EXHIBIT 2.1
AGREEMENT OF PURCHASE AND SALE OF STOCK
THIS AGREEMENT OF PURCHASE AND SALE OF STOCK (this "Agreement"), dated
as of July 18, 2003, is entered into between JMAR Technologies, Inc., a Delaware
corporation ("Seller"), JMAR Precision Systems, Inc., a California corporation
("JPSI") and Xxxxxx Xxxxxxx ("Xxxxxxx") and Xxxxx Xxxx ("Xxxx") (Xxxxxxx and
Xxxx are referred to herein collectively as the "Buyers").
W I T N E S S E T H:
WHEREAS, Buyers desire to purchase and acquire from Seller, and Seller
desires to sell, transfer and assign to Buyers, for the purchase price and upon
the terms and subject to the conditions hereinafter set forth, all of the shares
of capital stock of JPSI and, in connection therewith assume certain specified
liabilities;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, agreements and undertakings hereinafter set forth in this Agreement,
the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK;
CONSIDERATION AND TERMS OF PAYMENT
1.1 SALE OF JPSI STOCK. The parties understand and acknowledge that in
a sale of stock, as opposed to a sale of assets, JPSI retains all of its assets
and liabilities, except to the extent that the parties specifically agree herein
to exclude certain assets or liabilities from the acquisition. Seller hereby
sells and delivers to Buyers, and Buyers hereby purchase and acquire from
Seller, all right, title and interest of Seller in, to and under all of the
issued and outstanding shares of capital stock of JPSI (the "JPSI Stock"). At
the Closing (as defined in Section 4.1 below), Seller will transfer and deliver
all of the JPSI Stock to Buyers free and clear of all liabilities, obligations,
security interests, liens, charges, encumbrances and claims. Seller will
transfer sixty percent (60%) of the JPSI Stock to Xxxxxxx and forty percent
(40%) of the JPSI Stock to Xxxx.
1.2 CONSIDERATION. In consideration of the sale and delivery of all of
the JPSI Stock to Buyers, at the Closing, Buyers will pay or cause to be paid to
Seller the following (with Xxxxxxx paying 60% of the consideration and Xxxx
paying 40% of the consideration):
a). Cash in the amount of $250,000 (less the $50,000 deposit
previously delivered to Seller), by certified or cashier's check or by wire
transfer of available funds; and
b). Secured Promissory Notes in favor of Seller in the aggregate
principal amount of
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$250,000, with no accrual of interest, providing for four equal annual payments
of $62,500, with the first payment due and payable on December 1, 2004 and with
subsequent payments due on each of the three anniversary dates thereafter (the
"Note"). Payment of the Note shall be secured by 1) the pledge by Buyers of the
JPSI Stock, and 2) a Guaranty of the Note by JPSI and a Security Agreement
executed by JPSI granting Seller a perfected security interest in all of the
assets of JPSI. The Security Agreement shall also secure all of JPSI's
obligations under this Agreement.
