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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of
the 1st day of October, 1997 ("Effective Date"), by and between ELECTRONIC
DESIGNS, INC., a corporation organized and existing under the laws of the State
of Delaware with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ("Seller"), and ADVANCED REFRACTORY TECHNOLOGIES,
INC., a corporation organized and existing under the laws of the State of New
York with its principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ("Buyer").
WHEREAS Seller is engaged in the synthetic diamond films and coating
business and the manufacture of diamond using chemical vapor deposition at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Premises") ("Crystallume
Business");
WHEREAS Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all of the rights, properties and assets of Seller
which are necessary or used in connection with the Crystallume Business, upon
the terms and conditions set forth herein; and
WHEREAS Seller reserves no right, title or interest in or to the
Crystallume Business other than as provided in the Security Agreement (as
hereinafter defined) and the Royalty Agreement (as hereinafter defined).
NOW THEREFORE, in consideration of the representations, warranties and
agreements of the parties hereto (individually, a "Party"; collectively, the
"Parties") hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, the Parties
hereby agree as follows:
ARTICLE 1
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PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets. Subject to the terms and conditions of
this Agreement, Buyer hereby agrees to purchase, accept and acquire from Seller,
and Seller hereby agrees to sell, transfer, assign, convey and deliver to Buyer
(or Buyer's assignee), at the Closing (as hereinafter defined), all right, title
and interest of Seller in and to all of the rights, properties and assets of
every kind and type, tangible and intangible, real and personal, which are
necessary or used for the operation of the Crystallume Business or otherwise
primarily relate to the Crystallume Business, as owned or held by Seller,
wherever located, free and clear of all liens and encumbrances of any kind other
than the Assumed Liabilities (as hereinafter defined), but excluding the
Excluded Assets (as hereinafter defined), (collectively, the "Purchased
Assets"). Without in any way limiting the generality of the foregoing, the
Purchased Assets shall include, without limitation, all right, title and
interest of any kind owned or held by Seller in or to the following:
a. Inventory - the supplies, raw materials, work-in-process,
finished goods inventories, including, without limitation, all materials and
goods in transit and at all locations, set forth on Schedule 1.1a attached
hereto and made a part hereof, adjusted to reflect changes in the level and
composition of such inventories occurring in the ordinary course of business
since, October 21, 1997 (collectively, the "Inventory");
b. Technical Documentation - all technical and descriptive documents
and materials relating to the acquisition, design, development, maintenance,
practice or use of the Intellectual Property (as hereinafter defined), as set
forth on Schedule 1.1b attached hereto and made a part hereof (the "Technical
Documentation");
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c. Machinery and Equipment - those items of equipment, machinery,
tools, data processing hardware and the like of every description and kind, and
all replacement and component parts and supplies therefor, including, without
limitation, Seller's rights under all related warranties, set forth on Schedule
1.1.c attached hereto and made a part hereof (collectively, the "Machinery and
Equipment");
d. Furniture and Fixtures - those items of furniture and fixtures,
leasehold improvements, and all other tangible personal property of every
description and kind, set forth on Schedule 1.1.d attached hereto and made a
part hereof, adjusted to reflect changes in such items occurring in the ordinary
course of business since October 21, 1997 (collectively, the "Furniture and
Fixtures");
e. Assumed Leases - [Reserved];
f. Assumed Leases and Contracts - all of Seller's right, title and
interest in and to those contracts, agreements, understandings, purchase orders,
licenses, equipment leases, commitments and arrangements, set forth on Schedule
1.1.f attached hereto and made a part hereof (collectively, the "Assumed Leases
and Contracts");
g. Business Records - all business and marketing books, records,
documents and files, including, without limitation, operating records, asset
ledgers, inventory records, customer lists, supplier lists, employment and
consulting agreements, supplier lists, information and data respecting leased or
owned equipment, correspondence and mailing lists, advertising materials and
brochures and other business records, relating to the ownership or use of any of
the Purchased Assets, but excluding the Retained Business Records (as
hereinafter defined), (collectively, the "Business Records");
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h. Assumed Authorizations - all of Seller's right, title and
interest in and to those approvals, authorizations, certifications, consents,
variances, permissions, orders, waivers, licenses, accreditations, permits and
the like to or from, or filings, registration, notices, recordings or the like
to or with, any Government Authorities or other Persons, set forth on Schedule
1.1h attached hereto and made a part hereof (collectively, the "Assumed
Authorizations");
i. Purchased Intellectual Property - those patents, patent
applications, trademarks, service marks, trade names, copyrights, software,
technologies, formulas, compositions, processes, inventions, trade secrets,
know-how, mask works, ideas, improvements, concepts, information, methods,
studies, data, confidential and/or proprietary information (including, without
limitation, registrations, licenses and applications pertaining thereto) and
other intellectual property rights owned by Seller as set forth on Schedule 1.1i
attached hereto and made a part hereof (collectively, the "Purchased
Intellectual Property");
j. Licensed Intellectual Property - those rights to practice and use
the patents, patent applications, licenses, trademarks, service marks, trade
names, copyrights, software, technologies, formulas, compositions, processes,
inventions, trade secrets, know-how, mask works, ideas, improvements, concepts,
information, methods, studies, data, confidential information (including,
without limitation, registrations, licenses and applications pertaining thereto)
and other intellectual property rights and other proprietary information or
intangible property of any kind licensed by Seller from a Person, as provided in
those licenses and other agreements identified on Schedule 1.1j attached hereto
and made a part hereof (collectively, the "Licensed Intellectual Property");
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k. Claims - [Reserved];
l. Prepaid Expenses and Deposits - those prepaid expenses, security
deposits and other deposits of Seller, as set forth on Schedule 1.1l attached
hereto and made a part hereof (collectively, the "Prepaid Expenses");
m. Warranties - all express and implied warranties inuring to the
benefit of Seller and any and all rights and claims thereunder in each case
related to the ownership or use of any of the Purchased Assets, and all other
guarantees, warranties, indemnities, licenses and similar rights in favor of
Seller with respect to the ownership or use of any of the Purchased Assets;
n. Telephone Numbers - all telephone numbers used by Seller relating
primarily to the operation of the Crystallume Business, to the extent
transferable;
o. Goodwill - all goodwill and going concern value related to the
Crystallume Business (collectively, the "Goodwill"); and
p. Customers/Suppliers Records - all Business Records pertaining to
Seller's customers set forth on Schedule 1.1p attached hereto and made a part
hereof (collectively, the "Customers") or Seller's suppliers set forth on
Schedule 1.1p (collectively, the "Suppliers"), and all of Seller's rights and
benefits accruing under any and all agreements, arrangements or understandings
with any Customer or Supplier.
1.2 Intent of the Parties. The Schedules to this Agreement are intended to
be complete. To the extent any Purchased Asset is not properly itemized or does
not appear on the applicable Schedule where required, then, unless this
Agreement or any Schedule provides otherwise, such Purchased Asset shall
nonetheless be deemed transferred to Buyer at Closing.
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1.3 Excluded Assets. The following assets of Seller (collectively, the
"Excluded Assets") shall be retained by Seller and shall not be included in the
Purchased Assets, and Buyer is not purchasing or assuming any debt, obligation
or liability of any kind of Seller with respect to, any of the following: (a)
cash; (b) accounts receivable; (c) Seller's central financial, administrative
and similar books and records which do not relate primarily to the operation of
the Crystallume Business or the ownership or the use of any Purchased Asset
("Retained Business Records"); (d) any asset of Seller's Employee Benefit Plans
(as hereinafter defined); (e) all other assets which are not covered by the
scope of Section 1.1 or which are not deemed transferred under Section 1.2 ; and
(f) any claims ("Retained Claims") relating to Seller's operation of the
Crystallume Business prior to the Closing or Seller's use or ownership of any of
the Purchased Assets prior to the Closing, only for the sole and limited purpose
of and only to the extent necessary for, defending or asserting directly-related
counterclaims with respect to, any action or proceeding brought by any Person
against Seller after the Closing; provided, however, notwithstanding anything to
the contrary contained herein, Seller's retention and use of the Retained Claims
shall not in any way adversely effect Buyer's operation of the Crystallume
Business or Buyer's use or ownership of any Purchased Asset.
1.4 Reservation of Certain Rights by Seller. Seller does not reserve or
retain any right, title or interest of any kind in or to the Crystallume
Business or any of the Purchased Assets, except as otherwise expressly set forth
in the Security Agreement, the Royalty Agreement or Section 1.3.
1.5 Bulk Sales Compliance. With regard to the transactions contemplated in
this Agreement or in any other Covered Agreement, Buyer hereby waives compliance
by Seller under
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any bulk transfer or similar law of any jurisdiction, subject to the
indemnification provided by Seller under Article 12.
ARTICLE 2
ASSUMPTION OF LIABILITIES
2.1 Enumeration of Assumed Liabilities. At the Closing, in consideration
of the sale and assignment by Seller of the Assumed Leases and Contracts and in
reliance upon Seller's representations and warranties contained in Section 4.10,
subject to Section 2.2, Buyer shall assume and become liable for and shall
thereafter pay, perform, assume or discharge, all debts, obligations and
liabilities of Seller under the Assumed Leases and Contracts which arise or
accrue after the Closing (collectively, the "Assumed Liabilities"). The Assumed
Liabilities do not include any debt, obligation or liability of Seller not
specifically and expressly assumed by Buyer in this Section 2.1. Subject to the
express exclusions set forth in Section 2.2, the Assumed Liabilities shall
consist only of the following:
a. Assumed Liabilities - all Assumed Liabilities, except to the
extent attributable to: (1) any breach or default by Seller under any of the
Assumed Liabilities (other than as set forth on Schedule 2.1 attached hereto and
made a part hereof); or (2) any material liability or obligation outside the
ordinary course of business not disclosed by Seller pursuant to this Agreement;
and
b. Other Liabilities - any other liabilities specifically set forth
on Schedule 2.1.
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2.2 No Other Assumption. Notwithstanding anything to the contrary
contained herein, except as otherwise specifically and expressly provided in
Section 2.1, the Parties expressly agree and acknowledge that:
a. Buyer shall not be responsible or liable for, nor does Buyer
assume or become liable for or agree to pay, perform, assume or discharge, any
debts, obligations or liabilities of Seller of any type or description
whatsoever, whether such debts, obligations or liabilities are: (1) related or
unrelated to the Crystallume Business, any of the Purchased Assets or the
transactions contemplated in this Agreement or in any other Covered Agreement
(as hereinafter defined) in Section 10.7; or (2) known or unknown, absolute or
contingent, direct or indirect, and regardless of when or how any such debts,
obligations or liabilities have heretofore arisen or may hereafter arise; and
b. Seller shall remain fully responsible and liable for any
and all debts, obligations or liabilities of Seller of any type or
description whatsoever.
2.3 Delivery of Assignment and Assumption Agreement. At the Closing, Buyer
and Seller shall each execute and deliver an assignment and assumption agreement
with regard to the assignment by Seller and the assumption by Buyer of the
Assumed Liabilities, which shall be in form and substance mutually satisfactory
to the Parties and their respective counsel, in their respective sole
discretion.
ARTICLE 3
PRICE AND PAYMENT
3.1 Purchase Price. Subject to the terms and conditions of this Agreement,
the aggregate purchase price payable by Buyer to Seller for the Purchased Assets
and in
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consideration for the Covered Agreements ("Purchase Price"), shall be as
follows: (a) the sum of FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00),
payable as provided in Section 3.2(a); and (b) the Royalty payable as provided
in Section 3.2(b).
