ASSET PURCHASE AGREEMENT
by and among
NORTH STAR RESEARCH ACQUISITION CORP.,
IONATRON, INC.,
NORTH STAR RESEARCH CORPORATION,
and
THE PRINCIPAL STOCKHOLDERS NAMED THEREIN
September 16, 2004
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of September 16,
2004, by and among North Star Research Corporation, a New Mexico corporation
having its principal address at Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Seller"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand (collectively, the "Principal Stockholders"), North Star
Research Acquisition Corp., a Delaware corporation ("Buyer"), and Ionatron,
Inc., a Delaware corporation having an address at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ (the "Ionatron").
WHEREAS, the Seller is engaged in the business of creating and
manufacturing a range of high voltage equipment including, without limitation,
high power pulse generators, DC electron accelerators, DC ion accelerators, DC
power supplies, high voltage probes, high voltage dividers, and pulsed power
support equipment (including Thyratron Drivers and Ignitron Drivers), for the
aerospace, semiconductor, defense, manufacturing, medical and machine tool
industries (collectively, the "Business"); and
WHEREAS, the Seller desires to sell to the Buyer, and the Buyer desires to
purchase from the Seller, all of the assets and properties of the Seller and the
Business, other than certain (i) patents and other intellectual property
described in Section 1.2(i) hereof, (ii) intellectual property for Rx (Rapid
X-ray) electron beam scanning of X-ray sources and (iii) MeVScan beam scanning
technology licensed to American Science and Engineering (collectively, the
"Excluded Business");
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements, covenants, representations and warranties hereinafter contained, the
parties hereto hereby agree as follows:
SECTION 1. Purchase and Sale of Assets.
1.1 Purchase of Assets. Simultaneously with the execution and delivery of
this Agreement, and subject to the terms and conditions of this Agreement for
the consideration set forth herein, the Seller shall sell, assign, transfer and
convey to the Buyer, and the Buyer shall purchase, acquire and accept from the
Seller, all right, title and interest of the Seller in and to all of the
Seller's assets, Business, properties and rights of every nature, kind and
description wheresoever located and whether or not reflected on the books and
records of Seller (excluding only those assets set forth in Section 1.2 below),
including, without limitation, the following (collectively, the "Purchased
Assets"):
(i) all operating equipment (including machinery and tools),
furniture, fixtures, leasehold improvements, computer equipment, office
equipment, communications equipment, articles of store signage and other
tangible personal property which are used or held for use by the Seller in
connection with the Business as set forth on SCHEDULE 1.1(I);
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(ii) all inventory and works-in-process which is used or held for
use by Seller in connection with the Business as set forth on SCHEDULE 1.1(II);
(iii) all contracts, agreements, arrangements or commitments used in
connection with the operation of the Business as set forth on SCHEDULE 1.1(III)
(collectively, the "Assumed Contracts");
(iv) all licenses, permits, approvals, certificates, consents,
orders or other authorizations issued or granted by any governmental authority,
which are owned by Seller or which are used or held for use by Seller in
connection with the Business as set forth on SCHEDULE 1.1(IV);
(v) originals or copies of all books, records, files and papers of
Seller which are used or held for use in connection with the Business (or any
portions thereof), whether in hard copy or computer format, including books of
account, catalogues, mailing lists, customer data bases, telephone numbers,
invoices, sales and promotional materials, manuals, sales and purchase
correspondence, employment records, gift certificate and credit/return records
and documentation declared or used for accounting, marketing and/or
manufacturing;
(vi) all rights of Seller to any computer software programs and the
license or other agreements conferring rights related thereto as set forth on
SCHEDULE 1.1(VI);
(vii) all intellectual property rights and industrial property
rights arising under statutory or common law, contract or otherwise, and whether
or not perfected, which are owned by Seller or which are used or held for use by
Seller in connection with the Business, including without limitation, all (a)
patents, reissues and reexamined patents and patent applications, whenever filed
and wherever issued, including without limitation, continuations, continuations
in part, substitutes and divisions of such applications and all priority rights
result from such applications as set forth on SCHEDULE 1.1(VII)(A); (b) rights
associated with works of authorship including, but not limited to, copyrights,
moral rights, copyright applications and copyright registrations as set forth on
SCHEDULE 1.1(VII)(B); (c) rights relating to the protection of trade secrets and
confidential information as set forth on SCHEDULE 1.1(VII)(C); (d) rights in
trademarks, service marks, trade names, logos, symbols, sounds, musical
compositions, images, audio-visual works and the like as set forth on SCHEDULE
1.1(VII)(D); (e) rights analogous to those set forth in this paragraph (vii) and
any and all other proprietary rights relating to intangible property as set
forth on SCHEDULE 1.1(VII)(E); and (f) divisions, continuations, renewals,
reissues and extensions of the foregoing (as and to the extent applicable) now
existing, hereafter filed, issued or acquired;
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(viii) 50% of all of Seller's accounts receivable from Upton Taiwan
(the "Upton Taiwan Receivables");
(ix) all cash deposits, certificates of deposit, money market
accounts, accounts receivable (other than the Upton Taiwan Receivables) and all
other funds held by or on behalf of Seller, including, without limitation, (i)
Seller's warranty reserve in the amount of $40,000 (the "Warranty Reserve") and
(ii) Seller's Retained Earnings (as hereinafter defined) in excess of $303,000
(the "Acquired Retained Earnings"), as set forth on SCHEDULE 1.1(IX);
(x) all of the Seller's intellectual property rights, title and
interest in and to the trade name, trademark and service ▇▇▇▇ "North Star
Research" and any derivatives thereof (other than the name "North Star High
Voltage"), whether or not registered; and
(xi) all other assets, whether tangible or intangible, real or
personal, owned by Seller.
1.2 Excluded Assets. Notwithstanding anything to the contrary contained
herein, specifically excluded from the Purchased Assets are the right, title and
interest of the Seller in or to any of following properties, assets and rights
relating to the Excluded Business (collectively, the "Excluded Assets"):
(i) all patents or other intellectual property set forth on SCHEDULE
1.2(I);
(ii) all intellectual property for Rx (Rapid X-ray) electron beam
scanning of X-ray sources, including, but not limited to, (x) techniques for
scanning linac beams and techniques for laminography image manipulation and (y)
all designs created under "project 45"by the Seller (funded by the British
Government, AnnisTech, North Star, and L3);
(iii) MeVScan beam scanning technology which has been licensed to
American Science and Engineering as described in US Patent # 6,009,146 "MeVScan
transmission x-ray and x-ray system utilizing a stationary collimator method and
apparatus";
(iv) license agreement between North Star Research Corporation and
AnnisTech, Inc. for U.S. Patent No. 5,124,658;
(v) all technology licensed to L3 Communications as set forth in the
Joint Development Agreement dated October 5, 2002 and also set forth in the
Subcontract Agreement dated May 17, 2004;
(vi) subject to the provisions of Section 1.5 hereof, Seller's
Retained Earnings as of the Closing Date (as hereinafter defined) in an amount
of cash or accounts receivable or any combination thereof up to and not to
exceed $303,000, as set forth on SCHEDULE 1.2(VI);
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(vii) the balance of the Upton Taiwan Receivables not included among
the Purchase Assets pursuant to Section 1.1(viii) above;
(viii) all other contracts and assets set forth on SCHEDULE
1.2(VIII); and
(ix) High Voltage Probe/Driver intellectual property and business
including know-how, sketches, drawings, engineering calculations and all other
information required for the manufacture of high voltage probes, thyratron
drivers, and ignitron drivers.
For purposes of this Agreement, "Retained Earnings" shall mean Seller's
cash on hand and accounts receivable (other than the Upton Taiwan Receivables)
less Seller's accounts payable, project liabilities, warranty liabilities and
all other liabilities.
1.3 Assumed Liabilities. Simultaneously with the execution of this
Agreement and subject to the terms and conditions set forth herein, the Buyer
shall assume and agree to pay, honor and discharge when due only (i) Seller's
liabilities under the Assumed Contracts arising or accruing on and after the
date hereof and (ii) liabilities for warranty claims made against the Purchased
Assets in an amount not to exceed $75,000 (the "Warranty Cap") (collectively,
the "Assumed Liabilities").
1.4 Excluded Liabilities. Seller shall remain liable and solely
responsible for all liabilities and obligations of any kind whatsoever of the
Seller, other than the Assumed Liabilities, including, without limitation,
liabilities for warranty claims made against the Purchased Assets in an amount
in excess of the Warranty Cap (collectively, the "Excluded Liabilities").
1.5 Warranty Reserve. In order to partially secure the Seller's and the
Principal Stockholders' obligations under Section 6.12 hereof, at the Closing
the Seller shall assign to the Buyer, out of the Excluded Assets, an amount of
accounts receivable having a value of $8,000 (the "Warranty Reserve Cushion").
In the event that any of the accounts receivables comprising the Warranty
Reserve are not collected by Buyer in accordance with their terms, Buyer may
retain an amount of the Warranty Reserve Cushion (including any cash received by
Buyer upon collection thereof) equal to the lesser of (i) the amount of such
uncollected accounts receivable or (ii) $8,000. The balance of the Warranty
Reserve Cushion (including any cash received by Buyer upon collection thereof),
if any, shall be refunded by Buyer to the Seller when and to the extent that the
accounts receivable comprising the Warranty Reserve are collected by the Buyer.
SECTION 2. Purchase Price.
