Contract
Exhibit
10.4
This
Agreement is entered into as of August 23, 2002, (the “Effective Date”) by and
between ClearOne Communications, Inc., a Utah corporation (the “Seller”), and
Comrex Corporation, a Massachusetts corporation (the “Buyer”). Buyer and Seller
are referred to collectively herein as “Party” in the singular and “Parties”
in
the
plural.
This
Agreement contemplates a transaction in which Buyer will purchase certain
of the
assets and assume certain of the liabilities of Seller’s DH20, DH22 and DH30
digital hybrid product line, and the Parties shall engage in certain other
transactions, as further described herein.
Concurrently
with this Agreement the Parties are entering into that certain Manufacturing
Agreement and that certain Software License Agreement of even date
herewith.
Now,
therefore, in consideration of the premises and the mutual promises herein
made,
and the representations, warranties, and covenants herein contained and subject
to the terms and conditions hereinafter set forth, and intending to be legally
bound, the Parties agree as follows.
1. Definitions.
(a) “Acquired
Assets”
means
all of the right, title, and interest that Seller possesses and has the right
to
transfer in and to all of the assets constituting the Products as more fully
set
forth in Schedule
1,
and
including:
(i) the
manufacturing rights, Product documentation, all Source Code and Object Code
for
the Products as set forth in Schedule
1;
(ii)
the Intellectual Property; (iii) the tooling, dies, accessories, and other
tangible personal property owned by Seller identified and in the quantities
set
forth in Schedule
1;
(iv)
the sales and marketing materials in printed and in editable electronic file
format as set forth in Schedule
1;
and (v)
to the extent transferable or assignable by Seller, the governmental licenses,
permits, approvals and certifications, ratings, compliance reports and listings
from product or quality control certification organizations, as set forth
in
Schedule
1;
provided,
however,
that
the Acquired Assets shall not include the specific Source Code or Object
Code
for the Xxxxxxx/ClearOne proprietary acoustic echo canceling routines and
line
echo canceling routines which shall be licensed in Object Code form to Buyer
pursuant to the Software License Agreement and the Non-Exclusive Files licensed
to Buyer pursuant to §2(b) below.
(b) “Assumed
Liabilities”
has
the
meaning set forth in §6(c) below.
(c) “Audio
and Video Conferencing Environment”
means
the market segment where individuals or groups that are in physically separate
locations to communicate with each other through electronic media without
the
intent for such communications to be distributed to the general public for
profit.
(d) “Buyer”
has the
meaning set forth in the preface above.
(e) “Buyer’s
Disclosure Schedule”
has
the
meaning as set forth in §4 below.
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(f) “Closing”
has
the
meaning set forth in §2(e) below.
(g) “Closing
Date”
has
the
meaning set forth in §2(e) below.
(h) “Confidential
Information”
means
any information concerning the businesses and affairs of the disclosing Party
that is not already generally available to the public; provided, however,
that
Confidential Information shall not include, any information that: (i) at
the
time of the disclosure is already in the possession of the receiving Party
and
not subject to an existing obligation of confidentiality; (ii) is independently
made available to the receiving Party by an unrelated third party whose
disclosure would not constitute a breach of any duty of confidentiality owed
to
the disclosing Party; (iii) is generally available to the public through
no
wrongful act of the receiving Party; or (iv) is independently developed by
the
receiving Party without using the Confidential Information, as demonstrated
by
documentary evidence.
(i) “Customer
Warranties”
means
any obligations pursuant the written warranty for the Product in the form
attached hereto as Schedule
2,
Customer Warranties.
(j) “Digital
Hybrid”
means
the method of separating, sending and receiving audio on a telephone line
using
digital signal processing technology.
(k) “Excluded
Liabilities”
has
the
meaning set forth in §2(c) below.
(l) “Intellectual
Property”
means
(i) the following only with respect to the Acquired Assets and not to the
technology licensed to Buyer under this Agreement: all domestic and foreign
letters patent, patents, patent applications, docketed patent disclosures,
patent licenses, other patent rights, trademarks, trademark registrations,
trademark applications, trademark licenses, other trademark rights, service
marks, service xxxx registrations, service xxxx applications, service xxxx
licenses, other service xxxx rights, trade names, trade name licenses, trade
dress, brand names, brand marks, logos, slogans, ideas, processes, copyrights,
copyright registrations, copyright applications, Know-How, Know-How licenses,
computer software licenses, computer data, licenses and sublicenses granted
and
obtained with respect thereto,
and any
divisions, extensions, renewals, reissues, continuations, or continuations
in
part and rights thereunder, and goodwill associated therewith, and remedies
against infringement thereof ; and (ii) the following rights as each may
apply
after the Closing Date: all rights of Seller in and to, including rights
to
enforce the terms of, confidentiality agreements and noncompetition agreements
of, and any agreements relating to the assignment of Intellectual Property
made
by, prior and present employees and/or contractors of Seller, and any such
agreements with any other Person with respect to the Intellectual Property
and
rights to protection of interests therein under the laws of all jurisdictions
with respect to any of the foregoing.
(m) “Know-How”
means
the following as each relates exclusively to the Acquired Assets: trade secrets,
know-how (including product know-how and use and application know-how),
formulas, processes, product designs, inventions, specifications, quality
control procedures, manufacturing, cost and pricing data, parts trading
information, engineering and other drawings, technology, technical information,
safety information, lab journals, engineering data and design and
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engineering
specifications, research records, market surveys and creative materials,
advertising and promotional literature, customer and supplier lists and similar
data, including all depictions, descriptions, drawings and plans thereof;
the
foregoing definition shall not be implied to include the technology licensed
to
Buyer under the Software License Agreement.
