ASSET PURCHASE AND SALE AGREEMENT
Dated as of September 23, 1998
By and Between
FERROFLUIDICS CORPORATION
As Seller
and
GENERAL SIGNAL TECHNOLOGY CORPORATION
As Buyer
TABLE OF CONTENTS
Page
1. TERMS OF PURCHASE AND SALE.................................................. 1
1.1 Purchase and Sale of Assets............................................ 1
1.2 Excluded Assets........................................................ 2
1.3 No Assumption of Liabilities........................................... 3
1.4 Purchase Price......................................................... 3
1.5 Payment of Purchase Price.............................................. 3
1.6 Allocation of Purchase Price........................................... 3
1.7 Information............................................................ 3
1.8 Instruments of Transfer and Conveyance................................. 4
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER................................ 4
2.1 Corporate Organization................................................ 4
2.2 Authorization, Binding Obligation .................................... 4
2.3 No Violations or Defaults ............................................ 4
2.4 Assets of the Division ............................................... 5
2.5 Title and Authority................................................... 5
2.6 Intellectual Property Rights.......................................... 5
2.7 Authorization and Compliance with Laws ............................... 7
2.8 Personnel ............................................................ 7
2.9 Litigation ........................................................... 7
2.10 Insurance ............................................................ 7
2.11 Customers ............................................................ 7
2.12 Ordinary Course of Business .......................................... 8
2.13 Hazardous Materials .................................................. 8
2.14 Finder's Fee.......................................................... 8
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER ................................ 8
3.1 Corporate Organization................................................ 8
3.2 Authorization; Binding Obligation .................................... 8
3.3 No Violations or Defaults............................................. 8
3.4 Finder's Fee ......................................................... 9
4. CLOSING..................................................................... 9
4.1 The Closing........................................................... 9
- i -
TABLE OF CONTENTS
(continued)
Page
4.2 Conditions to Buyer's Obligation to Closing........................... 9
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION ............................................................ 10
5.1 Survival of Representations and Warranties............................ 10
5.2 Buyer's Right to Indemnification...................................... 10
5.3 Limitation on Indemnity Obligations of the Seller..................... 10
5.4 Seller's Right to Indemnification..................................... 10
5.5 Indemnification Procedure............................................. 11
6. TRADEMARK LICENSE .......................................................... 11
7. EMPLOYEES .................................................................. 11
8. MEMC ELECTRONICS PURCHASE ORDERS............................................ 12
9. POST-CLOSING COVENANTS...................................................... 13
9.1 Return of Seller's Proprietary Materials and Property by Non-Continuing
Employees............................................................. 13
9.2 Right to Use Intellectual Property and Equipment Post-Closing ........ 13
9.3 Seller's Covenant of Non-Disclosure and Non-Competition............... 13
9.4 Maintenance of Insurance.............................................. 15
9.5 Enforcement of Third Party Non-Disclosure and Non-Competition
Agreements............................................................ 15
9.6 Warranties............................................................ 15
9.7 Maintenance of Supplies, Inventory and Equipment Post Closing......... 15
9.8 New Orders............................................................ 15
9.9 Facilities ........................................................... 16
9.10 Access to Employees................................................... 16
9.11 Pullthrough Seals .................................................... 16
9.12 Assignment of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Vision System License ................... 16
9.13 Further Assurances.................................................... 16
10. DEFINITIONS................................................................. 16
10.1 Affiliate............................................................. 17
10.2 Code.................................................................. 17
10.3 Person................................................................ 17
10.4 Environmental Law..................................................... 17
- ii -
TABLE OF CONTENTS
(continued)
Page
10.5 Hazardous Material.................................................... 17
10.6 Benefit Arrangement................................................... 17
10.7 Employee Benefit Plan ................................................ 18
10.8 ERISA ................................................................ 18
11. MISCELLANEOUS PROVISIONS ................................................... 18
11.1 Entire Agreement...................................................... 18
11.2 Governing Law......................................................... 18
11.3 Non-Waiver............................................................ 18
11.4 Severability.......................................................... 18
11.5 Amendments............................................................ 19
11.6 Successors............................................................ 19
11.7 Notices .............................................................. 19
11.8 Assignment............................................................ 19
11.9 Interpretation; Syntax ............................................... 19
11.10 Transactional Costs .................................................. 20
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ASSET PURCHASE AND SALE AGREEMENT
---------------------------------
THIS ASSET PURCHASE AND SALE AGREEMENT (the "Agreement") is made and
entered into effective as of the 23rd day of September, 1998 (the "Effective
Date"), by and between FERROFLUIDICS CORPORATION, a Massachusetts corporation
(the "Seller"), and GENERAL SIGNAL TECHNOLOGY CORPORATION, a Delaware
corporation (the "Buyer").
WITNESSETH:
WHEREAS, subject to the terms and conditions hereinafter set forth,
the Seller wishes to sell and transfer to the Buyer certain of the assets of the
Seller's Systems Division (the "Division"), which engages in the crystal growing
furnace business (the "Business"), and the Buyer wishes to purchase and acquire
from the Seller such assets.
NOW, THEREFORE, in order to consummate said purchase and sale, and in
consideration of the mutual representations, warranties, promises, covenants and
conditions set forth in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. TERMS OF PURCHASE AND SALE
1.1 Purchase and Sale of Assets. Except as provided in Section 1.2
hereto, the Seller agrees to sell, convey, transfer, assign and deliver to the
Buyer, and the Buyer agrees to purchase and acquire from the Seller, free and
clear of any pledge, lien, option, security interest, mortgage, encumbrance,
purchase rights, claims or any other limitations or restrictions whatsoever
(collectively, "Encumbrances") and for the Purchase Price specified in Section
1.4 hereof, all of the Seller's right, title and interest in and to all assets,
rights and contracts which are related solely to the Division, including, but
not limited to, those items listed below (collectively, the "Assets"):
(a) Subject to Section 9.12 hereto, all of the Seller's
intellectual property relating solely to the Division (the "Intellectual
Property"), including without limitation, the Intellectual Property listed on
Schedule 1.1 (a) hereto. Notwithstanding anything contained herein to the
contrary, it is agreed and understood by the parties hereto that the
Intellectual Property does not include any rights whatsoever to any patents,
patent applications, trade secrets, know-how, inventions, licenses, drawings,
research protocols, marketing studies or any other technical information or
technology owned or possessed by the Seller and relating to or used or held for
use in the manufacturing and marketing of (i) Ferrofluids (the "Ferrofluids
Business"), (ii) magnetic fluid seals and sealing subsystems (the "Sealing
Business") or (iii) components for thin film deposition devices (the "Film
Business");
(b) All of the Seller's inventory, in-house and at suppliers,
(including all CZ60, CZ120, CZ150 and CZ300 (including feeders) and Vertical
▇▇▇▇▇▇▇▇▇ Furnaces), other than one completed CZ-300 crystal growing furnace and
certain inventory and supplies retained by the Seller to fulfill customer orders
in backlog as of the Closing Date, including without limitation, the inventory
listed on Schedule 1.1(b) hereto;
(c) All of the Seller's unfulfilled customer orders in
backlog, which are listed on Schedule 1.1(c) hereto, remaining as of December
31, 1998, other than the purchase orders C.O. # S000256 and C.O. # S0001311 of
MEMC Electronic Materials, Inc.;
(d) To the extent that such covenants are assignable, all
covenants of non-disclosure and non-competition executed or running in favor of
the Seller or previously assigned to the Seller with respect to the Division or
the Assets, as described or in the copies of such covenants as are attached to
Schedule 1.1(d) hereto;
(e) Copies of all of the Seller's customer correspondence and
account histories relating to or used in the Division, including, without
limitation, such information contained in sales office and engineering files;
(f) All of the Seller's fixed assets used exclusively in the
Division listed on Schedule 1.1(f) hereto (the "Equipment");
(g) All tapes, adhesives, lubricants, fasteners, electrical
and mechanical hardware and all other materials treated as an expense in the
course of the manufacture, assembly, testing, alignment, calibration,
installation and operation of the Division products and purchasing information
for same;
(h) All of Seller's drawings, sketches, diagrams and all
other forms of formal and informal documentation relating exclusively to the
construction, operation and maintenance of the Division products in all existing
storage formats;
(i) All of the Seller's Manufacturing Information System
files, data and documentation in electronic and physical hard copy media
relating exclusively to the Division, including but not limited to, part master
file, bills of materials, purchase part specifications, open and closed
engineering change order and change request, sales order demand history,
actual/standard costing vendor master, vendor/manufacture cross reference, part
extended description, purchase order history and/or receipt history files;
(j) All of the Seller's existing written procedures, process
knowledge, notes, sketches, wiring lists, and marked drawings documented either
formally or informally in all existing storage media, relating exclusively to
Engineering, Sales, Customer Service, Manufacturing, Quality, Inspection,
Production and Inventory Control, Purchasing, Test, Installation, Field Service,
Process Development and other activities within the scope of the Division
developed by the Division or other personnel; and
(k) The right to use the "Ferrofluidics" name and the model
numbers of the Seller's products produced in the Division, only to the extent
described in Section 6 hereto.