2.1 Purchase Price. In consideration of the sale, transfer, conveyance and
delivery of the Purchased Assets, and in reliance upon the representations and
warranties made by Seller herein, Buyer shall, in full payment therefore, (i)
pay to Seller the sum of $700,000 in immediately available funds (the "Cash
Consideration") and (ii) cause Ionatron to issue to Seller or its designees such
number of "restricted" shares of its common stock ("Ionatron Common Stock")
having an aggregate Market Value (as defined below) of $1,700,000 (the "Stock
Consideration") and (iii) assume the Assumed Liabilities. For purposes hereof,
"Market Value" of a share of Ionatron Common Stock means the average closing
sale price for Ionatron Common Stock on the over-the-counter bulletin board
("OTC") for the three (3) consecutive Trading Days (as defined below)
immediately preceding the third (3rd) day preceding the date hereof. "Trading
Days" means a day on which Ionatron Common Stock is traded on the OTC.
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SECTION 3. Closing.
3.1 Deliveries of Seller. Simultaneously with the execution and delivery
of this Agreement, the Seller shall deliver or cause to be delivered, to the
Buyer against delivery of the items specified in Section 3.2:
(a) all documents, certificates and agreements necessary to transfer
to the Buyer good and marketable title to the Purchased Assets, free and clear
of any and all liens, security interest, mortgages and other encumbrances of any
nature whatsoever (collectively, "Liens"), including bills of sale, assignments
and general conveyances, in form and substance reasonably satisfactory to Buyer;
(b) copies of resolutions adopted by Seller's Board of Directors and
stockholders authorizing Seller to execute and deliver this Agreement and the
other documents contemplated hereby to which Seller is a party and to perform
its obligations hereunder and thereunder, duly certified by the Secretary of the
Seller;
(c) a certificate of the Secretary of the Seller certifying as to
the incumbency and specimen signatures of the officers of the Seller executing
this Agreement and the other documents contemplated hereby to which Seller is a
party on behalf of the Seller;
(d) all third party consents required by Seller to consummate the
transactions contemplated hereby, if any;
(e) an opinion of counsel to the Seller, reasonably satisfactory to
Buyer and its counsel;
(f) a counterpart signature to the Manufacturing Agreement (as
defined in Section 6.3), duly executed by North Star High Voltage; and
(g) such other documents as may be required by this Agreement and as
Buyer or its counsel may reasonably require in order to document and carry out
the transactions contemplated by this Agreement.
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3.2 Deliveries of Buyer. Simultaneously with the execution and delivery of
this Agreement or promptly following the Closing, the Buyer shall deliver or
cause to be delivered, to the Seller against delivery of the items specified in
Section 3.1;
(a) the Cash Consideration;
(b) certificate(s) representing the Stock Consideration issued in
accordance with SCHEDULE 3.2(B); (c) instruments of assumption and such other
documents as the Seller shall prepare and may reasonably request in order to
evidence the Buyer's assumption of the Assumed Liabilities;
(d) copies of resolutions adopted by the each of Buyer's and
Ionatron's respective Board of Directors authorizing the Buyer and Ionatron to
execute and deliver this Agreement and the other documents contemplated hereby
to which they are a party and to perform their respective obligations hereunder
and thereunder, duly certified by the Secretary of each of the Buyer and
Ionatron;
(e) a certificate of the Secretary of the Buyer and Ionatron
certifying as to the incumbency and specimen signatures of the respective
officers of the Buyer and Ionatron executing this Agreement and the other
documents contemplated hereby to which they are a party on behalf of the Buyer
and Ionatron;
(f) all third party consents required by Buyer or Ionatron to
consummate the transactions contemplated hereby, if any;
(g) a counterpart signature to the Manufacturing Agreement, duly
executed by Buyer; and
(h) such other documents as may be required by this Agreement and as
Seller or its counsel may reasonably require in order to document and carry out
the transactions contemplated by this Agreement.
SECTION 4. Representations and Warranties of the Seller and the Principal
Stockholders.
The Seller and the Principal Stockholders, jointly and severally, hereby
represent and warrant to the Buyer and Ionatron as follows:
4.1 Corporate Organization and Good Standing of the Seller. The Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the State of New Mexico and is qualified to do business and in good
standing as a foreign corporation in each jurisdiction where the nature of its
Business makes such qualification necessary for it to conduct its Business as
currently conducted. True and complete copies of the Certificate of
Incorporation and Bylaws of Seller, as in effect to date, have heretofore been
furnished to Buyer.
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4.2 Necessary Authority. (a) The Seller has all requisite corporate power
and authority to enter into, deliver and perform this Agreement and the other
documents contemplated hereby to be executed by the Seller and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and such other documents and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Seller. This Agreement, and
each other document to be executed and delivered by Seller hereunder,
constitutes the Seller's valid and legally binding obligation, enforceable
against the Seller in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally, now or hereafter in effect, and
subject to the availability of equitable remedies.
(b) Each of the Principal Stockholders has the right, power, legal
capacity and authority to enter into and perform his obligations under this
Agreement and each other document to be executed and delivered by the Principal
Stockholders hereunder. This Agreement and each other document to be executed by
the Principal Stockholders hereunder has been duly and validly executed by the
Principal Stockholders, and this Agreement and each such other document
constitutes the Principal Stockholders' valid and legally binding obligation,
enforceable against the Buyer in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors' rights generally, now or hereafter in effect, and
subject to the availability of equitable remedies.
4.3 No Conflicts. Except as set forth on SCHEDULE 4.3, the execution,
delivery and performance of this Agreement by the Seller and the Principal
Stockholders and each other document contemplated hereby to which he, she or it
is a party, and the Seller's and the Principal Stockholders' consummation of the
transactions contemplated hereby and thereby, do not and will not (i) require
the consent, approval, authorization, order, filing, registration or
qualification of or notice or payment to any third party or any federal, state,
local or foreign governmental authority, agency, body, commission, branch,
department, instrumentality or court (a "Governmental Authority") that has not
been obtained, (ii) conflict with or result in any violation of or default under
any provision of the Certificate of Incorporation or Bylaws of the Seller or of
any mortgage, indenture, lease, contract or other agreement, instrument, permit,
concession or grant to which the Seller is a party or by which it or its
properties are bound, (iii) violate any law, ordinance, rule, regulation,
judgment, order or decree applicable to the Seller or (iv) result in the
creation or imposition of any Lien any of the Purchased Assets.
4.4 Title to Purchased Assets. The Purchased Assets comprise all of the
properties and assets used and/or owned by Seller in connection with the
Business (other than the Excluded Business). The Seller has good, valid and
marketable title to all of the Purchased Assets. To the extent Seller does not
own any of the Purchased Assets, Seller has a valid leasehold interest in or
license to use such Purchased Assets. The sale and delivery of the Purchased
Assets to the Buyer pursuant to this Agreement shall vest in the Buyer good and
marketable title thereto, free and clear of all Liens.
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4.5 Legal Proceedings. Except as set forth in SCHEDULE 4.5, there are no
claims, suits or actions, or administrative, arbitration or other proceedings or
governmental investigations, pending or threatened, against or relating to
Seller or which could reasonably be expected to have an adverse effect on the
transactions contemplated hereby. Except as set forth on SCHEDULE 4.5, there are
no judgments, orders, stipulations, injunctions, decrees or awards in effect
which relate to Seller, this Agreement, the transactions contemplated hereby,
the Business or any of the Purchased Assets, the effect of which is (a) to
limit, restrict, regulate, enjoin or prohibit any business practice of Seller in
any area, or the acquisition by Buyer of any of the Purchased Assets, or (b)
otherwise adverse to the Business or any of the Purchased Assets. To the
Seller's and the Principal Stockholders' knowledge, no basis exists for the
commencement of any claims, suits or actions, or administrative, arbitration or
other proceedings or governmental investigations against Seller, the Business or
any of the Purchased Assets. For purposes of this Agreement, Seller's
"knowledge" shall be the knowledge of each of (i) the current directors of
Seller or (ii) the current officers of Seller, in each case after reasonable
inquiry by such person of the currently employed Seller personnel with senior
executive or managerial responsibility for the matter in question.
4.6 Financial Statements. SCHEDULE 4.6 contains the financial statements
and notes thereto of Seller (including balance sheets and related statements of
income, retained earnings and cash flows) at and for the two (2) most recent
fiscal years ended December 31, 2003. SCHEDULE 4.6 also sets forth the Seller's
financial statements (including unaudited balance sheets and the related
statements of income, retained earnings and cash flows) at and for the period
ended September 3, 2004 (the "Balance Sheet"). The foregoing financial
statements of the Seller are hereinafter collectively referred to as the
"Financial Statements". The Financial Statements are true and correct, and
fairly present the financial position of the Seller as at such dates and the
results of its operations and the changes in its retained earnings and its
financial position for the periods then ended in accordance with GAAP
consistently applied throughout the periods indicated (except, with respect to
the Balance Sheet, for any absence of notes and the absence of normal year-end
adjustments). The Financial Statements do not contain any material misstatements
or omissions regarding the Business, assets, or condition (financial or
otherwise) of Seller. The books and records of Seller are complete and correct
in all material respects, have been maintained in accordance with good business
practices, and accurately reflect the basis for the financial condition, results
of operations and cash flow of Seller as set forth in the Financial Statements.
4.7 Absence of Undisclosed Liabilities. The Seller has no liabilities or
obligations of any nature whatsoever, whether accrued, matured, unmatured,
absolute, contingent, direct or indirect or otherwise, except (a) liabilities
reflected or reserved against in the Balance Sheet, (b) liabilities incurred in
the ordinary course of business since the date of the Balance Sheet or (c)
liabilities described in SCHEDULE 4.7.