3.2 Payment of Purchase Price. The Purchase Price shall be payable to
Seller, as follows: (a) wire transfer by Buyer at the Closing of FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($500,000.00) in immediately available funds to an
account designated in writing by Seller; and (b) Buyer's agreement for the
payment of the Royalty provided for in Section 2, Section 3 and Section 4 of the
Royalty Agreement (as hereinafter defined).
3.3 Proration. The items set forth on Schedule 3.3 attached hereto and
made a part hereof relating to the Purchased Assets and Assumed Liabilities
shall be prorated as of the Closing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer, as follows:
4.1 Standing. Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Seller has all
requisite corporate power and authority to conduct and operate the Crystallume
Business as is now being conducted and as presently contemplated to be
conducted, and to carry out the transactions contemplated in this Agreement and
in any other Covered Agreement to which Seller is a party. Seller is qualified
to do business in each of the jurisdictions in which the character of its assets
or the nature of its activities makes such qualification in such jurisdictions
necessary, except where the failure to so
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qualify would not have a material adverse effect, financial or otherwise, on the
operation of the Crystallume Business or the ownership or use of any Purchased
Assets.
4.2 Authority. The execution and delivery of this Agreement and the other
Covered Agreements to which it is a party and the consummation of the
transactions contemplated herein and therein have been duly authorized by all
necessary corporate action of Seller, including, without limitation, Seller's
Board of Directors, and Seller has all requisite corporate power and authority
to execute and deliver this Agreement and the other Covered Agreements to which
it is a party. This Agreement and the other Covered Agreements to which it is a
party have been duly executed and delivered by Seller and constitute legal,
valid and binding agreements of Seller enforceable in accordance with their
respective terms (except as the enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights or the
application of equitable principles in any action, legal or equitable or except
as to the enforceability of any noncompetition provision in the
Confidentiality/Noncompetition Agreement (as hereinafter defined)). Seller has
full power and authority to perform its obligations under this Agreement and the
other Covered Agreements to which it is a party and the transactions
contemplated herein and therein.
4.3 No Conflicts. Neither the execution and delivery of this Agreement or
any other Covered Agreement to which it is a party, nor the performance of this
Agreement or any other Covered Agreement to which it is a party, nor the
consummation of the transactions contemplated herein or therein, will: (a)
conflict with or constitute a breach of or a default under, or an event which,
with or without notice or lapse of time, or both, would be a breach of, default
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under or violation of: (1) Seller's Certificate of Incorporation or By-Laws; or
(2) any agreement, document, indenture, mortgage or other instrument or
undertaking to which Seller is a party or to which any of its properties is
subject, which breach, default or violation would have a material adverse
effect, financial or otherwise, on Seller's operation of the Crystallume
Business or ownership or use of any of the Purchased Assets or would be a
material violation of any Applicable Law; or (b) result in the creation or
imposition of any lien or encumbrance of any kind upon the Crystallume Business
or any of the Purchased Assets.
4.4 Consents. Except as set forth on Schedule 4.4 attached hereto and made
a part hereof, no Consent is necessary or required in connection with the valid
execution, delivery and performance of this Agreement or any other Covered
Agreement to which Seller is a party or the consummation of any of the
transactions contemplated herein or therein.
4.5 Title to Purchased Assets. At the Closing, Seller shall have good and
marketable title to the Purchased Assets (other than the Licensed Intellectual
Property) and shall possess the right or license to practice, use and sublicense
the Licensed Intellectual Property, all free and clear of all liens or
encumbrances of any kind.
4.6 Premises.
a. Zoning - To Seller's best knowledge, the Premises is properly
zoned for its present use and is in compliance with all Applicable Law.
b. Buildings - To Seller's best knowledge, except for matters which
shall not have a material adverse effect on the Purchased Assets, all buildings,
structures and other improvements located on the Premises: (1) are in good
working condition, ordinary wear and
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tear excepted; (2) are structurally sound; and (3) contain mechanical and other
systems which are in good working condition, ordinary wear and tear excepted.
4.7 Inventory/ Machinery and Equipment/Furniture and Fixtures. The
Inventory, the Machinery and Equipment and the Furniture and Fixtures are
being purchased "AS IS, WHERE IS."
4.8 Intellectual Property.
a. Third Party License Agreements - All of the material oral and
written contracts, agreements, understandings, arrangements and licenses to
which Seller is a party under which Seller is granted the right to practice, use
and/or sublicense the Licensed Intellectual Property (collectively, the "Third
Party License Agreements") are listed on Schedule 4.8 attached hereto and made a
part hereof. Seller has previously delivered to Buyer true, correct and complete
copies of all written Third Party License Agreements. None of the Purchased
Intellectual Property or the Licensed Intellectual Property has been obtained by
Seller pursuant to a Third Party License Agreement except as set forth on
Schedule 4.8.
Except as set forth on Schedule 4.8:
(1) Pursuant to the Third Party License Agreements, Seller has
the right to use the Licensed Intellectual Property (as provided in the
respective Third Party License Agreement) and to assign to Buyer all of Seller's
right, title and interest in and to the Licensed Intellectual Property, free and
clear of all liens, encumbrances, claims, challenges, conditions and
restrictions of any kind.
(2) To Seller's best knowledge, each licensor of Licensed
Intellectual Property ("Third Party Licensor"): (a) is the sole and exclusive
owner of all right, title and
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interest of any kind in the respective Licensed Intellectual Property, free and
clear of all liens, encumbrances, claims, challenges, conditions and
restrictions of any kind; and (b) has not granted any right, title or interest
of any kind therein to any other Person other than Seller in violation of the
terms of any Third Party License Agreement.
(3) Prior to the Closing, to the extent required Seller shall
obtain the Consent of each Third Party Licensor to the assignment of the
respective Licensed Intellectual Property, which Consent shall be in form and
substance satisfactory to Buyer and its counsel, in their respective sole
discretion.
(4) All royalties, fees, charges and any other amounts payable
by or on behalf of, or to or for the account of, Seller with respect to any
Third Party License Agreement have been fully paid to date by Seller.
(5) All reports required by any party pursuant to any Third
Party License Agreement have been timely and accurately made, in all material
respects, by the party to date in accordance with the terms of the respective
Third Party License Agreements.
b. Ownership - The Purchased Intellectual Property and the Licensed
Intellectual Property are collectively referred to as the "Intellectual
Property". Except as otherwise provided on Schedule 4.8:
(1) Purchased Intellectual Property - As to the Purchased
Intellectual Property: (a) Seller is the sole and exclusive owner of all right,
title and interest of any kind in and to the Purchased Intellectual Property,
free and clear of all liens, encumbrances, claims, challenges, conditions and
restrictions of any kind; and (b) Seller has not granted any right, title or
interest of any kind in or to the Purchased Intellectual Property to any Person.
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(2) Licensed Intellectual Property - As to the Licensed
Intellectual Property: (a) Seller is the sole and exclusive owner of all right,
title and interest of any kind in and to its rights in the Licensed Intellectual
Property, free and clear of all liens, encumbrances, claims, challenges,
conditions and restrictions of any kind; and (b) Seller has not granted any
right, title or interest of any kind in or to the Licensed Intellectual Property
to any Person.
c. Scope - The Intellectual Property constitutes all of the material
intellectual property rights and licenses which are currently used in the
operation of the Crystallume Business or the ownership or use of any Purchased
Asset and which are all those required or necessary for the operation of the
Crystallume Business as currently being conducted.
d. Protection -
(1) Seller Confidential Information - Other than Intellectual
Property subject to a validly existing registration of an intellectual property
right, to Seller's best knowledge, no Intellectual Property, including, without
limitation, trade secrets, know-how, confidential information and proprietary
information (collectively, "Seller Confidential Information") has been disclosed
to any Person under circumstances that may result in the loss of its
confidential or proprietary status, and which if disclosed would have a material
adverse effect on the Crystallume Business or any Purchased Asset. Seller has
taken reasonable precautions to protect the confidentiality of all material
Seller Confidential Information. Each Employee (as hereinafter defined) and any
other Person who has had authorized access to any Seller Confidential
Information has executed a written agreement requiring the respective Employee
or Person to maintain the confidential and proprietary status thereof. All
contracts, agreements, understandings, arrangements and licenses to which Seller
is a party relating to any Seller
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Confidential Information (collectively, the "Nondisclosure Agreements") are
listed or described on Schedule 1.1f. Seller has previously delivered to Buyer
true, correct and complete copies of all written Nondisclosure Agreements listed
on Schedule 1.1f.
(2) Confidential Information of Other Persons - Neither Seller
nor, to Seller's best knowledge, any of Seller's shareholders, officers,
directors, agents or Employees, has made any unauthorized use of any
intellectual property right necessary, used or useful for the ownership or use
of any of the Purchased Assets or the operation of the Crystallume Business,
both as proposed and as presently conducted (other than intellectual property
subject to a validly existing registration of an intellectual property right),
including, without limitation, trade secrets, know-how, confidential information
or proprietary information of any Person (collectively, the "Third Party
Confidential Information"), including, without limitation, any Third Party
Confidential Information of any former employers.
e. Trade Secrets - [Reserved].
f. No Infringement -
(1) Of Third Party Rights - To Seller's best knowledge,
neither the Intellectual Property nor any of the products manufactured or
services provided by Seller using any of the Intellectual Property: (a)
infringes in any way upon any patent, patent application, license, know-how,
copyright, trademark, service ▇▇▇▇, trade name, trade secret or any other
intellectual property right of any kind of any Person; or (b) constitutes a
wrongful use of any confidential information or proprietary information of any
Person.
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(2) By Third Parties - To Seller's best knowledge, none of the
Intellectual Property is being infringed, or otherwise used or available for
use, by any Person in any way.
g. Intellectual Property Litigation - There is not now pending and,
to Seller's best knowledge, there is not threatened nor is there any basis for,
any claim, demand, litigation, arbitration, action, suit, inquiry, investigation
or proceeding by or before any Government Authority to which Seller is or will
be a party, and which: (1) challenges or asserts any conflicting right or claim
as to the validity, ownership or any other right, title or interest of Seller in
or to the Intellectual Property; (2) asserts or claims that the Intellectual
Property or any of the products manufactured or services provided by Seller
using any of the Intellectual Property: (a) infringes in any way upon any
patent, patent application, license, know-how, copyright, trademark, service
▇▇▇▇, trade name, trade secret or any other intellectual property right of any
kind of any Person; (b) constitutes a wrongful use of any confidential
information or proprietary information of any Person; or (c) constitutes a
proceeding relating to the Intellectual Property, either inter parte or ex
parte, including, without limitation, any re-examination, interference,
opposition or cancellation proceeding, which is pending in or before any
Government Authority, including, without limitation, the United States Patent
and Trademark Office, the United States Copyright Office or any foreign
counterpart thereof.
h. Registration - Those patents, patent applications, trademarks,
service marks and copyrights and other intellectual property which have been
identified on Schedule 1.1i as having been registered with, filed and/or issued
by, as the case may be, have been duly registered with, filed and/or issued by,
as the case may be, the United States Patent and
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Trademark Office, the United States Copyright Office or such other filing
offices, domestic or foreign, of any applicable Government Authority, and all
such registrations, filings, issuances and other actions remain in full force
and effect and none has been invalidated, abandoned or forfeited in any way.
i. Personnel Agreements - All personnel, including Employees,
agents, consultants and contractors who have contributed to or participated in
the conception or development of any of the Intellectual Property on behalf of
Seller, either: (1) have been party to a "work-for-hire" arrangement or
agreement with Seller that has accorded Seller full, effective, exclusive and
original ownership of all tangible and intangible property rights thereby
arising; or (2) have executed appropriate instruments of assignment in favor of
Seller as assignee that have conveyed to Seller full, effective and exclusive
ownership of all tangible and intangible property rights thereby arising.