1.2 Excluded Assets. The parties to this Agreement expressly
understand and agree that the Seller is not selling, assigning, transferring or
conveying to the Buyer any asset not listed in Section 1.1 or the Schedules
thereto, including without limitation, the following assets (collectively, the
"Excluded Assets"):
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(a) Any and all assets, tangible or intangible, used or held
for use in, or relating to the Ferrofluids Business, the Sealing Business or
the Film Business or otherwise not exclusively used in the Division;
(b) Any accounts receivable of the Seller arising out of the
sale and delivery of goods and services, whether or not in respect of the
Division or the Assets;
(c) Any cash on hand or in bank accounts or cash equivalents;
(d) Any insurance policies;
(e) Any of the Seller's right, title and interest in any
real estate, or
(f) Any of the Seller's permits, licenses, certificates,
approvals, registrations and authorizations relating to or used in the
Division.
1.3 No Assumption of Liabilities. The Buyer does not assume and shall
not be liable for any of the debts, obligations, liabilities, losses, damages,
claims, deficiencies, costs and expenses (including, but not limited to, the
amount of any settlement and all reasonable legal and other expenses incurred in
connection with the investigation, prosecution or defense of the matter) of any
nature whatsoever of the Seller, its stockholders or the Division in existence
or relating to events or matters in existence (including the customer orders in
backlog as of the Closing Date to be fulfilled by the Seller), or the conduct of
the Division or the ownership, use, operation, acquisition or disposition of the
Assets, on or before the Closing Date, or relating to the transactions
contemplated hereby and the Seller shall indemnify the Buyer with respect to all
such liabilities as set forth in Section 5.2 hereto.
1.4 Purchase Price. In full consideration of the Seller's performance
of this Agreement and the sale, assignment, transfer, conveyance and delivery of
the Assets, the Buyer shall pay to the Seller Ten Million Eight Hundred Thousand
Dollars ($10,800,000) (the "Purchase Price").
1.5 Payment of Purchase Price. The Purchase Price will be payable by
the Buyer at the Closing to or on behalf of the Seller, by wire transfer of
immediately available funds to the following account of the Seller: The Bank of
New Hampshire, ABA#O11400071, for credit to Ferrofluidics Corporation, Account
No. 206808021.
1.6 Allocation of Purchase Price. The Seller and the Buyer agree that
the Purchase Price shall be allocated among the Assets and the Non-Competition
Covenant set forth in Section 9.3(b) in accordance with their fair market values
set forth in the attached Schedule 1.6, and that each party shall report such
amounts on all Federal and state income tax returns in accordance with such
allocation.
1.7 Information. The Seller and the Buyer each shall cooperate with
the other after the Closing Date by providing without additional consideration
and promptly upon request, copies of such records and other information
regarding the Assets and the Division as may reasonably be requested from time
to time by the other party, and in particular as is necessary for the
preparation or audit of its Federal, state and local income and other tax
returns, third party and reimbursement filings, audits, disputes, refund claims
and other valid business purposes.
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1.8 Instruments of Transfer and Conveyance. The sale, conveyance,
transfer, assignment and delivery of the Assets, as provided in this Agreement
and in the documents, instruments and certificates delivered in connection
herewith or pursuant hereto (collectively, the "Operative Documents"), shall be
effected by delivery by the Seller at the Closing of such deeds, bills of sale,
endorsements, assignments, certificates, drafts, checks or other instruments of
transfer and conveyance (collectively, the "Transfer Documents") as the Buyer
and its counsel shall reasonably deem appropriate or desirable. The Seller
agrees that it will, from time to time on and after the Closing Date, upon the
Buyer's reasonable request and at its expense, promptly perform, execute, seal,
acknowledge, deliver and file, and cause to be performed, executed, sealed,
acknowledged, delivered and filed, all such further acts, deeds, certificates,
assignments, transfers, conveyances, powers of attorney, assurances and other
documents as may reasonably be requested by the Buyer to perfect the transfer of
the Assets and to carry out the terms of the Operative Documents, provided that
they are consistent with the Operative Documents.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER
As a material inducement to the Buyer to enter into each of the
Operative Documents and the transactions contemplated thereunder, the Seller
represents and warrants to the Buyer, such representations and warranties to be
true and correct on the date hereof, as follows:
2.1 Corporate Organization. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to own, lease and operate its
properties and to carry on its business as now conducted. The Seller is duly
qualified to do business as a foreign corporation in those jurisdictions, and
the Seller is licensed or qualified to conduct its business or own its property
in those jurisdictions where the failure to be so licensed or qualified would
have a material adverse effect on the Division.
2.2 Authorization, Binding Obligation. The execution and delivery of
the Operative Documents, the Transfer Documents and of each document, instrument
and certificate required thereby, and the consummation of the transactions
contemplated thereby, have been duly authorized by all requisite corporate
action of the Seller. The Seller has the right, power, and authority to execute,
deliver, and perform the Operative Documents, the Transfer Documents and each
document, instrument and certificate required thereby or delivered in connection
therewith, and the transactions contemplated thereby; and each Operative
Document, Transfer Document and each document, instrument and certificate
required thereby or delivered in connection therewith constitutes the legally
valid and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency or reorganization laws, or other laws relating to or affecting the
availability of the remedy of specific performance or equitable principles of
general application.