4.8 Absence of Changes. Since December 31, 2003 and except as set forth in
SCHEDULE 4.8, there have not been (a) any adverse changes (other than as is
normal in the ordinary course of business) in the condition (financial or
otherwise) of the assets liabilities, business, prospects, results of operations
or cash flows of Seller (including, without limitation, any such adverse change
resulting from damage, destruction or other casualty loss, whether or not
covered by insurance), (b) any waivers by the Seller of any right, or
cancellations of any debt or claim, of substantial value, (c) any declarations,
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set asides or payments of any dividend or other distributions or payments in
respect of the Seller's capital stock, (d) any changes in the accounting
principles or methods which are utilized by the Seller, (e) any amounts borrowed
or any liabilities (absolute or contingent) incurred by Seller, other than in
the ordinary course of business, (f) any Liens discharged or satisfied or any
obligations or liabilities (absolute or contingent) paid by the Seller, other
than in the ordinary course of business, (g) any assets, either tangible or
intangible, of Seller mortgaged, pledged or subjected to a Lien, other than in
the ordinary course of business consistent with past practices, (h) any tangible
assets of Seller sold, assigned or transferred, other than the sale of inventory
in the ordinary course of business, (i) any patents, trademarks, trade names,
copyrights, trade secrets or other intangible assets of Seller sold, assigned or
transferred, (j) any losses of property of Seller, (k) any expenditures by
Seller of any material amount, or any bonuses or extraordinary salary increases,
or (l) any amendments or terminations of any Assumed Contract.
4.9 Tax Matters.
(a) (i) Seller has properly and timely filed all Tax Returns
required to be filed by it, all of which were accurately prepared and completed
in full compliance with all applicable laws; (ii) Seller has paid all Taxes
required to be paid by it (whether or not shown on a Tax Return) or accrued such
Taxes on the Financial Statements; (iii) no audit of Seller by any governmental
taxing authority has ever been conducted, is currently pending or, to the best
of Seller's and Principal Stockholders' knowledge, is threatened; (iv) no notice
of any proposed Tax audit, or of any Tax deficiency or adjustment, has been
received by Seller, and there is no reasonable basis for any Tax deficiency or
adjustment to be assessed against Seller; (v) there are no agreements or waivers
currently in effect that provide for an extension of time for the assessment of
any Tax against Seller, (vi) since the date of the Financial Statements, Seller
has not incurred any liabilities for Taxes except in the ordinary course of
business consistent with past practices; and (vii) no proceeding is pending or,
to the best of Seller's and Principal Stockholders' knowledge, has been
threatened, and no claim has been or, to the best of Seller's and Principal
Stockholders' knowledge, is likely to be asserted, against or with respect to
Seller in respect of any Tax (including from jurisdictions that Seller does not
file Tax Returns).
(b) Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other Person for all periods
for which the statutory period of limitations for the assessment of such Tax has
not yet expired and all IRS Forms W-2 and 1099 required with respect thereto
have been properly completed and timely filed.
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(c) SCHEDULE 4.9 contains an accurate and complete list of all Tax
Returns with respect to the Seller's last five fiscal years. Accurate and
complete copies of all federal, state, local and foreign income, sales and use
Tax Returns filed by Seller with respect to its last five fiscal years are
attached to SCHEDULE 4.9.
4.10 No Violation of Law. Seller is not engaging in any activity or
omitting to take any action as a result of which it is in violation of any law,
rule, regulation, zoning or other ordinance, statute, order, injunction or
decree, or any other requirement of any court or Governmental Authority
applicable to Seller, the Business or any of the Purchased Assets, including,
but not limited to, those relating to: occupational safety and health matters;
issues of environmental and ecological protection (e.g., the use, storage,
handling, transport or disposal of pollutants, contaminants or hazardous or
toxic materials or wastes, and the exposure of persons thereto); business
practices and operations; labor practices; employee benefits; and zoning and
other land use laws and regulations. To the Seller's and the Principal
Stockholders' knowledge, neither Seller nor any of its stockholders, officers,
directors, employees, agents or representatives has made, directly or
indirectly, with respect to the Seller, the Purchased Assets or the Business,
any illegal political contributions or payments from corporate funds, that were
falsely recorded on the books and records of Seller, payments from corporate
funds to governmental officials in their individual capacities for the purpose
of affecting their action or the action of the government they represent to
obtain special concessions, illegal payments from corporate funds to obtain or
retain business or payments from corporate funds to third parties in their
individual capacities for the purpose of affecting their action or the action of
the persons or entities that they represent to obtain special concessions.
4.11 Contracts. SCHEDULE 4.11 sets forth a true and correct list of all
contracts, commitments, obligations and understandings to which the Seller or
the Purchased Assets is bound or subject (collectively, "Contracts"). True and
correct copies of all such written Contracts have been delivered to Buyer and
SCHEDULE 4.11 includes a complete and accurate description of all material oral
Contracts. All of the Contracts set forth on SCHEDULE 4.11 and referred to in
this Agreement or in the other Schedules hereto are in full force and effect;
Seller is not in default under any of them nor is any other party to any such
Contract in default thereunder, nor is there any condition or basis for any
claim of a default by any party thereto or event that, with notice, lapse of
time or both, would constitute a default thereunder; and Seller has paid in full
or accrued all amounts due thereunder for periods on or prior to the date hereof
(whether or not currently payable) and has satisfied in full or provided in full
for all of its liabilities and obligations thereunder for periods on or prior to
the date hereof. Except as disclosed in SCHEDULE 4.11, all rights of Seller
under the Assumed Contracts extending beyond the date hereof are assignable to
Buyer and upon assignment shall continue unimpaired and unchanged in Buyer on
and after the date hereof without (a) the consent (except for any consent(s)
which have been obtained before the date hereof) of any Person or (b) the
payment of any penalty, the incurrence of any additional obligation or the
change of any term.
4.12 Government Contracts.
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(a) With respect to any Government Contract or Government Bid (as
such terms are defined below) (i) Seller has complied in all material respects
with all material terms and conditions of each Government Contract or Government
Bid; (ii) Seller has complied with all material requirements of all applicable
laws, regulations, written directives, or agreements pertaining to each
Government Contract or Government Bid and to Seller's performance on its
Government Contracts; and (iii) all material representations and certifications
executed, acknowledged or set forth in, or pertaining to each Government
Contract or Government Bid were, when given, and to the extent any such
representation or certification pertains to future events which have yet to
occur are presently complete, correct in all material respects, and Seller has
complied with all such representations and certifications.
(b) As of the date of this Agreement, Seller has not received from a
party to a Government Contract any written show-cause notice, stop work order,
cure notice, notice of termination, or termination concerning a Government
Contract.
(c) Seller has not received a written negative determination of
responsibility concerning a Government Bid.
(d) Neither the Seller nor either of the Principal Stockholders has
any knowledge of a request within three years prior to the date hereof by any
Government Authority for a contract price adjustment including, without
limitation, based upon (i) a claim by any Government Authority of defective
pricing or (ii) any cost incurred by Seller that has been questioned, challenged
or disallowed or has been the subject of any investigation, and no money due to
Seller has been (or has been attempted to be) withheld or set off with respect
to any Government Contract, which contract price adjustment, withheld or set off
amount is reasonably expected to have a material adverse effect on the business
or financial condition of the Seller.
(e) To Seller's and Principal Stockholders' knowledge, neither
Seller nor or any of its directors, officers, employees, consultants or agents
is (or for the last three years has been) under administrative, civil or
criminal investigation, indictment or information or equivalent official
government charge or allegation by any Government Authority with respect to any
alleged irregularity, misstatement or omission arising under or relating to any
Government Contract or Government Bid. Seller has not conducted or initiated any
internal investigation or made a voluntary disclosure to the U.S. Government
with respect to any alleged irregularity, misstatement, omission or other matter
in connection with any Government Contract and/or Government Bid. To Seller's
and Principal Stockholders' knowledge, there is no irregularity, misstatement or
omission or other matter arising under or relating to any Government Contract or
Government Bid that has led or could reasonably be expected to lead, either
before or after the Closing (as hereinafter defined), to a material adverse
effect on the business or financial condition of the Seller.
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(f) There exist (i) no outstanding claims or requests for equitable
adjustment or other contractual action for relief against Seller, either by a
Government Authority or by any prime contractor, subcontractor, vendor or other
Person, arising or relating to any Government Contract or Government Bid, and
(ii) no disputes between Seller and the U.S. Government under the Contract
Disputes Act of 1978, as amended (the "Contract Disputes Act") or between Seller
and any prime contractor, subcontractor, vendor or other person arising under or
relating to any Government Contract or Government Bid. To Seller's and Principal
Stockholders' knowledge, Seller has no knowledge of any fact(s) which constitute
the basis for and could reasonably be expected to result in a claim or dispute
under clause (i) or (ii) of the immediately preceding sentence. Seller has no
interest in any pending or potential material claim under the Contract Disputes
Act against the U.S. Government or any prime contractor, subcontractor or vendor
arising under or relating to any Government Contract or Government Bid.
(g) To Seller's and Principal Stockholders' knowledge, neither
Seller nor any of its directors, officers, employees, consultants or agents, is
(or for the last three years has been) suspended or debarred or proposed to be
suspended or debarred or declared ineligible from doing business with any
Government Authority or is the subject of a finding of nonresponsibility or
ineligibility for contracting with any Government Authority. To Seller's and
Principal Stockholders' knowledge, no facts or circumstances exist that would
warrant or could reasonably lead to the institution of suspension or debarment
proceedings or the finding of nonresponsibility or ineligibility on the part of
Seller or any such director, officer, employee, consultant or agent.
(h) To Seller's and Principal Stockholders' knowledge, the cost
accounting systems with respect to Government Contracts of Seller are in
compliance in all material respects with all applicable laws.