(n) “Lien”
means
any mortgage, pledge, security interest, encumbrance, lien or charge of any
kind
(including, without limitation: any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement
to
give any financing statement under the Uniform Commercial Code or comparable
law
of any jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
(o) “Manufacturing
Agreement”
has
the
meaning set forth in §6(f) below.
(p) “Material
Adverse Effect”
means
any change, event, circumstance, development, or effect that has or is
reasonably likely to have a material adverse effect on the Acquired Assets
or
the consummation or fulfillment of any obligations under this Agreement or
any
other agreement contemplated by Buyer or Seller hereunder.
(q) “Non-Exclusive
Files”
means
those data and routine files which are not unique to the Products and used
in
other ClearOne products.
(r) “Object
Code”
means
the computer programs assembled or compiled in magnetic or electronic binary
form on software media, which are readable and usable by machines, but not
generally readable by humans without reverse assembly, reverse compiling,
or
reverse engineering.
(s) “Other
Inventory”
has
the
meaning set forth in Exhibit
D2,
attached hereto and incorporated herein by reference.
(t) “Other
Raw Materials”
has
the
meaning set forth in Exhibit
D2,
attached hereto and incorporated herein by reference.
(u) “Party”
or “Parties”
has
the
meaning set forth in the preface above.
(v) “Permits”
has
the
meaning set forth in §3(j).
(w) “Person”
means
an individual, a partnership, a corporation, an association, a limited liability
company, a joint stock company, a trust, a joint venture, an unincorporated
organization, other entity, or a governmental entity (or any department,
agency,
or political subdivision thereof).
(x) “Product”
or
“Products”
has
the
meaning set forth in Schedule
1,
attached hereto and incorporated herein by reference.
(y) “Purchase
Price”
has
the
meaning set forth in §2(d) below.
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(z) “Residuals”
means
information which may be remembered by persons who have received or worked
with
Seller’s Confidential Information, including ideas, concepts, know-how or
techniques contained therein.
(aa) “Seller”
has
the
meaning set forth in the preface above.
(bb) “Software
License Agreement”
means
that certain Software License Agreement between the Parties for the license
of
acoustic echo canceling and line echo canceling routines entered into
simultaneously herewith.
(cc) “Source
Code”
means
the computer programs written in higher-level, human-readable programming
language, including comments, and all documentation reasonably necessary
to
build and/or modify such code.
(dd) “Studio
Environment”
means
the market segment where movies, shows, or programs are produced in order
to
mass distribute such programs to the public through radio, television or
other
means of mass media distribution.
(ee) Tax
or
Taxes”
means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital, franchise, profit, withholding, social
security (or similar), 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.
(ff) “Transition
Period”
means
that period of time commencing upon Closing and continuing until the Seller
and
Buyer have performed the actions described in the Transition Plan, but in
no
event shall such period exceed ninety (90) days.
(gg) “Transition
Plan”
means
the plan attached as Schedule 5.
2. Basic
Transaction.
Subject
to the terms of this Agreement, the Parties hereby agree as
follows:
(a) Purchase
and Sale of Assets.
Buyer
agrees to purchase from Seller, and Seller agrees to sell, assign, transfer
and
convey to Buyer at the Closing, all of the Acquired Assets, free and clear
of
any and all Liens, for the consideration specified below in this §2. The
Acquired Assets shall be delivered to Buyer at the Closing or as may otherwise
be set forth in the Transition Plan.
(b) License
Agreement.
Seller
agrees to license certain technology to Buyer in accordance with the terms
of
the Software License Agreement between the Parties in substantially the form
set
forth in Exhibit
A
attached
hereto. Seller also grants to Buyer a perpetual, royalty-free license to
copy,
modify and create derivatives of the Non-Exclusive Files, provided that such
license is for the use by Buyer for the Products or Product upgrades, and
for
new products to be developed
4
by
Buyer.
Seller agrees that it will not grant a license or otherwise grant a right
to use
the Non-Exclusive Files to third-parties for use in Digital Hybrid products
designed for the Studio Environment.
(c) Limited
Assumption of Liabilities.
Except
for the assumption of Customer Warranties, Buyer does not and shall not assume
or be otherwise responsible for any liability of or obligation associated
with
the Acquired Assets arising from or related to activities which occurred
prior
to the end of business on the Closing Date, including without
limitation:
(i) any
debts, liabilities, obligations, contracts or Taxes with respect to any period
whether known or unknown, contingent or fixed, liquidated or
unliquidated;
(ii) litigation
to which Seller is a party or subject to, or arising from or related to any
litigation relating to any events, occurrences or facts connected to Seller,
the
Acquired Assets, or Seller's operation of the Acquired Assets, or to which
Seller is a party or subject;
(iii) claims
by
employees, former employees or retirees of Seller, including without limitation,
those relating to terms or conditions of employment policies, practices,
compensation, medical benefits, benefit or welfare plans or any other
employment-related obligation;
(iv) personal
injury, product liability or property damage claims whether arising by
negligence, strict liability or otherwise, for any products manufactured,
fabricated, made, distributed or sold by Seller, or any Inventory, Other
Inventory or Other Raw Materials;
(v) any
compensation or benefits claims (including, without limitation, pension,
profit-sharing or vacation benefits) for services rendered for Seller;
or
(vi) Seller's
compliance with any applicable laws, rules, regulations, ordinances or orders
of
federal, state or local laws, the conduct of Seller's operations, the Acquired
Assets, including, without limitation, all applicable environmental, health
and
safety matters, except that Seller shall not be liable for FCC compliance
testing for the DH30 product except as set forth in the Transition Plan in
Schedule
5.
