Confidential Treatment Requested. Confidential Portions of this document
have been redacted and have been filed separately with the Commission.
--------------------------------------------------------------------------------
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
BETWEEN
SCIENTIFIC MEASUREMENT SYSTEMS, INC., AS SELLER
AND
ESMS INDUSTRIES, INC., AS PURCHASER
DECEMBER 16, 1999
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TABLE OF CONTENTS
ARTICLE 1
SALE OF ASSETS AND CONSIDERATION
1.01 Sale of Assets .................................................................................1
1.02 Purchase Price .................................................................................1
1.03 Payment of Purchase Price ......................................................................1
1.04 Transfer of Ownership and Title ................................................................2
1.05 Liabilities ....................................................................................2
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
2.01 Organization, Good Standing and Qualification ..................................................2
2.02 Authorization ..................................................................................3
2.03 Title to Property and Encumbrances .............................................................3
2.04 Governmental Consents ..........................................................................3
2.05 Compliance with Other Instruments ..............................................................3
2.06 Financial Information ..........................................................................3
2.07 Information Supplied ...........................................................................4
2.08 Disclosure .....................................................................................4
2.09 Litigation .....................................................................................4
2.10 Patents and Trademarks .........................................................................5
2.11 Employees ......................................................................................5
2.12 Contracts ......................................................................................5
2.13 Client Base ....................................................................................5
2.14 Licenses and Contracts .........................................................................6
2.15 Environmental Problems .........................................................................6
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND OBLIGATIONS OF PURCHASER
3.01 Organization, Good Standing and Qualification ..................................................6
3.02 Authorization ..................................................................................6
3.03 Governmental Consents ..........................................................................7
3.04 Compliance with Other Instruments ..............................................................7
3.05 Reserved .......................................................................................7
3.06 Litigation .....................................................................................7
ARTICLE 4
COVENANTS
4.01 Brokers for Seller .............................................................................7
4.02 Brokers for Purchaser ..........................................................................8
4.03 Liabilities ....................................................................................8
ARTICLE 5
GENERAL CONDITIONS OF CLOSING
5.01 Lease ..........................................................................................8
ARTICLE 6
ADDITIONAL AGREEMENTS
6.01 Noncompetition .................................................................................8
6.02 Trade Secrets and Other Confidential Information ...............................................9
6.03 Remedies ......................................................................................10
6.04 Expenses ......................................................................................11
6.05 Sale of Assets or ESMS Stock...................................................................11
6.06 Miscellaneous Agreements and Consents .........................................................12
6.07 Reliance ......................................................................................12
6.08 Alliant Agreement..............................................................................12
6.09 Health Insurance...............................................................................13
6.10 Post-Closing Obligations.......................................................................13
ARTICLE 7
CLOSING
7.01 Conditions to Obligations of Purchaser ........................................................14
7.02 Conditions to Obligations of Seller ...........................................................15
ARTICLE 8
TERMINATION AND WAIVER
8.01 Effective Termination .........................................................................16
8.02 Waiver ........................................................................................16
8.03 Termination ...................................................................................16
8.04 Specific Performance ..........................................................................16
ARTICLE 9
GENERAL PROVISIONS
9.01 Closing .......................................................................................16
9.02 Survival of Representations, Warranties and Agreements ........................................16
9.03 Severability ..................................................................................16
9.04 Notices .......................................................................................17
9.05 Public Announcements...........................................................................17
9.06 Successors and Assigns ........................................................................17
9.07 Titles, etc. ..................................................................................18
9.08 Governing Law ................................................................................18
9.09 Counterparts ..................................................................................18
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EXHIBITS
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Schedule 1.01(a) Service Bureau Assets
Schedule 1.05 Liabilities & Obligations
Schedule 2.06 Customer Account Information
Schedule 2.09 Litigation
Schedule 2.11 Officers, Directors, Employees and Agents of
Scientific Measurement Systems, Inc.
Schedule 2.12 Contracts
Schedule 2.13 Client Base
Schedule 2.14 License and Contracts
Schedule 2.15 Environmental Problems
Schedule 6.02 Trade Secrets and Other Confidential Information
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
This Agreement entered into as of this 16th day of December, 1999 by
and between ESMS INDUSTRIES, INC., a Texas corporation (hereinafter referred to
as "ESMS" or "Purchaser") and SCIENTIFIC MEASUREMENT SYSTEMS, INC., a Texas
corporation (hereinafter referred to as "SMS" or "Seller").
