection and disclosure of product specifications), (d) intellectual property, (e) anti-competitive practices or unfair trade practices of any kind, (f) the prices charged by the Company in connection with the marketing or sale of any products or services, and (g) all ITAR and foreign activities compliance requirements. To the knowledge of the Shareholders, there is no proposed Law or Order that would be applicable to the Company and that would adversely affect any assets, properties, liabilities, operations or prospects of the Company.

 

4.10 Necessary Property and Conditions of Property . The Company is the only operation through which the Company’s business is conducted. The assets and properties owned, leased or licensed by the Company (other than surplus assets not currently being used by the Company, the total value of which is less than $50,000.00, and for which there is no value reflected in the Financial Statements) are in good condition and repair (subject to normal wear and tear consistent with the age of the assets and properties), and constitute all of the assets and properties nece