(The
foregoing are collectively referred to as the “Excluded
Liabilities”).
(d) Purchase
Price.
At the
Closing (defined below), Buyer agrees to pay to Seller the sum of One Million
Three Hundred Thousand Dollars ($1,300,000) (the “Purchase
Price”)
for
the Acquired Assets, payable in immediately available funds deposited to
such
bank account as Seller shall designate to Buyer in writing not less than
three
(3) business days prior to the Closing
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Date.
The
amount stated as the Purchase Price does not include the additional amount
to be
paid by Buyer for Other Raw Materials and Other Inventory, which amount shall
be
allocated to inventory.
(e) The
Closing.
Subject
to and after fulfillment of or waiver of the conditions set forth in §7 of this
Agreement, the closing of the transactions contemplated by this Agreement
(the
“Closing”)
shall
take place on a date selected by Buyer within five (5) days following the
satisfaction or waiver of all conditions to the obligations of the Parties
to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself),
or
such other date as the Parties may mutually determine (the “Closing
Date”)
through the mutual exchange of documents by overnight mail and telecopy,
or such
other manner as the parties may otherwise agree.
(f) Deliveries
at the Closing.
At the
Closing, (i) Seller will deliver to Buyer: (A) a xxxx of sale conveying to
Buyer
the Acquired Assets, duly executed by Seller in substantially the form attached
hereto as Exhibit
B
(the
“Xxxx of Sale”); (B) termination statements, as prescribed by the Uniform
Commercial Code as in effect in the State of Utah, or other evidence of release
satisfactory to Buyer, in any case duly prepared and properly executed, by
each
Person that has a security interest in or a Lien against any of the Acquired
Assets; (C) such other documents, instruments and certificates as Buyer may
reasonably request in connection with the transactions contemplated by this
Agreement; and (D) the immediate possession of the Acquired Assets, except
as
may otherwise be provided in the Transition Plan, in which case delivery
of
possession shall made in accordance with the Transition Plan; and (ii) Buyer
will deliver to Seller the Purchase Price.
(g) Sales,
Transfer, and Use Taxes.
Seller
shall be responsible for paying any transfer taxes arising from the transactions
contemplated by this Agreement, and the Buyer shall be responsible for paying
any sales and use taxes resulting from the sale of the Acquired Assets and/or
any other transaction contemplated by this Agreement.
(h) Allocation.
The
Parties agree to allocate the Purchase Price (and all other capitalizable
costs)
among the Acquired Assets for all purposes (including financial accounting
and
tax purposes) in accordance with the Allocation Schedule attached hereto
as
Exhibit
C.
The
Parties acknowledge that such allocation was determined by arm's length
negotiation, and that no Party will take a position on any Tax return, before
any governmental agency charged with collection of any Tax, or in any action
that is inconsistent with Exhibit C, without the prior written consent of
the
other Party. Both parties agree to file identical Form 8594 with their
respective corporate tax returns for the year in which the sale of the Acquired
Assets pursuant to this Agreement occurs.
(i) Other
Raw Materials and Other Inventory.
At
Closing, in addition to the Inventory constituting a portion of the Acquired
Assets, Buyer agrees to purchase the Other Raw Materials and Other Inventory
identified in Exhibit
D2
attached
hereto at the pricing set forth therein, all of which shall be delivered
to
Buyer in accordance with the Transition Plan and in the amounts as reduced
by
those amounts used during the Transition Period.
3. Representations
and Warranties of Seller.
Seller
represents and warrants to Buyer that the statements contained in this §3 are
true, correct and complete as of the date of this
6
Agreement,
and will be true, correct and complete as of the Closing Date (as though
made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this §3), except as set forth in Seller disclosure schedule
accompanying this Agreement (the “Seller’s Disclosure Schedule”). The Seller’s
Disclosure Schedule will be arranged corresponding to the lettered and numbered
paragraphs contained in this §3.
(a) Organization
of Seller.
Seller
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Utah, with full power and authority to own or lease
its
properties and conduct its business in the manner and the place where such
properties are owned or leased or such business is conducted.
(b) Authorization
of Transaction.
Seller
has full power and authority (including full corporate power and authority)
to
execute and deliver this Agreement and to perform its obligations hereunder.
Seller is not required to obtain approval from Seller’s Board of Directors in
order to enter into this Agreement. This Agreement constitutes the valid
and
legally binding obligation of Seller, enforceable in accordance with its
terms
and conditions, except
as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in
equity.
(c) Non-contravention.
Except
as set forth in the Seller’s Disclosure Schedule, neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments referred to in §2 above), will:
(i) violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency,
or
court to which Seller or the Acquired Assets are subject or any provision
of the
charter, organizational documents or bylaws of any of Seller; or (ii) violate,
conflict with, result in a breach of, constitute a default under, result
in the
acceleration of, create in any party the right to accelerate, terminate,
modify,
or cancel, or require any notice under any agreement, contract, license,
instrument, or other arrangement to which Seller is a party or by which it
is
bound or to which any of the Acquired Assets is subject or result in the
imposition of any Lien upon any of the Acquired Assets.
(d) Consents.
No
consent, approval or authorization of, or declaration, filing or registration
with any Person (including, without limitation, any governmental or regulatory
authority pursuant to any other state or federal regulation) is required
in
connection with the execution and delivery by Seller of this Agreement or
the
performance by Seller of its obligations hereunder, except as listed in the
Disclosure Schedule.
