ASSET PURCHASE AGREEMENT
This Agreement dated as of September 3, 1997, is by and between Xxxx Xxxxx
Co. Ltd., a Japanese corporation ("Buyer") and Conductus, Inc., a Delaware
corporation ("Seller").
This Agreement sets forth the terms and conditions upon which Buyer will
purchase from Seller, and Seller will sell to Buyer, certain assets of Seller's
Instrument and Systems Division ("CISD"), subject to those liabilities of Seller
which are specifically hereinafter described, for the consideration provided
herein.
In consideration of the foregoing, the mutual representations, warranties
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement hereby agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, all capitalized words or
expressions used in this Agreement shall have the meanings specified in this
Article 1 (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
1.1.1 "AFFILIATE" means when used with respect to any Person if such Person
is a corporation, any officer or director thereof and any Person which is,
directly or indirectly, the beneficial owner (by itself or as part of any group)
of more than five percent (5%) of any class of any equity security thereof, and,
if such beneficial owner is a partnership, any general or limited partner
thereof, or if such beneficial owner is a corporation, any Person controlling,
controlled by or under common control with such beneficial owner, or any officer
or director of such beneficial owner or of any corporation occupying any such
control relationship.
1.1.2 "AGREEMENT" means this Asset Purchase Agreement (together with all
Exhibits and Schedules hereto) as in effect from time to time.
1.1.3 "CHARTER" means the Certificate of Incorporation, Articles of
Incorporation or Organization or other organizational document of a corporation,
as amended and restated through the date hereof.
1.1.4 "CLAIM" means an action, suit, proceeding, hearing, investigation,
litigation, charge, complaint, claim or demand.
1.1.5 "LIEN" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind.
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1.1.6 "MATERIAL ADVERSE EFFECT" means a material adverse impact or effect on
the business, operations, assets, liabilities, prospects or condition (financial
or otherwise) of the Purchased Assets.
1.1.7 "OFFICER'S CERTIFICATE" means a certificate signed in the name of a
corporation by its President, Chief Executive Officer, Treasurer, Chief
Financial Officer, or, if so specified, the Clerk or Secretary, acting in his or
her official capacity.
1.1.8 "PERSON" means any individual, firm, partnership, association, trust,
corporation, limited liability company, governmental body or other entity.
1.1.9 "PRODUCT LINE" means Seller's iMag -Registered Trademark- system,
XMag-TM- system, RLM bridge, TIT system and such custom SQUID systems as were
delivered to and accepted by customers of Buyer prior to the date of Closing.
1.1.10 "PURCHASE DOCUMENTS" means this Agreement and any other certificate,
document, instrument or agreement executed in connection therewith.
1.1.11 "TAX" means any federal, state, local or foreign tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
2. PURCHASE AND SALE OF ASSETS
2.1 PURCHASE OF ASSETS. Upon the terms and subject to the conditions contained
in this Agreement, at the Closing (as defined in Section 2.9 hereof), Seller
shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase,
acquire and accept from Seller, those of Seller's assets as set forth in
SCHEDULE 2.1 attached hereto (the "Purchased Assets"), and subject only to the
liabilities and obligations of Buyer which are defined in Section 2.4 hereof
(the "Assumed Liabilities").
2.2 GRANT OF LICENSE. Seller shall grant Buyer a nonexclusive, royalty-free,
perpetual license, without right of sublicense to U.S. Patent No. 5,532,592,
titled "SQUID Control Apparatus with Non-Cryogenic Flux-Locked Loop Disposed in
Closed Proximity to the SQUID of Seller.
2.3 RETAINED ASSETS. Seller will retain ownership of all of Seller's assets
other than the Purchased Assets and identified on SCHEDULE 2.3 hereto (the
"Retained Assets").
2.3 ASSUMED LIABILITIES. Buyer shall assume the Assumed Liabilities, and will
pay, perform and discharge the Assumed Liabilities as they become due. The
Assumed Liabilities shall consist solely of the liabilities of Seller listed on
SCHEDULE 2.4 attached hereto. Buyer shall assume no other debts, obligations,
contracts, leases or liabilities of Seller (other than the Assumed Liabilities),
and Seller shall hold Buyer harmless from, and indemnify Buyer against, any
debt, obligation, contract, lease or liability of Seller not expressly assumed
by Buyer.
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2.5 RETAINED LIABILITIES. Seller will retain all liabilities other than
Assumed Liabilities including, without limitation, those liabilities listed in
SCHEDULE 2.5 attached hereto.