1.3 GUARANTY OF LEASE OBLIGATION. On or before the Closing Date, JPSI
will execute a Sublease ("Sublease") with Seller which will obligate JPSI to
pay, perform and discharge all of Seller's obligations under that certain Lease
Agreement dated August 14, 2002, between Seller and Northpark Industrial (the
"Facility Lease"), a copy of which has previously been delivered to Buyers;
provided, however, that the Sublease will provide that Seller shall make the
monthly lease payments and pay the real property taxes under the Facility Lease
until June 30, 2004. During the period from the Closing Date to June 30, 2004,
JPSI will remain responsible for all other costs associated with the facility
and the Facility Lease, including utilities, building and landscape maintenance,
repairs, insurance and all other facility costs. Commencing on July 1, 2004,
JPSI will be responsible for the monthly lease payments, real property taxes and
all other obligations under the Facility Lease, including any costs associated
with delivering the premises to the landlord on expiration of the Facility
Lease. As additional purchase price consideration, effective as of the Closing
Date, Buyers will execute and deliver a Guaranty guaranteeing the prompt payment
when due and the prompt performance of all of JPSI's obligations under the
Sublease and under this Section 1.3 (the "Buyers' Guaranty"). The Buyers'
obligations hereunder shall be secured as follows:
a) Until confirmation is received that the Deed of Trust
provided by Veena and Xxxxx Xxxx under Section 1.3(b) below has been
recorded with the County Recorder, the Buyers' total obligation under
this Section 1.3 shall be secured by the grant of a perfected security
interest in the securities brokerage account owned by Xxxxxxx. The
parties estimate that the total amount of rental and tax payments that
JPSI and Buyers are responsible for under this Section 1.3 is
approximately $270,000. After confirmation of the recording of the Deed
of Trust by Veena and Xxxxx Xxxx, Vanjani's obligation hereunder shall
be reduced to sixty percent (60%) of the Buyers' total obligation under
Section 1.3. In connection with the grant of this security interest,
Xxxxxxx, Seller and T.D. Waterhouse shall enter into a Control
Agreement in form and substance acceptable to Seller. The Control
Agreement will allow Xxxxxxx to continue to make trades in the
brokerage account from time to time and to make withdrawals without
Seller's prior consent so long as the value of the account following
any such withdrawals shall not fall below 120% of Vanjani's obligation
hereunder; and
b) Forty percent (40%) of the Buyers' total obligation under
this Section 1.3 shall be secured by a Deed of Trust, executed by Xxxxx
Xxxx and Xxxxx Xxxx in favor of Seller and recorded in the County
Recorder's Office against the real property described on Schedule 1.3
hereto (the "Real Property Security"). For so long as there remains
sufficient equity in the Real Property Security, Seller will agree to
execute such
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subordination agreements as may be requested by Buyers from time to
time to facilitate subsequent refinancings of such real property.
1.4 ASSUMPTION OF LIABILITIES BY SELLER. At the Closing, JMAR will
assume the following JPSI liabilities by delivering an Assumption Agreement to
Buyers ("Excluded Liabilities"):
a) All amounts owing and unpaid to employees through the Closing
Date, including accrued vacation, accrued wages, any outstanding severance
obligations, and any and all claims by employees against JPSI, including claims
for worker's compensation, disability, unemployment and other employment law
claims;
b) All sales commissions due on sales prior to the Closing (where
the receivable has been assigned to Seller or has already been collected by
Seller);
c) All income, sales, use or other taxes owing by JPSI in
connection with the sale of products and other activities conducted by JPSI
prior to the Closing Date; and
d) All other liabilities, obligations or commitments of JPSI as
of the Closing Date, other than those liabilities and obligations set forth in
Section 1.3 above and those arising out of the contracts, warranties and open
purchase orders listed on Schedule 2.7 hereto, all of which shall be retained by
JPSI.
1.5 ASSIGNMENT OF RECEIVABLES AND OTHER CASH ASSETS. Buyers acknowledge
and agree that the accounts receivables, cash and deposits of JPSI as of the
Closing Date are not included in the acquisition. On or before the Closing Date,
JPSI shall execute and deliver an instrument assigning all of its outstanding
accounts receivables, cash and deposits to Seller. Buyers and JPSI shall
cooperate with Seller and shall, from time to time, execute such further
documents and take such further actions as necessary to ensure that any proceeds
collected from such receivables and such deposits are promptly remitted to
Seller.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF JPSI
Seller and JPSI, jointly and severally, represent and warrant to Buyers
as follows:
2.1 ORGANIZATION; QUALIFICATION. JPSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
JPSI has full corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as now being conducted where such
business is now being conducted.