4.9 Adequacy of Technical Documentation. [Reserved].
4.10 Leases and Contracts.
a. Schedule - All of the material contracts, agreements,
understandings, arrangements, commitments, leases, licenses and purchase orders
to which Seller is a party or by which Seller is bound in connection with the
operation of the Crystallume Business or the ownership or use of any of the
Purchased Assets, but excluding the Excluded Assets, (collectively, the "Leases
and Contracts") are listed on Schedule 4.10 attached hereto and made a part
hereof. Seller has previously delivered to Buyer true, correct and complete
copies of all Leases and Contracts. Except for the Assumed Liabilities, all
Leases and Contracts are, and shall
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remain, the sole obligation of Seller. There are no Leases and Contracts to
which any Affiliate of Seller is a party.
b. Status - Except as set forth on Schedule 4.10:
(1) each Assumed Lease and Contract is in full force and
effect and is a legal, valid and binding agreement of Seller enforceable as to
Seller in accordance with its respective terms;
(2) neither Seller nor, to Seller's best knowledge, any other
party to any Assumed Lease and Contract is in breach of or default under (nor
has a default been asserted by any party under) any Assumed Lease and Contract,
which breach or default may have a material adverse effect, financial or
otherwise, on the Crystallume Business or any of the Purchased Assets;
(3) there has not occurred any event with respect to Seller
nor, to Seller's best knowledge, with respect to any other party to any Assumed
Lease and Contract, which, after the giving of notice or the lapse of time, or
both, would constitute a default under or result in a breach of any Assumed
Lease and Contract, which breach or default would have a material adverse
effect, financial or otherwise, on the Crystallume Business or any Purchased
Asset;
(4) no Assumed Lease and Contract will be subject to amendment
or termination as a result of the consummation of transactions contemplated in
this Agreement or in any other Covered Agreement;
(5) Seller has received no notice of any counterclaim or
offset under any Assumed Lease and Contract from any party thereto;
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(6) there does not exist any lien or encumbrance of any kind
of any Person created or suffered to exist on any interest of Seller under any
Assumed Lease and Contract;
(7) the assignment to Buyer of the Assumed Leases and
Contracts will not breach, amend or terminate any of the Assumed Leases and
Contracts, and such assignment will transfer and convey to Buyer all of Seller's
right, title and interest therein;
(8) no party to any Assumed Lease and Contract has indicated
its intention to withhold consent or otherwise to object to assignment of such
Assumed Lease and Contract to Buyer; and
(9) no Assumed Lease and Contract contains any
change-in-control, term or other term or condition that will become applicable
upon consummation of the transactions contemplated in this Agreement or in any
other Covered Agreement.
c. No contracts or other agreements relating primarily to the
Crystallume Business or any of the Purchased Assets are currently being
negotiated by Seller, other than this Agreement, the other Covered Agreements
and any other contracts or agreements necessary for Seller to deliver the
Purchased Assets to Buyer free and clear of all liens and encumbrances.
4.11 Authorizations.
a. Schedule - All of the material permits, licenses, variances,
certificates, consents, registrations, accreditations, authorizations,
approvals, filings, orders, waivers, memberships and other licenses required or
necessary under Applicable Law for the operation of the Crystallume Business or
the ownership or use of any of the Purchased Assets (collectively, the
"Authorizations") are listed on Schedule 4.11 attached hereto and made a part
hereof. Seller
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has not received any notice from any Government Authority or any other Person to
the effect (and has no reason to believe) that any additional permits, licenses,
variances, certificates, consents, accreditations, authorizations, approvals,
filings, orders, waivers, registrations, memberships or other licenses are
required or necessary under any Applicable Law for the operation of the
Crystallume Business or the ownership or use of any of the Purchased Assets.
Seller has previously delivered to Buyer true, correct and complete copies of
any and all written Authorizations. Except for the Assumed Authorizations, all
Authorizations of Seller relating to the Crystallume Business or any of the
Purchased Assets are and shall remain, the sole property and obligation of
Seller. There do not exist any waivers or exemptions relating to any of the
Authorizations.
b. Status - Except as set forth on Schedule 4.11:
(1) each Assumed Authorization is in full force and effect and
is legal, valid, binding and enforceable as to Seller in accordance with its
respective terms;
(2) Seller is not in violation of or default under (nor has a
default been asserted against Seller under) any Assumed Authorization, which
violation or default may have a material adverse effect, financial or otherwise,
on the Crystallume Business or any of the Purchased Assets;
(3) no Assumed Authorization will be subject to amendment or
termination as a result of the consummation of the transactions contemplated in
this Agreement or in any other Covered Agreement;
(4) the assignment to Buyer pursuant to this Agreement of the
Assumed Authorizations will not amend or terminate any of the Assumed
Authorizations, and
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such assignment will transfer and convey to Buyer all of Seller's right, title
and interest thereunder; and
(5) no party to any Assumed Authorization has indicated its
intention to withhold consent or otherwise to object to assignment of such
Assumed Authorizations to Buyer.
4.12 Financial Statements. Seller has delivered to Buyer true, correct and
complete copies of the following: Unaudited Statements of Revenue and Expenses
for the Crystallume Business for the years ending on September 30, 1997,
September 30, 1996 and September 30, 1995 (collectively, the "Financial
Statements"). The accounting policies, principles and procedures applied in
preparing the Financial Statements are set forth on Schedule 4.12 attached
hereto and made a part hereof. The Financial Statements are based on the books
and records of Seller.
4.13 Absence of Certain Changes. Except as described on Schedule 4.13
attached hereto and made a part hereof, since September 30, 1997, with respect
to the Crystallume Business or any of the Purchased Assets, Seller has not:
a. [Reserved];
b. entered into any transaction which is material to the
operation of the Crystallume Business, except in the
ordinary course of business;
c. suffered any material adverse change in the Purchased
Assets or the Crystallume Business;
d. [Reserved];
e. [Reserved]; or
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f. made or suffered any amendment or termination or any material
Lease and Contract or any material Authorization, or canceled,
modified or waived any substantial debt or claim held by it or
waived any right of substantial value, whether or not in the
ordinary course of business.
4.14 Taxes.
a. Tax Return Filings - Seller has duly and timely filed any and all
tax returns, filings and reports (collectively, the "Tax Returns") required to
be filed by it pursuant to any Applicable Law with any Government Authority
("Tax Authority"), including, without limitation, any and all foreign, federal,
state and local tax returns, filings and reports with respect to income taxes,
franchise taxes, Payroll Taxes (as hereinafter defined), unemployment insurance
taxes, sales taxes and use taxes, and all Tax Returns are, and will be, true,
correct and complete in all respects and do properly reflect any and all tax
liabilities of Seller for the periods covered thereby.
b. Tax Return Payments - Seller has duly and timely paid any and all
foreign, federal, state and local: (1) income, franchise, payroll, unemployment
insurance, sales and use taxes; (2) assessments, interest, penalties and
deficiencies; (3) fees and charges of any Government Authority; and (4) duties
or impositions of any Government Authority; which are reflected as payable on
any Tax Returns, which are claimed to be due by any Tax Authority or which
Seller is obligated to withhold from amounts owing to any Employee
(collectively, the "Taxes"), except for those amounts being contested in good
faith by Seller in appropriate proceedings for which appropriate amounts have
been reserved.
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c. No Notice - Seller has received no notice of any deficiency or
assessment from any Tax Authority that has not been paid in full, or notice of
claim, audit, action, suit, proceeding or investigation with respect to Taxes
due or claimed to be due from Seller pursuant to any Tax Return filed or
required to be filed by Seller, except for those amounts being contested in good
faith by Seller in appropriate proceedings for which appropriate amounts have
been reserved. No assessment of any additional Taxes that pursuant to any
Applicable Law should have been reported, paid or accrued, is expected by
Seller.
d. [Reserved].
4.15 Major Customers and Suppliers. Schedule 4.15 lists the name, address,
telephone number and contact of each Supplier and Customer to whom Seller paid
or billed, as the case may be, in the aggregate Ten Thousand Dollars
($10,000.00) or more during its most recent fiscal year.
4.16 Litigation. There is not now pending and, to Seller's best knowledge,
there is not threatened nor is there any basis for, any claim, demand,
litigation, arbitration, action, suit, inquiry, investigation or proceeding by
or before any Government Authority to which Seller is or may be a party, and
which: (a) may result in a material adverse effect, financial or otherwise, on
the Crystallume Business or any of the Purchased Assets; (b) may threaten the
validity of this Agreement or any other Covered Agreement; or (c) seeks to
prevent, or if successful would prevent, Seller from consummating any of the
transactions contemplated in this Agreement or in any other Covered Agreement.
Neither Seller, the Crystallume Business nor any of the Purchased Assets is
subject to any judgment, decree, injunction, rule, decision or order of any
Government Authority having, or which, insofar as can be foreseen in the future,
may have, any
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material adverse effect, financial or otherwise, on the Crystallume Business or
any of the Purchased Assets.
4.17 [Reserved].
4.18 Compliance with Law.
a. Seller has complied in all material respects with all Applicable
Law relating to the Crystallume Business or any of the Purchased Assets, and no
claims have been made to or against Seller by any Person to the contrary. Seller
has received no notice of any violation of or noncompliance with any Applicable
Law applicable to the Crystallume Business or any of the Purchased Assets which
has not been cured, the violation of, or noncompliance with, would have a
material adverse effect, financial or otherwise, on the Crystallume Business or
the Purchased Assets.
b. Neither Seller nor, to Seller's best knowledge, any of Seller's
officers, directors, employees, agents or Affiliates, has, directly or
indirectly, made or agreed to make, any kickback, bribe, gift or other payment
to any Person for referring, recommending or arranging business with, to or for
Seller.