2.6 PURCHASE PRICE. Upon the terms and subject to the conditions contained in
this Agreement, and in consideration of the sale, assignment, transfer and
delivery of the Purchased Assets, Buyer will pay, by wire transfer of
immediately available funds, to Seller, one hundred ninety thousand dollars
($190,000) plus such California State sales tax as may be applicable to the
transaction.
2.7 REVENUE SHARE. For a period of three (3) years after Closing, Buyer shall
pay Seller three percent (3%) of Net Revenue from sale of XMag systems and
components, except that the SWCC unit shall not be subject to a royalty payment.
For purposes of this Section 2.7, "Net Revenue" shall mean the net amounts
received by Buyer less separately stated amounts such as sales, value added and
similar taxes and governmental charges, transportation, installation, duties,
insurance and similar charges.
2.8 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated among
the Purchased Assets as set forth in SCHEDULE 2.8 attached hereto.
2.9 TIME AND PLACE OF CLOSING. The closing of the transactions described in
Sections 2.1 through 2.8 hereof (the "Closing") shall take place at Seller's
Sunnyvale offices at 9:30 a.m. on September 3, 1997, or at such other place or
time as the parties hereto may agree. The date and time at which the Closing
actually occurs is hereinafter referred to as the "Closing Date."
2.10 EXECUTION AND DELIVERY OF DOCUMENTS BY SELLER. At the Closing, Seller
shall execute and deliver to Buyer a Xxxx of Sale in the form of EXHIBIT
2.10(a) and a License in the form of Exhibit 2.10(b) in order to effect the
sale, conveyance, and transfer of the Purchased Assets from Seller to Buyer.
Such instruments and documents shall be sufficient to convey to Buyer good
and merchantable title in all of the Purchased Assets. Seller will, from
time to time after the Closing Date, take such additional actions and execute
and deliver such further documents as Buyer may reasonably request in order
more effectively to sell, transfer and convey the Purchased Assets to Buyer
and to place Buyer in position to operate and control all of the Purchased
Assets.
2.11 EXECUTION AND DELIVERY OF DOCUMENTS BY BUYER. At the Closing, Buyer shall
execute and deliver to Seller an Assumption Agreement in the form of Exhibit
2.11(a) and a Sublease Agreement in the form of Exhibit 2.11(b) in order to
evidence Buyer's assumption of the Assumed Liabilities. Buyer will, from time
to time after the Closing Date, take such additional action and deliver such
further documents as Seller may reasonably request in order effectively to
assume the Assumed Liabilities.
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3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Seller has full power and authority to own, use and lease its properties and to
conduct its business as currently conducted.
3.2 AUTHORITY; NO VIOLATION. Seller has all requisite corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by Seller has been duly and validly authorized and approved by all necessary
corporate action. This Agreement constitutes the legal and binding obligation
of Seller, enforceable against it in accordance with its terms. To Seller's
Knowledge, the entering into of this Agreement by Seller does not, and the
consummation by Seller of the transactions contemplated hereby, including
specifically the transfer of the Purchased Assets to Buyer by Seller, will not
violate the provisions of (a) any applicable federal, state, local or foreign
laws, (b) Seller's Charter or By-Laws, or (c) any provision of, or result in a
default or acceleration of any obligation under, or result in any change in the
rights or obligations of Seller under, any Lien, contract, agreement, license,
lease, instrument, indenture, order, arbitration award, or judgment, which
would have a Material Adverse Effect on the Purchased Assets or Buyer's right,
title and interest in and to the Purchased Assets after the Closing.
3.3 TITLE, SUFFICIENCY AND CONDITION OF ASSETS. Seller has good and marketable
title to, all of the Purchased Assets, free and clear of all Liens and the sale
and delivery of the Purchased Assets to Buyer pursuant hereto shall vest in
Buyer good and marketable title thereto, free and clear of any and all Liens and
defects, other than as disclosed in SCHEDULE 3.3 hereto or as may be created by
Buyer.
3.4 BROKERS. Neither Seller nor anyone acting on its behalf, has engaged,
retained, or incurred any liability to any broker, investment banker, finder or
agent or has agreed to pay any brokerage fees, commissions, finder's fees or
other fees with respect to the sale of the Purchased Assets, this Agreement or
the transactions contemplated hereby.
3.5 INTELLECTUAL PROPERTY. To Seller's Knowledge, without having conducted any
patent or trademark search, Seller has sufficient title and ownership of, or
license to, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes necessary for the
Product Line, without any conflict with or infringement of the rights of others.