In consideration of the representations, warranties and agreements
herein contained, the parties agree as follows:
1.
SALE OF ASSETS AND CONSIDERATION
--------------------------------
1.01 SALE OF ASSETS. Seller hereby agrees to sell, convey, transfer,
assign and deliver to Purchaser and Purchaser hereby agrees that it will
purchase from Seller, all of the assets and properties of Seller of every kind,
nature and description whatsoever included in the operation of Seller's service
bureau (hereinafter referred to as "Service Bureau Assets"), including those
specified in Schedule 1.01(a), attached hereto and made a part hereof. Seller
represents and warrants that the Service Bureau Assets listed on Schedule
1.01(a) include all material properties of Seller's Service Bureau Business
including, tangible or intangible, movable or immovable, personal or mixed,
licenses, permits, proprietary technology, claims and rights under agreements
and contracts of Seller.
1.02 PURCHASE PRICE. The total purchase price for the Service Bureau
Assets to be paid by Purchaser to Seller is: the sum of Six Hundred Thousand and
No/100 ($600,000.00) Dollars.
1.03 PAYMENT OF PURCHASE PRICE. Purchaser shall pay Six Hundred
Thousand and No/100 ($600,000.00) Dollars in cash at Closing, by wire or
certified funds.
1
1.04 TRANSFER OF OWNERSHIP AND TITLE.
(a) Seller hereby agrees to deliver to Purchaser, at Closing, acts of
sale, assignments, conveyance and transfer sufficient, in the opinion of
Purchaser's attorney, to convey and vest complete and unencumbered ownership and
title in the Service Bureau Assets as described in paragraph 1.01 above, unto
and in Purchaser. Appropriate forms of such acts of sale, assignments,
conveyances and transfer, in conformity with this Agreement, shall be submitted
to Seller.
(b) Seller agrees that it shall, at all times and from time to time
after Closing, upon the request of Purchaser, do, execute, and deliver, or shall
cause to be done, executed, acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances as
may be required in conformity with this Agreement as required by Purchaser, or
its successors and assigns, or for aiding and assisting in collecting and
reducing to possession, any or all of the assets or property to be acquired by
Purchaser as provided herein.
1.05 LIABILITIES. Except as listed on Schedule 1.05, Purchaser shall
not, does not and will not pay, perform, discharge or assume any of the
liabilities or obligations of Seller. Purchaser does not assume and Seller
indemnifies and holds Purchaser free and harmless from any liability resulting
from any liability of Seller occurring prior to the execution of this Agreement.
2.
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Purchaser, as of the date of
this Agreement and the date of Closing, as follows:
2.01 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas and has requisite
2
corporate power and authority to carry on its business as now conducted and are
qualified to do business in all jurisdictions in which they are required to be
so qualified.
2.02 AUTHORIZATION. By Closing, all corporate action on the part of
Seller necessary for the authorization, execution and delivery of this Agreement
and the performance of the obligations of Seller hereunder in connection with
the transfer of the Service Bureau Assets of Seller have been taken and this
Agreement constitutes a valid and legally binding obligation of Seller
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or other laws affecting
the enforcement of creditors' rights generally.
2.03 TITLE TO PROPERTY AND ENCUMBRANCES. Seller have good and
marketable title to all of the Service Bureau Assets, as defined herein, subject
to no mortgage, conditional sales agreement, financing statement, charges, liens
or encumbrances other than shown on Schedule 1.05. Seller has not heretofore
obligated itself to dispose of any of said assets.
2.04 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration, or
filing with, any federal, state or local governmental authority on the part of
Seller is currently required in connection with consummation of the transactions
contemplated by this Agreement.
2.05 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation of, or be in conflict with,
or constitute, with or without the passage of time and giving of notice, a
default under any provision of the articles of incorporation or bylaws of Seller
or of any instrument or contract to which it is a party or by which it is bound.
2.06 FINANCIAL INFORMATION. Seller has provided Purchaser a list of all
of the customers of the Service Bureau Business, as defined in Section 6.01(b),
with the gross revenues billed for each
3
customer for the past twelve (12) month period, attached hereto and incorporated
herein as Schedule 2.06. Such list is true and accurate in all material respects
and is not misleading.