(e) Financial
Data.
Schedule
3(e)
of the
Seller’s Disclosure Schedule describes the data provided by Seller to Buyer
relating to Seller’s sales of the Acquired Assets.
(f) Intellectual
Property.
The
Disclosure Schedule identifies each registered Intellectual Property right
(or
pending application therefore), whether patent, trademark, or otherwise,
that
has been issued to Seller in connection with the Acquired Assets, and identifies
each material license, agreement, or other permission which Seller has obtained
or granted to any third
7
party
with respect to any of its Intellectual Property forming a part of, or
incorporated in, the Acquired Assets. Except
as
set forth
on the
Disclosure Schedule, Seller has full legal right, title and interest
in
the
Intellectual Property
and has
not granted any rights in or to the same to any third party. To Seller's
knowledge, (i) Seller's use of the Acquired Assets has not and does not infringe
or misappropriate any Intellectual Property rights held or asserted by any
Person, (ii) no Person is infringing on the Intellectual Property in the
Acquired Assets, (iii) no payments are required for the continued use of
the
Acquired Assets, and (iv) none of the Acquired Assets has ever been declared
invalid or unenforceable, or is the subject of any pending or threatened
action
for opposition, cancellation, declaration, infringement, or invalidity,
unenforceability or misappropriation or like claim, action or
proceeding.
(g) Compliance
with Laws.
To
Seller’s knowledge, Seller has received no notice of any claim by any
governmental authority that Seller is in material violation of any provision
of
any such laws, rules or regulations relating to the use, possession or ownership
of the Acquired Assets; and, to Seller’s knowledge, Seller has materially
complied and is in material compliance with all such laws, rules and regulations
where non-compliance would have a Material Adverse Effect. To the knowledge
of
Seller, no such violation claim, or investigation is threatened or pending
in
respect of the Acquired Assets.
(h) Insurance.
All
insurance policies owned or held by Seller which cover the Acquired Assets
are
in full force and effect, all premiums with respect thereto have been paid
to
the extent due, no notice of cancellation or termination has been received
with
respect to any such policy (other than those policies which Seller has replaced
or intends to replace prior to the expiration thereof by policies providing
substantially the same types and amounts of coverage), and no claim is currently
reserved under any such policy. Seller insurance includes liability and products
liability policies covering the Acquired Assets.
(i) Good
Title, Adequacy and Condition.
Seller
has, and at the Closing Date will have, good and marketable title to the
Acquired Assets with full power to sell, transfer and assign the same free
and
clear of any Lien, and by delivery of the Xxxx of Sale as contemplated by
§2(f),
Seller will deliver to Buyer at Closing title to such Acquired Assets free
and
clear of any Lien. The equipment included in the Acquired Assets is in good
operating condition, normal wear and tear excepted, and has been maintained
in
accordance with all applicable specifications and warranties. Seller has
no
knowledge of any material defects in the equipment included in the Acquired
Assets.
(j) Licenses
and Permits.
To
Seller’s knowledge, Seller possesses all licenses and required governmental or
official approvals, permits or authorizations (collectively, the “Permits”)
relating to the Acquired Assets, and the Disclosure Schedule sets forth a
complete list of all such Permits. To Seller’s knowledge, all such Permits are
valid and in full force and effect, Seller is in material compliance with
the
respective requirements thereof, except as set forth on Schedule 3(j), and
no
proceeding is pending or threatened to revoke or amend any of them.
(k) Brokers'
Fees.
Seller
has no liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which Buyer could become liable or obligated.
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4. Representations
and Warranties of Buyer.
Buyer
represents and warrants to Seller that the statements contained in this §4 are
true, correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this
§4), as except as set forth in Buyer disclosure schedule accompanying this
Agreement (“Buyer’s Disclosure Schedule”). Buyer‘s Disclosure Schedule will be
arranged corresponding to the lettered and numbered paragraphs contained
in this
§4.
(a) Organization
of Buyer.
Buyer
is a corporation duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts.
(b) Authorization
of Transaction.
Buyer
has full power and authority (including full corporate power and authority)
to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of Buyer,
enforceable in accordance with its terms and conditions, except as the same
may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or
similar laws affecting the enforcement of creditors’ rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
(c) Non-contravention.
Neither
the execution and the delivery of this Agreement, nor the consummation of
the
transactions contemplated hereby will: violate any statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any
government, governmental agency, or court to which Buyer is subject or any
provision of the charter, organizational documents or bylaws of any of Buyer;
or
violate, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, license, instrument, or other arrangement to which Buyer is a party
or
by which it is bound.
(d) Consents.
No
consent, approval or authorization of, or declaration, filing or registration
with any Person (including, without limitation, any governmental or regulatory
authority pursuant to any other state or federal regulation) is required
in
connection with the execution and delivery by Buyer of this Agreement or
the
performance by Buyer of its obligations hereunder, except as listed in the
Buyer’s Disclosure Schedule.
(e) Brokers'
Fees.
Buyer
has no liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which Seller could become liable or obligated.
5. Pre-Closing
Covenants.
The
Parties agree as follows with respect to the period between the execution
of
this Agreement and the Closing:
(a) General.
Each of
the Parties will use its reasonable best efforts to take all action and to
do
all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver,
9
of
the
closing conditions set forth in §7 below). Between the date hereof and the
Closing, Seller will comply with the following covenants:
(i) Seller
will maintain in full force and effect its present insurance policies with
respect to the Acquired Assets, and will not knowingly take any action which
would enable the insurers thereunder to avoid liabilities for claims arising
out
of occurrences prior to the date of Closing.