SCHEDULE 3.5 sets forth (i) a true and complete list of such patents,
trademarks, service marks, trade names, copyrights owned by Seller and used in
the Product Line, and (ii) all patents, trademarks, trade names, copyrights,
technology and processes not owned by Seller but used by Seller in the Product
Line. No claims are pending against Seller by any person with respect to the
use of any of the foregoing, or challenging
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or questioning the validity or effectiveness of any license or agreement
relating to the same. Seller has not received any communications alleging that
Seller has violated any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary right of any person or entity.
Neither the execution nor delivery of this Agreement or any assignment of
licenses ancillary hereto will, to the best of Seller's knowledge, conflict with
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract covenant or instrument to which Seller is a party.
3.6 MATERIAL MISSTATEMENTS OR OMISSIONS. Neither this Agreement (including the
Schedules and Exhibits hereto) nor any document, certificate or instrument
furnished in connection therewith contains, with respect to Seller or the
Product Line, any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein not misleading.
3.7 EFFECTIVE DATE OF WARRANTIES, REPRESENTATIONS AND COVENANTS. Each
warranty, representation, and covenant set forth in this Article 3 shall be
deemed to be made on and as of and speak as of the Closing (except as otherwise
specifically provided herein). The representations and warranties contained in
this Article 3 shall not be affected or deemed waived by reason of the fact that
Buyer and/or its representatives knew or should have known that any such
representation or warranty is or might be inaccurate in any respect.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
4.1 ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Japan, with full power
and authority to own, use or lease its properties and to conduct its business as
such properties are owned, used or leased and as such business is conducted.
4.2 AUTHORITY. Buyer has the requisite corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Buyer have been duly
and validly authorized and approved by all necessary corporate action on the
part of Buyer, and this Agreement constitutes the legal and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms. Assuming the
accuracy of the representations and warranties of Seller hereunder and to the
best knowledge of Buyer, the entering into of this Agreement by Buyer does not,
and the consummation by Buyer of the transactions contemplated hereby will not,
violate the provisions of (a) any applicable laws of the United States or any
other state or jurisdiction in which Buyer does business, (b) the Charter or
By-Laws of Buyer, or (c) any provision of, or result in a default or
acceleration of any obligation under, or result in any change in the rights or
obligations of Buyer under, any mortgage, Lien, lease, agreement, contract,
instrument, order, arbitration award, judgment, or
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decree which would have a Material Adverse Effect on Buyer's ability to
consummate the transactions contemplated hereunder.
4.3 BROKERS. Neither Buyer nor anyone acting on its behalf has engaged,
retained or incurred any liability to any broker, investment banker, finder or
agent or has agreed to pay any brokerage fees, commissions, finder's fees or
other fees with respect to the purchase of Purchased Assets, this Agreement or
the transactions contemplated hereby.
4.4 WAIVER OF COMPLIANCE WITH THE BULK SALES ACT. In connection with the
transactions contemplated hereby, and in reliance upon Seller's representations
and warranties in Section 3.3 hereof, the parties shall waive compliance with
the provisions of Article 6 of the Uniform Commercial Code - Bulk Transfers and
the Bulk Sales Act and any other applicable bulk sales act or statute ("Bulk
Sales Acts").
5. CLOSING CONDITIONS
5.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to consummate
this Agreement and the transactions contemplated hereby are subject to the
fulfillment, prior to or at the Closing, of the following conditions precedent:
5.1.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
representations and warranties of Seller contained in this Agreement shall
remain true and correct at the Closing Date as fully as if made on the Closing
Date; Seller shall have performed, on or before the Closing Date, all of its
obligations under this Agreement and the other Purchase Documents which by the
terms thereof are to be performed on or before the Closing Date; and Seller
shall have delivered to Buyer an Officer's Certificate dated the Closing Date of
Seller to such effect.
5.1.2 NO PENDING ACTION. No legislation, order, rule, ruling or regulation
shall have been proposed, enacted or made by or on behalf of any governmental
body, department or agency, and no legislation shall have been introduced in
either House of Congress or in the legislature of any state, and no
investigation by any governmental authority shall have been commenced or
threatened, and no action, suit, investigation or proceeding shall have been
commenced before, and no decision shall have been rendered by, any court or
other governmental authority or arbitrator, which, in any such case, in the
reasonable judgment of Buyer could adversely affect, restrain, prevent or
rescind the transactions contemplated by this Agreement (including, without
limitation, the purchase and sale of the Purchased Assets) or result in a
Material Adverse Effect.
5.1.3 PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT. Buyer's
purchase of and payment for the Purchased Assets (a) shall not be prohibited by
any applicable law or governmental order, rule, ruling, regulation, release or
interpretation, (b) shall not constitute a fraudulent or voidable conveyance
under
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any applicable law, and (c) shall be permitted by all applicable laws, statutes,
ordinances, regulations and rules of the jurisdictions to which Buyer is
subject.