2.07 INFORMATION SUPPLIED. Seller shall provide to Purchaser or its
representative all records, including, but not limited to, all leases, financial
books and records, executory agreements, purchase orders, customer commitments,
employee information, union contracts and all other records and information of
Seller relating to Service Bureau Business and other than government classified
information.
2.08 DISCLOSURE. Neither this Agreement nor any Schedule hereto nor any
certificate nor other instrument referred to herein and furnished to Purchaser
by Seller knowingly contains any untrue statement of a material fact or
knowingly omits to state any material fact necessary to make the statements
contained therein or herein in light of the circumstances under which they were
made, not misleading. There is no material fact known to Seller, which
materially adversely affects or in the future is likely to materially adversely
affect Seller's business, operations or assets, financially or otherwise, which
Seller have not disclosed in writing to Purchaser.
2.09 LITIGATION. Except as disclosed on Schedule 2.09, there is no
action, suit, proceeding or investigation, threatened or pending, nor to the
best of the knowledge of Seller is there any circumstances which could form a
valid basis for any action, suit or proceeding against Seller which might
result, either individually or in the aggregate, in any material, adverse change
in the business, operations or assets, financially or otherwise, of Seller.
Seller is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or governmental agency or
instrumentality. Purchaser shall be promptly advised of the commencement of any
suit, action, claim or investigation affecting the business of Seller or the
Service Bureau Assets or which may relate in any way to the provisions of any
obligation of Seller or their successor.
4
2.10 PATENTS AND TRADEMARKS. To the best of Seller's knowledge, the
conduct of the Service Bureau Business and operations of Seller does not cause
or result in the material infringement or the material violation of any
currently existing or effective patent, copyright, trademark, trade name,
service xxxx, license or proprietary information of any entity not a party
hereto.
2.11 EMPLOYEES. A schedule reflecting all names and addresses of all
officers, directors, employees and agents of the Service Bureau Business and the
remuneration and compensation being made to all such employees of Seller as of
the effective date of this Agreement is attached hereto as Schedule 2.11,
attached hereto and incorporated herein.
2.12 CONTRACTS. Seller has performed all obligations required to be
performed by Seller with respect to the Service Bureau Business contracts to
date and are not in material default under any of the contracts, agreements,
leases or other documents to which they are parties. All parties with whom
Seller have contractual arrangements are in material compliance therewith in all
respects and not in material default thereunder. All such contracts, including
all operating leases, customer contracts and supplier contracts, are listed on
Schedule 2.12, with copies of each contract attached, not previously supplied to
Purchaser. All consents of the parties to the Service Bureau Business contracts
necessary to assign and transfer such contracts to Purchaser have been or shall
be obtained by Closing.
2.13 CLIENT BASE. Seller has no information, nor is it aware of any
facts indicating that any customers or suppliers of Seller's Service Bureau
Business intends to cease doing business with Seller or materially alter the
amount of business they are presently dealing with Seller, except as indicated
on Schedule 2.13, and shall use their best efforts to insure the continuity of
Seller's current clientele and contracts with respect to the Service Bureau
Business and Service Bureau Assets.
5
2.14 LICENSES AND CONTRACTS. Seller is the owner of the licenses and
contracts related to the Service Bureau Business listed on Schedule 2.14 other
than those previously supplied to Purchaser. None of such documents have been
modified or amended in a material fashion, each is in full force and effect and
are transferable to Purchaser and none are subject to any default by any party
thereto.
2.15 ENVIRONMENTAL PROBLEMS. Except as provided on Schedule 2.15,
Seller represents and warrants to the best of its knowledge, without engaging
any environmental consultants, experts or audit firms, that it has revealed, in
writing, to Purchaser all of the environmental problems of Seller to which it
has knowledge with respect to the properties to be acquired by Purchaser. Seller
has obtained any and all environmental licenses and permits necessary to operate
the Service Bureau Business.
3.
REPRESENTATIONS, WARRANTIES AND OBLIGATIONS OF PURCHASER
--------------------------------------------------------
Purchaser represents and warrants to Seller as follows:
3.01 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas and has all requisite corporate power and authority to
carry on its business.
3.02 AUTHORIZATION. All corporate actions on the part of Purchaser and
its officers, and directors, necessary for the authorization, execution and
delivery of this Agreement and for the performance of all obligations of
Purchaser hereunder, have been taken and this Agreement constitutes a valid and
legally binding obligation of Purchaser enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally.