2.2 CAPITALIZATION OF JPSI. The authorized capital stock of JPSI
consists of 1,000,000 shares of common stock, no par value per share ("Common
Stock"). A total of 100,000 shares of
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Common Stock are issued and outstanding and owned beneficially and of record by
Seller, which number constitutes all of the issued and outstanding shares of
capital stock of JPSI (the "JPSI Stock"). All outstanding shares of Common Stock
are validly issued, fully paid and nonassessable and not issued in violation of
any preemptive rights. Other than this Agreement, there is not outstanding any
subscription, option, warrant, call, right or other agreement or commitment
obligating JPSI to issue or sell any shares of the JPSI Common Stock or any
shares of any other capital stock of JPSI. There are no outstanding contractual
obligations of JPSI or Seller or, to the best knowledge of JPSI and the Seller,
any other person or entity, to repurchase, redeem or otherwise acquire any
outstanding shares of JPSI's capital stock.
2.3 TITLE TO JPSI STOCK. Seller owns beneficially and of record all of
the JPSI Stock, free and clear of all pledges, security interests, liens,
charges, encumbrances, equities, claims, options or limitations affecting its
ability to transfer such shares to Buyer.
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Seller and JPSI has
full power and authority to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to perform any other obligations of
such parties hereunder. The respective Boards of Directors of Seller and JPSI
have taken all action required by law, their respective Articles of
Incorporation and Bylaws or otherwise to authorize the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by JPSI and the
Seller and constitutes the legal, valid and binding agreement and obligation of
JPSI and the Seller, enforceable against each of them in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally or by
general principles of equity, including principles governing the availability of
equitable remedies.
2.5 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by JPSI or the Seller nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Articles of Incorporation or Bylaws of JPSI; (ii)
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States or foreign governmental or regulatory
authority or other third party; (iii) result in a breach of the terms of any
material contract of JPSI, except for such breaches which individually or in the
aggregate would not have a material adverse impact on the business, condition
(financial or otherwise), assets, properties or results of operations of JPSI;
(iv) conflict with or result in a violation of any provision of any applicable
statute, rule, regulation or ordinance.
2.6 PROPERTIES AND RELATED MATTERS. To the best of JPSI's knowledge,
Schedule 2.6 hereto is a list of all inventory and furniture, fixtures and
equipment included on JPSI's balance sheet as of July 18, 2003. Schedule 2.6
also reflects the accumulated depreciation of the depreciable assets listed on
such schedule. Substantially all of the depreciable assets that are not yet
fully depreciated are in JPSI's possession. JPSI has good and marketable title
to the property listed on Schedule 2.6 hereto, in each case free and clear of
all security interests, mortgages, deeds of trust, claims, liens, pledges,
charges or other encumbrances or adverse claims of any nature whatsoever, except
(i) as indicated in Schedule 2.6 hereto, (ii) liens for current taxes not
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yet due and payable, and (iii) such other encumbrances and easements which do
not, individually or in the aggregate, materially detract from the value or
interfere with the use of the properties affected thereby, for the purposes for
which they are currently used. JPSI owns no real property or any buildings or
other improvements thereon. Neither Seller nor JPSI make any representations or
warranties of any kind, whether express or implied (except as set forth in this
Agreement), concerning the value, condition, merchantability or fitness for a
particular use of JPSI's assets.
2.7 CONTRACTS.
(a) Schedule 2.7 hereto contains a complete and correct list
of all contracts which are material to the operations or financial condition of
JPSI ("Material Contracts").
(b) Schedule 2.7 contains a true and complete copy of the
terms and conditions of JPSI's warranty or warranties and JPSI has not modified,
either in writing or, to the best of JPSI's knowledge, orally, any of the terms
or conditions of such warranty or warranties.
(c) Except as set forth on Schedule 2.7, such Material
Contracts are in full force and effect and there does not exist thereunder any
material default or event or condition which, after notice or lapse of time or
both, would constitute a material default thereunder by JPSI or, to the best
knowledge of JPSI and the Seller, by any other party thereto.