5.1.4 PROCEEDINGS SATISFACTORY. All proceedings taken in connection with
the purchase and sale of the Purchased Assets, all of the other Purchase
Documents and all documents and papers relating thereto, shall be in form and
substance reasonably satisfactory to Buyer.
5.1.5 CONSENTS - PERMITS. Seller shall have received (and there shall be in
full force and effect) all material consents, approvals, licenses, permits,
orders and other authorizations of, and shall have made (and there shall be in
full force and effect) all such filings, registrations, qualifications and
declarations with, any Person pursuant to any applicable law, statute,
ordinance, regulation or rule or pursuant to any agreement, order or decree to
which Seller with respect to the Product Line is a party or to which it is
subject, in connection with the transactions contemplated by this Agreement and
the sale of the Purchased Assets.
5.1.6 INTELLECTUAL PROPERTY. With respect to patents, trademarks, service
marks, trade names, copyrights owned by Seller, included among the Purchased
Assets, and listed in SCHEDULE 3.5, Seller shall execute and deliver to Buyer
appropriate instruments of transfer conveying to Buyer all right, title and
interest in and to such intellectual property; and
5.1.7 CREDITORS. Seller shall satisfy all creditors in connection with
Seller's operation of the Product Line prior to the Closing, except as
contemplated by the Assumed Liabilities, and shall remove any and all Liens
against the Purchased Assets.
5.2 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
5.2.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Buyer in this Agreement shall remain true and correct at the
Closing Date, and Buyer shall, on or before the Closing Date, have performed all
of its obligations under this Agreement and the other Purchase Documents which
by the terms thereof are to be performed by it on or before the Closing Date.
5.2.2 NO PENDING ACTION. No legislation, order, rule, ruling or regulation
shall have been proposed, enacted or made by or on behalf of any governmental
body, department or agency, and no legislation shall have been introduced and no
investigation by any governmental authority shall have been commenced or
threatened, and no action, suit, investigation or proceeding shall have been
commenced before, and no decision shall have been rendered by, any court or
other governmental authority or arbitrator, which, in any such case, was not
known by Seller on the date hereof or which could adversely affect, restrain,
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prevent or rescind the transactions contemplated by this Agreement (including,
without limitation, the purchase and sale of the Purchased Assets) or result in
a Material Adverse Effect.
5.2.3 CONSENTS - PERMITS. Buyer shall have received (and there shall be in
full force and effect) all material consents, approvals, licenses, permits,
orders and other authorizations of, and shall have made (and there shall be in
full force and effect) all such filings, registrations, qualifications and
declarations with, any Person pursuant to any applicable law, statute,
ordinance, regulation or rule or pursuant to any agreement, order or decree to
which Buyer with respect to the Product Line is a party or to which it is
subject, in connection with the transactions contemplated by this Agreement, the
purchase of the Purchased Assets and the assumption of Assumed Liabilities.
5.3 CLOSING DELIVERIES. Closing deliveries shall be made at or prior to the
Closing.
5.3.1 PURCHASE PRICE. Buyer shall deliver, or cause to be delivered to
Seller, the Purchase Price.
5.3.2 PURCHASE DOCUMENTS. Buyer and Seller shall execute and deliver, or
cause to be executed and delivered, the Purchase Documents.
6. TERMINATION
6.1 TERMINATION OF AGREEMENT. This Agreement and the transactions
contemplated hereby may (at the option of the party having the right to do
so) be terminated at any time on or prior to the Closing Date as follows:
6.1.1 MUTUAL CONSENT. By mutual written consent of Buyer and Seller;
6.1.2 COURT ORDER. By Buyer or Seller if any court of competent
jurisdiction shall have issued an order pursuant to the request of a third
party restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
6.1.3 FAILURE TO CLOSE. By Buyer or Seller if the transactions
contemplated hereby shall not have been consummated on or before September 15,
1997; provided, however, that such right to terminate this Agreement shall not
be available to any party whose failure to fulfill any obligation of this
Agreement has been the cause of, or resulted in, the failure of the transactions
contemplated hereby to be consummated on or before such date;
6.1.4 TERMINATION BY SELLER. By Seller upon notice to Buyer, if as
of the Closing (i) a condition to the performance of Seller set forth in
Section 6.2 hereof shall not be fulfilled at the time specified for the
fulfillment thereof, (ii) a default under or a breach of this Agreement shall
be made by Buyer, or (iii) any representation or
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warranty set forth in this Agreement or in any instrument delivered by Buyer
pursuant hereto shall be materially false or misleading; or
6.1.5 TERMINATION BY BUYER. By Buyer by notice to Seller at any
time prior to the Closing if (i) a condition to the performance of Buyer set
forth in Section 6.1 hereof shall not be fulfilled at the time specified for
the fulfillment thereof, (ii) a default under or a breach of this Agreement
shall be made by Seller, (iii) any representation set forth in this Agreement
or in any instrument delivered by Seller pursuant hereto shall be materially
false or misleading, or (iv) the results of Buyer's due diligence shall not
be satisfactory to Buyer.