6
3.03 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration, or
filing with, any federal, state or local governmental authority on the part of
Purchaser is currently required in connection with consummation of the
transactions contemplated by this Agreement.
3.04 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any violation of, or be in conflict with,
or constitute, with or without the passage of time and giving of notice, a
default under any provision of Articles of Incorporation of Purchaser or Bylaws
or of any material instrument or contract to which it is a party or by which it
is bound.
3.05 RESERVED.
3.06 LITIGATION. Except as disclosed in Schedule 2.09, there is no
action, suit, proceeding or investigation, threatened or pending, nor to the
best of the knowledge of Purchaser are there any circumstances which could form
a valid basis for any action or proceeding, against Purchaser or which might
result, either individually or in the aggregate, in any material, adverse change
in the business, affairs, operations, assets, condition or prospects,
financially or otherwise, of Purchaser. Purchaser is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or governmental agency or instrumentality.
4.
COVENANTS
---------
The parties hereto covenant and agree that at all times from the date
of this Agreement and after the date of Closing:
4.01 BROKERS FOR SELLER. Seller will be responsible for paying all
brokerage fees incurred by Seller. Seller agrees to indemnify and hold harmless
Purchaser from any claim, demand or
7
judgment made or rendered against Purchaser for brokerage fees and/or
commissions in this transaction by reason of any breach of such warranty by
Seller.
4.02 BROKERS FOR PURCHASER. Purchaser will be responsible for paying
all brokerage fees incurred by Purchaser. Purchaser agrees to indemnify and hold
harmless Seller from any claim, demand or judgment made or rendered against
Seller for brokerage fees and/or commissions in this transaction by reason of
any breach of such warranty by Purchaser.
4.03 LIABILITIES. Seller is liable for and indemnifies and holds
harmless Purchaser from any and all liabilities, obligations and/or claims
against Seller not expressly assumed as provided in Section 1.05, including any
and all environmental liabilities of Seller and its subsidiary. Purchaser hereby
indemnifies and holds harmless Seller from any liabilities and obligations of
Seller, which are expressly assumed herein.
5.
GENERAL CONDITIONS OF CLOSING
-----------------------------
The obligations of all of the parties hereto are subject to the
fulfillment at or before Closing of each of the following conditions:
5.01 LEASE. Purchaser and Seller must have negotiated a sublease of
5,703 square feet of the premises leased by Seller, approved by landlord, of a
portion of the leased premises in which the Service Bureau Business currently
operates in a form satisfactory to Purchaser.
6.
ADDITIONAL AGREEMENTS
---------------------
6.01 NONCOMPETITION. (a) Seller, its successors and assigns shall not,
for a period ending ten (10) years after the Closing, except as permitted by
Purchaser by its prior written consent, directly or indirectly, acquire, retain,
or hold any ownership interest in, (except an ownership interest of five
8
(5%) percent or less in a publicly registered corporation), manage, operate,
invest or participate in, or otherwise be connected with in any manner, any
business or business entity in or proposing to engage in any computerized
tomography service business of the type presently conducted by Seller, directly
or indirectly, in the geographic area of the United States of America, Canada
and Mexico except that (i) Seller may engage in scanning services * or (ii) if
Seller acquires an entity which is performing CT scanning services as of the
date of this Closing, Seller may continue such entity's scanning services in
substantially the same manner conducted as of the date of this Closing.
(b) Seller agrees that neither Seller nor its successors or assigns
shall, for a period of ten (10) years from the date hereof, sell a CT scanner to
anyone who Seller is aware intends to use such CT scanner in the operation of a
supplying CT scanning services to third parties for compensation, ("Service
Bureau Business").
6.02 TRADE SECRETS AND OTHER CONFIDENTIAL INFORMATION. (a) In further
consideration of the payment to be made hereunder and the mutual agreements
contained herein, Seller agrees that:
(1) Seller will not divulge to any individual or company engaged in the
Service Bureau Business, other than to persons designated by Purchaser in
writing, any trade secrets or other confidential information (including, without
limitation, any information related to customer lists, methods, or products)
directly or indirectly useful in any aspect of the Service Bureau Business of
Seller, as conducted from time to time, which is not in the public domain.