2.3 No Violations or Defaults. Except as disclosed on Schedule 2.3,
the execution, delivery and compliance with and performance by the Seller of the
Operative Documents, the Transfer Documents and each document, instrument and
certificate delivered in connection therewith do not and will not (i) violate
the Articles of Organization or By-laws of the Seller or any law, statute, rule,
regulation, order, judgment or decree to which the Seller is subject; (ii)
conflict with, or result in or constitute a default under, or breach or
violation of, or grounds for termination of, or an event which, with notice or
the lapse of time, or both, would constitute a default under, or breach or
violation of, or grounds for termination of, any agreement or instrument to
which the Seller is a party or by which
4
the Seller or any of the Assets may be bound, the termination of which would
materially adversely affect the Division or the Assets; (iii) result in the
creation or imposition of any Encumbrance upon any of the Assets; (iv) require
any approval or consent of any person under the organizational documents of the
Seller or any contract, agreement or other instrument to which the Seller is a
party or by which the Seller or the Assets are bound or to which the Seller or
the Assets are subject, the lack of which approval or consent would materially
adversely affect the Division; or (v) result in the termination, modification or
cancellation of or any requirement to transfer to the Buyer of any license,
permit, franchise, governmental authorization, permit, contract, clearance or
approval, the absence of which would materially adversely affect the Division.
2.4 Assets of the Division. Except as disclosed on Schedule 2.4, the
Intellectual Property constitutes all the material patents, patents pending,
applications for patents, trademark registrations, applications for trademark
registrations, tradenames, service marks, copyright registrations or
applications; technical documentation, prints, drawings, specifications and
notes thereto; trade secrets, know-how, show-how, manufacturing methods and
processes, and all licenses, claims, studies and undertakings related thereto
that are used in the operation of the Division.
2.5 Title and Authority. The Seller has good and marketable title to
the Assets and has full legal right, power, and authority to sell, assign,
transfer and deliver the Assets free and clear of all Encumbrances. All of the
Assets are free and clear of all Encumbrances.
2.6 Intellectual Property Rights.
(a) Except as listed in Schedule 2.6(a) attached hereto: (i)
the Seller, to the best of its knowledge, owns or has the right to use, free and
clear of any payment, encumbrance, title defect, lien or claim of ownership by
any third party, such Intellectual Property as is necessary to operate the
Division as now being operated and, to the best of Seller's knowledge, is not
infringing upon or in conflict with the asserted rights of others in such
Intellectual Property and is not making unauthorized use of any confidential
information or trade secrets of any other person; and (ii) there are no written
claims or demands of any other person, firm, corporation or business entity
pertaining to any of the Intellectual Property and no proceedings have been
instituted which challenge any of the rights of the Seller in respect thereto.
The Seller, to the best of its knowledge, has the right to use, free and clear
of claims or rights of others, designs, manufacturing or other processes and
documentation therefore, computer software, systems, data compilations, research
results and other information required for or incident to the Division as
presently conducted.
(b) All Intellectual Property owned by Seller is freely
transferable to Buyer. All licenses or other agreements under which Seller is
granted rights in Intellectual Property are in full force and effect, there is
no material default by any party thereto and, except as set forth on Schedule
2.6(b), all of Seller's rights thereunder are freely assignable or, where not
freely assignable, consent for such assignment to Buyer has been obtained. The
Seller hereby agrees that it will execute the requisite assignment documents,
and will comply with any contract provisions governing the transfer of any of
the Intellectual Property being transferred hereby, to legally transfer
ownership of the Intellectual Property being purchased hereby to the Buyer. True
and complete copies of all such licenses or other agreements, and any amendments
thereto, have been provided to Buyer.
(c) All licenses or other agreements under which Seller has
granted rights to others in Intellectual Property owned or licensed by Seller
are listed in Schedule 2.6(c). All of said
5
licenses or other agreements are in full force and effect, there is no material
default by any party thereto, and, except as set forth on Schedule 2.6(c), all
of Seller's rights thereunder are freely assignable. True and complete copies of
all such licenses or other agreements, and any amendments thereto, have been
provided to Buyer.
(d) The Seller represents that, to the best of its knowledge,
there are currently no claims, actions, suits, or proceedings, either pending or
threatened against the Seller or its Affiliates alleging that any of the
Intellectual Property being transferred hereby infringes any patents, or
violates any other intellectual property rights, of any third parties, or
alleging that any of the Intellectual Property being transferred hereby are
invalid or unenforceable.
(e) The Seller represents that it has no knowledge, or reason
to believe, that the past or present conduct of any third parties infringes, or
otherwise violates, any of the Intellectual Property rights being transferred
hereby.
(f) The Seller represents that it has not alleged
infringement, or any other violations, of any of the Intellectual Property being
transferred hereby by any third parties; that the Seller has not sent any
communication(s) to a third party requesting that such third party cease and
desist conduct based on potential violation(s) of any of the Intellectual
Property being transferred hereby; and that the Seller has not sent any
communication(s) to a third party suggesting or implying that such third party
needs to enter into a license agreement under any of the Intellectual Property
being transferred hereby.
(g) The Seller represents that none of the Intellectual
Property being transferred hereby is the subject of any judgment(s), order(s),
or other ruling(s) that would limit the Buyer's use of such property.
(h) The Seller, to the best of its knowledge, represents that
it has not engaged in any conduct, or omitted to perform any act, the result of
which could invalidate, or adversely affect the enforceability of, any of the
Intellectual Property being transferred hereby.
(i) With regard to any issued U.S. patents, and any pending
U.S. patent applications, being transferred hereby, the Seller represents that,
to the best of its knowledge, it has disclosed to the U.S. Patent Office all
prior art, which is material to the patentability of the claims of each such
patent and patent application, that was known to the Applicants (including the
Seller, the inventors, and the Seller's and/or inventors' representatives)
during the prosecution of each such patent and patent application; that it has
disclosed the best mode for carrying out the invention(s) claimed in each such
patent and patent application known to the inventors at the time of initial
filing for each such patent, or of each such patent application; and that it has
paid all required fees and performed all required acts necessary for maintaining
each such patent and patent application.
(j) The Seller represents and warrants that, to the best of
its knowledge, any trade secrets being transferred hereby were developed by the
Seller and its employees under appropriate secrecy safeguards, are not generally
known in the field of silicon crystal growing or semiconductor processing, have
been used for commercial advantage, have been maintained by the Seller subject
to appropriate secrecy safeguards, and lend a competitive advantage over those
without knowledge of such trade secrets.
6
(k) Subject to Section 9.2 hereof, the Seller shall continue
to maintain any trade secrets transferred hereby under the appropriate secrecy
safeguards, and, after such transfer, shall cease the use of any such trade
secrets, until such time as they become publicly known or available through no
unauthorized acts or conduct of the Seller. Notwithstanding the foregoing,
information, such as customer lists and materials specifications, which directly
pertains to the Seller's existing Sealing Business shall continue to be
available to the Seller after the transfer of such trade secrets.
(l) The Seller shall use its commercially reasonable efforts
to obtain all governmental or regulatory approvals, consents, or grants, and
make or cause to be made (or use its best efforts to assist the Buyer in making)
any declarations, filings, and registrations with governmental or regulatory
authorities (including those necessary for continued prosecution of any pending
patent applications, and necessary for any subsequent reissue or reexamination
proceedings concerning any of the patents, being transferred hereby), which are
necessary to consummate the transactions contemplated herein.