(i) To Seller's and Principal Stockholders' knowledge, it has
engaged in no conduct that could lead to the imposition of Liability relating to
mischarging, fraud, false claims, false certifications, and the Foreign Corrupt
Practices Act.
(j) To Seller's and Principal Stockholders' knowledge, Seller has
fully complied in all material respects with all of its obligations under
Government Contracts relating to any government furnished property or similar
property or equipment owned by the United States or any contractor.
(k) To Seller's and Principal Stockholders' knowledge, Seller is not
in violation of (i) any laws, directives, or regulations relating to security
clearances of the protection of classified information; (ii) its security
agreements relating thereto; or (iii) any laws, directives, or regulations
relating to export controls.
(l) For the purposes of this Agreement, (i) the term "Government
Bid" shall mean any written quotations, bids or proposals that, if accepted,
would bind any Person to perform the resultant Government Contract to furnish
products or services to (A) any Government Authority, (B) any prime contractor
of any Government Authority, or (C) any subcontractor, at any tier level, to any
contract described in clauses (A) or (B) above and (ii) the term "Government
Contract" shall mean a written, mutually binding legal relationship with (A) any
Government Authority, (B) any prime contractor of any Government Authority, or
(C) any subcontractor, at any tier level, to any contract described in clauses
(A) or (B) above which obligates any Person to furnish products or services to a
Government Authority, to which Seller is a party on or as of the Closing Date.
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(m) SCHEDULE 4.12(M) sets forth a list and description of each final
audit, inspection or investigation, or in the absence thereof, a draft thereof,
received by Seller since January 1, 1998 and performed by or for any prime or
higher-tiered contractor or subcontractor, or Government Authority, including
the Defense Contract Audit Agency, the Defense Contract Management Command, the
Defense Contract Administration Service Management Area, the Defense Criminal
Investigative Service, any government agencies under the supervision of the
Secretary of Defense, any investigative agency, the Defense Security Service,
any Inspector General, the Department of Justice, the Department of State, or
the General Accounting Office (other than routine audits by resident auditors,
none of which is material to the business of Seller). SCHEDULE 4.12(M) also
briefly describes the current status of such matters.
(n) SCHEDULE 4.12(N) sets forth a list and description of each
settlement agreement concerning Government Contracts between Seller and the U.S.
Government which currently has or is expected to have a binding effect on Seller
after the date hereof, and under which Seller has material unperformed
obligations with respect thereto.
4.13 Accounts Receivable. All accounts receivable reflected on the
Financial Statements, to the extent uncollected on the date hereof, and all
accounts receivable arising subsequent to the date of the latest Financial
Statement and on or prior to the date hereof (other than the Upton Taiwan
Receivables), have arisen in the ordinary course of business, represent valid
obligations to Seller and will be collected promptly when due in the full
aggregate face amount thereof. A true, correct and complete list of all accounts
receivable outstanding on the date hereof is attached as SCHEDULE 4.13. Except
as disclosed in SCHEDULE 4.13, there are no refunds, discounts or other
adjustments payable in respect of any of the accounts receivable (other than the
Upton Taiwan Receivables) or any defenses, rights of setoff, assignments,
restrictions or encumbrances enforceable by third parties on or affecting any of
Seller's accounts receivable (other than the Upton Taiwan Receivables), nor has
any third party claimed any of the foregoing. The amount carried for doubtful
accounts and allowances disclosed in the Financial Statements is as of the date
of this Agreement sufficient to provide for any losses which may be sustained on
realization of the accounts receivable shown in the Financial Statements.
Anything contained in this Agreement to the contrary notwithstanding, the Seller
makes no representations or warranties hereunder with respect to the amount,
validity or collectability of the Upton Taiwan Receivables.
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4.14 Inventory. Except as set forth in SCHEDULE 4.14, all of Seller's
Inventory consists of items of quality and quantity useable or saleable in the
ordinary course of business, and no item of such Inventory is obsolete, below
standard quality or slow-moving.
4.15 Intangibles/Inventions. SCHEDULE 4.15 identifies (by a summary
description) the Intangibles (as defined below), the ownership thereof and, if
applicable, Seller's authority for use of the same, which Schedule is complete
and correct in all material respects and encompasses: (A) all United States and
foreign patents, trademarks and trade name registrations, trademarks and trade
names, brandmarks and brand name registrations, servicemarks and servicemark
registrations, assumed names and copyrights and copyright registrations, owned
in whole or in part or used by Seller, and all applications therefor
(collectively, the "Marks"), (B) all domain names, fictitious and d.b.a. names,
proprietary 800 and 888 prefix phone numbers, Internet URLs and other similar
identifiers and proprietary rights owned or used by Seller (collectively, the
"Proprietary Identifiers"), (C) all inventions, discoveries, improvements,
processes, formulae, technology, know-how, processes and other intellectual
property, proprietary rights and trade secrets relating to the Business
(collectively, the "Inventions"), and (D) all licenses and other agreements to
which Seller is a party or otherwise bound which relate to any of the
Intangibles or the Inventions or Seller's use thereof in connection with the
Business (collectively, the "Licenses", and together with the Marks, Proprietary
Identifiers and the Inventions, the "Intangibles"). Seller is not in breach or
violation of, and to Seller's and the Principal Stockholders' knowledge, no
other party thereto is in breach or violation of, any of the terms of any of the
aforesaid licenses and/or agreements. Except as disclosed on SCHEDULE 4.15, (1)
Seller owns or is authorized to use in connection with the Business all of the
Intangibles; (2) no proceedings have been instituted, are pending or threatened,
which challenge the rights of Seller with respect to the Intangibles or its use
thereof in connection with the Business and/or the Purchased Assets or the
validity thereof, and there is no valid basis for any such proceedings with
respect to Intangibles owned by Seller, and there is no valid basis for any such
proceedings with respect to Intangibles used by Seller pursuant to a License;
(3) neither Seller's ownership of the Intangibles owned or purported to be owned
by it nor the use of such Intangibles in connection with the Business and/or the
Purchased Assets violates any laws, statutes, ordinances or regulations, or has
at any time infringed upon or violated any rights of others, or, to Seller's and
the Principal Stockholders' knowledge, is being infringed by others; (4) none of
the Intangibles, or Seller's use thereof in connection with the Business and/or
the Purchased Assets, is subject to any outstanding order, decree, judgment,
stipulation or any Lien and (5) Seller has not granted any license to any third
party with regard to its Intangibles.
4.16 Systems and Software. Seller owns or has the right to use pursuant to
lease, license, sublicense, agreement or permission all computer hardware,
software and information systems necessary for the operation of the Business as
currently operated (collectively, "Systems"). Each System owned or used by
Seller immediately prior to the Closing Date shall be owned or available for use
by Buyer on substantially identical terms and conditions immediately subsequent
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to the Closing Date. With respect to each System owned by a third party and used
by Seller pursuant to lease, license, sublicense, agreement or permission, each
of which is set forth on SCHEDULE 4.16: (a) the lease, license, sublicense,
agreement or permission covering the System is legal, valid, binding,
enforceable, and in full force and effect; (b) the lease, license, sublicense,
agreement or permission will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms immediately following the date
hereof; (c) Seller is not, and to Seller's and the Principal Stockholders'
knowledge, no other party to any such lease, license, sublicense, agreement or
permission is, in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default which would permit
termination, modification or acceleration thereunder by the other party thereto;
(d) no party to any such lease, license, sublicense, agreement or permission has
repudiated any provision thereof; (e) the Seller has not granted any sublicense,
sublease or similar right with respect to any such lease, license, sublicense,
agreement or permission; and (f) Seller's use and continued use of such Systems
owned by them does not and will not, and Seller's use and continued use of such
Systems used by them pursuant to lease, license, sublicense, agreement or
permission does not and will not, interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any intellectual property rights of third
parties as a result of the continued operation of the Business (other than the
Excluded Business) by Buyer after the date hereof.
4.17 Governmental Approvals; Consents.
(a) Seller currently holds all governmental and administrative
consents, permits, appointments, approvals, licenses, certificates and
franchises which are necessary for the operation of the Business and the
Purchased Assets, all of which are in full force and effect and will remain in
full force and effect immediately following the consummation of the transactions
contemplated by this Agreement without the payment of any penalty or the
incurrence of any additional debt, liability or obligation of any nature
whatsoever or the change of any term. SCHEDULE 4.17 is a complete and correct
list of all such governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and franchises. No material
violations of the terms thereof have heretofore occurred within the past three
years or exist as of the date of this Agreement.
(b) All consents, waivers, approvals, licenses and authorizations by
third parties and Governmental Authorities set forth on SCHEDULES 4.3 and 4.12
or otherwise required as a precondition to the performance by Seller and the
Principal Stockholders of their respective obligations hereunder and under any
agreement delivered pursuant hereto have been duly obtained and are in full
force and effect.
4.18 Products and Services. Except as set forth in SCHEDULE 4.18, there
are no statements, citations or decisions by any Governmental Authority stating
that any of the Seller's products or services are defective or unsafe or fail to
meet any standards promulgated by any such Governmental Authority. Except as set
forth on SCHEDULE 4.18, there have been no recalls ordered by any Governmental
Authority with respect to any of the Seller's products or services. Except as
set forth on SCHEDULE 4.18, the Seller has not received any written complaints
of any injury or harm to any person relating to its products or services and
there is no (i) fact relating to any of such products or services that may
impose upon the Seller a duty to recall any of such products or services or a
duty to warn any third party of a defect in any of such products or services,
(ii) latent or overt design, manufacturing or other defect in any of such
products or services or (iii) liability for warranty claims with respect to any
of such products or services not fully reflected on the Financial Statements.