(2) At Closing, Seller shall deliver into escrow for benefit of
Purchaser, all software source codes, algorthemns, designs, licenses and rights
to manufacture all equipment, software described on Schedule 6.02 related to
trade secrets or other confidential information, in whatever form that may
exist, which are then in Seller's custody, possession or control. Purchaser
shall have a non-exclusive
* Indicates confidential treatment requested. The redacted material has been
filed separately with the Commission.
9
license of Seller's proprietary technology including, but no limited to, any
software, utilized in Seller's Service Bureau Business. Seller shall supply
Purchaser with any upgrades of such technology or software under the terms of
the Business Service Agreement and Seller shall have the right to use such
upgrades. In the event that Seller or its successors ceases to manufacture
scanners, Purchaser shall have the right to use such trade secrets and know how
to manufacture such scanner for its use and/or sale and to operate such
scanners.
(b) In further consideration of the payment to be made hereunder and
the mutual agreements contained herein, Purchaser agrees that it will not
divulge to any person or entity engaged in the manufacturing of CT scanners any
trade secrets or any other confidential information directly or indirectly
useful in Seller's business, as conducted from time to time, which is not in the
public domain.
6.03 REMEDIES. If Seller commits a breach, or threatens to commit a
breach of any of the provisions of Section 6.01, or Section 6.02, Purchaser
shall have the right and remedy, in addition to any other remedy that may be
available, at law or in equity, to have the provisions of Sections 6.01 and 6.02
specifically enforced by any court having appropriate jurisdiction together with
an accounting therefore, it being acknowledged and agreed that any such breach
or threatened breach will cause irreparable injury to Purchaser and that money
damages will not provide an adequate remedy to Purchaser. Purchaser shall have
the right to an injunction to enforce the provisions of the Agreement against
Seller.
If any covenant contained in Section 6.01 or Section 6.02 or any part
thereof, (hereinafter referred to as "Covenants") is hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to
10
the invalid portions, and any court having jurisdiction shall have the power to
reduce the duration and business scope of such covenant and, in its reduced
form, said covenant shall then be enforceable.
The parties hereto intend and hereby confer jurisdiction to enforce the
Covenants upon the court of the state or any county within the geographic scope
of such Covenants in which state or parish any alleged breach of such Covenant
occurs.
6.04 EXPENSES. The parties hereto shall bear responsibility for their
respective closing costs, including their legal and accounting expenses.
6.05 SALE OF ASSETS OR ESMS STOCK.
(a) In the event: (1) ESMS desires to sell, assign, or otherwise
dispose of its ownership interests in all of the assets specified in Schedule
1.01(a); or (2) ESMS desires to sell One Hundred (100%) Percent of all
outstanding shares of ESMS (collectively "ESMS Asset Interests"), SMS shall have
a first right of refusal of the sale of the ESMS Asset Interests for a period of
two (2) years from the down payment on the Order Placement on the CT Scanner
QT120699.
(b) SMS shall have an option to purchase the ESMS Asset Interests at
the same price and on the same terms and conditions as ESMS, acting in good
faith, shall have been offered by a third party who negotiated the price and
terms and conditions in good faith. The offer shall be in writing, shall set
forth the price and terms upon which the ESMS Asset Interests are offered and
the name and mailing address of the third party.
(c) If SMS either refuses the offer made, waives the requirement of an
offer in writing, or fails for a period of thirty (30) day period after the
receipt of the written offer to accept it by compliance with the terms herein
set forth, then ESMS may sell the ESMS Asset Interests to such third party upon
such terms and conditions.
11
(d) In the event that SMS exercises this right of first refusal, SMS
shall close its purchase of the ESMS Assets Interests upon the same terms and
conditions within ninety (90) days of the exercise of such option. In the event
that SMS fails to close its purchase within such period. SMS shall cease to have
any right of first refusal and ESMS may sell the ESMS Asset Interests to
whomever ESMS desires upon any terms and conditions ESMS desires.
(e) This right of first refusal shall not be transferable or assignable
without prior written consent other than to SMS' successors.
6.06 MISCELLANEOUS AGREEMENTS AND CONSENTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, using reasonable
efforts to cause all conditions to be fulfilled and to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby. In case at
any time after the Closing any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of
Purchaser or Seller, as the case may be, shall take all such necessary action.
6.07 RELIANCE. The representations and warranties contained herein are
made by the respective parties with the knowledge and expectation that the other
parties to this Agreement are placing complete reliance therein.