4.19 Environmental.
a. Seller has complied in all material respects with each
Environmental and Safety Law (as hereinafter defined) with respect to the
operation of the Crystallume Business and the ownership and use of the Purchased
Assets.
b. Except as disclosed on Schedule 1.1h or Schedule 4.19 attached
hereto and made a part hereof, Seller has obtained and is presently operating in
compliance in all respects with all Authorizations necessary under any
Environmental and Safety Law for the operation of
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the Crystallume Business or the ownership or use of any of the Purchased Assets
except in such respects as would not have a material adverse effect, financial
or otherwise, on the Crystallume Business or any Purchased Asset.
c. To Seller's best knowledge, all Authorizations relating to any
Environmental and Safety Law can be transferred or reissued, if necessary, to
Buyer, and Seller knows of no reason why any such Authorization will not be
renewed upon expiration of its respective current term without imposition of
less favorable requirements than those currently in effect.
d. Seller has received no Environmental Notice from any Person with
respect to the operation of the Crystallume Business or the ownership or use of
any of the Purchased Assets relating in any way to any Environmental and Safety
Law or the Release (as hereinafter defined) of any Hazardous Material (as
hereinafter defined) or Chemical Substance (as hereinafter defined).
e. To Seller's best knowledge, there has been no Release of any
Hazardous Material or Chemical Substance in a quantity or concentration at, on,
under, upon, in, near, beneath or about the Premises which would constitute an
Environmental Compliance Liability.
f. There is not now pending and, to Seller's best knowledge, there
is not threatened nor is there any basis for, any claim, demand, litigation,
arbitration, action, suit, inquiry, investigation or proceeding by or before any
Government Authority or any other Person, to which Seller is or may be a party,
and which: (1) may result in a material adverse effect, financial or otherwise,
on the Crystallume Business or any of the Purchased Assets; and (2) arises out
of, relates to or results from: (x) the violation or alleged violation of any
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Environmental and Safety Law; (y) the presence of any Hazardous Material and/or
Chemical Substance at, on, under, upon, in, near, beneath or about the Premises;
or (z) exposure to any Hazardous Material or Chemical Substance.
g. To Seller's best knowledge, there are no Hazardous Materials or
Chemical Substances in any inactive, closed or abandoned storage or disposal
areas or facilities at, on, under, upon, in, near, beneath or about the
Premises.
h. To Seller's best knowledge, the Premises is not listed in the
Registry of Inactive Hazardous Waste Disposal Sites maintained by the State of
California or any of its political subdivisions or the National Priorities List
of Inactive Hazardous Waste Disposal Sites maintained by the U.S. Environmental
Protection Agency.
i. Seller is in compliance with any and all occupational safety and
health standards required by the Environmental and Safety Law for the operation
of the Crystallume Business or the ownership or use of any of the Purchased
Assets, except in such respects as would not have a material adverse effect,
financial or otherwise, on the Crystallume Business or any Purchased Assets, and
Seller has received no notice of any work-related chronic illness or injury to
any of its Employees, except accidents accurately reported in its OSHA 200 Log,
a copy of which Seller has provided to Buyer.
j. To the extent controlled or directed by Seller, the discharge of
process wastes to any publicly-owned treatment works ("POTW") made in connection
with the operation of the Crystallume Business or the ownership or use of any of
the Purchased Assets, is in all respects in compliance with all of the
requirements of the POTW and the Government Authority
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responsible for its operation, including, without limitation, any and all
applicable pre-treatment requirements.
k. To Seller's best knowledge, Seller has complied with any and all
applicable pre-transfer notification requirements of all Environmental and
Safety Laws necessary to allow for the transfer and sale of the Purchased Assets
and the assignment and assumption of the assumed Authorizations to Buyer.
l. Definitions. The following terms shall have the respective
meanings set forth below:
(1) "Chemical Substance" means any substance, including,
without limitation, any pollutant, contaminant, chemical, raw material,
intermediate product or by-product, solid, toxic or hazardous substance,
material or waste, solid waste, petroleum or any fraction thereof, asbestos or
asbestos-containing material, radon, urea-formaldehyde or polyurethane foam and
polychlorinated biphenyls, including, without limitation, all substances,
materials and wastes which are identified or regulated under any Hazardous
Materials Law, including, without limitation, any rule or regulation promulgated
by the State of California or any of its political subdivisions.
(2) "Environment" means any real property and the plant,
facilities, improvements and fixtures located thereon, including, without
limitation, ambient air, surface water, drinking water, ground water, land
surface, sub-surface strata, stream and river sediment.
(3) "Environmental Conditions" means any and all circumstances
with respect to soil, surface waters, ground waters, ponds, stream and river
sediment, ambient air and similar environmental media, both on-site and off-site
of the Premises, that may require remedial
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action and/or that may result in claims or demands by and/or liabilities to, any
Government Authority and any other Person.
(4) "Environmental Compliance Liability" means any and all
liabilities arising under or related to any and all Environmental and Safety Law
relating to the operation of the Crystallume Business or the ownership or use of
any of the Purchased Assets, which may result in claims or demands by and/or
liabilities to any Persons, including, without limitation, any Government
Authority, for failure to comply with the requirements of any Environmental and
Safety Law.
(5) "Environmental Notice" means any summons, citation,
directive, order, claim, litigation, pleading, investigation, proceeding,
judgment, letter or any other written or oral communication from the United
States Environmental Protection Agency ("USEPA"), the State of California or any
of its political subdivisions or any other Government Authority or other Person
with respect to: (a) any act or omission which has resulted in or which may
result in the Release of any Hazardous Material or Chemical Substance into the
Environment; or (b) any other violation or alleged violation of Environmental
and Safety Law.
(6) "Environmental and Safety Law" means any Applicable Law
relating to pollution, protection or clean-up of the Environment attributable to
any Hazardous Material or Chemical Substance, including, without limitation, any
Hazardous Materials Law relating to: (a) the Release, containment, removal,
remediation, response, clean-up or abatement of any type of Hazardous Material
or Chemical Substance; (b) the manufacture, generation, formulation, processing,
labeling, distribution, introduction into commerce, use, treatment, handling,
storage, recycling, disposal or transportation of any Hazardous Material or
Chemical
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Substance; (c) the exposure of any Person, including, without limitation,
employees, to any Hazardous Material or Chemical Substance; and (d) the physical
structure or condition of a building, facility, fixture or other structure,
including, without limitation, those relating to the management, use, storage,
disposal, clean-up or removal of asbestos, asbestos-containing materials,
polychlorinated biphenyls or any other Hazardous Material or Chemical Substance.
(7) "Hazardous Material" means any and all substances,
including, without limitation, asbestos, the group of organic compounds known as
polychlorinated biphenyls, flammable material, explosives, radioactive
materials, chemicals known to cause cancer or reproductive toxicity, pollutants,
effluents, contaminants, emissions or related materials and any items included
in the definition of hazardous or toxic waste, materials or substances under any
Hazardous Materials Law. It is the intent of the Parties to construe the term
"Hazardous Material" in its broadest possible sense.
(8) "Hazardous Materials Law" means any and all Applicable Law
relating to the Environment and Environmental Conditions, including, without
limitation, the Resource Conservation and Recovery Act of 1976 ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
as amended by the Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"),
the Hazardous Materials Transportation Act ("HMTA"), the Clean Water Act
("CWA"), the Toxic Substances Control Act ("TSCA"), the Safe Drinking Water Act
("SDWA"), the National Environmental Policy Act ("NEPA"), the Occupational
Safety and Health Act ("OSHA"), the Federal Insecticide, Fungicide and
Rodenticide Act ("FIFRA"), the Emergency Planning and Community Right to Know
Act ("EPCRA"), the Noise Control Act ("NCA") and all regulations, orders and
decrees
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and other Applicable Law now or hereafter promulgated thereunder. It is the
intent of the Parties to construe the term "Hazardous Materials Law" in its
broadest possible sense.
(9) "Environmental Permit" means any and all permits,
licenses, variances, certificates, consents, authorizations, approvals,
registrations or other licenses issued or granted by any Government Authority
pursuant to any Environmental and Safety Law, required for the operation of the
Crystallume Business or the ownership or use of any of the Purchased Assets, as
of the Closing Date.
(10) "Release" means any and all spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing of any Hazardous Material or Chemical Substance of any kind into
the Environment, including, without limitation, the abandonment or discarding of
barrels, containers, tanks or other receptacles containing or previously
containing any Hazardous Material and/or Chemical Substance.
4.20 Employment Laws and Contracts. To Seller's best knowledge, Seller has
complied in all material respects with all Applicable Law and all Leases and
Contracts pertaining to the employment of any and all current and former
employees of Seller employed in the operation of the Crystallume Business
(collectively, the "Employees"), including, without limitation, any Applicable
Law or any of the Leases and Contracts relating to wages, hours, benefits,
collective bargaining, payment of withholding taxes, discrimination in
employment or employment practices, workers' compensation, occupational safety
and health standards, labor relations, equal employment, fair employment
practices and any other employment practices or acts (collectively the
"Employment Laws and Contracts"). There is not now pending and, to Seller's best
knowledge, there is not threatened nor is there any basis for, any claim,
demand,
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litigation, arbitration, action, suit, inquiry, investigation or proceeding by
or before any Government Authority to which Seller or any officer, director,
employee, shareholder or Affiliate of Seller is or may be a party, with regard
to the operation of the Crystallume Business or the ownership or use of any of
the Purchased Assets, arising out of or relating to any of the Employment Laws
and Contracts.
4.21 Employees.
a. List - Schedule 4.21 attached hereto and made a part hereof sets
forth a true, correct and complete list of any and all Employees employed in the
operation of the Crystallume Business during the Twelve (12) month period prior
to Closing.
b. Employment Contract - Each Employee who has entered into an
employment contract which contract remains in effect through the Closing
("Employment Contract") with Seller is identified on Schedule 4.21, and Seller
has provided a true, correct and complete copy of each such Employment Contract
to Buyer.
c. Termination - Seller shall terminate all of its Employees at or
prior to the Closing and shall provide Buyer with copies of any and all related
correspondence and notices required under Applicable Law, including, without
limitation, COBRA (as hereinafter defined) and HIPPA (as hereinafter defined)
notices and benefit termination notices. Other than the Assumed Liabilities, the
Parties expressly agree that Seller shall remain responsible and liable for all
of the following as they relate to Seller's employment of the Employees: (1)
salaries, bonuses, wages and benefits; (2) Payroll Taxes (as hereinafter
defined); (3) accrued sick leave, holiday, vacation and severance benefits; (4)
health care benefits; and (5) any other compensation and other fringe benefits.
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4.22 Labor Matters. Seller is not now, and has not been during the last
Five (5) years, a party to or bound by any labor contract, collective bargaining
agreement, letter of understanding or any other arrangement, formal or informal,
with any labor union or organization which obligates Seller to compensate its
Employees at prevailing rates or union scale, nor are any of its Employees
represented by any labor union or organization, and there are no labor unions or
other organizations representing, purporting to represent or attempting to
represent any Employee. There is not now pending or, to Seller's best knowledge,
threatened, and there has not been during the last Five (5) years, any labor
dispute, labor strike, unfair labor practice complaint, organizational attempt,
slow-down, picketing, work stoppage, concerted refusal to work overtime or other
similar labor activity with respect to any Employee or any labor union
organizing activity or any boycott or informational or other picketing or
leafleting with regard to labor matters, directed against Seller or any other
Person, with respect to the Crystallume Business or any of the Purchased Assets.
There are no labor disputes currently subject to any grievance procedure,
action, suit, claim, arbitration or litigation of any kind and there is no
representation petition pending or threatened with respect to any Employee.
4.23 Payroll Taxes. All amounts required to be withheld by Seller from its
Employees for any and all foreign, federal, state or local income, social
security, unemployment insurance or other employment taxes (collectively, the
"Payroll Taxes") through and including the Closing, have been withheld and were
either paid to the appropriate Government Authority or set aside for such
purpose, in accordance with all Applicable Law. All amounts required to be paid
by Seller representing its share of the payments of Payroll Taxes through and
including the Closing have
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been paid to the appropriate Government Authority or set aside for such purpose,
in accordance with all Applicable Law.