(ii) Seller
will duly observe and conform to the lawful requirements of any governmental
authorities relating to any of the Acquired Assets and the covenants, terms
and
conditions upon or under which any of the Acquired Assets are held, provided
that, with respect to the FCC compliance testing for the DH30, duly observe
and
conform shall mean fulfilling those obligations set forth in paragraph 8
of the
Transition Plan in Schedule
5.
(iii) Seller
will cooperate with Buyer in Buyer’s efforts to obtain any and all approvals and
consents, governmental or otherwise, and provide all notices which are necessary
for the consummation of the transactions contemplated by this Agreement in
accordance with its terms.
(iv) Seller
shall not enter into any contract, commitment or transaction binding on or
affecting the Acquired Assets that is not in the usual and ordinary course
of
business or that would obligate Buyer without first obtaining Buyer's prior
written authorization.
(b) Notice
of Developments.
Each
party shall notify the other of any development causing a breach of any of
its
representations and warranties in §3 or §4, above.
6. Post-Closing
Covenants.
The
Parties agree as follows with respect to the period following the
Closing:
(a) Further
Assurances.
At any
time and from time to time whether before or after the Closing Date, each
Party
shall execute and deliver any further instruments and/or documents and take
all
further action as the other Party may reasonably request in order to consummate
this Agreement.
(b) Seller’s
Liabilities.
Seller
will pay, and will be solely responsible for all debts, liabilities, and
obligations relating to or arising from the Excluded Liabilities, provided
however, Buyer, not Seller, shall assume Customer Warranties.
(c) Buyer’s
Liabilities.
Buyer,
subject to the limitations of §2(c) above, will be responsible for: (i) all
debts, liabilities and obligations arising after the Closing Date that relate
to
product liability or claims for defective products or other claims for Products
manufactured and sold by Buyer; (ii) all Customer Warranties for the Products,
including Products produced or sold by Seller prior to the Closing Date;
and
(iii) technical support obligations arising after the Closing with
10
respect
to Products sold by either Seller or Buyer and not otherwise explicitly agreed
to by Seller as set forth in §6(d) below. (The foregoing are collectively
referred to as the “Assumed Liabilities”).
(d) Additional
Support.
In
order to complete the transfer of the Acquired Assets, Seller agrees and
covenants to provide Buyer the following assistance after the Closing for
the
time periods indicated or as otherwise indicated in the Transition Plan.
Buyer
agrees to assume those obligations with respect to FCC compliance testing
and
certification for the DH30, as set forth in the Transition Plan.
(i) Training.
Without
charge, Seller agrees to provide Buyer up to one (1) business day (8 hours)
of
training to Buyer's designated personnel at Seller's facilities in the areas
of
manufacturing, technical support and marketing, including training on the
workings of the Object Code licensed to Buyer under the Software License
Agreement at a mutually agreeable time and date, and to provide an additional
business day (8 hours) of such training to Buyer’s technical support personnel
at a mutually agreeable time and date.
(ii) Telephone
and E-mail Assistance.
During
the sixty (60) days following Closing, without charge Seller will make available
its technical, marketing, and manufacturing employees to Buyer's personnel
as
reasonably requested for telephone and/or e-mail consultation regarding the
Products and sales related issues during normal business hours.
(iii) Engineering
Assistance.
Seller
will provide forty (40) hours of engineering assistance without charge in
connection with the transition of the manufacturing process for the Products.
Additional engineering assistance will be provided by Seller as requested
by
Buyer at $150 per hour for the next additional forty (40) hours of engineering
assistance and $200 per hour for the following forty (40) hours.
(iv) Warranty
Assistance.
All of
the foregoing shall be in addition to any assistance that is reasonably
requested by Buyer to meet the warranty obligations described in §6(c) of this
Agreement, which Seller will provide to Buyer without charge.
(v) Sales
Support.
For a
period of twelve (12) months after the Closing, in response to all customer
inquiries with regard to the Products, Seller agrees to provide Buyer’s contact
information, including the names of certain individuals, addresses, and phone
numbers identified to Seller by Buyer in writing, and to request customer
contact information and submit to Buyer.
(e) Confidential
Information.
(i) Each
Party will treat and hold as such all of the Confidential Information received
from the other Party, and refrain from using any of the
11
Confidential
Information except in connection with this Agreement, and deliver promptly
to
the disclosing Party (meaning the party originally disclosing the Confidential
Information to the other Party and, additionally, Buyer's Confidential
Information shall include any Confidential Information of Seller assigned
to
Buyer pursuant to this Agreement, in which case Buyer shall be deemed the
disclosing party) or destroy, at the request and option of the disclosing
Party,
all tangible embodiments (and all copies) of the Confidential Information
which
are in its possession.
(ii) Notwithstanding
anything to the contrary contained herein, any Confidential Information of
Seller relating exclusively to the Acquired Assets and transferred to Buyer
as
part of the Acquired Assets pursuant to this Agreement shall be deemed to
be
Confidential Information of Buyer at Closing for purposes of the confidentiality
obligations of the parties under this Agreement.