2.8 BROKERS, FINDERS, ETC. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
intervention of any person acting on behalf of Seller or JPSI in such manner as
to give rise to any claim against Buyers or JPSI for any brokerage or finder's
commission, fee or similar compensation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Each of the Buyers, jointly and severally, represents and warrants to
Seller as follows:
3.1 AUTHORIZATION OF AGREEMENT. Each of the Buyers has the requisite
power and authority to enter into and deliver this Agreement and to carry out
his or her obligations hereunder. The execution and delivery by the Buyers of
this Agreement, and the documents to be executed in connection herewith, the
performance by Buyers of their respective obligations hereunder and the
consummation by Buyers of the transactions contemplated hereby have been duly
authorized by all necessary action on their part. This Agreement has been duly
and validly executed and delivered by Buyers and is the legal, valid and binding
agreement and obligation of each of the Buyers, enforceable against such Buyer
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally, including, without limitation, laws regarding fraudulent or
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preferential transfers, or by the principles governing the availability of
equitable remedies.
3.2 COLLATERAL FOR SECURITY. Each of the Buyers represents and warrants
that he or she owns the real property listed on Schedule 1.3 hereto and has the
full power to execute and record a Deed of Trust against their respective
ownership interests in said real property. Each of the Buyers represents and
warrants that there is sufficient unencumbered equity in the subject real
property to secure the Buyers' obligations under Section 1.3 hereof.
3.3 CONDITION OF PURCHASED ASSETS. Each of the Buyers understands and
acknowledges that nether Seller nor JPSI make any representations or warranties
of any kind, whether express or implied (except as set forth in this Agreement),
concerning the condition, merchantability or fitness for a particular use of
JPSI's assets, and Buyers accept the JPSI assets "as is" and "where is." Each of
the Buyers has assured himself or herself as to the condition of JPSI's assets.
3.4 BROKERS, FINDERS, ETC. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
intervention of any person acting on behalf of Buyers or any of their affiliates
in such manner as to give rise to any claim against Seller for any brokerage or
finder's commission, fee or similar compensation.
ARTICLE IV
THE CLOSING
4.1 TIME AND PLACE OF CLOSING. The closing of the sale and purchase
contemplated by this Agreement (the "Closing") will take place at the offices of
JPSI concurrently with the execution by the parties of this Agreement. The date
upon and time at which the Closing actually occurs is herein referred to as the
"Closing Date".
4.2 DELIVERIES BY SELLER. At the Closing, Seller will deliver to
Buyers, and the obligation of Buyers to consummate the Closing shall be subject
to its receipt from Seller of, the following:
(i) Stock Assignments, in form and substance satisfactory to
Buyers and Seller, conveying good and marketable title to the
JPSI Stock to Buyers, free and clear of all Encumbrances,
other than the pledge of the JPSI Stock to Seller under the
Pledge Agreement;
(ii) Corporate documents, including articles of incorporation,
bylaws and Board and shareholder minutes;
(iii) An Assumption Agreement, executed by Seller, covering
the assumption by Seller of the items listed in Section 1.4
above; and
(iv) All other agreements, documents, instruments and writings
required to be delivered by Seller at the Closing pursuant to
this Agreement.
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4.3 DELIVERIES BY BUYERS. At the Closing, Buyers will deliver to
Seller, and the obligation of Seller to consummate the Closing shall be subject
to its receipt from Buyers of, the following:
(i) A certified or cashier's check in the amount of
$250,000 (less the $50,000 deposit previously delivered to
Seller);
(ii) A Secured Promissory Note, executed by Xxxxxxx, in
the principal amount of $150,000 and a Secured Promissory
Note, executed by Xxxx, in the principal amount of $100,000;
(iii) A Pledge Agreement, executed by the Buyers, securing
the Buyers' obligations under the Note by the pledge of all of
the shares of common stock of JPSI, and Stock Assignments
executed by Buyers covering the JPSI Stock;
(iv) A Guaranty by JPSI in favor of Seller guaranteeing
Buyers' obligations under the Notes;
(v) A Security Agreement executed by JPSI in favor of
Seller, securing the Buyers' obligations under the Note by the
grant of a security interest in all of the assets of JPSI,
together with a UCC Financing Statement executed by JPSI;
(vi) A Guaranty by Xxxxxxx and a Guaranty by Xxxx of their
obligations under Section 1.3 of this Agreement;
(vii) A Security Agreement executed by Xxxxxxx in favor of
Seller, securing the Vanjani's obligations under the Guaranty
by the grant of a security interest in his interest in the
securities held in a certain brokerage account with T.D.