4.24 COBRA/HIPPA. Seller has complied in all material respects with any
and all applicable provisions of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA") and the Health Insurance Portability and
Accountability Act of 1996 ("HIPPA") with respect to any and all Employees or
any qualified beneficiary of any Employee.
4.25 WARN Notification. The sale of the Purchased Assets will not result
in any mass layoff or plant closings within the meaning of the Worker Adjustment
and Retraining Notification Act or any law, rule or regulation of the State of
California or any of its political subdivisions.
4.26 ERISA. Schedule 4.26 attached hereto and made a part hereof contains
a true, correct and complete list of any and all Employee Benefit Plans, whether
formal or informal, whether oral or written, and whether covering one or more
individuals, which are sponsored or maintained by Seller with respect to its
Employees. For the purposes hereof, the term "Employee Benefit Plan" means any
and all plans, funds, programs, policies, arrangements, practices, customs and
understandings providing benefits of economic value to any Employee or present
or former beneficiary, dependent, or assignee of any Employee, whether or not
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and each bonus, incentive or deferred compensation, severance,
termination, retention, change of control, stock option, stock appreciation,
stock purchase, phantom stock or other equity-based performance plan. Without
limitation, the term "Employee Benefit Plan" includes any and all employee
welfare benefit plans within the meaning of Section 3(1) of ERISA and all
employee pension
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benefit plans within the meaning of Section 3(2) of ERISA. Seller has provided
true, correct and complete copies of all written Employee Benefit Plans and
written descriptions of all oral Employee Benefit Plans to Buyer. Seller has not
communicated to any Employee any intention or commitment to modify any Employee
Benefit Plan or to establish or implement any other employee or retiree benefit
or compensation arrangement. Seller is not transferring any asset of any
Employee Benefit Plan to Buyer and Buyer is assuming any debt, liability or
obligation of any kind of Seller with respect to any Employee Benefit Plan.
4.27 Insurance. Schedule 4.27 attached hereto and made a part hereof is a
true, correct and complete list of any and all insurance policies and other
insurance coverages and arrangements, including, without limitation, self
insurance and risk retention arrangements, of Seller relating to the operation
of the Crystallume Business or the ownership or use of any Purchased Assets, in
effect at any time during the Twelve (12) months prior to Closing.
4.28 Brokers. Except as disclosed on Schedule 4.28 attached hereto and
made a part hereof, no agent, finder, broker, investment banker or other Person
acting under the authority of Seller is or will be entitled to any broker's fee
or finder's fee or any other commission or similar fee, directly or indirectly,
from Buyer or any Affiliate of Buyer as a result of the transactions
contemplated in this Agreement or in any other Covered Agreement.
4.29 Related Party Transactions. Except as set forth on Schedule 4.29
attached hereto and made a part hereof, with respect to or involving the
Crystallume Business, any of the Purchased Assets or any Assumed Liabilities,
Seller is not a party to any Lease and Contract, directly or indirectly,
(collectively, "Related Party Contracts"), with: (a) any Affiliate of Seller;
(b) any employee, officer or director of Seller or any Affiliate of Seller; or
(c) any Affiliate of
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any employee, officer or director of Seller (collectively, the "Related
Parties") or any member of the immediate family of any Related Party or any
entity in which any Related Party has a material financial interest. Each
Related Party Contract was entered into by Seller in the ordinary course of
business upon terms that are fair and reasonable without regard to the status
and relationship of such other parties.
4.30 [Reserved].
4.31 Location of Purchased Assets. All of the Furniture and Fixtures,
Machinery and Equipment, Inventory, Business Records and Technical
Documentation are located at the Premises.
4.32 [Reserved].
4.33 General Warranty. No representation or warranty by Seller in this
Agreement or in any other Covered Agreement to which it is a party, and no
statement contained in any document, instrument or certificate furnished to
Buyer by Seller in connection with the transactions contemplated in this
Agreement or in any other Covered Agreement to which Seller is a party, contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained or incorporated herein or therein not
misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 Standing. Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York.
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5.2 Authority. The execution and delivery of this Agreement and the other
Covered Agreements to which it is a party and the consummation of the
transactions contemplated herein and therein have been duly authorized by all
necessary corporate action of Buyer, including, without limitation, Buyer's
Board of Directors, and Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and the other Covered Agreements to which it
is a party. This Agreement and the other Covered Agreements to which it is a
party have been duly executed and delivered by Buyer and constitute legal, valid
and binding agreements of Buyer enforceable in accordance with their respective
terms (except as the enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights or the application of
equitable principles in any action, legal or equitable or except as to the
enforceability of any noncompetition provision in the
Confidentiality/Noncompetition Agreement). Buyer has full power and authority to
perform its obligations under this Agreement and the other Covered Agreements to
which it is a party and the transactions contemplated herein and therein.
5.3 No Conflicts. Neither the execution and delivery of this Agreement or
any other Covered Agreement to which it is a party, nor the performance of this
Agreement or any other Covered Agreement to which it is a party, nor the
consummation of the transactions contemplated herein or therein, will: (a)
conflict with or constitute a breach of or a default under, or an event which,
with or without notice or lapse of time, or both, would be a breach of, default
under or violation of: (1) Buyer's Certificate of Incorporation or By-Laws; or
(2) any agreement, document, indenture, mortgage or other instrument or
undertaking to which Buyer is a party or to
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which any of its properties is subject, which breach, default or violation would
have a material adverse effect, financial or otherwise, on Buyer.
5.4 Consents. Except as set forth on Schedule 5.4 attached hereto and made
a part hereof, no Consent is necessary or required in connection with the valid
execution, delivery and performance of this Agreement or any other Covered
Agreement to which Buyer is a party or the consummation of any of the
transactions contemplated herein or therein.
5.5 Brokers. No agent, finder, broker, investment banker or other Person
acting under the authority of Buyer is or will be entitled to any broker's fee
or finder's fee or any other commission or similar fee, directly or indirectly,
from Seller or any Affiliate of Seller as a result of the transactions
contemplated in this Agreement or in any other Covered Agreement.
5.6 General Warranty. No representation or warranty by Buyer in this
Agreement or in any other Covered Agreement to which it is a party, and no
statement contained in any document, instrument or certificate furnished to
Seller by Buyer in connection with the transactions contemplated in this
Agreement or in any other Covered Agreement to which Buyer is a party, contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained or incorporated herein or therein not
misleading.
ARTICLE 6
[Reserved]
ARTICLE 7
COVENANTS OF SELLER AND BUYER
7.1 Covenants of Seller.
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a. Due Diligence - From the date of this Agreement through the
Closing, Seller, upon Buyer's prior reasonable notice, shall provide Buyer and
its employees, agents, advisors, attorneys and accountants (collectively, the
"Representatives") with: (a) the opportunity to inspect Seller's legal,
financial and operating condition relating to the Crystallume Business or any
Purchased Asset; (b) complete access to all of Seller's books, records,
facilities and other properties as they relate to the Crystallume Business or
any Purchased Assets; and (c) the ability to discuss matters relating thereto
with officers and employees of Seller, as well as the Seller's accountants and
attorneys. Such due diligence review shall be conducted during Seller's normal
business hours in such a manner as to minimize any disruption of the day-to-day
operations of Seller.
b. [Reserved].
c. [Reserved].
d. Assumed Government Contracts --
(1) General - As promptly as practicable after the Closing,
Seller shall use commercially reasonable best efforts to obtain such Consents as
may be required for the transfer by Seller to Buyer of all Assumed Contracts set
forth in Paragraph 3 of Schedule 1.1f, which Assumed Contracts cannot as a
matter of Applicable Law be assigned by Seller to Buyer at or prior to the
Closing (collectively, the "Assumed Government Contracts"). Seller agrees that
it will enter into all novation or other agreements required by Applicable Law
with respect to any such Assumed Government Contract which requires such
novation or other agreement prior to transfer to Buyer. Buyer covenants that it
will reasonably cooperate with Seller in such effort but such cooperation shall
not include the payment by Buyer of any money or consideration to obtain
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any such Consent, novation or other agreement. Seller shall keep Buyer
reasonably informed as to the status and progress of obtaining all such
Consents, novations and other agreements.
(2) No Transfer - This Agreement shall not constitute an
agreement to assign any Assumed Government Contract or any claim, right or
benefit arising thereunder or resulting therefrom, if an assignment without the
consent of a third party or without novation or other agreement of the same,
would constitute a breach or violation thereof or affect adversely the rights of
Seller or Buyer thereunder. If a Consent, novation or other agreement is
required in order to transfer and assign any interest in any Assumed Government
Contract to Buyer, and such Consent, novation or other agreement is not obtained
by Seller prior to the Closing, or if an attempted assignment would be
ineffective or would adversely affect Seller's ability to convey the benefit of
such Assumed Government Contract to Buyer, then: (1) Buyer shall be entitled to
all benefits of each such Assumed Government Contract accruing on or after the
Effective Date; (2) Buyer shall assume as an Assumed Liability all liabilities
relating to or arising out of or incurred in connection with each such Assumed
Government Contract which accrue and relate to periods, circumstances and events
on or after the Effective Date; (3) Seller shall continue to deal with the other
contracting party(ies) as the prime contracting party; and (4) Seller shall
cooperate with Buyer until such Consent, novation or other agreement is obtained
or effected in any lawful arrangement so that Buyer shall receive all of
Seller's right, title, and interest in all benefits under any such Assumed
Government Contracts. Seller shall promptly assign to Buyer each such Assumed
Government Contract after receipt of the appropriate Consent, novation or other
agreement.
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(3) Collection of Receivables - From and after the Closing,
Seller shall, unless Buyer otherwise requests, act on Buyer's behalf for the
limited purpose of collecting any and all accounts receivable relating to any
Assumed Government Contracts accruing on or after the Effective Date which have
not been transferred to Buyer, and shall immediately deliver to Buyer the gross
proceeds of such collection without deduction or set-off.
e. [Reserved].
f. Access - Seller agrees that for the Ten (10) year period after
the Closing, Buyer and its Representatives shall be permitted access during
normal business hours and upon prior reasonable notice for reasonable purposes
to inspect and make copies of all Retained Business Records.
g. [Reserved].
h. Consents - Except as provided in Section 7.1d or Schedule 9.8
attached hereto and made a part hereof, Seller shall obtain prior to Closing all
Consents and give all notices required by it to consummate the transactions
contemplated in this Agreement or in any other Covered Agreement to which it is
a party. As to the Consents set forth in Schedule 9.8, Seller shall use its
commercially reasonable best efforts to obtain all of such Consents after the
Closing, or as provided in Schedule 9.8.
7.2 Covenants of Buyer.
a. Access - Buyer agrees that for the Ten (10) year period after the
Closing, Seller and its Representatives shall be permitted access during normal
business hours and upon prior reasonable notice for reasonable purposes to
inspect and make copies of all Business Records.