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4.19 Warranty Claims. The amount of Losses (as defined in Section 7.1
hereof) which may be sustained by Buyer after the Closing Date on account of
warranty or similar claims accruing prior to the Closing Date and made against,
or with respect to, the Purchased Assets will not exceed the Warranty Cap.
4.20 Employee Arrangements.
(a) SCHEDULE 4.20 is a complete and correct list and summary
description of all (i) union, collective bargaining, employment, management,
termination and consulting agreements to which Seller is a party or otherwise
bound, and (ii) compensation plans and arrangements; bonus and incentive plans
and arrangements; deferred compensation plans and arrangements; pension and
retirement plans and arrangements; profit-sharing and thrift plans and
arrangements; stock purchase and stock option plans and arrangements;
hospitalization and other life, health or disability insurance or reimbursement
programs; holiday, sick leave, severance, vacation, tuition reimbursement,
personal loan and product purchase discount policies and arrangements; and other
plans or arrangements providing for benefits for employees of Seller. Said
Schedule also lists the names and compensation of all employees of Seller as of
the date hereof and (i) their bonuses and other incentive compensation for the
last two full fiscal years of Seller, (ii) their last compensation changes and
the dates on which such changes were made, (iii) any license or permit held by
them that relates to or is used in connection with any of the Business and (iv)
any outstanding loans or advances made to them. As of the date hereof, Seller
has not received any notice of termination from any of such persons, nor to
Seller's or the Principal Stockholders' knowledge, does any such employee intend
to terminate his or her employment.
(b) Seller is not transferring to Buyer any "employee pension
benefit plan", as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA "), or any "welfare
benefit plan" as such term is defined in Section 3(1) of ERISA.
4.21 Broker and Intermediaries. Except for fees and expenses in the amount
of $25,000 payable by the Seller to Houston Financial Consulting, Inc., which
fees and expenses shall be paid by the Seller at the Closing, the Seller has not
employed any broker, finder, agent, advisor or intermediary in connection with
the transactions contemplated by this Agreement, which would be entitled to a
broker's, finder's or similar fee or commission in connection therewith or upon
consummation thereof, for which the Buyer may be liable.
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4.22 Investment Intent. Seller represents and warrants to Buyer and
Ionatron that:
(a) It understands that the shares of Ionatron Common Stock are
"restricted securities" within the meaning of Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act") and that the shares
have not been registered under the Securities Act or any other applicable state
securities laws ("Other Securities Laws"), and may not be sold, transferred or
otherwise disposed of, except if an effective registration statement is then in
effect or pursuant to an exemption from registration under said Act and that
Ionatron is under no obligation to register the shares of Ionatron Common Stock
under the Securities Act or Other Securities Laws (except as provided in this
Agreement), and that Ionatron is not obligated to take any other action in order
to make compliance with an exemption from the registration provisions of the
Securities Act or Other Securities Laws available.
(b) It understands that the certificates representing the shares of
Ionatron Common Stock will bear a restrictive legend thereon substantially as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY OTHER APPLICABLE SECURITIES LAWS, AND ARE RESTRICTED
SECURITIES AS THAT TERM IS DEFINED UNDER RULE 144 PROMULGATED UNDER
THE ACT. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED,
DISTRIBUTED OR OTHERWISE DISPOSED OF IN ANY MANNER UNLESS THEY ARE
REGISTERED UNDER THE ACT AND ANY APPLICABLE SECURITIES LAWS, OR
UNLESS THE REQUEST FOR TRANSFER IS ACCOMPANIED BY AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT AND ANY OTHER
SECURITIES LAWS."
(c) It is able to bear the economic risk of an investment in the
shares of Ionatron Common Stock, including, without limiting the generality of
the foregoing, the risk of losing part or all of its investment in the shares of
Ionatron Common Stock and its possible inability to sell or transfer the shares
of Ionatron Common Stock for an indefinite period of time.
(d) It is acquiring the shares of Ionatron Common Stock for its own
account and for the purpose of investment and not with a view to, or for resale
in connection with, any distribution within the meaning of the Securities Act or
any Other Securities Laws, in violation of the Securities Act or any applicable
Other Securities Laws.
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(e) It acknowledges that Ionatron has relied on the representations
contained herein and that the statutory basis for exemption from the
requirements of Section 5 of the Securities Act may not be present if,
notwithstanding such representations, it is acquiring the shares of Ionatron
Common Stock for resale or distribution upon the occurrence or non-occurrence of
some predetermined event.
4.23 Retained Earnings. SCHEDULE 4.23 sets forth a true and correct
calculation of the Seller's Retained Earnings as of the Closing Date. SCHEDULE
4.23 also contains a true and correct update of the balance sheet and related
statements of income, retained earnings and cash flows set forth in the
Financial Statements as of the Closing Date, calculated in accordance with GAAP
consistently applied throughout the periods indicated (except, with respect to
such balance sheet, for any absence of notes and the absence of normal year-end
adjustments), upon which such calculation of the Seller's Retained Earnings as
of the Closing Date was derived.
4.24 Full Disclosure. All documents delivered by or on behalf of Seller in
connection with this Agreement and the transactions contemplated hereby are true
and complete and all such documents are authentic. The information furnished by
or on behalf of Seller to Ionatron in connection with this Agreement and the
transactions contemplated hereby do not contain any untrue statement of material
fact and do not fail to state any material fact necessary to make the statements
made, in the context in which they are made, not false or misleading. There is
no fact which Seller has not disclosed to Ionatron in writing which adversely
affects, or so far as Seller can now foresee, will adversely affect, the
Business or condition (financial or other) of Seller or the ability of Seller to
perform this Agreement.
SECTION 5. Representations and Warranties of the Buyer and Ionatron.
The Buyer and Ionatron, jointly and severally, hereby represent and
warrant to the Seller as follows:
5.1 Corporate Organization and Good Standing. Each of the Buyer and
Ionatron is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
5.2 Necessary Authority. Each of the Buyer and Ionatron has all requisite
corporate power and authority to enter into, deliver and perform this Agreement
and to consummate the transactions contemplated herein. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate action
on the part of each of the Buyer and Ionatron. This Agreement has been duly
executed and delivered by each of the Buyer and Ionatron and constitutes its
valid and legally binding obligation, enforceable against each of the Buyer and
Ionatron in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally, now or hereafter in effect, and subject to the
availability of equitable remedies.
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5.3 No Conflicts. The execution, delivery and performance of this
Agreement by each of the Buyer and Ionatron and each of the Buyer's and
Ionatron's respective consummation of the transactions contemplated herein, do
not and will not (i) require the consent, approval, authorization, order,
filing, registration or qualification of any Governmental Authority that has not
been obtained, (ii) conflict with or result in any violation of or default under
any provision of the respective Certificate of Incorporation or Bylaws of Buyer
and Ionatron or of any mortgage, indenture, lease, contract or other agreement,
instrument, permit, concession or grant to which the Buyer or Ionatron is a
party or by which either of them or their respective properties are bound, or
(iii) violate any law, ordinance, rule, regulation, judgment, order or decree
applicable to Buyer or Ionatron.
5.4 Stock Consideration. The issuance, sale and delivery of the Stock
Consideration has been duly authorized by all necessary corporate action on the
part of Ionatron. Each of the shares of Ionatron Common Stock constituting the
Stock Consideration, when so issued, sold and delivered against payment therefor
in accordance with the provisions of this Agreement, will be duly and validly
authorized and issued, fully paid and nonassessable.
5.5 Listing of Ionatron Common Stock. Ionatron has not taken any action
and is not aware of any facts that would result in the Ionatron Common Stock to
be no longer quoted on the OTC.
5.6 Broker and Intermediaries. Neither the Buyer nor Ionatron has employed
any broker, finder, advisor or intermediary in connection with the transactions
contemplated by this Agreement, which would be entitled to a broker's, finder's
or similar fee or commission in connection therewith or upon consummation
thereof, for which the Seller may be liable.
5.7 Regulatory Compliance. Ionatron has duly filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Securities and Exchange Commission (the "Commission") pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including material filed pursuant to Section 13(a) or 15(d) of the
Exchange Act. At the time of their respective filing, such reports, statements
and other documents complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such documents.
5.8 Full Disclosure. None of the representations or warranties made by
Ionatron or Buyer in this Agreement contains any untrue statement of a material
fact, or omits to state any material fact necessary in order to make the
statements therein contained not misleading.
SECTION 6. Covenants.
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6.1 Piggyback Registration.
(a) At any time that Seller beneficially owns any of the Registrable
Securities (as defined below), if Ionatron proposes to prepare and file with the
Securities and Exchange Commission (the "Commission") one or more registration
statements or post-effective amendments thereto covering equity or debt
securities of Ionatron (other than in connection with a merger, acquisition or
pursuant to Form S-8 or successor form) (collectively, the "Registration
Statement"), it will give written notice of its intention to do so by registered
mail ("Notice"), at least ten (10) days prior to the initial filing of each such
Registration Statement, to the Seller. Upon the written request of Seller, made
within five (5) days after receipt of the Notice, that Ionatron include any of
Seller's Registrable Securities in the proposed Registration Statement, Ionatron
shall, as to the Seller, effect the registration under the Act of the
Registrable Securities which it has been so requested to register ("Piggyback
Registration"); provided, however, that if, in the opinion of Ionatron's
managing underwriter, if any, for such offering, the inclusion of all or a
portion of the Registrable Securities requested to be registered, when added to
the securities being registered by Ionatron, will exceed the maximum amount of
Ionatron's securities which can be marketed or adversely affect the entire
offering, then, subject to the provisions of Section 6.1(b) below, Ionatron may
exclude from such offering all or a portion of the Registrable Securities which
it has been requested to register. The term "Registrable Securities" means (i)
the Stock Consideration and (ii) any Ionatron Common Stock issued as a dividend
or other distribution with respect to, in exchange for or in replacement of the
Stock Consideration; provided that any such Stock Consideration or Ionatron
Common Stock shall not be considered Registrable Securities at such time as all
of such shares held by a holder may be freely traded (without registration under
the Securities Act) under Rule 144 promulgated under the Securities Act or
otherwise.