6.08 ALLIANT AGREEMENT. On or before February 29, 2000, Seller shall
complete and make operational the CT Scanner presently under construction for
the Alliant Techsystems ("Alliant"). Purchaser acquires hereunder all of
Seller's right, title and interest in such CT Scanner, subject to
12
Seller's obligation to use such scanner to supply certain scanning services to
Alliant until May 31, 2002. In the event Seller fails to complete such scanner
and make such scanner operational by February 29, 2000, Seller shall pay
Purchaser the sum of One Thousand ($1,000.00) Dollars per day until such scanner
is completed and operational. Purchaser shall pay Seller a royalty of Fifteen
(15%) percent of the gross revenues from all scans that are not for Seller or
Alliant during the initial term of the Alliant Agreement, and pay 15% of gross
revenues for use of the CT Scanner by any party other than Seller thereafter.
6.09 HEALTH INSURANCE. Seller shall continue to pay the health
insurance premiums of the four (4) existing employees of Seller who are to be
employed by Purchaser through March 31, 2000.
6.10 POST-CLOSING OBLIGATIONS. On or before February 29, 2000 (the
"Payment Date"), Purchaser shall pay the down payment of thirty (30%) of the
Order Placement on a CT scanner pursuant to Seller's quote number QT 120699 (the
"Quote"). If Purchaser does not pay the down payment, Seller shall have the
option to purchase all assets of Purchaser, other than cash, cash equivalents,
receivables and payables, for the amount of the exercise price plus the
assumption of the capital expenditure debt, defined below. The exercise price of
such option shall be five times Purchaser's EBITDA, (calculated in accordance
with percentage completion accounting) calculated from January 1, 2000 to
December 31, 2000, minus (x) Purchaser's then Capital Expenditure Debt, (which
is defined as the capital expenditure obligations of the Service Bureau Business
in the initial amount of $600,000 plus the amount of any additional capital
expenditure debt and the amount of any capital leases acquired before exercise
of the option which debt or lease is personally guaranteed by any principal of
ESMS), and (y) the purchase price of the CT scanner as stated in the Quote;
provided, however, that if the sum of (x) and (y) is greater than five times
Purchaser's EBITDA, the exercise price for Seller's option shall be the
assumption of Purchaser's Capital Expenditure Debt at
13
the time of exercise. Seller's option to purchase Purchaser's assets shall be
exercisable at any time from January 1, 2001 to July 1, 2001 upon written notice
to Seller. This option can be exercised by Seller alone and is not transferable
or assignable. In order to exercise this option, Seller must have Xxxxxx X.
Xxxxx or any of Purchaser's principals released from any personal guarantee of
the Capital Expenditure Debt. The parties shall close within 90 days of the date
of such exercise.
7.
CLOSING
7.01 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser under this Agreement are subject to the fulfillment at or before the
Closing of each of the following conditions:
(a) All representations and warranties contained in Article 2 shall be
true as of the date of this Agreement and as of the Closing, as though made on
and as of the Closing.
(b) Seller shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by them on or before the Closing and shall have
delivered to Purchaser Certificates of Good Standing for Seller from the Texas
office of the Comptroller and a Certificate of Existence from the Texas
Secretary of State.
(c) Xxxxxx Xxxxxx as Chief Executive Officer of Seller, shall deliver
to Purchaser at the Closing a certificate certifying that the conditions
specified in Section 7.01(a) and 7.01(b) have been fulfilled and stating that
there has been no adverse change in the business, operations, assets, of Seller
since the execution of this Agreement.
(d) All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Purchaser and its
counsel, and they shall have received all counterpart originals and certified or
other copies of such documents as they may reasonably request.
14
(e) Business Service Agreement and maintenance agreements between
Seller and Purchaser with respect to the operation of the Service Bureau
Business in connection with Seller after Closing.
(f) Alliant Agreement by and among Seller, Buyer and Alliant
Techsystems, Inc. ("Alliant") with respect to the rights and obligations of the
Parties under Alliant's purchaser order, to Seller dated January 22, 1999 and
S.M.S. Proposal BQT90113R1.DOC to Alliant.
(g) An Employment Agreement with Xx. Xxx Xxxxxx in a form satisfactory
to Purchaser.
7.02 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
under this Agreement are subject to the fulfillment at or before the Closing of
each of the following conditions: (a) All representations and warranties
contained in Article 3 shall be true as of the date of this Agreement and as of
the Closing, as though made on and as of the Closing.