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b. Cooperation - Buyer shall reasonably cooperate with Seller, as
provided in Section 15.19, with respect to Section 7.1d, but such cooperation
shall not include the payment by Buyer of any money or consideration to obtain
any such Consent, novation or other agreement.
c. Offers of Employment - Buyer shall offer employment commencing on
the Closing Date, to the individuals listed on Schedule 7.2c attached hereto and
made a part hereof, at the respective salary, vacation benefits and health
insurance set forth on Schedule 7.2c with respect to such individuals. Any
employees hired by Buyer shall be entitled to participate on the same terms and
conditions in employee benefit plans which are made available generally to
employees of Buyer. Buyer shall also offer employment agreements in
substantially the form of Exhibit A and Exhibit B attached hereto and made a
part hereof (collectively, the "Employment Agreements") to ▇▇▇▇ ▇. ▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇, respectively.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Seller's obligation to consummate the transactions contemplated in this
Agreement and in any other Covered Agreement to which it is a party is subject
to the satisfaction on or before the Closing of each of the following conditions
(the fulfillment of each of which may be waived by Seller):
8.1 Compliance. Buyer shall have performed and complied in all material
respects, with all agreements and covenants required by this Agreement and all
other Covered Agreements to which Buyer is a party, to be performed and complied
with by Buyer prior to the Closing.
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8.2 Other Covered Agreements. Buyer shall have executed and delivered the
other Covered Agreements to which it is a party and shall have performed and
complied with all of the agreements, representations and warranties made by it
therein.
8.3 Authorization. All corporate and other proceedings necessary to be
taken by Buyer in connection with the authorization, execution and delivery of
this Agreement and all other Covered Agreements to which it is a party and the
authorization of all transactions contemplated herein and therein, shall be
reasonably satisfactory in form and substance to Seller and its counsel.
8.4 Accuracy. The representations and warranties of Buyer in this
Agreement shall be true, correct and complete in all material respects on the
date of this Agreement and as of the Closing Date as if made on the Closing
Date.
8.5 Other Deliverables. Buyer shall have delivered to Seller,
reasonably satisfactory to Seller in form and substance in each case:
a. an Officer's Certificate, dated as of the Closing Date,
stating that the conditions specified in Sections 8.1, 8.3
and 8.4 have been satisfied;
b. incumbency certificates for Buyer's officers executing this
Agreement or any other Covered Agreement;
c. a copy of the Resolutions adopted by Buyer's Board of
Directors authorizing the execution, delivery and
performance of this Agreement and the other Covered
Agreements to which Buyer is a party and the transactions
contemplated herein and therein; and
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d. such other instruments and documents as are: (1) required by
any provision of this Agreement or any other Covered Agreement
to which Buyer is a party; or (2) reasonably necessary in the
opinion of Seller or its counsel to effect performance by
Buyer of this Agreement or any other Covered Agreement to
which Buyer is a party.
8.6 Purchase Price. The Purchase Price shall have been paid by
Buyer, as set forth in Section 3.2(a).
8.7 Litigation. No action or proceeding shall be pending or threatened by
or before any Government Authority to restrain or prohibit or to recover damages
in respect of the consummation of any or all of the transactions contemplated
herein, nor shall there by any other action or proceeding pending or threatened,
which action or other proceeding may, in the reasonable opinion of Seller,
result in a decision, ruling, or finding that, individually or in the aggregate,
has or may reasonably be expected to have, a material adverse effect on the
validity or enforceability of this Agreement or on the ability of Buyer to
perform its obligations under this Agreement.
8.8 Employment Agreements. Buyer shall have offered the Employment
Agreements in substantially the form of Exhibit A and Exhibit B to ▇▇▇▇ ▇.
Herb and ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇, respectively.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Buyer's obligation to consummate the transactions contemplated in this
Agreement and in any other Covered Agreement to which it is a party is subject
to the satisfaction on or before
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the Closing of each of the following conditions (the fulfillment of each of
which may be waived by Buyer):
9.1 Compliance. Seller shall have performed and complied in all material
respects, with all agreements and covenants required by this Agreement and all
other Covered Agreements to which Seller is a party, to be performed and
complied with by Seller prior to the Closing.
9.2 Other Covered Agreements. Seller shall have executed and delivered the
other Covered Agreements to which it is a party and shall have performed and
complied with all of the agreements, representations and warranties made by it
therein.
9.3 Authorization. All corporate and other proceedings necessary to be
taken by Seller in connection with the authorization, execution and delivery of
this Agreement and all other Covered Agreements to which it is a party and the
authorization of all transactions contemplated herein and therein, shall be
reasonably satisfactory in form and substance to Buyer and its counsel.
9.4 Accuracy. The representations and warranties of Seller in this
Agreement shall be true, correct and complete in all material respects on the
date of this Agreement and as of the Closing Date as if made on the Closing
Date.
9.5 Other Deliverables. Seller shall have delivered to Buyer,
reasonably satisfactory to Buyer in form and substance in each case:
a. an Officer's Certificate of Seller, dated as of the Closing
Date, stating that the conditions specified in Sections
9.1, 9.3 and 9.4 have been satisfied;
b. incumbency certificates for the officers of Seller
executing this Agreement or any other Covered Agreement;
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c. a copy of the Resolutions adopted by the Board of Directors
of Seller authorizing the execution, delivery and
performance of this Agreement and the other Covered
Agreements to which it is a party and the transactions
contemplated herein;
d. a certificate of the Secretary of State of the State of
Delaware, dated as of a recent date, attesting to the good
standing of Seller in Delaware, dated as of a recent date;
e. a certificate of the Secretary of State of the State of
California attesting to the good standing of Seller in
California and a California Tax Status Certificate, both
dated as of a recent date;
f. a certificate of the Secretary of State of the Commonwealth
of Massachusetts, dated as of a recent date, attesting to
the good standing of Seller in Massachusetts, dated as of a
recent date;
g. an original counterpart (or copy if no original counterpart
is in Seller's possession or control) of each Assumed Lease
and Contract and each Assumed Authorization, including,
without limitation, all amendments or modifications,
through the Closing; and
h. such other instruments and documents as are: (1) required by
any provision of this Agreement or any other Covered Agreement
to which Seller is a party; or (2) reasonably necessary in the
opinion of Buyer or its counsel, in their respective sole
discretion, to effect performance by Seller of this Agreement
or any other Covered Agreement to which it is a party.
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9.6 Opinion of Counsel. At the Closing, Buyer shall receive an opinion of
counsel to Seller in the form attached hereto and made a part hereof as
Exhibit F.
9.7 [Reserved].
9.8 Consents. Seller shall have provided to Buyer any and all necessary
Consents (except as otherwise provided in Section 7.1d or as otherwise provided
on Schedule 9.8 attached hereto and made a part hereof) to the transfer to Buyer
of the Purchased Assets and to the assignment and assumption of each of the
Assumed Liabilities and each of the Assumed Authorizations to Buyer, which
Consents shall be satisfactory to Buyer and its counsel, in their respective
sole discretion.
9.9 [Reserved].
9.10 Litigation. No action or proceeding shall be pending or threatened by
or before any Government Authority to restrain or prohibit or to recover damages
in respect of the consummation of any or all of the transactions contemplated
herein, nor shall there by any other action or proceeding pending or threatened,
which action or other proceeding may, in the reasonable opinion of Buyer, result
in a decision, ruling, or finding that, individually or in the aggregate, has or
may reasonably be expected to have, a material adverse effect on the validity or
enforceability of this Agreement, on the ability of Seller to perform its
obligations under this Agreement or on the condition of the Crystallume Business
or any of the Purchased Assets.
9.11 [Reserved].
9.12 Lease. [Reserved].
9.13 Subtenant Waiver. [Reserved].
ARTICLE 10
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CLOSING
10.1 Closing. The transactions contemplated in this Agreement and all
other Covered Agreements shall be closed on October 27, 1997 (or such other date
as the Parties shall mutually agree) at the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇
LLP, Exchange Place, Boston, Massachusetts at 10:00 a.m. (Throughout this
Agreement, such event is referred to as the "Closing" and such date and time are
collectively referred to as the "Closing Date".)
10.2 Asset Transfer. At the Closing, Seller shall deliver the Purchased
Assets to Buyer and shall transfer the Purchased Assets to Buyer by warranty
▇▇▇▇ of sale, assignments and such other documents of transfer as are reasonably
required by Buyer or Buyer's counsel, in their respective sole discretion, to
accomplish the transactions contemplated in this Agreement or in any other
Covered Agreement.
10.3 Royalty Agreement. Seller and Buyer each agrees to execute and
deliver at the Closing a royalty agreement in substantially the form attached
hereto and made a part hereof as Exhibit C ("Royalty Agreement").
10.4 Security Agreement. Seller and Buyer each agrees to execute and
deliver at the Closing a security agreement in substantially the form attached
hereto and made a part hereof as Exhibit D ("Security Agreement").
10.5 Confidentiality/Noncompetition Agreement. Seller and Buyer each
agrees to execute and deliver at the Closing a confidentiality/noncompetition
agreement in substantially the form attached hereto and made a part hereof as
Exhibit E ("Confidentiality/Noncompetition Agreement").
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10.6 Employment Agreements. Seller agrees to use its commercially
reasonable best efforts to have ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ each
execute and deliver at the Closing employment agreements in substantially the
forms attached hereto and made a part hereof as Exhibit A and Exhibit B,
respectively.
10.7 Covered Agreements. The term "Covered Agreements" means each of the
following: (a) this Agreement; (b) the Royalty Agreement; (c) the Security
Agreement; (d) the Confidentiality/Noncompetition Agreement; (e) the Exhibits
and the Schedules in this Agreement and in any other Covered Agreement; and (f)
any other agreement, instrument or document delivered or required to be
delivered by Seller or Buyer pursuant to this Agreement or any other agreement
described in this Section 10.7.
ARTICLE 11
COVENANTS OF SELLER AND BUYER FOLLOWING CLOSING
11.1 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Purchased Assets in the manner set forth on Schedule 11.1 attached
hereto and made a part hereof ("Allocation"). To the extent that the
transactions contemplated in this Agreement or in any other Covered Agreement
are required to be reported on any Tax Return of Buyer or Seller, each Party
agrees that, to the extent not prohibited by Applicable Law, it will report such
transactions as a purchase and sale of property, and that it will allocate for
purposes of Section 1060 of the Internal Revenue Code of 1986, as amended, the
portion of the Purchase Price as set forth on Schedule 11.1 to the Purchased
Assets set forth on Schedule 11.1, and neither Party shall take a position
inconsistent with the Allocation.
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11.2 Sales/Use Taxes. Seller shall be liable for, and shall timely pay,
any and all sales taxes, use taxes and any similar taxes, fees or charges levied
or imposed by any Government Authority as a result of the sale and transfer of
any of the Purchased Assets, and shall provide Buyer with satisfactory written
evidence that such taxes, fees and charges have been timely paid.