(b) If securities are proposed to be offered for sale pursuant to a
Registration Statement by security holders of Ionatron (other than the Seller)
and the total number of securities to be offered by such other selling security
holders and the Seller is required to be reduced pursuant to a request from the
managing underwriter (which request shall be made only for the reasons and in
the manner set forth in Section 6.1(a) above) the aggregate number of
Registrable Securities to be offered by the Seller pursuant to such Registration
Statement shall equal the number which bears the same ratio to the maximum
number of securities that the underwriter believes may be included for all the
selling security holders (including the Seller) as the number of Registrable
Securities beneficially owned by the Seller bears to the total original number
of securities proposed to be offered by the Seller and other selling security
holders, and in such event, no person or entity shall be entitled to sell any
equity securities of Ionatron in such registration other than Ionatron, such
other selling security holders and the Seller.
(c) In the event of any registration of Registrable Securities shall
be in connection with an underwritten public offering, the Seller shall not
effect any sale of any such securities (other than as part of such public
offering) during the period after such effective date as reasonably required by
the managing underwriter of an underwritten offering, but in no event longer
than the earlier of (i) the shortest period applicable to the officers,
directors and stockholders holding 5% or more of the equity securities of
Ionatron or (ii) 180 days.
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6.2 Employees. Ionatron shall offer to employ those current employees of
the Seller listed on SCHEDULE 6.2 hereto on an "at will" basis for salaries or
wages consistent with their levels immediately preceding the date hereof and
with benefits comparable to similar situated employees of Ionatron and with
recognition of their original date of hire with the Seller.
6.3 Manufacturing Agreement. Simultaneously with the execution of this
Agreement, Buyer shall, and the Seller shall cause North Star High Voltage to,
enter into a manufacturing agreement in the form of Exhibit A annexed hereto
("Manufacturing Agreement").
6.4 Books and Records. Promptly following the date hereof, the Seller
shall deliver to Buyer (i) all books and records of the Seller related to the
Business (other than the Excluded Business) and (ii) all financial and operating
data and other information as to the history, ownership, operations, assets and
liabilities of the Business (other than the Excluded Business) and the Seller.
6.5 Assignment of Contracts and Rights.
(a) With respect to any Assumed Contract or security clearance (i)
which by its terms requires the consent, approval, novation and/or waiver of any
third party to the assignment of such assumed contract from Seller to Buyer, or
(ii) the transfer or attempted transfer of which would constitute a breach or a
violation of any applicable law, nothing in this Agreement shall constitute a
transfer or attempted transfer thereof.
(b) With respect to any Assumed Contract or security clearance
subject to paragraph (a), above and as a material inducement for Buyer to enter
into this Agreement, the Seller shall use its best efforts obtain all necessary
consents and approvals as promptly as possible after Closing and:
(i) Effective as of the Closing Date, Buyer shall receive the
claims, rights and benefits, and assume the corresponding obligations, under the
such Assumed Contracts in accordance with this Agreement and, to the extent
necessary, Seller and Buyer shall enter into arrangements, including, but not
limited to, subcontracting, sub-licensing or sub-leasing arrangements, or other
arrangements reasonably satisfactory to Buyer under which Seller would enforce
such Assumed Contracts for the benefit of Buyer, with Buyer assuming Seller's
rights and obligations, including any and all claims, rights and benefits of
Seller against a third party thereto;
(ii) Commencing on the Closing Date and continuing thereafter,
Seller shall promptly pay to Buyer all monies received by Seller under such
Assumed Contracts (including with respect to receivables) or any claims, rights
or benefits arising thereunder not assigned or transferred directly to Buyer;
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(iii) Seller shall enter into arrangements reasonably
satisfactory to Buyer to secure for Buyer use of all intellectual property
rights (whether or not constituting Purchased Assets) necessary to perform under
such Assumed Contracts in substantially the same manner as prior to Closing; and
(iv) Seller shall enter into arrangements reasonably
satisfactory to Buyer, and to the extent legally permissible, under which Buyer
shall obtain, effective as of the Closing Date, the benefits of such permits,
authorizations, and security clearances as are necessary to operate the Business
and perform any such Assumed Contract, without limitation, subcontracting,
subleasing and sublicensing arrangements.
(c) With respect to each Assumed Contract that is not transferred at
the time of Closing, such Assumed Contract shall transfer automatically to
Buyer, in accordance with all of the terms and provisions of this Agreement and
such Assumed Contract, immediately upon the attainment of the consent described
above.
6.6 Delivery of Property Received by Seller or Buyer After Closing. From
and after the date hereof, the Buyer shall have the right and authority to
collect, for the account of the Buyer, all assets that shall be transferred or
are intended to be transferred to the Buyer as part of the Purchased Assets as
provided in this Agreement, and to endorse without recourse with the name of the
Seller any checks or drafts received on account of any such assets. The Seller
shall transfer or deliver to Buyer, promptly after the receipt thereof, any cash
or other property that the Seller receives after the date hereof in respect of
any assets transferred or intended to be transferred to the Buyer as part of the
Purchased Assets under this Agreement. The Buyer shall transfer or deliver to
the Seller, promptly after receipt thereof, any cash or other property that the
Buyer receives after the date hereof in respect of any assets not transferred or
intended to be transferred to the Buyer as part of the Purchased Assets under
this Agreement.
6.7 Buyer Appointed Attorney for Seller. The Seller, effective the date
hereof, hereby constitutes and appoints the Buyer, its successors and assigns,
the true and lawful attorney of the Seller in the name of either the Buyer or
the Seller (as the Buyer shall determine in its sole discretion) but for the
benefit of the Buyer to institute and prosecute all proceedings that the Buyer
may deem proper in order to collect, assert or enforce any claim, right or title
of any kind in or to the Purchased Assets as provided for in this Agreement. The
Seller acknowledges that the foregoing powers are coupled with an interest and
shall be irrevocable. The Buyer shall be entitled to retain for its own account
any amounts collected pursuant to the foregoing powers, including any amounts
payable as interest in respect thereof. The Buyer agrees to act in good faith in
seeking to collect, assert or enforce any claim against any third party in
accordance with this Section 6.7. The Seller agrees to execute powers of
attorney and such similar documents as may be required under the circumstances
to give effect to the agreements of the parties contained in this Agreement.
23
6.8 Further Assurances. From time to time after the date hereof, at the
Buyer's request, the Seller (and its successors and assigns) shall execute,
acknowledge and deliver to the Buyer such other instruments of conveyance and
transfer and take such other actions and execute and deliver such other
documents, certifications and further assurances as the Buyer may reasonably
require in order to vest title more effectively in the Buyer, or to put the
Buyer more fully in possession of, any of the Purchased Assets. Each party
hereto shall cooperate with the other party hereto and execute and deliver to
the other party such other instruments and documents and take such other actions
as may be reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence and confirm the intended purposes of this
Agreement.
6.9 Bulk Sales Compliance. Seller waives compliance by Buyer with the
provisions of the bulk sales laws in connection with the purchase of the
Purchased Assets. Seller and the Principal Stockholders, jointly and severally,
hereby indemnify and hold Buyer harmless from, against and with respect to, and
shall reimburse Buyer for any and all losses suffered or incurred by Buyer
arising out of, relating to or by reason of such waiver or any noncompliance by
Buyer with such laws. This indemnification is in addition to the indemnification
provided pursuant to Section 7.
6.10 Rule 144 Restrictions. Ionatron hereby agrees to comply with Rule 144
promulgated under the Securities Act and Other Securities Laws with respect to
sales of shares of Ionatron Common Stock comprising the Stock Consideration that
are permitted thereunder, and Ionatron shall not unreasonably withhold any
requests to obtain legal opinions from its counsel with respect to the such
permitted sales, if appropriate.
6.11 Use of the Name "North Star Research". Following the Closing, neither
the Principal Stockholders nor the Seller shall, directly or indirectly, use the
name "North Star Research" or any derivative thereof; provided, however, the
Principal Stockholders may continue to use the name "North Star High Voltage"
after the Closing, subject to the provisions of Section 8 hereof.
6.12 Retained Earnings. In the event that any of the Retained Earnings
retained by Seller hereunder as part of the Excluded Assets are comprised of
cash (rather than accounts receivable), each of Seller and the Principal
Stockholders shall, jointly and severally, reimburse Buyer for any amounts
comprising the accounts receivable set forth on the Financial Statements (to the
extent such accounts receivable are not included in the Excluded Assets) that
are not collected by Buyer in accordance with their terms. Without limiting the
generality of the foregoing, each of Seller and the Principal Stockholders
shall, jointly and severally, reimburse Buyer for any accounts receivables
comprising the Warranty Reserve that are not collected by Buyer in accordance
with their terms. Anything contained herein to the contrary notwithstanding, (i)
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand's aggregate liability under this Section 6.12
shall not exceed an amount equal to 9% of the Seller's and the Principal
Stockholders' aggregate liability under this Section 6.12 and (ii) ▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇'▇ aggregate liability under this Section 6.12 shall not exceed an
amount equal to 91% of the Seller's and the Principal Stockholders' aggregate
liability under this Section 6.12.