6.2 EFFECT OF TERMINATION AND RIGHT TO PROCEED. If this Agreement is
terminated pursuant to this Section 6, all further obligations of Buyer and
Seller under this Agreement shall terminate without further liability of Buyer
or any Affiliate thereof to Seller or of Seller to Buyer or any Affiliate
thereof. If any of the conditions to obligations of Buyer specified herein have
not been satisfied, Buyer, in addition to any other rights which it may have,
shall have the right to waive its rights to have such conditions satisfied and
elect to proceed with the transactions contemplated hereby and, if any of the
conditions to the obligations of Seller specified herein have not been
satisfied, Seller in addition to any other rights which may be available to it,
shall have the right to waive its rights to have such conditions satisfied and
elect to proceed with the transactions contemplated hereby.
7. INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each and every such
representation and warranty set forth in this Agreement shall survive until the
first anniversary of the Closing Date.
7.2 INDEMNIFICATION BY SELLER. Seller shall indemnify, defend and hold Buyer,
its officers, directors, employees, owners, agents and Affiliates, harmless from
and in respect of any and all losses, damages, costs and expenses of any kind
and nature whatsoever (including, without limitation, interest and penalties,
reasonable expenses of investigation and court costs, reasonable attorneys' fees
and disbursements and the reasonable fees and disbursements of other
professionals) which may be sustained or suffered by any of them (collectively
"Losses"), arising out of, resulting from or pertaining to any Retained
Liability, any breach or inaccuracy of any representation or warranty or the
breach of or failure to perform any warranty, covenant, undertaking or other
agreement of Seller contained in this Agreement or any other Purchase Document,
liabilities under the Bulk Sales Acts, and all environmental, ecological,
health, safety, products liability or other claims pertaining to the Purchased
Assets which relate to time periods or events occurring prior to the Closing
Date.
7.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify, defend and hold Seller
and its officers, directors, employees, consultants, owners, agents and
Affiliates,
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harmless from and in respect of any and all Losses which may be sustained or
suffered by any of them arising out of or resulting from or pertaining to any
breach or inaccuracy of any representation or warranty or the breach of or
failure to perform any warranty, covenant, undertaking or other agreement of
Buyer contained in this Agreement or any other Purchase Document or all Assumed
Liabilities (other than Retained Liabilities) and for all environmental,
ecological, health, safety, products liability or other Claims pertaining to the
Assumed Liabilities or the Purchased Assets which relate to time periods or
events occurring after the Closing Date.
7.4 NOTICE AND OPPORTUNITY TO DEFEND. If there occurs an event which a party
asserts is an indemnifiable event pursuant to Section 7.2 or 7.3, the party
seeking indemnification (the "Claiming Party") shall promptly notify the other
party obligated to provide indemnification (the "Indemnifying Party"). If such
event involves (a) any Claim, or (b) the commencement of any action, suit or
proceeding by a third person, the Claiming Party will give the Indemnifying
Party prompt written notice of such Claim or the commencement of such action,
suit or proceeding, PROVIDED, HOWEVER, that the failure to provide prompt notice
as provided herein will relieve the Indemnifying Party of its obligations
hereunder only to the extent that such failure prejudices the Indemnifying Party
hereunder. In case any such action, suit or proceeding shall be brought against
a Claiming Party and it shall notify the Indemnifying Party of the commencement
thereof, the Indemnifying Party shall be entitled to participate therein and, to
the extent that it desires to do so, to assume the defense thereof, with counsel
reasonably satisfactory to the Claiming Party and, after notice from the
Indemnifying Party to the Claiming Party of such election so to assume the
defense thereof, the Indemnifying Party shall not be liable to the Claiming
Party hereunder for any attorneys' fees or any other expenses, in each case
subsequently incurred by the Claiming Party, in connection with the defense of
such action, suit or proceeding. The Claiming Party shall cooperate fully with
the Indemnifying Party and its counsel in the defense against any such action,
suit or proceeding. In any event, the Claiming Party shall have the right to
participate at its own expense in the defense of such action, suit or
proceeding. In no event shall an Indemnifying Party be liable for any
settlement or compromise effected without its prior consent.