ARTICLE 12
INDEMNIFICATION
12.1 Agreement by Seller to Indemnify.
a. Seller shall, regardless of any investigation made at any time by
or on behalf of Buyer or any information that Buyer may have, promptly
indemnify, defend and hold harmless, Buyer, its Affiliates, and their respective
directors, officers, employees, shareholders and agents (collectively, the
"Buyer Indemnitees") with respect to the aggregate of all "Indemnifiable Damages
of Buyer". For purposes of this Section 12.1, "Indemnifiable Damages of Buyer"
shall mean the aggregate of all claims, losses, costs, judgments, deficiencies,
penalties, obligations, liabilities, damages (including, without limitation,
indirect, special, incidental and consequential damages), fines, expenses
(including, without limitation, reasonable attorneys' fees and disbursements and
costs of any bonds necessary to release any attachments of the Purchased Assets
or to stay any judgments or perfect any appeals) or diminution in value
(collectively, the "Claims"), whether or not any of the Claims result from third
party claims or result from the assertion of any of Buyer's rights hereunder,
incurred or suffered by any of the Buyer Indemnitees, directly or indirectly,
arising out of or relating to:
(1) any breach of or default in the observance or
performance of any agreement made by Seller in this
Agreement or Seller's failure to
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fulfill any other obligation which it is required to
perform or observe in this Agreement;
(2) any inaccuracy in any, breach of any, or false or
fraudulent, representation or warranty made by Seller
in this Agreement;
(3) the operation of the Crystallume Business or the
ownership or use of any Purchased Asset, prior to the
Closing;
(4) the failure of Seller to pay, discharge or perform any
of the debts, obligations or liabilities of Seller other
than the Assumed Liabilities;
(5) any product liability claim with respect to products
manufactured or sold, or services performed, by Seller
prior to the Closing;
(6) any product or service warranties, indemnities or
guarantees with respect to products manufactured or sold
or services performed, by Seller prior to Closing;
(7) any environmental action, claim or proceeding with
respect to the Premises, any Purchased Asset or the
Crystallume Business as to which Buyer is or may become
subject, including, without limitation, as a potentially
responsible party, which environmental action, claim or
proceeding arises from or relates to any act or omission
of any Person during the period of time during which
Seller occupied the Premises prior to Closing;
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(8) as to any transaction contemplated in this Agreement,
the failure of either Party to comply with the
provisions of Article 6 of the California Uniform
Commercial Code or any similar "bulk sales" law or
similar Applicable Law relating to bulk sales or notices
to creditors, or any debt, liability or obligation with
respect thereto or arising thereunder; or
(9) the investigation or defense of any Claim which is made
or brought against any of the Buyer Indemnitees relating
to any of the Indemnifiable Damages of Buyer.
12.2 Agreement by Buyer to Indemnify.
a. Buyer shall promptly indemnify, defend and hold harmless, Seller,
its Affiliates, and their respective directors, officers, employees,
shareholders and agents (collectively, the "Seller Indemnitees") with respect to
the aggregate of all "Indemnifiable Damages of Seller". For purposes of this
Section 12.2, "Indemnifiable Damages of Seller" shall mean the aggregate of all
Claims, whether or not any of the Claims result from third party claims or
result from the assertion of any of Seller's rights hereunder, incurred or
suffered by any of the Seller Indemnitees, directly or indirectly, arising out
of or relating to:
(1) any breach of or default in the observance or
performance of any agreement made by Buyer in this
Agreement, or Buyer's failure to fulfill any other
obligation which it is required to perform or observe in
this Agreement;
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(2) any inaccuracy in any, breach of any, or false or
fraudulent, representation or warranty made by Buyer
in this Agreement;
(3) the operation of the Crystallume Business or the
ownership or use of any Purchased Asset, subsequent to
the Closing, except to the extent such Claims result
from or arise out of or constitute Indemnifiable Damages
of Buyer;
(4) the failure of Buyer to pay, discharge or perform any
of the Assumed Liabilities;
(5) any product liability claim with respect to products
manufactured or sold, or services performed, by Buyer
after the Closing;
(6) any product or service warranties, indemnities or
guarantees with respect to products manufactured or sold
or services performed, by Buyer after Closing;
(7) any environmental action, claim or proceeding with
respect to the Premises, any Purchased Asset on the
Crystallume Business as to which Seller is or may become
subject, including, without limitation, as a potentially
responsible party, which environmental action, claim or
proceeding arises from or relates to any act or omission
of any Person during the Period of time during which
Buyer occupies the Premises after the Closing; or
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(8) the investigation or defense of any Claim which is made
or brought against any of the Seller Indemnitees
relating to any of the Indemnifiable Damages of Seller.
12.3 Rules Regarding Indemnification. The obligations and liabilities of
each Party which may be subject to indemnification liability under Section 12.1
or Section 12.2 ("Indemnifying Party") to the Buyer Indemnitees or Seller
Indemnitees, as the case may be ("Indemnified Party"), shall be subject to the
following terms and conditions:
a. Claims by Non-Parties - Promptly after receipt by an Indemnified
Party of notice of the commencement of any proceeding against it by a third
party ("Third Party Claim") which is likely to give rise to Indemnifiable
Damages of the Indemnified Party, the Indemnified Party shall give written
notice ("Notice of Third Party Claim") to the Indemnifying Party stating the
nature of such Claim, the amount thereof and a brief description of the facts
and circumstances relating thereto, to the extent known. The Notice of Third
Party Claim shall contain or be accompanied by all reasonably appropriate
documentation relating to the circumstances giving rise to the Claim, including,
without limitation, a copy of all pleadings and other papers served, if any. The
failure of an Indemnified Party to give such Notice of Third Party Claim to the
Indemnifying Party or delay in giving such Notice of Third Party Claim, will not
affect the validity or amount of the Claim and the indemnification obligations
of the Indemnifying Party will remain in effect as to such Claim, except to the
extent that the Indemnifying Party has been prejudiced in its defense by such
failure or delay. If within Thirty (30) days after receiving such Notice of
Third Party Claim, the Indemnifying Party advises the Indemnified Party that it
will provide indemnification and assume the defense at its expense, then
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so long as such defense is being conducted, the Indemnified Party shall not
settle or admit liability with respect to the Claim and shall provide the
Indemnifying Party and defending counsel reasonable assistance in defending the
Claim. If the Indemnifying Party assumes the defense, counsel shall be selected
by such Indemnifying Party, which counsel shall be reasonably acceptable to the
Indemnified Party, and if the Indemnified Party then retains its own counsel, it
shall do so at its own expense, and the Indemnifying Party shall have the right
to settle the Claim with the consent of the Indemnified Party, which consent
shall not be unreasonably withheld or delayed. If the Indemnified Party does not
receive a written notice of assumption of the defense as hereinabove provided
from the Indemnifying Party within Thirty (30) days after the Indemnifying
Party's receipt of such Notice of Third Party Claim, the Indemnifying Party will
be bound by any determination made in such proceeding or any compromise or
settlement affected by the Indemnified Party, and the Indemnified Party may
control the defense of such proceeding and, in its sole discretion, may settle
or admit liability.
b. Claims by a Party - The determination of a Claim asserted by one
or more of the Buyer Indemnitees or Seller Indemnitees, as the case may be,
hereunder (other than as set forth in Section 12.3a), shall be made as follows:
the Indemnified Party shall give prompt written notice to the Indemnifying Party
of any Claim by the Indemnified Party which has not been made pursuant to
Section 12.3a, stating the nature of such Claim, the amount thereof and a brief
description of the facts and circumstances relating thereto, to the extent
known. If the Indemnified Party does not receive a written objection to the
notice from the Indemnifying Party within Thirty (30) days after the
Indemnifying Party's receipt of such notice, the Claim shall be conclusively
presumed to be a liability of the Indemnifying Party in an amount equal to such
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Claim. If within the aforesaid Thirty (30) day period the Indemnified Party
shall have received written objection to the notice (which written objection
shall briefly describe the basis of the objection to the notice or the amount
thereof, all in good faith), then for a period of Sixty (60) days after the
receipt of such objection, the Parties shall attempt to settle the disputed
Claim as between the Indemnified Party and the Indemnifying Party. If the
Parties are unable to settle the disputed Claim, either Party may bring an
action on the dispute as provided in Section 15.20.
12.4 Set-off. Seller and Buyer each acknowledges and agrees that the
Royalty Agreement contains obligations arising out of the transactions described
in this Agreement. Seller and Buyer each acknowledges and agrees that the
Royalty Agreement contains obligations of Buyer to pay Seller certain sums of
money (any and all payments of whatever nature thereunder are referred to herein
collectively as the "Obligations"). After the Closing, Buyer shall have the
right to recoup and set-off against the Obligations with respect to any
Indemnifiable Damages of Buyer under Section 12.1 of the Agreement. Buyer shall
promptly so notify Seller of its intent to recoup and set-off against the
Obligations and shall provide Seller with the notice required by Section 12.3b.
If Seller reasonably disagrees with Buyer's intention to recoup and set-off as
set forth herein, Seller shall give written notice thereof to Buyer, within
Thirty (30) days after receipt of Buyer's notice. In such event, Buyer shall
make all required payments pursuant to the Obligations into an interest-bearing
escrow account of Marine Midland Bank, N.A. to be held by Marine Midland Bank,
N.A. for the benefit of the Parties as their interests may finally be determined
by a court of competent jurisdiction (as provided in Section 15.20), pending
resolution of this dispute between the Parties. If the Parties cannot
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resolve any such dispute within Thirty (30) days after notice is given by
Seller, any Party may bring an action on the dispute as provided in Section
15.20.
12.5 No Event of Default. Notwithstanding anything to the contrary
contained in this Agreement or in any other Covered Agreement, any right of
recoupment or set-off asserted in good faith by Buyer in substantial compliance
with Section 12.4 (including, without limitation, payment into escrow as
required thereunder) shall not be an event of default under this Agreement or
under any other Covered Agreement, even though it may ultimately be determined
by a court that such assertion was improperly made or that Buyer was not
reasonably entitled to assert such right.
12.6 Cumulative Rights and Remedies. The rights and remedies of the
Parties under this Article 12 shall be in addition to and cumulative of, and not
in lieu or exclusive of, any other rights or remedies of the Parties pursuant to
this Agreement or any other Covered Agreement, at law or in equity. The rights
and remedies of any Party based upon, arising out of or otherwise in respect of,
any inaccuracy in or breach of, any representation, warranty or agreement or
failure to fulfill any condition shall in no way be limited by the fact that the
act, omission, occurrence or other statement of facts upon which any claim for
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty or agreement as to which there is no inaccuracy or
breach.
12.7 Waiver. No representation or warranty of Seller herein shall be
affected or deemed waived by reason of any investigation made by or on behalf of
Buyer, including, without limitation, any investigation made by any of its
Representatives or by reason of the fact that
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Buyer or any of its Representatives knew or should have known that any such
representation or warranty is or may be inaccurate.