(iii) In
the
event that a Party is requested or required (by oral question or request
for
information or documents in any legal proceeding, interrogatory, subpoena,
civil
investigative demand, or similar process) to disclose any Confidential
Information of the other Party, the non-disclosing Party will notify the
disclosing Party promptly of the request or requirement so that the disclosing
Party may seek an appropriate protective order or waive compliance with the
provisions of this §6(e). If, in the absence of a protective order or the
receipt of a waiver hereunder, the non-disclosing Party is, on the advice
of
counsel, compelled to disclose any Confidential Information to any tribunal
or
else stand liable for contempt, the non-disclosing Party may disclose the
Confidential Information to the tribunal; provided,
however,
that
the non-disclosing Party shall use its reasonable efforts to obtain, at the
reasonable request of the disclosing Party, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the non-disclosing Party shall
designate.
(iv) Upon
the
Closing Date, that certain Mutual Confidentiality and Non-Disclosure Agreement,
dated January 17, 2002, shall terminate.
(v) The
parties’ obligations of confidentiality under this Agreement shall not be
construed to limit Buyer’s right to independently develop or acquire products
without use of the Seller’s Confidential Information. Further, except as
otherwise provided herein, Buyer shall be free to use, in accordance with
the
limitations set forth in Section 10(b), the Residuals resulting from Seller’s
disclosure of or Buyer’s work with such Confidential Information, provided that
such party shall otherwise maintain the Residuals as Confidential Information
hereunder. Buyer shall not have any obligation to limit or restrict the
assignment of its persons or to pay obligation to limit or restrict the
12
assignment
of its persons or to pay royalties for any work resulting from the use of
Residuals.
(f) Manufacturing.
The
Parties acknowledge and agree that, concurrently herewith, they are entering
into a Manufacturing and Exclusive Distribution Agreement, substantially
in the
form of Exhibit
E
attached
hereto and incorporated herein by reference, providing for the manufacture
by
Seller for Buyer of the TS-612 Product, as defined therein on and subject
to the
terms and conditions set forth therein
7. Conditions
to Obligation to Close.
(a) Conditions
to Obligation of Buyer.
The
obligation of Buyer to consummate the transactions to be performed by it
in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the
representations and warranties set forth in §3 above shall be true and correct
in all material respects at and as of the Closing Date with the same force
and
effect as though made as and at such time, except that the Parties agree
that
the non-compliance of the DH30 with FCC certification requirements is not
material for purposes of this §7;
(ii) Seller
shall have performed and complied with all of its covenants hereunder in
all
material respects through the Closing; and Seller shall have delivered to
Buyer
the documents required under §2(f);
(iii) there
shall not be any injunction, judgment, order, decree, ruling, or charge in
effect preventing consummation of any of the transactions contemplated by
this
Agreement;
(iv) the
Parties shall have entered into those agreements and Seller shall have delivered
those documents in form and substance substantially as set forth in Exhibit
A
and
Exhibit
E,
and the
same shall be in full force and effect;
(v) all
actions to be taken by Seller in connection with consummation of the
transactions contemplated hereby and all certificates, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Buyer; and
(vi) there
shall not be pending or threatened any action or proceeding by or before
any
court or other governmental body which shall seek to restrain, prohibit,
invalidate or collect damages arising out of the transactions contemplated
hereby, and which, in the judgment of Buyer, makes it inadvisable to proceed
with the transactions contemplated hereby.
13
Buyer
may
waive any condition specified in this §7(a) if it executes a writing so stating
at or prior to the Closing.
(b) Conditions
to Obligation of Seller.
The
obligation of Seller to consummate the transactions to be performed by it
in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the
representations and warranties set forth in §4 above shall be true and correct
in all material respects at and as of the Closing Date;
(ii) Buyer
shall have performed and complied with all of its covenants hereunder in
all
material respects through the Closing;
(iii) there
shall not be any injunction, judgment, order, decree, ruling, or charge in
effect preventing consummation of any of the transactions contemplated by
this
Agreement;
(iv) the
Parties shall have entered into agreements in form and substance substantially
as set forth in Exhibit
A
and
Exhibit
E
and the
same shall be in full force and effect;
(v) all
actions to be taken by Buyer in connection with consummation of the transactions
contemplated hereby and all certificates, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller; and
(vi) there
shall not be pending or threatened any action or proceeding by or before
any
court or other governmental body which shall seek to restrain, prohibit,
invalidate or collect damages arising out of the transactions contemplated
hereby, and which, in the judgment of Seller, makes it inadvisable to proceed
with the transactions contemplated hereby.
Seller
may waive any condition specified in this §7(b) if it executes a writing so
stating at or prior to the Closing.
8. Remedies
for Breaches of this Agreement.
(a) Survival
of Representations and Warranties.
All of
the representations and warranties of Seller and Buyer contained in §3 and §4 of
this Agreement shall survive the Closing (unless Buyer knew or had reason
to
know of any misrepresentation or breach of warranty at the time of Closing)
and
continue in full force and effect for a period of one (1) year except that
the
representations and warranties made by Seller with the first sentence of
§3(i)
with respect to good and marketable title shall be in full force and effect
for
a period of three (3) years, provided that any claims made pursuant to any
representations and warranties must be within such survival period and the
notice procedures in pursuant to §11(g) below.
14
(b) Indemnification
Provisions for Benefit of Buyer.
In
the
event Seller breaches any of its representations or warranties contained
in §3,
subject to the limitations and notice requirements in §8(a) above, or any of its
covenants contained in this Agreement, then Seller agrees to indemnify Buyer
from and against the entirety of any damages Buyer shall suffer through and
after the date of the claim for indemnification (but excluding
any
damages the Buyer shall suffer after the end of any applicable survival period)
caused by the breach. Notwithstanding the foregoing, Seller shall have no
obligation to indemnify Buyer until Buyer has suffered damages by reason
of all
such breaches in excess of $25,000, in the aggregate, and then, only to the
extent the damages which Buyer has suffered by reason of all such breaches
is
less than or equal to $1,000,000 (after which point Seller will have no
obligation to indemnify Buyer from and against further such damages). In
all
circumstances, Seller’s indemnification obligation under this §8(b) of this
Agreement shall not exceed $1,000,000.