7.5 PAYMENT. Payment of amounts owing by the Indemnifying Party pursuant to
Sections 7.2 through 7.3 with respect to a third party claim shall be made
within thirty days after the later of (i) settlement of the third party claim,
or (ii) the expiration of the period for appeal of a final adjudication of such
third party claim.
7.6 TAX BENEFITS; INSURANCE PROCEEDS. In determining the amount of any damages
for which any party is entitled to indemnification under this Agreement, the
gross amount thereof will be reduced by any correlative Tax benefit or insurance
proceeds realized or to be realized by such party; provided, however, that any
increase in insurance premiums or Taxes or the like caused by the damages or
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payment thereof shall be taken into consideration and utilized to offset the
reduction in damages.
7.7 DISPUTE RESOLUTION. In the event that a dispute arises between the parties
as to any claim for Indemnification under Sections 7.1 through 7.4 hereof, the
Presidents of each party hereto shall, for a period of ten (10) days, discuss
the matter in question to see if it is capable of a resolution without invoking
the provisions of Section 7.4 hereof. In the event that the matter has not been
so resolved upon the conclusion of such ten (10) day period, during the next
thirty (30) days the parties shall engage in good faith non-binding mediation
with a mutually agreeable third party mediator in an effort to resolve such
matter. The mediation shall occur in San Jose, California.
8. Restrictive Covenants.
8.1 NONCOMPETITION. For a period of three (3) years after the date of Closing,
Seller will not, except with written permission of Buyer, offer for sale,
directly or through representatives or distributors, products which compete
directly with Mag systems or RLM Bridges.
8.2 RETENTION OF DOCUMENTATION. Seller may retain a single copy of technical
documentation under suitable administrative control only for archival purposes
and to satisfy any residual warranty obligations. Seller shall keep the
documents in strict confidence and shall not use them for any other purpose
whatsoever and shall not divulge them to any party whatsosever. Seller may
retain copies of the customer lists for any purpose.
8.3 NONUSE OF DOCUMENTATION. Seller will not, except with the written
permission of Buyer, at any time after closing use any portion of the retained,
nonpublic, technical documentation to compete with Buyer. Seller may use
customer lists for any purpose.
8.4 RESTRICTIONS REASONABLE. Seller and Buyer acknowledge and agree that (a)
the restrictions set forth in this Section 8 are reasonable in terms of scope,
duration, geographic area, and otherwise, and (b) the protections afforded to
the Buyer, and its Affiliates, hereunder are necessary to protect their
legitimate business interests.
9. SUPPLY OF SQUID SENSORS.
For a period of three (3) years after closing, Seller will offer such
SQUID sensors as it offers to the general public for sale to Buyer at a price no
higher than it offers those sensors to other customers for similar quantities,
delivery times, warranty and payment terms.
Seller will continue to honor the warranty terms on SQUID sensors
previously delivered to Buyer.
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10. SUPPORT FOR XMAG.
10.1 PROBE PURCHASE. Buyer will make, deliver, install and warrant (except for
SQUID sensors contained therein) a probe for the XMAG sold to the University of
Nebraska for a price of $_______ and a delivery date of _____.
10.2 SERVICE CONTRACT. Seller and Buyer will enter into a time and materials
service contract in the form set forth in Exhibit 10.2 for warranty service of
XMAG systems sold to the University of Nebraska and Scienchem in Taiwan.
11. MISCELLANEOUS
11.1 FEES AND EXPENSES. Each of the parties hereto will pay and discharge its
own expenses and fees in connection of with the negotiation of and entry into
this Agreement and the consummation of the transactions contemplated hereby.
11.2 NOTICES. All notices, requests, demands, consents and communications
necessary or required under this Agreement or any other Purchase Document shall
be made in the manner specified, or, if not specified, shall be delivered by
hand or sent by registered or certified mail, return receipt requested,
overnight courier, or by telecopy (receipt confirmed) to:
if to Buyer:
Xxxx Xxxxx Co. Ltd.
00-0 Xxxxxxxx 0-xxxxxx
Xxxxxxxx-Xxxx
Xxxxx 000 Xxxxx
Attn.: Takefumi Niki
President
Facsimile Transmission Number:
with a copy to:
Konaka, Toyama & Hosoya
Attn.: Xxxxxxxxx Xxxxxx
Facsimile Transmission Number: 001-81-3-3587-0101
if to Seller:
Conductus, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
President
Facsimile Transmission Number: (000) 000-0000
12
with a copy to:
Conductus, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. XxXxxxxx, Esq.