2.7 Authorization and Compliance with Laws. The Seller represents that
it presently holds all permits, licenses, certificates, approvals, registrations
and authorizations (collectively, the "Permits") necessary for the ownership of
the Assets, excepting only Permits the absence of which would not materially
adversely affect the Assets, and which can be obtained without additional
material cost. To the Seller's best knowledge, the Seller has not violated and
is in full compliance with all applicable law and regulations, including all
laws and regulations relating to employment, occupational safety and
environmental matters.
2.8 Personnel. There are no agreements by or on behalf of the Seller
with any union, trade association or other employee representative organization
with respect to the employees of the Division.
2.9 Litigation. Except as set forth on the attached Schedule 2.9, with
respect to the Division or the Assets, the Seller has no knowledge or actual
notice of any legal actions, suits, proceedings or arbitrations pending against
the Seller nor of any claims, controversies or investigations pending or
threatened against the Seller, and the Seller is not a party to or subject to
any judgment, order, writ, injunction or decree materially adversely affecting
the Division, or encumbering the Assets.
2.10 Insurance. The Seller represents that it has had, and currently
has general liability and product liability insurance covering its operations
through the policies listed in Schedule 2.10. The Seller represents that such
policies are in full force and effect, all premiums due thereon have been paid,
and that the Seller has complied in all material respects with the provisions of
such policies. The Seller has not recalled, at any time, any of the products
still produced by the Seller in the Division.
2.11 Customers. Except as set forth in Schedule 2.11, to the best of
the knowledge of the Seller, no material customer has canceled or otherwise
terminated, or threatened in writing to cancel or otherwise terminate, its
relationship with the Division or has during the past 12 months decreased
materially, or threatened in writing to decrease materially, its orders to the
Division, primarily because of issues of product quality. The Seller will
provide the Buyer with copies of all warranty claims and written customer
complaints concerning product quality received by the Seller with respect to the
Division within the previous three years from the date hereof. The Seller
7
acknowledges that the Buyer has not had the opportunity to contact the Seller's
customers of the Division.
2.12 Ordinary Course of Business. Since June 30, 1998 and continuing
through the Closing Date, the Division has been carried on only in the normal
and ordinary course and the Seller has maintained its books of account and
records relating to the Division in its usual, regular and ordinary manner.
2.13 Hazardous Materials. The Seller has not used Hazardous Materials
in connection with the Division and is not required pursuant to any
Environmental Law to report any inventory or release of Hazardous Material in
connection with the Division.
2.14 Finder's Fee. The Seller has no liability or obligation to pay
any fees or commissions to broker, finder or agent relating to or in connection
with the transactions contemplated by the Operative Documents, for which the
Buyer could become liable or obligated.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER
As a material inducement to the Seller to enter into each of the
Operative Documents and the transactions contemplated thereunder, the Buyer
hereby represents and warrants to the Seller, such representation and warranties
to be true and correct on the date hereof, as follows:
3.1 Corporate Organization. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the power to own and operate its properties and carry on its business as
now conducted and as contemplated by the transactions which are the subject of
the Operative Documents.
3.2 Authorization; Binding Obligation. The execution and delivery of
the Operative Documents, the Transfer Documents and of each document, instrument
and certificate required thereby, and the consummation of the transactions
contemplated thereby, have been duly authorized by all requisite corporate
action of the Buyer. The Buyer has the right, power, and authority to execute,
deliver, and perform the Operative Documents, the Transfer Documents and each
document, instrument and certificate required thereby or delivered in connection
therewith, and the transactions contemplated thereby; and each Operative
Document, Transfer Document and each document, instrument and certificate
required thereby or delivered in connection therewith constitutes the legally
valid and binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency or reorganization laws, or other laws relating to or affecting the
availability of the remedy of specific performance or equitable principles of
general application.
3.3 No Violations or Defaults. The execution, delivery and compliance
with and performance by the Buyer of the Operative Documents and each document,
instrument and certificate delivered in connection therewith do not and will
not: (i) violate the Articles of Organization or By-laws of the Buyer or any
law, statute, rule, regulation, order, judgment or decree to which the Buyer is
subject; (ii) conflict with, or result in or constitute a default under, or
breach or violation of, or grounds for termination of, or an event which, with
notice or the lapse of time, or both, would constitute a default under, or
breach or violation of, or grounds for termination of, any agreement or
instrument to which the Buyer is a party or by which the Buyer may be bound; or
(iii)
8
require any approval or consent of any person or entity under the organizational
documents of the Buyer or any contract, agreement or other instrument to which
the Buyer is a party or by which the Buyer is bound or to which the Buyer is
subject.
3.4 Finder's Fee. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder or agent relating to or in connection
with the transactions contemplated by the Operative Documents, for which the
Seller could become liable or obligated.
4. CLOSING
4.1 The Closing. The purchase and sale hereunder shall take place at a
closing (the "Closing") to be held at the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ on September 23, 1998 (the "Closing
Date"), or on such other date and at such other time as may be mutually agreed
upon by the Buyer and the Seller.
4.2 Conditions to Buyer's Obligation to Closing. The obligation of the
Buyer to consummate the transactions contemplated by this Agreement is subject
to satisfaction of the following conditions, on or prior to the Closing Date.
(a) The Seller shall deliver a General Assignment and ▇▇▇▇ of
Sale in the form attached hereto as Exhibit A executed by the Seller, and such
other Transfer Documents and agreements as the Buyer deems reasonably necessary
to effectuate the transfer of the Assets to the Buyer and to vest good and
marketable title to the Assets in the Buyer, free and clear of all Encumbrances,
including those documents designated herein for delivery by the Seller and
provided for as Schedules and/or Exhibits hereto and thereto;
(b) The Seller shall deliver corporate resolutions of the
Seller, certified as of the Closing Date by an officer of the Seller,
authorizing the Seller to undertake the transactions contemplated by the
Operative Documents and authorizing the Seller's signatories to execute the
Operative Documents, the Transfer Documents and each document, instrument and
certificate contemplated thereunder, such resolutions having been duly adopted
and being in full force and effect on the Closing Date;
(c) The Seller shall deliver Non-Competition Agreement
executed by ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. pursuant to Section 9.3(b) hereto; and
(d) The Seller shall have caused the Bank of New Hampshire
(the "Bank") to deliver documentation satisfactory to the Buyer, pursuant to
which the Bank shall have covenanted to the release of the Assets as collateral
upon the Closing, pursuant to (i) a certain Revolving Loan and Security
Agreement by and between the Seller and the Bank, dated June 24, 1994, (ii) a
$800,000 installment note to the Bank expiring January 25, 2001, and (iii) a
$1,500,000 promissory note to the Bank due November 26, 1998, and the
termination of any financing statements in connection therewith.
9
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
5.1 Survival of Representations and Warranties. All the
representations and warranties contained in the Operative Documents and in the
Schedules and Exhibits thereto shall survive the execution and delivery of and
the Closing under the Operative Documents for a period of twenty-four (24)
months.