12.8 Limitations.
a. Threshold - No claim for indemnification under Article 12 of this
Agreement shall be payable by any Indemnifying Party or otherwise recoverable by
any Indemnified Party, by setoff or otherwise, until (and then only to the
extent that) the total of all Indemnifiable Damages of Buyer, or the total of
all Indemnifiable Damages of Seller, as the case may be, equals or exceeds Ten
Thousand Dollars ($10,000.00).
b. Time of Assertion - No claim for indemnification under Article 12
of this Agreement shall be payable by any Indemnifying Party or otherwise
recoverable by any Indemnified Party, by setoff or otherwise, with respect to
Claims as to which such Indemnifying Party has not received notice from the
Indemnified Party within Twelve (12) months after the Closing Date, except that
there shall be no limitation on the time during which indemnification may be
sought or obtained for: (1) Third Party Claims related to any debts, obligations
or liabilities of Seller of any kind other than the Assumed Liabilities; or (2)
any instance of fraud, intentional breach of a covenant or intentional
misrepresentation by any Party contained in or relating to this Agreement or any
other Covered Agreement.
c. Seller's Maximum Liability - Seller's maximum liability to
Buyer's Indemnitees for indemnification under this Article 12, exclusive of
Indemnifiable Damages of Buyer arising from fraud, intentional breach of a
covenant or intentional misrepresentation by Seller contained in or relating to
this Agreement or any other Covered Agreement, shall not exceed the Purchase
Price. Seller shall be liable to Buyer to the extent provided in Section 12.1,
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for Indemnifiable Damages of Buyer arising from fraud, intentional breach of a
covenant or intentional misrepresentation by Seller contained in or relating to
this Agreement or any Covered Agreement, without limitation.
d. Buyer's Maximum Liability - Buyer's maximum liability to Seller's
Indemnitees for indemnification under this Article 12, exclusive of
Indemnifiable Damages of Seller arising from fraud, intentional breach of a
covenant or intentional misrepresentation by Buyer contained in or relating to
this Agreement or any other Covered Agreement, shall not exceed (1) One Hundred
Thousand Dollars ($100,000.00); provided, however, notwithstanding the
immediately preceding limitation, (2) Buyer's maximum liability to Seller's
Indemnitees for indemnification pursuant to Section 12.2a(4) relating to arising
out of the failure of Buyer to pay, discharge or perform any of the Assumed
Liabilities arising out of that certain lease described in Schedule 1.1f,
Paragraph 1e shall not exceed an amount equal to the Purchase Price reduced by
Buyer's liability to Seller's Indemnitees pursuant to Section 12.8d(1). Buyer
shall be liable to Seller to the extent provided in Section 12.2, for
Indemnifiable Damages of Seller arising from fraud, intentional breach of a
covenant or intentional misrepresentation by Buyer contained in or relating to
this Agreement or any Covered Agreement, without limitation.
e. Exclusive Remedy - Notwithstanding anything to the contrary
contained in Section 12.6, the Parties acknowledge and agree that this Article
12 is the exclusive remedy of the Parties for damages for breach or
misrepresentation of or under this Agreement only (but not under any other
Covered Agreement), other than a claim of interpleader based on Buyer's failure
to discharge the Assumed Liabilities or Seller's failure to discharge any
liabilities of Seller other
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than the Assumed Liabilities; provided, however, the rights and remedies of the
Parties under any other Covered Agreement shall not be limited or affected in
any way.
ARTICLE 13
CONFIDENTIALITY
13.1 Existing Confidentiality Agreements.
a. Non-Disclosure Agreement - The Parties agree that as to that
certain Non-Disclosure Agreement by and between the Parties, dated January 31,
1995: (1) all duties and obligations of Buyer shall terminate at the Closing;
and (2) all duties and obligations of Seller shall survive the Closing, as
provided therein
b. Confidentiality Agreement - The Parties agree that as to that
certain Confidentiality Agreement by and between the Parties, dated May 27,
1997: (1) all duties and obligations of Buyer shall terminate at the Closing;
and (2) all duties and obligations of Seller shall survive the Closing, as
provided therein; provided, however, Section 6 of said Confidentiality Agreement
shall survive in accordance with its terms.
ARTICLE 14
[Reserved]
ARTICLE 15
MISCELLANEOUS
15.1 Entire Agreement. This Agreement and the other Covered Agreements
constitute the entire agreement by and between the Parties regarding the subject
matter contained herein and supersede all prior and contemporaneous undertakings
and agreements by and between the Parties, whether written or oral, with respect
to such subject matter.
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15.2 Amendment. This Agreement shall not be amended except by a
writing executed by both Parties.
15.3 Parties Bound. This Agreement shall be binding upon and shall inure
to the benefit of the Parties and their respective successors and permitted
assigns, subject to the restrictions against assignment provided in Section
15.4.
15.4 Assignment. This Agreement shall not be assignable by either Party
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed; provided, however, Buyer shall have the right,
without obtaining Seller's prior written consent, upon prior notice to Seller,
to assign its rights under this Agreement to any Affiliate of Buyer. No
assignment of any rights under this Agreement relieves the assigning Party of
primary liability for its obligations under this Agreement, and as between the
Parties, the assigning Party shall continue to be liable for all of its
obligations under this Agreement as though no assignment has been made.
15.5 Counterparts. This Agreement may be executed simultaneously in Two
(2) or more counterparts, any of which shall be deemed an original, and all of
which together shall constitute one and the same instrument, notwithstanding
that both Parties are not a signatory to the original or the same counterpart.
15.6 Headings. The headings used herein are inserted for convenience only
and are in no way intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement.
15.7 Waiver. Failure by either Party to insist upon strict performance of
any provision herein by the other Party shall not be deemed a waiver by such
Party of its rights or remedies or a
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waiver by it of any subsequent default by the other Party and no waiver shall be
effective unless it is in writing and duly executed by the Party entitled to
enforce the provision being waived.
15.8 Transaction Expenses. Each Party shall pay its own fees, costs and
expenses and those of its Representatives with respect to the transactions
contemplated in this Agreement and in any other Covered Agreement, and the
Closing.
15.9 Notices. All notices required or permitted hereunder shall be in
writing and shall be: (a) sent by telex or facsimile transmission (to be
effective when receipt is acknowledged unless sent after 5:00 p.m. on any
business day, in which event notice shall be deemed received on the next
business day); (b) personally delivered; (c) sent by certified mail, return
receipt requested; or (d) sent by a nationally recognized, commercial overnight
delivery service with provisions for a receipts, postage or delivery charges
prepaid, and, except as otherwise provided in Section 15.9(a), shall be deemed
given when personally delivered or when placed in the possession of such mail or
delivery service, and addressed to the Parties, as follows:
To Seller: Electronic Designs, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
To Buyer: Advanced Refractory Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to: Damon & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
Notice of change of address shall be given in accordance with the terms of this
Section 15.9 and shall be effective only upon receipt.
15.10 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York without giving effect
to the principles of conflicts of laws.
15.11 Public Announcements. Except for any announcement intended solely
for internal distribution by a Party or any disclosure required by legal,
accounting or regulatory requirements beyond the reasonable control of said
Party, any media release relating to this Agreement or any of the other Covered
Agreements by Buyer within the Ten (10) day period after the Closing shall be
coordinated with and approved in writing by Seller prior to the release thereof,
which approval shall not be unreasonably withheld or delayed.
15.12 Third-Party Beneficiaries. With the exception of: (a) the
Parties; and (b) the Buyer Indemnitees and the Seller Indemnitees (as
provided in Article 12), there shall exist no right of any Person to claim a
beneficial interest in this Agreement or any rights arising under this
Agreement.
15.13 Survivability. All representations, warranties and agreements
contained herein shall survive and continue to bind the Parties after the
execution and delivery of this Agreement and any other Covered Agreement, the
Closing, the termination or expiration of this Agreement and any other Covered
Agreement, and any investigation conducted by either Party, to the extent
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and for as long as may be necessary to give effect to the rights, duties and
obligations of the Parties pursuant to this Agreement, subject to any applicable
statutes of limitations.
15.14 [Reserved].
15.15 [Reserved].
15.16 Post-Closing Communications. Seller shall promptly notify and
provide to Buyer any correspondence or other communications received by Seller
after the Closing relating to the Crystallume Business or any of the Purchased
Assets.
15.17 Inconsistent Provisions. If any provision of this Agreement is
inconsistent with any provision of any other Covered Agreement, the
provisions of this Agreement shall be controlling.
15.18 Severability. If any provision of this Agreement is determined by a
court of competent jurisdiction to be illegal or unenforceable, such provision
shall be automatically reformed and construed so as to be valid, operative and
enforceable to the maximum extent permitted by law or equity while preserving
its original intent. The invalidity of any part of this Agreement shall not
render invalid the remainder of this Agreement.
15.19 Cooperation. If at any time either Party reasonably requests that
any further assignment, conveyance, agreement or assurance is necessary or
desirable to fully carry out the provisions of this Agreement and the
transactions contemplated in this Agreement or in any other Covered Agreement,
including, without limitation, the collection of accounts receivable due either
Party hereunder, then the other Party shall execute and deliver, or cause to be
executed and delivered, any and all proper assignments, conveyances, agreements
and assurances, and do or cause to be done all things necessary or desirable to
fully carry out the provisions of this
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Agreement and the other Covered Agreements and the transactions contemplated
herein and therein.
15.20 Disputes. Each Party agrees that any dispute or controversy arising
between the Parties hereunder shall be settled in an action commenced and
maintained in the United States District Court for the Southern District of New
York, or if said Court lacks subject matter jurisdiction, then in the New York
Supreme Court, County of New York, and each Party consents to personal
jurisdiction in such courts. Seller hereby designates ▇▇▇▇▇▇▇, Procter & ▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its authorized agent for
service of process within the State of New York.
ARTICLE 16
DEFINITIONS
16.1 Definitions. For purposes of this Agreement, the following terms
shall have the respective meanings set forth below:
a. "Affiliate" of a Person means any Person which Controls, is
Controlled by, or is under common Control with, such Person.
b. "Applicable Law" means any and all applicable laws, rules,
regulations, statutes, orders and ordinances of any Government Authority.
c. "Consent" means any consent, estoppel (or other) certificate,
approval, authorization, waiver, permit, grant, franchise, concession,
agreement, license, exemption or order of, registration, declaration or filing
with, or report, filing, registration or notice to, any Person, including,
without limitation, any Government Authority.
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d. "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
e. "Government Authority" means any foreign, federal, state, local
or other government, governmental agency or authority or quasi-governmental
body, or any entity exercising any executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, including, without
limitation, any government authority, agency, department, board, commission,
court or tribunal or arbitrator.
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IN WITNESS WHEREOF, each Party has caused this Asset Purchase Agreement to
be executed by its duly authorized officer on the day and year first above
written.
ELECTRONIC DESIGNS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
ADVANCED REFRACTORY TECHNOLOGIES, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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List of Schedules and Exhibits to
Asset Purchase Agreement
Schedule 1.1a - Inventory
Schedule 1.1b - Technical Documentation
Schedule 1.1c - Machinery and Equipment
Schedule 1.1d - Furniture & Fixtures
Schedule 1.1e - Assumed Leases
Schedule 1.1f - Assumed Leases and Contracts
Schedule 1.1h - Assumed Authorizations
Schedule 1.1i - Purchased Intellectual Property
Schedule 1.1j - Licensed Intellectual Property
Schedule 1.1l- Prepaid Expenses and Deposits
Schedule 1.1p - Customers/Suppliers Records
Schedule 2.1b - Assumed Liabilities
Schedule 3.3 - Proration
Schedule 4.4 - Consents (Sellers)
Schedule 4.8 - Intellectual Property
Schedule 4.10 - Leases and Contracts
Schedule 4.11 - Authorizations
Schedule 4.12 - Financial Statements
Schedule 4.13 - Absence of Certain Changes
Schedule 4.15 - Major Customers and Suppliers
Schedule 4.19 - Environmental
Schedule 4.21 - Employees
Schedule 4.26 - ERISA
Schedule 4.27 - Insurance
Schedule 4.28 - Brokers
Schedule 4.29 - Related Party Transactions
Schedule 5.4 - Consents of Buyer
Schedule 7.2c - Offers of Employment
Schedule 9.8 - Undelivered Consents
Schedule 11.1 - Allocation of Purchase Price
Exhibit A - Employment Agreement with ▇▇▇▇ ▇. ▇▇▇▇
Exhibit B - Employment Agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇
Exhibit C - Royalty Agreement
Exhibit D - Security Agreement
Exhibit E - Confidentiality/Noncompetition Agreement
Exhibit F - Opinion of Seller's Counsel