Manager, Legal Affairs
Facsimile Transmission Number: (000) 000-0000
All such notices, requests, demands, consents and other communications
shall be deemed to have been duly given or sent two (2) days following the date
on which mailed, or on the date on which delivered by hand or overnight courier
or by facsimile transmission (receipt confirmed), as the case may be, and
addressed as aforesaid.
11.3 SUCCESSORS AND ASSIGNS. All covenants and agreements set forth in this
Agreement and made by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the successors and assigns of such party, whether or not
so expressed, except that Seller may not assign or transfer any of its rights or
obligations under this Agreement without the consent in writing of Buyer.
11.4 COUNTERPARTS, ETC. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason in any
jurisdiction, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired or affected, it being intended that each of parties' rights and
privileges shall be enforceable to the fullest extent permitted by law, and any
such invalidity, illegality and unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
11.5 GOVERNING LAW. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the laws of the State of California applicable
to contracts made and to be performed entirely in such state (without giving
effect to the conflicts of laws provisions thereof). subject to the provisions
of Section 7.7, the exclusive jurusdiction and venue over any dispute arising in
connection with or as a result of this Agreement shall be a court of the State
of California of competent jurisdiction located in San Diego County, California.
13
11.6 ENTIRE AGREEMENT. This Agreement, including the Schedules referred to
herein, is complete, and all promises, representations, understandings,
warranties and agreements with reference to the subject matter hereof, and all
inducements to the making of this Agreement relied upon by all the parties
hereto, have been expressed herein or in said Schedules or Exhibits. This
Agreement may not be amended except by an instrument in writing signed on behalf
of Seller and Buyer.
11.7 ATTORNEYS' FEES: COSTS. If either party resorts to mediation, litigation
or other legal process to enforce its rights under this Agreement, the
prevailing party shall be entitled to an award of its reasonable costs and
attorney's fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first set forth above.
ATTEST: XXXX XXXXX CO. LTD..
__________________________ __________________________
By:_______________________ By:_______________________
Title:____________________
ATTEST: CONDUCTUS, INC.
__________________________ __________________________
By:_______________________ By:_______________________
Title:____________________
14
SCHEDULE 2.1
PURCHASED ASSETS
Seller shall deliver to Buyer the following:
1. All drawings, specifications and similar materials for the Product Line in
hard copy and electronic form (where available);
2. Intellectual property specific to the Product Line, including, the
following rights as more fully identified on SCHEDULE 3.5 hereto;
a) All trademarks used to identify the Product Line as follows:
1. IMAG;
2. XMAG;
b) All copyrights used in the Product Line, including copyright in
firmware, software and manuals; and
c) All know-how related to the Product Line, including all documentation
regarding such know-how;
3. The fixtures, tools and equipment of the Product Line used in the assembly,
test, calibration, and support of the Product Line as follows:
Description Tab # Quantity
a) Tekscope-100 mhz-portable THS 710 17 1
b) Ultrasonic "3210" 51 1
c) Large Torch Cart 56 1
d) Oxygen Cylinder 57 1
e) Acetylene Cylinder 58 1
f) Drill Press Enco 70 1
g) Belt Disc Sander 71 1
h) Flammable Cabinet 73 1
i) Veeco Leak Detector-MS 9 76 1
j) Veeco Leak Dector-MS 17 77 1
k) Stanford Function Generator-model 108 1
DS33
l) HP 54601B - O-Scope 376 1
m) HP 34401A Multimeter 382 1
n) Chart Recorder 555 1
o) Microscope 560 1
p) Engine Stand 568 1
q) Vacuum Pump 572 1
r) HP Dynamic Signal Analyzer 598 1
s) Mass Flowmeter 602 1
t) Power Stat Variable Auto. Trans 610 1
u) Lock-in Amplifier - Stanford 619 1
SR510
v) AT 6400 (used) 827 1
w) AT 6400 (used) 828 1
x) 3 Layer Shield 848 1
y) 3 Axis Fluxgate Magnetometer 885 1
z) Soldering Iron XXX 0
0
Xxxxxxxxxxx Xxx # Xxxxxxxx
xx) Black Cabinets TBD 4
bb) Office Desks TBD 4
cc) File Cabinets TBD 4
dd) Desk Chairs TBD 4
ee) Work Benches TBD 2
ff) Small Tools - sets N/A 2
gg) Labview with Labwindows N/A 1
hh) Borland 4.5-5.0 N/A 1
ii) Protogen N/A 1
4. Inventories of the Product Line, including all raw materials, work in
process, finished goods, and test and marketing demonstration units
existing on the Closing Date, but excluding SQUID Sensors and the
1-channel HTS system sold to Oriental Scientific, which will be
retained by the Seller.