5.2 Buyer's Right to Indemnification. The Seller hereby agrees to
indemnify and hold harmless the Buyer its officers, employees, agents,
successors and assigns from and against (i) any and all losses, obligations,
liabilities, damages, claims, deficiencies, costs and expenses (including, but
not limited to, the amount of any settlement and all reasonable legal and other
expenses incurred in connection with the investigation, prosecution or defense
of the matter), which may be asserted against or sustained or incurred by the
Buyer in connection with, arising out of, or relating to (a) any events or
matters in existence (including the customer orders in backlog as of the Closing
Date to be fulfilled by the Seller), or the conduct of the Division or the
ownership, use, operation, acquisition or disposition of the Assets, on or
before the Closing Date (the "Pre-Closing Liabilities"), (b) any inaccuracy in,
misrepresentation or breach of any of the representations, warranties,
agreements and covenants made by the Seller in the Operative Documents or in any
Schedule or Exhibit thereto; and (ii) any and all costs and expenses (including,
but not limited to, reasonable legal expenses) incurred by the Buyer in
connection with the enforcement of its rights under the Operative Documents.
5.3 Limitation on Indemnity Obligations of the Seller.
(a) Notwithstanding anything to the contrary in this
Agreement, and except as set forth in Section 5.3 (b) below, the Buyer shall not
be entitled to indemnification pursuant to Section 5.2 hereto until the
aggregate amount of all amounts paid and all other damages and losses of any
kind suffered by the Buyer exceeds $50,000, whereupon the Buyer shall be
entitled to indemnification pursuant to such Section 5.2 for all such amounts
paid, damages and losses exceeding $50,000 in the aggregate up to an aggregate
total amount of $2,000,000 indemnity under said Section 5.2.
(b) The limitations set forth in Section 5.3 (a) above shall
not apply to any amounts paid and other damages and losses suffered arising out
of, based upon or resulting from any, (i) Pre-Closing Liabilities or (ii) costs
and expenses (including, but not limited to, reasonable legal expenses) incurred
by the Buyer in connection with the enforcement of its rights under the
Operative Documents.
5.4 Seller's Right to Indemnification. The Buyer hereby agrees to
indemnify and hold harmless the Seller from and against (i) any and all losses,
obligations, liabilities, damages, claims, deficiencies, costs and expenses
(including, but not limited to, the amount of any settlement and all reasonable
legal and other expenses incurred in connection with the investigation,
prosecution or defense of the matter), which may be asserted against or
sustained or incurred by the Seller in connection with, arising out of, or
relating to any inaccuracy in, misrepresentation or breach of any of the
representations, warranties, agreements and covenants made by the Buyer in the
Operative Documents or in any Schedule or Exhibit thereto; and (ii) any and all
costs and expenses (including, but not limited to, reasonable legal expenses)
incurred by the Seller in connection with the enforcement of its rights under
the Operative Documents.
10
5.5 Indemnification Procedure. Any party claiming any right of
indemnification under the Operative Documents ("Indemnified Party"), including
any rights as a result of a third party's claim or threatened claim against the
Indemnified Party (a "Third Party Claim"), shall promptly notify the other party
("Indemnifying Party") pursuant to the provisions hereof, specifying the nature
of the claim and the amount or the estimated amount thereof, and giving notice
of any fact upon which the Indemnified Party intends to base a claim for
indemnification hereunder (a "Claim Notice"). In the case of a Third Party
Claim, the Indemnifying Party shall have thirty (30) days (or, if shorter, a
period to a date not less than the date when a responsive pleading or other
document is required to be filed giving effect to any available extension) (the
"Notice Period") to notify the Indemnified Party (a) whether or not it disputes
its liability for indemnification of the Third Party Claim and (b) if liability
is not disputed, whether or not it desires to defend the Indemnified Party. If
the Indemnifying Party elects to defend by appropriate proceedings, such
proceedings shall be promptly settled or prosecuted to a final conclusion in
such a manner as is reasonably calculated to avoid any risk of damage to the
Indemnified Party or the Assets; and all costs and expenses of such proceedings
and the amount of any judgment or settlement shall be paid by the Indemnifying
Party.
If the Indemnifying Party has disputed its liability for the Third
Party Claim, as provided above, the Indemnified Party shall have the right to
control the defense or settlement of such action, in its discretion, and shall
be reimbursed by the Indemnifying Party for the costs and expenses of such
defense if it shall thereafter be found that such Third Party Claim was subject
to indemnification by the Indemnifying Party hereunder.
In the event that the Indemnified Party should have a claim for
indemnification hereunder which does not involve a Third Party Claim being
asserted against it or sought to be collected by a third party, the Indemnified
Party shall promptly send a Claim Notice with respect to such claim to the
Indemnifying Party, such notice containing a statement that the Indemnifying
Party must notify the Indemnified Party within one hundred and twenty (120) days
if it disputes the claim, or pay the claim if it does not provide such notice.
If the Indemnifying Party does not notify the Indemnified Party within one
hundred and twenty (120) days following its receipt of such Claim Notice that it
disputes such claim, the Indemnifying Party shall pay the amount thereof to the
Indemnified Party.
6. TRADEMARK LICENSE. Effective as of the Closing Date and until the
fifth (5th) anniversary of the Closing Date, the Buyer and its affiliates shall
have the exclusive, royalty free right and license to use the trade name
"Ferrofluidics Crystal Growing Systems" and the model numbers of the Seller's
products produced in the Division, solely for the purposes of identifying those
products formerly produced by the Seller in the Division as then currently being
produced by the Buyer. Nonetheless, the Buyer shall have the perpetual right to
represent that it has acquired the Division from the Seller. All other uses of
the "Ferrofluidics" name, including without limitation, any name that includes
"Ferro," "Ferrofluid," "Ferrofluidic," "Ferromedic," or "FerroSound," by the
Buyer or any of its affiliates, whether now existing or hereinafter arising,
shall be strictly prohibited. The Buyer shall not use such name and model
numbers in such a manner so as to give the impression that the Buyer is in fact
the Seller or has acquired or become the corporate successor of the Seller.
7. EMPLOYEES
(a) The Seller's employees or independent contractors listed
on Schedule 7 are those employees or independent contractors whose services or
responsibilities relate to the Division
11
(collectively, the "Division Workers"). Except as provided below, the Seller
shall continue to retain the Division Workers' services following the Closing
Date until at least December 31, 1998; provided, however, that the Seller may
terminate a Division Worker's services during such period (i) for cause upon
providing at least three business days prior written notice to the Buyer or (ii)
at such time as the Seller determines the services of such Division Worker are
no longer needed by the Seller upon providing at least ten days prior written
notice Buyer. The Buyer shall have the right, but not the obligation, to
employee such Division Worker after terminating employment with the Seller. The
Seller shall be exclusively responsible to provide compensation and benefits to
Division Workers for all periods of engagement with the Seller, including but
not limited to accrued vacation, bonuses, overtime, welfare coverage and
retirement benefits, and shall discharge these obligations for Division Workers
retained by the Buyer under Section 7(b) below pursuant to existing plan terms
and applicable legal requirements. Any other liabilities, costs and expenses
relating to services provided at any time by Division Workers while employed by
the Seller, including but not limited to workplace injuries and worker
negligence, other than with respect to services provided to or on behalf of the
Buyer, shall not be the Buyer's responsibility.