(c) Indemnification
Provisions for Benefit of Seller.
In
the
event Buyer breaches any of its representations or warranties contained in
§4,
subject to the limitations and notice requirements in §8(a) above, or any of its
covenants contained in this Agreement, then Buyer agrees to indemnify Seller
from and against the entirety of any damages Seller shall suffer through
and
after the date of the claim for indemnification (but excluding
any
damages Seller shall suffer after the end of any applicable survival period)
caused proximately by the breach. Notwithstanding the foregoing, Buyer shall
have no obligation to indemnify Seller until Seller has suffered damages
by
reason of all such breaches in excess of $25,000.00, in the aggregate, and
then,
only to the extent the damages which Seller has suffered by reason of all
such
breaches is less than or equal to $1,000,000.00 (after which point Buyer
will
have no obligation to indemnify Seller from and against further such damages).
In all circumstances, Buyer’s indemnification obligation under this §8(c) of
this Agreement shall not exceed $1,000,000.00.
(d) Matters
Involving Third Parties.
(i) If
any
third party shall notify any Party (the “Indemnified
Party”)
with
respect to any matter (a “Third
Party Claim”)
which
may give rise to a claim for indemnification against the other Party (the
“Indemnifying
Party”)
under
this §8, then the Indemnified Party shall promptly (and in any event within five
business days after receiving notice of the Third Party Claim) notify the
Indemnifying Party thereof in writing.
(ii) The
Indemnifying Party will have the right at any time to assume and thereafter
conduct the defense of the Third Party Claim with counsel of its
15
choice;
provided,
however,
that
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably)
unless the judgment or proposed settlement involves only the payment of money
damages and does not impose an injunction or other equitable relief upon
the
Indemnified Party.
(iii) Unless
and until the Indemnifying Party assumes the defense of the Third Party Claim
as
provided in §8(d)(ii) above, the Indemnified Party may defend against the Third
Party Claim in any manner it reasonably may deem appropriate.
(iv) In
no
event will the Indemnified Party consent to the entry of any judgment or
enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party.
(e) Exclusive
Remedy.
Buyer
and Seller acknowledge and agree that the foregoing indemnification provisions
in this §8 shall be the exclusive remedy of Buyer and Seller with respect to the
transactions contemplated by this Agreement.
9. Termination.
(a) Termination
of Agreement.
The
Parties may terminate this Agreement as provided below:
(i) Buyer
and
Seller may terminate this Agreement by mutual written consent at any time
prior
to the Closing;
(ii) Buyer
may
terminate this Agreement by giving written notice to Seller at any time prior
to
the Closing (A) in the event Seller has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect,
and
Buyer has notified Seller of the breach, and the breach has continued without
cure for a period of fifteen (15) days after the notice of breach, or (B)
if the
Closing shall not have occurred on or before August 31, 2002, by reason of
the
failure of any condition precedent under §7(a) hereof (unless the failure
results primarily from Buyer itself breaching any representation, warranty,
or
covenant contained in this Agreement); and
(iii) Seller
may terminate this Agreement by giving written notice to Buyer at any time
prior
to the Closing (A) in the event Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect,
and
Seller has notified Buyer of the breach, and the breach has continued without
cure for a period of fifteen (15) days after the notice of breach, or (B)
if the
Closing shall not have occurred on or before August 31, 2002, by reason of
the
failure of any condition precedent under
16
§7(b)
hereof (unless the failure results primarily from Seller itself breaching
any
representation, warranty, or covenant contained in this Agreement).
(b) Effect
of Termination.
If any
Party terminates this Agreement pursuant to §9(a) above, all rights and
obligations of the Parties hereunder shall terminate without any liability
of
any Party to the other Party (except for any liability of any Party then
in
breach); provided,
however,
that the
confidentiality provisions of §6(e) and the indemnification provisions of §8
shall survive termination.
10. Restrictive
Covenants.
(a) The
Seller shall not, for a period of five (5) years following the Closing, engage
in the business of designing, developing, manufacturing (except as provided
in
the Manufacturing Agreement) or marketing the Products and/or Digital Hybrid
products for use in the Studio Environment, provided however, that the
beneficial ownership of less than five percent (5%) of any class of securities
of any entity having a class of equity securities actively traded on a national
securities exchange or over-the-counter market shall not be deemed, in and
of
itself, to violate the prohibitions of this §10(a).
(b) The
Buyer
shall not, for a period of five (5) years following the Closing, engage in
the
business of designing, developing, manufacturing, or marketing the Products
or
Digital Hybrid products for use in the Audio and Video Conferencing Environment,
provided that the beneficial ownership of less than five percent (5%) of
any
class of securities of any entity having a class of equity securities actively
traded on a national securities exchange or over-the-counter market shall
not be
deemed, in and of itself, to violate the prohibitions of this
§10(b).
(c) The
Buyer
and the Seller agree and acknowledge that the restrictions contained in this
§10
are reasonable in scope and duration, and are necessary to protect the Buyer
and
the Seller, and are material inducement for the Buyer and the Seller to enter
into this Agreement. The Buyer and the Seller agree and acknowledge that
any
breach of this §10 will cause irreparable injury to the other party and upon any
breach or threatened breach of any provision of this §10, the Buyer and the
Seller shall be entitled to injunctive relief, specific performance or other
equitable relief, without the necessity of posting bond; provided, however,
that
this shall in no way limit any other remedies which the Buyer or the Seller
may
have as a result of such breach, including the right to seek monetary damages.