5. A copy of all customer files and records relating to the Product Line
and Purchased Assets.
6. All brochures, marketing literature, and customer lists.
7. Other fixed assets and equipment as follows:
Description Tab # Quantity
a) Compressor 49 1
b) Small Torch with 2 cylinders 53 1
c) Triple Beam Balance 63 1
d) Leak Detector Cart with Parts 65 1
e) Hoist CM Series 622 68 1
f) Telephone System & Phones Various 21
g) HP DC Power supply 116 1
h) 4 Drawer File Cabinet-Purchasing 201 1
i) 4 Drawer File Cabinet-Purchasing 202 1
j) HP 165B Logic Analyzer 381 1
k) Bead Blaster 551 1
l) Hydraulic Press 561 1
m) Extreme Isolation X-Former 615 1
n) Gauss Meter - X.X. Xxxx - 9200 617 1
o) Conference Table & Chairs 763-771 9
p) Overhead Projector & Screen 773 2
q) Canon Copier-NP6030 780 1
r) Refrigerator 783 1
s) Heat Gun 823 1
t) XXXXX Heat Gun 825 1
u) Lab Xxxxx 830 1
v) Cal Comp Xxxxxxx 000 0
w) Xxxxxx Fax - L777 849 1
x) File cabinets TBD 6
y) Desks TBD 6
z) Chairs TBD 6
2
aa) White boards (if available) TBD 10
bb) Work benches - non-formica tops TBD 6
cc) Pentium computer (Xxxxxx'x) 957-958 1
dd) 486 Computer-generic XXX 0
xx) Xxxxxxxxx X/X 0
xx) Xxxxxxxxxx X/X 0
gg) Bookcases-Purchasing TBD 4
hh) Wastebaskets N/A 10
ii) Soldering Stations XXX 0
xx) XXX Xxxxx X/X 0
3
SCHEDULE 2.3
RETAINED ASSETS
Seller shall retain ownership of the following assets:
1. All fixtures, tools and equipment of Seller, whether used in the
Business or not, except for those assets listed in SCHEDULE 2.1; and
2. U.S. Patent No. 5,532,592, titled "SQUID Control Apparatus with
Non-Cryogenic Flux-Locked Loop Disposed in Closed Proximity to the
SQUID;"
3. All intellectual property related to the design and manufacture of
SQUID sensors;
4. All purchased software for accessing computer data files; and
5. All licenses for patents from third parties.
1
SCHEDULE 2.4
ASSUMED LIABILITIES
Buyer shall be responsible for the following:
1. all responsibility for manufacture, delivery and warranty service for
all XMAG systems sold by Niki;
2. all liability arising from the cancellation by Conductus of orders for
options for XMAG systems sold by Niki;
3. all liability arising from the cancellation by Conductus of orders for
RLM bridges sold by Niki;
4. all responsibility for completion, delivery and warranty service of
the TIT system, including any liability for late delivery;
5. all liability associated with the cancellation of delivery of the
Riken scanning microscope system; and
6. all responsibility for warranty service for custom systems sold by
Niki.
1
SCHEDULE 2.5
RETAINED LIABILITIES
Seller shall retain all liability for:
1. Warranty service for all SQUID sensors sold by Seller;
2. All liability, including warranty service, for all XMAG systems, other
than those sold to customers of Buyer, including systems sold to the University
of Nebraska and Scienchem Corp. in Taiwan.
1
SCHEDULE 2.8
ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated as follows:
1. Fixed Assets $30,000
2. Inventory $50,000
3. Lease Assumption $26,000
4. Ongoing R&D $84,000
1
SCHEDULE 3.3
LIENS AND DEFECTS
None
1
SCHEDULE 3.5
INTELLECTUAL PROPERTY
(i) Intellectual Property owned by Seller:
1. U.S. Patent No. 5,532,592, titled "SQUID Control Apparatus with
Non-Cryogenic Flux-Locked Loop Disposed in Closed Proximity to the SQUID;
2. Registered trademark "IMAG";
3. Common law trademark "XMAG;"
4. Copyright in all software, firmware and manuals.
(b) Third Party Intellectual Property licensed by Seller:
1. License from Sperry Unisys for U.S. Patent No. 4,663,590 titled
"Single frequency noise reduction circuit for squids;"
2. License from BTI for U.S. Patent No. 4,389,612 titled "Apparatus
for Reducing Low Frequency Noise in DC Biased SQUIDS.
1