(b) The Buyer shall employ at least ten Division Workers
chosen in its sole discretion after termination by the Seller. If the Buyer
offers employment or a consulting arrangement to a Division Worker, the Seller
shall (i) terminate the Division Worker's services and (ii) pay any termination
related expenses, if any. The Seller shall encourage the Division Workers who
are offered employment by the Buyer to accept such employment with the Buyer.
The Seller shall assume exclusive responsibility for paying all termination
related expenses, if any, triggered in connection with this Agreement.
(c) The Seller will refrain and will use its best efforts to
cause its Affiliates to refrain from offering employment or other engagements to
Division Workers from the Closing Date through December 31, 1998, without the
prior written consent of the Buyer. Thereafter, the Seller or any Affiliate may
offer employment to any Division Worker who is not offered or did not accept
employment with the Buyer prior to January 1, 1999. The Seller agrees to provide
the Buyer, in a complete, diligent and timely manner after the Closing Date all
information regarding the Division Workers as the Buyer may reasonably request,
including but not limited to compensation, service and other information as may
be appropriate or useful in determining to whom and on what terms it will extend
offers of employment or other engagements, provided, however, that the Buyer
shall not request the Seller to provide and the Seller shall not provide the
Buyer with any recommendations or opinions with respect to which Division
Workers the Buyer should extend such offers of employment. The Seller shall make
Division Workers reasonably available for the Buyer solicitation from the
Closing Date to December 31, 1998.
(d) Nothing herein, express or implied, is intended to confer
on any Division Worker or his or her legal or other representatives or
beneficiaries any rights or remedies of any nature or kind whatsoever under or
by reason of this Agreement including, without limitation, any right to
continued employment or to any severance or other benefits from the Seller, the
Buyer or any of their respective Affiliates.
8. MEMC ELECTRONICS PURCHASE ORDERS. As of December 31, 1998, to the
extent the purchase orders C.O. # S000256 and C.O. # S0001311 from MEMC
Electronic Materials, Inc. (the "MEMC Purchase Orders") have not been fulfilled
by the Seller, the Seller shall place a purchase order with the Buyer (the
"Seller Purchase Order") to manufacture those products not yet
12
delivered by the Seller under the MEMC Purchase Orders. The MEMC Purchase Orders
shall remain the property of the Seller and the Seller shall have the full
responsibility to ▇▇▇▇ and collect the MEMC Purchase Orders and provide all
services required under the warranty of such products. The Seller Purchase Order
placed with the Buyer by the Seller shall be priced according to the following
formula: P = (CSP-SC-$10,000) x 0.5, where P is the price per machine paid to
the Buyer, CSP is the price per machine charged to the customer (including
options, if any) and SC is the standard cost of the machine (including options,
if any) as recorded in the Seller's cost accounting system. Upon receipt of
written notice from the Buyer as described below, the Seller shall, commencing
on November 30, 1999, use its commercially reasonable efforts to obtain the
consent of MEMC Electronic Materials, Inc. ("MEMC") to the assignment of the
MEMC Purchase Orders to the Buyer; provided, however, that in the event the
Seller obtains such consent prior to December 31, 1999, such assignment shall
not become effective until December 31, 1999. If the Buyer intends to acquire
the MEMC Purchase Orders, the Buyer shall provide the Seller with written notice
to such effect no later than November 30, 1999.
9. POST-CLOSING COVENANTS
9.1 Return of Seller's Proprietary Materials and Property by
Non-Continuing Employees. The Seller hereby agrees that it will cause any of its
employees who do not continue their employment with the Buyer to return to the
Seller (for the benefit of the Buyer) forthwith following the Closing all
proprietary information and property of the Seller in such employees' possession
or control.
9.2 Right to Use Intellectual Property and Equipment Post-Closing.
From the Closing Date, the Buyer hereby agrees that the Seller shall have the
right to utilize at no cost to the Seller, the Intellectual Property and the
Equipment to the extent, and only to such extent, reasonably necessary for the
Seller (i) to fulfill customer orders in backlog as of the Closing Date until
December 31, 1998 and (ii) to fulfill its warranty obligations with respect to
products relating to the Division sold or produced by the Seller on or before
December 31, 1998 or sold pursuant to purchase orders C.O. #S000256 and C.O.
#S0001311. The Seller hereby agrees that it shall not utilize the Assets other
than pursuant to this Section 9.2 and Section 9.8 for any reason whatsoever. If
the inventory retained by the Seller is insufficient for the Seller to fulfill
the customer orders in backlog as of the Closing Date, the Buyer shall have no
obligation to provide inventory to the Seller and the Seller shall be fully
responsible for procuring such inventory.
9.3 Seller's Covenant of Non-Disclosure and Non-Competition. The
Seller acknowledges that the success of the business of the Buyer (including
without limitation after giving effect to the sale and transfer of the Assets to
the Buyer at the Closing) depends upon both the absence of competition from the
Seller and ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., and the continued preservation of the
confidentiality of certain information possessed by the Seller and ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇., that an absence of such competition and the preservation of the
confidentiality of such information is an essential premise of the bargain
between the Seller and the Buyer, and that the Buyer would be unwilling to enter
into this Agreement in the absence of this Section 9.3. Accordingly, the Seller
hereby agrees with the Buyer as follows:
(a) Confidentiality Covenant. Neither the Seller nor ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇. will, at any time, directly or indirectly, without the prior written
consent of the Buyer, disclose or use, in any way harmful to the business,
operations, assets, prospects or condition, financial or otherwise, of the
13
Buyer, or otherwise contrary to the interests of the Buyer, any proprietary or
Confidential Information (as defined below) involving or relating to the
Division past, present or future, actual or prospective; provided, however, that
such information shall not include any information known generally to the public
(other than as a result of disclosure in violation hereof by the Seller or ▇▇▇▇
▇. ▇▇▇▇▇, ▇▇.); and provided, further, that the provisions of this Section
9.3(a) shall not prohibit any disclosure required by law in connection with any
judicial or administrative proceeding or inquiry. "Confidential Information"
includes, but is not limited to, information relating to the Division which is
not generally known to those outside of the Division relating to (i) the
business, conduct or operations of the Division, (ii) any materials, apparatus,
processes, methods, ways of business, programs, formulae, technology, research,
development, or Intellectual Property, (iii) any customer lists, or customer
requirements and preferences (iv) any supplier lists or supplier requirements
and preferences, (v) financial information or business plans, or (vi) any other
information about or generated by the Seller which could, if disclosed, be
useful to any competitors of the Division. Notwithstanding the foregoing, it
shall not be a violation of this Section 9.3(a) for the Seller to disclose or
use Confidential Information, in the ordinary course of business, in connection
with (i) the fulfillment of its customer orders for the sale of products or
services relating to the Division existing as of the Closing Date on or before
December 31, 1998, (ii) the performance of its warranty obligations with respect
to products relating to the Division sold or produced by the Seller on or before
December 31, 1998 or sold pursuant to customer orders C.O. #S000256 and C.O.
#S0001311, (iii) the acceptance of orders for and perform repair work relating
to rotary feedthroughs with magnetic fluid sealing, and (iv) manufacturing and
selling products, providing services or conducting any other type of activity
relating to the Ferrofluids Business, the Sealing Business, the Film Business,
to or with any customer, without exception. This Confidentiality covenant shall
survive the Closing.