(b) Purchaser shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by them on or before the Closing and shall have
delivered to Seller a Certificate of Good Standing of Purchaser from the Texas
Office of the Comptroller and a Certificate of Existence from the Texas
Secretary of State.
(c) Xxxxxx X. Xxxxxx, an officer of Purchaser, shall deliver to Seller
at the Closing certificates certifying that the conditions specified in Section
7.02(a) and 7.02(b) have been fulfilled and stating that there has been no
adverse change in the business, affairs, operations, assets, condition or
prospects of Purchaser and its subsidiaries since the execution of this
Agreement.
(d) All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Seller and its
counsel, and they shall have received all counterpart originals and certified or
other copies of such documents as they may reasonably request.
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8.
TERMINATION AND WAIVER
----------------------
8.01 EFFECTIVE TERMINATION. In the event that the parties mutually
agree to terminate this Agreement prior to the Closing, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or their officers or directors.
8.02 WAIVER. Any term or provision of this Agreement may be waived in
writing at any time by the party which is entitled to the benefits thereof, or
by mutual agreement of the parties.
8.03 TERMINATION. If the general conditions of Closing set forth in
Section 5.01 have not been fulfilled by December 31, 1999, the Agreement shall
terminate and the provisions shall be null and void and there shall be no
liability on the part of any party hereto or their officers or directors.
8.04 SPECIFIC PERFORMANCE. Each of the parties to this Agreement does
hereby grant to each of the other parties to this Agreement the right of
specific performance of all terms and conditions of this Agreement, provided
that all conditions for the performance of the defaulting party have been
fulfilled or waived.
9.
GENERAL PROVISIONS
------------------
9.01 CLOSING. The Closing shall take place at the offices of Jenkens &
Xxxxxxxxx, A Professional Corporation, within thirty (30) days of the execution
of this Agreement.
9.02 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and obligations contained in or made pursuant to
this Agreement shall survive the Closing.
9.03 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable for any reason, such provisions shall be excluded from this
Agreement and the balance
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of this Agreement shall be enforceable in accordance with its terms, provided
that such exclusion does not materially and substantially detract from or
diminish the bargain of one of the parties.
9.04 NOTICES. Any notice or other thing required or desired to be
served, given or delivered shall be deemed validly served, given or delivered
upon the deposit thereof in the United States registered or certified mail,
postage prepaid, addressed to the party to be notified as follows:
If to Seller: Xxxxxx Xxxxxx, President
SCIENTIFIC MEASUREMENT SYSTEMS, INC.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx, 00000
If to Purchaser: Xx. Xxxxxx X. Xxxxxx
ESMS INDUSTRIES, INC.
0000 Xxxxxxxxxx Xxxx, # 00
Xxxxxx, Xxxxx, 00000-0000
Any address of any party may be changed by written notice of the other parties
duly served in accordance herewith.
9.05 PUBLIC ANNOUNCEMENTS. Except to the extent that the Seller or the
Purchaser believes on the advice of counsel that public disclosure is required
by law, no party to this Agreement shall make, or cause to be made, any press
release or public announcement in respect to this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without prior
notification to the other parties, and the parties shall cooperate as to the
timing and contents of any such press release or public announcement.
9.06 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and assigns. However, a party cannot assign its rights or
obligations hereunder without prior written consent of the other party. Nothing
in this Agreement, expressed or implied, is intended to confer any rights,
17
remedies, obligations or liabilities under or by reason of this Agreement upon
any party other than the foregoing except as expressly provided in this
Agreement.
9.07 TITLES, ETC. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
9.08 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Texas.
9.09 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and same instrument.
* * * * *
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IN WITNESS WHEREOF, the parties have caused this instrument to be
executed at Austin, Texas as of the date and year first above written.
WITNESSES: SELLER:
SCIENTIFIC MEASUREMENT SYSTEMS, INC.
/s/ Xxxxxx Xxxxxxx
-----------------------------
BY: /s/ Xxxxxx Xxxxxx
-----------------------------
Xxxxxx Xxxxxx, President
/s/Xxxx Xxxxx
-----------------------------
WITNESSES: PURCHASER:
ESMS INDUSTRIES, INC.
/s/ Xxxxxx Xxxxxxx
-----------------------------
BY: /s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx, Senior Vice
President
/s/ Xxxx Xxxxx
-----------------------------
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