24
SECTION 7. Indemnification.
7.1 Indemnification by Seller and the Principal Stockholders. Subject to
the terms and conditions herein contained, from and after the date hereof,
Seller and the Principal Stockholders, jointly and severally, shall indemnify
and hold harmless each of Ionatron, Buyer, their affiliates, and their
respective officers, directors, employees, agents, consultants, representatives
and successors from and against any losses, obligations, deficiencies,
liabilities, claims, damages, costs and expenses (including reasonable
attorney's fees) (collectively, "Losses") which may be sustained or incurred by
any of them and which arise out of or result from:
(i) any breach by Seller or the Principal Stockholders of any
representation or warranty made by it or him in this Agreement or in any
document to be executed by him or it in connection with this Agreement;
(ii) any failure by Seller or the Principal Stockholders to
perform any of their obligations contained in this Agreement or in any document
to be executed by it or him in connection with this Agreement;
(iii) the Excluded Liabilities; and/or
(iv) any claims or proceedings described on SCHEDULE 4.5.
This indemnification obligation shall also apply to claims directly by Buyer
and/or Ionatron against the Seller and/or the Principal Stockholders as well as
to third party claims.
7.2 Indemnification by Buyer and Ionatron. Subject to the terms and
conditions herein contained, from and after the date hereof, each of Buyer and
Ionatron, jointly and severally, shall indemnify and hold harmless Seller from
and against any Losses which may be sustained or incurred by Seller and which
arise out of or result from:
(i) any breach by Buyer or Ionatron of any representation or
warranty made by either of them in this Agreement or in any document to be
executed by either of them in connection with this Agreement;
(ii) any failure by Buyer or Ionatron to perform any of their
respective obligations contained in this Agreement or in any document to be
executed by either of them in connection with this Agreement; and/or
(iii) the Assumed Liabilities.
This indemnification obligation shall also apply to claims directly by Seller
against Buyer and/or Ionatron as well as to third party claims.
25
7.3 Third Party Claims. Promptly after receipt by any party entitled to
indemnification under this Section 7 ("Indemnitee") of written notice of the
assertion of a claim or the commencement of any action, litigation or proceeding
by any third party (a "Third-Party Claim") with respect to any matter for which
indemnification is or may be owing pursuant to subparagraph 7.1 or 7.2, the
Indemnitee shall give written notice thereof (the "Indemnification Notice") to
the party or parties obligated to provide indemnification ("Indemnitor";
provided, however, that failure of the Indemnitee to give the Indemnitor the
Indemnification Notice as provided herein shall not relieve the Indemnitor of
any of its obligations hereunder unless the Indemnitor shall have been
materially prejudiced thereby. The Indemnitor shall have the right, at its
option and at its own expense, to participate in or, by giving notice to the
Indemnitee no later than 20 days after delivery of the Indemnification Notice,
to take control of, the defense, negotiation and/or settlement of any such
Third-Party Claim with counsel reasonably satisfactory to the Indemnitee. The
Indemnitee shall have the right to participate in the defense, negotiation
and/or settlement of any such Third-Party Claim with counsel of its own
choosing. Notwithstanding the foregoing, with respect to any such Third-Party
Claim, the defense, negotiation and/or settlement of which the Indemnitor has
taken control, the Indemnitee shall have the right to retain separate counsel to
represent it, and the Indemnitor shall pay the reasonable fees and expenses of
such separate counsel, if the named parties to any such Third Party Claim
include both the Indemnitee and Indemnitor and the Indemnitee reasonably
determines that defenses are available to it that are unavailable to the
Indemnitor. The Indemnitor and the Indemnitee shall each cooperate with and
render to each other such assistance as may reasonably be requested in order to
insure the proper and adequate defense of any such Third Party Claim or
proceeding, which assistance shall include, without limitation, making
appropriate personnel reasonably available for any discovery or trial. If the
Indemnitor fails or refuses to undertake the defense of any such Third-Party
Claim within 20 days after delivery of the Notice, the Indemnitee shall have the
right to take exclusive control of the defense, negotiation and/or settlement of
such Third-Party Claim at the Indemnitor's expense. Neither the Indemnitor nor
the Indemnitee shall settle or compromise any Third-Party Claim without the
consent of the other, which consent shall not be unreasonably withheld.
7.4 Limitations on Indemnification.
(a) Notwithstanding anything contained in this Agreement to the
contrary, the Indemnitor's liability for indemnity under this Section 7 shall be
limited to an amount equal to the sum of (the "Indemnity Cap"): (i) the Cash
Consideration and (ii) the product of (x) the number of shares constituting the
Stock Consideration multiplied by (y) the average closing price for Ionatron
Common Stock on the OTC (or other exchange, if applicable) for the three (3)
consecutive Trading Days immediately preceding the date that such claim for
indemnification is made (the "Per Share Indemnification Value"); provided,
however, that (i) ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand's aggregate liability for
indemnification under this Section 7 shall not exceed an amount equal to 9% of
the Indemnity Cap and (ii) ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇'▇ aggregate liability for
indemnification under this Section 7 shall not exceed an amount equal to 91% of
the Indemnity Cap.
26
(b) Notwithstanding anything contained in this Agreement to the
contrary, the Indemnitor shall not be liable in respect of any indemnification
obligation arising under this Section 7 with respect to any individual Loss
unless such Loss exceeds $5,000, in which case the Indemnitor shall be liable
for the full amount of such Loss.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the Indemnitor shall have no liability for any claim for
indemnification under this Section 7 unless the Indemnitee gives an
Indemnification Notice with respect thereto within two (2) years after the
Closing Date.
7.5 Satisfaction of Indemnification Obligations. Any liability of the
Seller and the Principal Stockholders for indemnification under this Section 7
may be satisfied, at the discretion of the Seller and the Principal
Stockholders, (i) by the payment of cash and/or (ii) by the return of an amount
of the Stock Consideration equal to the amount of such liability, which Stock
Consideration shall be valued at its Per Share Indemnification Value for
purposes of this Section 7.
SECTION 8. Noncompete; Confidentiality.
8.1 Noncompete Covenant.
(a) Each of the Seller (on behalf of its and on behalf of its
subsidiaries and affiliates), North Star High Voltage and the Principal
Stockholders hereby agrees for a period of five (5) years after the Closing
Date, not to, directly or indirectly, (i) engage or become interested in any
business (whether as owner, manager, operator, licensor, licensee, lender,
guarantor partner, stockholder, joint venturer, employee, consultant or
otherwise) or render any services to any business competitive with the Business
(other than the Excluded Business) or any business of Ionatron and/or its
subsidiaries, other than as a holder for investment purposes only of not more
than one percent (1%) of the publicly-traded capital stock of any corporations
engaged in such businesses; provided, however, that subject to the
confidentiality restrictions set forth in Section 8.2 hereof, the restrictive
covenant set forth in this clause (i) shall not apply to any business described
in SCHEDULE 8.1(A) in the event that (A) neither Ionatron nor any of its
subsidiaries are then engaging in such business or are projected to engage in
such business within the succeeding twelve (12) month period (provided that such
engagement has been approved by Ionatron's Board of Directors and provided
further that following the expiration of such twelve (12) month period, Ionatron
27
shall no longer be deemed to be projected to engage in such business unless
Ionatron shall have engaged in any research and development, sales and/or
marketing activities with respect to such business during such twelve (12) month
period) and (B) such business is approved by Ionatron as an exception to the
restrictive covenant set forth in this clause (i), which approval shall not be
unreasonably withheld, or (ii) take any other action which constitutes an
interference with or a disruption of Buyer's or Ionatron's operation of the
Business (other than the Excluded Business) or Buyer's or Ionatron's use,
ownership and enjoyment of the Purchased Assets after the Closing Date. At no
time during the term of the noncompete covenant set forth in this Section 8.1 or
thereafter shall any of the Seller, North Star High Voltage or the Principal
Stockholders, directly or indirectly, disparage the commercial, business or
financial reputation of Ionatron or any of its subsidiaries.
(b) For purposes of clarification, but not of limitation, each of
the Seller (on behalf of its and on behalf of its subsidiaries and affiliates),
North Star High Voltage and the Principal Stockholders acknowledges and agrees
that the provisions of Section 8.1(a) above shall serve as a prohibition against
it or he, during the period described therein, directly or indirectly, hiring,
offering to hire, enticing away or in any other manner persuading or attempting
to persuade any officer, employee, agent, lessor, lessee, licensor, licensee,
customer, prospective customer or supplier of the Business (other than the
Excluded Business) or any business of Ionatron and/or its subsidiaries to
discontinue or alter his or its relationship such business.
(c) The parties hereto hereby acknowledge and agree that (i) Buyer
and Ionatron would be irreparably injured in the event of a breach by the
Seller, North Star High Voltage or any of the Principal Stockholders of any of
their obligations under this Section 8.1, (ii) monetary damages would not be an
adequate remedy for any such breach, and (iii) Buyer and Ionatron shall be
entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach. It is hereby also agreed that the
existence of any claims which Seller, North Star High Voltage or the Principal
Stockholders may have against Buyer or Ionatron, whether under this Agreement or
otherwise, shall not be a defense to the enforcement by Buyer or Ionatron of any
of the rights under this Section 8.1.