(b) Non-Competition Covenant. For a period of five (5) years following
the Closing Date (the "Non-Competition Term"), neither the Seller nor ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇. shall, directly or indirectly, (i) develop, acquire, own, manage,
operate, control or participate directly or indirectly in any manner in the
acquisition, ownership, management, operation or control of, or be connected as
an officer, employee, partner, director, principal, consultant, agent or
otherwise with, or have any financial interest in, or aid or assist anyone else
in the conduct of, any business, venture or activity relating to or involving
the Business regardless of location (including the provision of replacement or
spare parts relating to the Business), (ii) recruit or otherwise seek to induce
any employee of the Buyer to terminate his or her employment or violate any
agreement with or duty to the Buyer or hire any such employee, (iii) solicit or
encourage any Person who is a customer or supplier of the Buyer to terminate its
relationship with the Buyer, or (iv) encourage any of the Division Workers to
take up employment with any Person whose activities, products or services are
competitive with those of the Kayex division of the Buyer. Notwithstanding the
foregoing, it shall not be a violation of this Section 9.3(b) for the Seller to,
during the Non-Competition Term, (i) fulfill its customer orders for the sale of
products or services relating to the Division existing as of the Closing Date on
or before December 31, 1998, (ii) perform its warranty obligations with respect
to products relating to the Division sold or produced by the Seller on or before
December 31, 1998 or sold pursuant to customer orders C.O. #S000256 and C.O.
#SOOO1311, (iii) accept orders for and perform repair work relating to rotary
feedthroughs with magnetic fluid sealing, and (iv) manufacture and sell
products, provide services or conduct any other type of activity relating to the
Ferrofluids Business, the Sealing Business, the Film Business, to or with any
customer, without exception. This Non-Competition Covenant shall survive the
Closing. As a condition precedent to the Buyer's obligation to close under this
Agreement, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. shall deliver to the Buyer at Closing a Non-
14
Competition Agreement incorporating the foregoing terms, in substantially the
form of Exhibit B attached hereto.
(c) Enforcement. The Seller acknowledges and agrees that,
because the legal remedies of the Buyer may be inadequate in the event of a
breach of, or other failure to perform, any of the covenants and obligations set
forth in this Section 9.3, the Buyer may, in addition to obtaining any other
remedy or relief available to it (including without limitation consequential and
other damages at law), enforce this Section 9.3 by injunction and other
equitable remedies. The Seller also acknowledges and agrees that no breach by
the Buyer of, or other failure by the Buyer to perform, any of the covenants and
obligations of the Buyer under this Agreement or otherwise shall relieve the
Seller of its obligations under this Section 9.3.
(d) Severability; etc. The parties agree that the provisions
set forth in this Section 9.3, including without limitation as to duration and
geographic scope, are reasonable to protect the legitimate interests of the
Buyer and the good will of the Division after the purchase of the Assets by the
Buyer. The provisions of this Section 9.3 are severable, and in the event that
any provision hereof should, for any reason, be held invalid or unenforceable in
any respect, it shall not invalidate, render unenforceable or otherwise affect
any other provision hereof, and such invalid or unenforceable provision shall be
construed by limiting it so as to be valid and enforceable to the maximum extent
compatible with, and possible under, applicable law.
9.4 Maintenance of Insurance. The Seller agrees that it will maintain
for a period of three years product liability insurance in an amount customarily
carried by Persons engaged in the Business.
9.5 Enforcement of Third Party Non-Disclosure and Non-Competition
Agreements. The Seller agrees that it shall strictly enforce those covenants of
non-disclosure and non-competition executed or running in favor of the Seller or
previously assigned to the Seller with respect to the Business or the Assets
that are not assignable to the Buyer, upon the written request of the Buyer to
enforce such covenants. The Buyer shall reimburse the Seller for all
out-of-pocket expenses related to such enforcement.
9.6 Warranties. The Seller agrees that it shall be responsible for any
and all service required by the warranties of those products relating to the
Division sold or produced by the Seller on or before December 3l, l998 or sold
pursuant to purchase orders C.O. #S000256 and C.O. #S000l3ll.
9.7 Maintenance of Supplies, Inventory and Equipment Post Closing. The
Seller agrees that through December 3l, l998 it shall undertake all such
commercially reasonable actions to maintain the Equipment and inventory acquired
by the Buyer in such working order as that Equipment and inventory was in as of
the Closing Date, including the repair thereof, subject to normal wear and tear.
9.8 New Orders. The Seller hereby agrees that it shall not accept any
orders for any products or parts related to the Division, after the Closing Date
and shall promptly refer all such orders to the Buyer, provided, however, that
the Seller may accept orders for (i) the repair of rotary feedthroughs with
magnetic fluid sealing and (ii) through the second anniversary of the Closing
Date, the sale of the MCZ-300 Crystal Growing Furnace currently on the Seller's
production floor. Upon the second anniversary of the Closing Date, the Seller
shall transfer the MCZ-300 Crystal Growing Furnace to
15
the Buyer at no additional cost if the Seller has not sold such unit for its
fair market value. The Seller agrees that upon the written request of the Buyer
it shall ship those parts that are the property of the Buyer pursuant to such
written request at the sole expense of the Buyer. The Seller shall provide the
Buyer subcontract work on orders referred to the Buyer on or before December 31,
1998 to the extent requested by the Buyer on mutually agreeable terms.
9.9 Facilities. The Seller agrees that it shall not (i) close on the
sale of, or (ii) lease the facilities utilized by the Division on or before
December 31, 1998 and that it shall operate such facilities in the ordinary
course of business so as to prevent damage or theft of the inventory, supplies
and equipment acquired by the Buyer remaining at such facilities.
9.10 Access to Employees. The Seller agrees that, to the extent that
Division Workers in possession of knowledge or expertise pertaining to the sale,
design, manufacture, installation, service or other activity within the scope of
the Division remain employed by the Seller following the Closing Date, for a
period of two (2) years following the Closing Date, the Seller shall, upon the
reasonable request of the Buyer, use its commercially reasonable efforts to make
such individuals reasonably promptly available to the Buyer at locations and for
durations of time to be mutually agreed upon. The Buyer shall compensate the
Seller for costs (including salary and benefits) related to this covenant on a
mutually determined basis to the extent that the Buyer utilizes the Seller's
employees for a period of one-half day at a time.
9.11 Pullthrough Seals. (a) The Buyer agrees to incorporate the
Seller's pullthrough seals into the Buyer's existing grower design, if the
Seller makes such pullthrough seals available to the Buyer at a commercially
competitive cost.
(b) The Buyer agrees to facilitate for a period of two years following
the Closing Date the investigation of the use and sale of the Seller's
pullthrough seal designs by other operating units of General Signal Corporation,
including Lightnin.
9.12 Assignment of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Vision System License. The Seller
will use its commercially reasonable efforts to obtain the consent of MEMC to
the assignment by the Seller to the Buyer of that certain License Agreement
between the Seller and MEMC dated May 28, 1996 with respect to the ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Vision System License.