The Buyer and the Seller hereby agree that either party may assign, without
limitation and without the other party’s consent, the foregoing restrictive
covenants to any successor to its business.
11. Miscellaneous.
(a) Press
Releases and Public Announcements.
No
Party shall issue any press release or make any public announcement relating
to
the subject matter of this Agreement without the prior written approval of
the
other Party; provided,
however,
that
any Party may make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement
17
concerning
its publicly-traded securities (in which case the disclosing Party will use
its
reasonable best efforts to advise the other Party prior to making the
disclosure).
(b) No
Third-Party Beneficiaries.
This
Agreement shall not confer any rights or remedies upon any Person other than
the
Parties and their respective successors and permitted assigns.
(c) Entire
Agreement.
This
Agreement (including the documents referred to herein) constitutes the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral,
to
the extent they relate in any way to the subject matter hereof. The exhibits
and
schedules constitute a part hereof as though set forth in full above. This
Agreement is not intended to confer upon any Person, other than the parties
hereto, any rights or remedies hereunder.
(d) Succession
and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. Seller may
not
assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of Buyer.
(e) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the
same
instrument. A telecopy signature of any party shall be considered to have
the
same binding legal effect as an original signature.
(f) Headings.
The
section headings contained in this Agreement are inserted for convenience
only
and shall not affect in any way the meaning or interpretation of this
Agreement.
(g) Notices.
All
notices, requests, demands, claims, and other communications hereunder will
be
in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given if it is sent via telefax or overnight courier
(and
shall be deemed given on the date of dispatch), and addressed to the intended
recipient as set forth below:
If
to
Seller:
ClearOne
Communications, Inc.
0000
Xxxxxxxx Xxx
Xxxx
Xxxx
Xxxx, XX 00000
Telefax: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxxxxxx
If
to
Buyer:
Comrex
Corporation
00
Xxxx
Xxxx
Xxxxxx,
XX 00000
Telefax: (000)
000-0000
Attention: Xxxx
Xxxxxxx
18
with
a copy to:
Xxxxxxxx
X. Xxxxxx, Esq.
Akerman,
Senterfitt & Xxxxxx, P.A.
Xxx
X.X.
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx,
XX
00000
Any
Party
may send any notice, request, demand, claim, or other communication hereunder
to
the intended recipient at the address set forth above using any other means
(including personal delivery, messenger service, ordinary mail, or electronic
mail); but no such notice, request, demand, claim, or other communication
shall
be deemed to have been duly given unless and until it actually is received
by
the intended recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set
forth.
(h) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Utah without giving effect to any choice or conflict of law provision
or rule thereof.
(i) Dispute
Resolution.
Any
dispute arising out of the interpretation and effect of this Agreement or
alleged breaches thereof, shall be fully and finally settled first, by good
faith negotiation for a period of ten (10) days, and if unsuccessful, then
by
mediation, and if unsuccessful within thirty (30) days of the commencement
thereof, then by arbitration in accordance with the applicable rules of the
American Arbitration Association then in effect, by one (1) Arbitra-tor
appointed in accordance with such Rules, with the arbitration to take place
at
Chicago, Illinois. Judgment of the arbitrator may be entered in any court
having
jurisdiction over the Party against whom the judgment is rendered.
(j) Interpretation.
When a
reference is made in this Agreement to an article, section, subsection,
paragraph, clause, schedule or exhibit, such reference shall be deemed to
be to
this Agreement unless otherwise indicated. The headings contained herein
and on
the schedules are for reference purposes only and shall not affect in any
way
the meaning or interpretation of this Agreement or the schedules. Whenever
the
words “include,”“includes” or “including” are used in this Agreement, they shall
be deemed to be followed by the words “without limitation.” Time shall be of the
essence in this Agreement.
(k) Amendments
and Waivers.
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by Buyer and Seller. No waiver by any Party
of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such
occurrence.
(l) Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of
the
19
remaining
terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
(m) Expenses.
Each of
Buyer and Seller will bear its own costs and expenses (including legal fees
and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
12. Construction.
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring
any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall
be
deemed also to refer to all rules and regulations promulgated thereunder,
unless
the context requires otherwise. The word “including” shall mean including
without limitation.
(a) Incorporation
of Exhibits and Schedules.
The
Exhibits and Schedules identified in this Agreement are incorporated herein
by
reference and
made a
part of this Agreement.
(b) Bulk
Transfer Laws.
Buyer
agrees to waive compliance by Seller with the requirements of all applicable
laws, if any, relating to bulk transfer laws.
(c) Survival.
All
representations, warranties, covenants and agreements of the Parties hereto
contained in this Agreement and any Schedule or Exhibit hereto shall survive
the
execution and delivery hereof and thereof and consummation of the transactions
provided for herein notwithstanding any investigation heretofore or hereafter
made by or on behalf of the respective Parties hereto.
[SIGNATURE
PAGE FOLLOWS]
20
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date
first above written.
|
COMREX
CORPORATION
|
CLEARONE
COMMUNICATIONS, INC.
|
|
By:
/s/ Xxxx X. Xxxxxxx
|
By:
/s/ Xxxxxxx X. Xxxxxxxxx
|
|
Name:
Xxxx X. Xxxxxxx
|
Name:
Xxxxxxx X. Hichinkski
|
|
Title:
President
|
Title:
CFO
|