(d) It is the intent of the parties hereto that the covenants
contained in this Agreement shall be enforced to the fullest extent permissible
under the laws of and public policies of each jurisdiction in which enforcement
is sought (the Seller and the Principal Stockholders hereby acknowledge that
said restrictions are reasonably necessary for the protection of Buyer and
Ionatron). Accordingly, it is hereby agreed that if any one or more of the
provisions of Section 8.1 shall be adjudicated to be invalid or unenforceable
for any reason whatsoever, said provision shall be (only with respect to the
operation thereof in the particular jurisdiction in which such adjudication is
made) construed by limiting and reducing it so as to be enforceable to the
extent permissible.
(e) The provisions of this Section 8.1 shall be in addition to, and
not in lieu of, any other obligations with respect to the subject matter hereof,
whether arising as a matter of contract, by law or otherwise, including, but not
limited to, any obligations which may be contained in any employment agreements,
if any, between Buyer or Ionatron and the Principal Stockholders entered into at
or after the Closing.
(f) In furtherance of the foregoing, during the term of the
covenants set forth in this Section 8.1, each of Seller, North Star High Voltage
and the Principal Stockholders, on the one hand, and Buyer and Ionatron, on the
other hand, hereby agree to use its or his commercially reasonably efforts to
promptly refer all business relating to the other party's business coming to its
or his attention to such other party.
28
8.2 Confidentiality. On and after the Closing Date, unless otherwise
authorized in writing by Ionatron, each of the Seller (on behalf of its and on
behalf of its subsidiaries and affiliates), North Star High Voltage and the
Principal Stockholders hereby agrees not to, at any time, directly or
indirectly, use, communicate, disclose or disseminate any Confidential
Information. As used in this Section 8.2, the term "Confidential Information"
shall mean any and all information (oral and written) relating to the Business
(other than the Excluded Business) or the Purchased Assets, other than such
information which can be shown by the disclosing party to be in the public
domain (such information not being deemed to be in the public domain merely
because it is embraced by more general information which is in the public
domain) other than as the result of a breach of the provisions of this Section
8.2 including, but not limited to, information relating to: proprietary
information, technical data, trade secrets, know-how, other intellectual
property rights, identity and description of goods and services used;
purchasing; costs; pricing; equipment; technology; research; test procedures and
results; customers and prospects; personnel matters, business plans and
projections, customer or visitor data, marketing; and selling and servicing.
SECTION 9. Definitions. All capitalized words or expressions used in this
Agreement and not otherwise defined herein (including the Schedules annexed
hereto) shall have the meanings specified in this Section 9 (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
9.1 "Closing" shall mean the closing of the purchase and sale transaction
contemplated by this Agreement.
9.2 "Closing Date" shall mean the time and date of the Closing.
9.3 "GAAP" shall mean United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession, which are applicable to the circumstances
as of the date of determination, consistently applied.
9.4 "Person" shall mean any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization, or
other entity, as well as any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
29
9.5 "Tax" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs, duties, capital stock,
franchise, licensing, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated or other tax
of any kind whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not.
11.6 "Tax Return" shall mean all federal, state, local, foreign and other
Tax returns and reports, information returns, statements, declarations,
estimates, schedules, notices, notifications, forms, elections, certificates or
other documents Seller is required to file or submit to any governmental body
with respect to the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Law relating to any Tax; including any amendments thereto.
SECTION 10. General.
10.1 Disclosure. The parties hereto shall consult with each other prior to
issuing any press release or public announcement in respect of this Agreement or
the transactions contemplated hereby or otherwise communicate with news media,
and none of the parties hereto shall issue any such press release or make any
such public statement prior to such consultation.
10.2 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the earlier of the date delivered or mailed if delivered personally, by
overnight courier or mailed by express, registered or certified mail (postage
prepaid, return receipt requested) or by facsimile transmittal, confirmed by
express, certified or registered mail, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice,
except that notices of changes of address shall be effective upon receipt):
If to Buyer or Ionatron: Ionatron, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Blank Rome LLP
(which copy shall not ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
constitute notice): ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
30
If to Seller or the Principal
Stockholders, to: Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
North Star Research Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
(which copy shall not ▇.▇. ▇▇▇ ▇▇▇▇
constitute notice): ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
10.3 Assignment, Successors and Assigns. This Agreement may not be
assigned by either party hereto without the express written consent of the other
party hereto (which consent may be granted or withheld in the sole discretion of
such party). This Agreement shall be binding upon and inure to benefit of the
parties hereto and their respective permitted successors and assigns and, except
as set forth herein, nothing herein, express or implied, is intended to or shall
confer upon any other Person any legal or equitable right, benefit, or remedy of
any nature whatsoever under or by reason of this Agreement.
10.4 Applicable Laws; Jurisdiction.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the principles of
conflicts of law thereof.
(b) Each of Ionatron and Buyer hereby irrevocably agrees that any
lawsuit commenced by such party against Seller and/or the Principal Stockholders
in connection with any dispute arising out of or relating to this Agreement or
the transactions contemplated hereby (each, a "Buyer Lawsuit") shall be brought
by Ionatron and/or Buyer, as the case may be, solely in a federal or state court
located within the State of Arizona, and, in connection with each Buyer Lawsuit,
each of Buyer, Ionatron, the Seller and the Principal Stockholders irrevocably
agrees to submit to the exclusive jurisdiction of any federal or state court
located within such State and irrevocably waives, to the fullest extent
permitted by applicable law, any objection which he, she or it may now or
hereafter have to the laying of venue of any Buyer Lawsuit brought in such court
or any defense of inconvenient forum for the maintenance of such Buyer Lawsuit
in such court.
31
(c) Each of the Seller and the Principal Stockholders hereby
irrevocably agrees that any lawsuit commenced by such party against Buyer or
Ionatron in connection with any dispute arising out of or relating to this
Agreement or the transactions contemplated hereby (each, a "Seller Lawsuit")
shall be brought by the Seller and/or the Principal Stockholders, as the case
may be, solely in a federal or state court located within the County of New
York, State of New York, and, in connection with each Seller Lawsuit, each of
Buyer, Ionatron, the Seller and the Principal Stockholders irrevocably agrees to
submit to the exclusive jurisdiction of any federal or state court located with
the County of New York, State of New York and irrevocably waives, to the fullest
extent permitted by applicable law, any objection which he, she or it may now or
hereafter have to the laying of venue of any Seller Lawsuit brought in such
court or any defense of inconvenient forum for the maintenance of such Buyer
Lawsuit in such court.
10.5 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any and all prior agreements and understandings, both
written and oral, between the parties hereto with respect to the subject matter
hereof.
10.6 Headings. The headings in the sections of this Agreement are inserted
for convenience only and shall not constitute a part hereof or affect the
meaning or interpretation hereof.
10.7 Amendment, Waiver, Discharge of the Agreement. This Agreement may not
be amended, released or discharged except by an instrument in writing signed on
behalf of each of the parties hereto. The failure of a party to enforce any
provision of this Agreement shall not be deemed a waiver by such party of any
other provision or subsequent breach of the same or any other obligation
hereunder.
10.8 Survival of Representations and Warranties. Each of the parties
hereto agrees that the representations and warranties of the Seller and the
Principal Stockholders, on the one hand, and Buyer and Ionatron, on the other
hand, shall survive the date hereof and all covenants and agreements of the
parties shall survive in accordance with their respective terms.
10.9 Expenses. Each party hereto shall be responsible for its own legal,
accounting and similar fees and expenses incurred in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby.
10.10 Execution of Counterparts. For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
document. Any counterpart may be executed by facsimile signature and such
facsimile signature shall be deemed an original.
[Signature page follows]
32
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the day and year first above written.
SELLER: IONATRON:
------ --------
NORTH STAR RESEARCH CORPORATION IONATRON, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------- -----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President Title: President and CEO
PRINCIPAL STOCKHOLDERS: BUYER:
---------------------- ------
NORTH STAR RESEARCH
ACQUISITION CORP.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------- Title: President and CEO
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand
-----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand
----------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇-Sand
AGREED TO AND ACCEPTED
BY WITH RESPECT TO
SECTION 8 HEREOF:
NORTH STAR HIGH VOLTAGE
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
33
Pursuant to Item 601(b)(2) of Regulation S-K, the following is a list of omitted
schedules and exhibits to the Asset Purchase Agreement. Ionatron, Inc. agrees to
provide complete copies of the foregoing schedules upon request.
Schedule 1.1(i) Tangible Personal Property
Schedule 1.1(ii) Inventory
Schedule 1.1(iii) Assumed Contracts
Schedule 1.1(iv) Governmental Authorizations
Schedule 1.1(vi) Software
Schedule 1.1(vii) Intellectual Property Rights
Schedule 1.1(ix) Warranty Reserve and Retained Earnings
Schedule 1.2(i) Excluded Patents
Schedule 1.2(vi) Excluded Retained Earnings
Schedule 1.2(viii) Other Excluded Assets
Schedule 3.2(b) Stock Consideration
Schedule 4.3 No Conflicts
Schedule 4.5 Legal Proceedings
Schedule 4.6 Financial Statements
Schedule 4.7 Undisclosed Liabilities
Schedule 4.8 Absence of Changes
Schedule 4.9 Tax Returns
Schedule 4.11 Contracts
Schedule 4.12(m) Audits
Schedule 4.12(n) Settlement Agreements
Schedule 4.13 Accounts Receivable
Schedule 4.14 Inventory
Schedule 4.15 Intangible/Inventions
Schedule 4.16 Systems and Software
Schedule 4.17 Governmental Approvals; Consents
Schedule 4.18 Products and Services
Schedule 4.20 Employee Arrangements
Schedule 4.23 Retained Earnings
Schedule 6.2 Employment Offers
Schedule 8.1(a) Exceptions to Noncompete Covenant
Exhibit A Manufacturing Agreement
34