9.13 Further Assurances. Each of the parties hereto after the Closing,
upon the request from time to time of any other party hereto and without further
consideration, will do each and every act and thing as may be necessary or
reasonably requested to consummate the transactions contemplated hereby and to
effect an orderly transfer to the Buyer of the Assets, including without
limitation executing, acknowledging and delivering assurances, assignments,
powers of attorney and other documents and instruments, furnishing information
and copies of documents, books and records (including without limitation tax
records); filing reports, returns, applications, filings and other documents and
instruments with governmental authorities; and cooperating with each other party
hereto in exercising any right or pursuing any claim, whether by litigation or
otherwise, other than rights and claims running against the party from whom or
which such cooperation is requested.
10. DEFINITIONS
For purposes of this Agreement:
16
10.1 Affiliate. The term "Affiliate" mean (i) any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with the Seller (or other specified Person), (ii) any Person who is or has been
within five years of the time in question an officer, director or direct or
indirect beneficial holder of at least 5% of any class of the outstanding
capital stock of the Seller (or other specified Person), and (iii) any person of
which the Seller (or other specified Person) or an Affiliate (as defined in
clause (ii) above) thereof shall, directly or indirectly, beneficially own at
least 10% of any class of outstanding capital stock or other evidence of
beneficial interest.
10.2 Code. The term "Code" shall mean the federal Internal Revenue
Code of 1986 or any successor statute, and the rules and regulations thereunder,
and in the case of any referenced section of any such statute, rule or
regulation, any successor section thereto, collectively and as from time to time
amended and in effect.
10.3 Person. The term "Person" shall mean any individual, partnership,
corporation, association, trust, joint venture, unincorporated organization, or
entity, and any government, governmental department or agency or political
subdivision thereof.
10.4 Environmental Law. The term "Environmental Law" shall mean any
environmental or health and safety-related law, regulation, rule, ordinance, or
by-law at the federal, state, county, regional, or local level, whether existing
as of the date hereof, previously enforced, or subsequently enacted, including
without limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. 9601 et seq., the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. 5101 et seq., the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq., the Federal
Clean Water Act, as amended, 33 U.S.C. 1251 et seq., the Federal Clean Air Act,
as amended, 42 U.S.C. 7401 et seq., the Occupational Safety and Health Act, 29
U.S.C. 651 et seq., similar state and local requirements, any other requirements
regulating or in any way pertaining to Hazardous Materials, and any requirements
pertaining to environmental or health and safety matters that are set forth in a
permit, license, approval, consent, authorization, or order issued by, or an
agreement with, a governmental agency or in an order or decision issued by a
court.
10.5 Hazardous Material. The term "Hazardous Material" shall mean any
pollutant, contaminant, toxic substance, hazardous waste, hazardous material, or
hazardous substance, or any oil, petroleum, or petroleum product, as defined in
or pursuant to, or which is or becomes prohibited, limited, or regulated under,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. 9601 et seq., the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. 5101 et seq., the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901 et seq., the Federal Clean Water Act, as
amended, 33 U.S.C. 1251 et seq., the Federal Clean Air Act, as amended, 42
U.S.C. 7401 et seq., the Occupational Safety and Health Act, 29 U.S.C. 651 et
seq. or any other Environmental Law.
10.6 Benefit Arrangement. The term "Benefit Arrangement" shall mean
any benefit arrangement that is not an Employee Benefit Plan, including (i) any
employment or consulting agreement, (ii) any arrangement providing for insurance
coverage or workers' compensation benefits, (iii) any incentive bonus or
deferred bonus arrangement, (iv) each arrangement providing for termination
allowance, severance or similar benefits, (v) any equity compensation plan, (vi)
any
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deferred compensation plan and (vii) each compensation policy and practice
maintained by either the Seller or any ERISA Affiliate of either of them
covering the employees, former employees, and the beneficiaries of any of them.
10.7 Employee Benefit Plan. The term "Employee Benefit Plan" shall
mean any employee benefit plan, as defined in ss.3(3) of ERISA, including any
multiemployer plan.
10.8 ERISA. The term "ERISA" shall mean the Federal Employee
Retirement Income Security Act of 1974 or any successor statute, and the rules
and regulations thereunder, and in the case of any referenced section of any
such statute, rule or regulation, any successor section thereto, collectively
and as from time to time amended and in effect.
11. MISCELLANEOUS PROVISIONS
11.1 Entire Agreement. The Operative Documents, together with the
Schedules and Exhibits thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements and understandings, whether oral or written, between
the parties with respect to the subject matter hereof, and there are no
agreements between the parties in connection with the subject matter hereof
except as set forth or referred to herein. No alteration or modification of an
Operative Document shall be valid unless in writing and executed by each of the
parties thereto.
11.2 Governing Law. The Operative Documents shall be governed and
interpreted in accordance with, and the rights of the parties shall be
determined by, the internal laws of the Commonwealth of Massachusetts, without
giving effect to its conflict of law principles. The Operative Documents shall
be deemed to have been made in Massachusetts and will be specifically
enforceable in any court of competent jurisdiction in Massachusetts. The parties
agree to jurisdiction and venue in the federal and state courts within the
Commonwealth of Massachusetts for all disputes and enforcement actions under
this Agreement.
11.3 Non-Waiver. Failure by any party on any occasion to insist upon
strict adherence to any term or provision of an Operative Document shall not be
considered a waiver and shall not deprive that party of its right thereafter to
enforce that or any other term or provision of such Operative Document.
11.4 Severability. If any provision of an Operative Document shall be
declared invalid or illegal for any reason whatsoever, then notwithstanding such
invalidity or illegality, the remaining terms and provisions of such Operative
Document shall remain in full force and effect in the same manner as if the
invalid or illegal provision had not been contained herein, and the parties
hereby agree to substitute for the invalid or illegal provision a valid and
legal provision which most closely approximates the effect and intent of the
invalid or illegal provision. As to any restriction, covenant or agreement
contained in any Operative Document which may be unenforceable on account of its
scope or duration, such Operative Document shall be deemed to have been
automatically amended as if agreed to by the parties thereto on the date of
execution thereof to provide for the broadest scope and longest time period that
will result in such restriction, covenant or agreement remaining valid,
enforceable and binding on the parties.
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11.5 Amendments. No alteration or modification of the Operative
Documents shall be valid unless made in writing and executed by each of the
parties hereto.
11.6 Successors. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and to their respective successors and
assigns.
11.7 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered personally, sent by Federal Express or other similar overnight
delivery service providing evidence of receipt, or mailed via certified mail,
return receipt requested, postage prepaid as follows:
(a) If to the Seller:
To: Ferrofluidics Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
with a copy to: ▇▇▇▇▇▇ ▇. Cable, Esq.
▇▇▇▇▇▇▇, Procter & ▇▇▇▇, LLP
Exchange Place
Boston, Massachusetts 02109
(a) If to the Buyer:
To: Kayex
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address or addresses as either party may from time to time
designate in a written notice given in accordance with the provisions hereof.
11.8 Assignment. Neither party may assign this Agreement without the
express written consent of the other party.
11.9 Interpretation; Syntax. The section headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement. All references made and pronouns
used herein shall be construed in the singular or plural, and in such gender as
the sense and circumstances require.
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11.10 Transactional Costs. Each party to the Operative Documents shall
be responsible for its own legal, accounting and other consulting services, if
any, attendant to the negotiation and drafting of this Agreement and to the
transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement under seal as of the date first written above.
SELLER: FERROFLUIDICS CORPORATION.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
BUYER: GENERAL SIGNAL TECHNOLOGY
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------