Waterhouse, together with a UCC Financing Statement executed
by Xxxxxxx;
(viii) A Control Agreement executed by Seller, Xxxxxxx and
T.D. Waterhouse;
(ix) A Deed of Trust executed by Xxxx in favor of Seller
covering the real property listed on Schedule 1.3 hereto; and
(x) All other agreements, documents, instruments and
writings required to be delivered by Buyers at the Closing
pursuant to this Agreement.
ARTICLE V
SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF SELLER AND BUYER
All representations and warranties of Buyers, on the one hand, and
Seller and JPSI, on
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the other, in this Agreement or in any document or other papers delivered
pursuant to or in connection with this Agreement shall survive for one year
after the Closing.
ARTICLE VI
COVENANT NOT TO COMPETE
6.1 Without the prior consent of Buyers, neither Seller nor any
affiliate of Seller (referred to collectively in this Article VIII as "Sellers")
shall, as a partner, employee, officer, director, manager, agent, associate,
investor, or otherwise, directly or indirectly, engage in the manufacture and
sale of precision optical inspection systems and precision motion control stages
used in such systems in substantially the same manner as such business was being
conducted on the Closing Date.
6.2 The covenants and other provisions contained in this Article VI
shall cover the activities of Buyers or Seller, as the case may be, in every
part of the world (the "Territory").
6.3 Buyers, on the one hand, and Seller, on the other hand, recognize
that the territorial restrictions contained in this Article VI are properly
required for the adequate protection of their respective businesses and that in
the event any covenant or other provision contained in this Article VI shall be
deemed to be illegal, unenforceable, or unreasonable by a court or other
tribunal of competent jurisdiction with respect to any part of the Territory,
such covenant or provision shall not be affected with respect to any other part
of the Territory, and Buyers or Sellers, as the case may be, agree and submit to
the reduction of said territorial restriction to such an area as said court
shall deem reasonable.
6.4 The covenants contained in this Article VI shall be effective as to
Buyers and Seller for a period of three years commencing on the Closing Date.
6.5 Buyers and Seller acknowledge that (i) the covenants and the
restrictions contained in this Article VI are necessary, fundamental, and
required for the protection of Buyer's and Seller's respective businesses; (ii)
such covenants relate to matters which are a special, unique, and extraordinary
character that gives each of such covenants a special, unique, and extraordinary
value; and (iii) a breach of any of such covenants or any other provision of
this Article VI by one party will result in irreparable harm and damages to the
other party which cannot be adequately compensated by a monetary award.
Accordingly, it is expressly agreed by Buyers and Seller that in addition to all
other remedies available at law or in equity, each shall be entitled to the
immediate remedy of a temporary restraining order, preliminary injunction, or
such other form of injunctive or equitable relief as may be used by any court of
competent jurisdiction to restrain or enjoin the other from breaching any such
covenant or provision or to specifically enforce the provisions hereof.
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ARTICLE VII
POST CLOSING OBLIGATIONS
7.1 FURTHER AGREEMENTS OF SELLER AND BUYER. Seller shall, upon the
reasonable request of Buyers from time to time, execute and deliver to Buyers
such further bills of sale, endorsements and other good and sufficient
instruments of title, conveyance, transfer and assignment, as may be necessary
or desirable in order to vest in Buyers all right, title and interest in and to
any and all of the JPSI Stock to the extent contemplated by this Agreement.
Seller and Buyers agree to cooperate in order to obtain all necessary consents
to the transfer to Buyers of any rights constituting part of the JPSI Stock.
7.2 ACCESS. For up to one year after the Closing Date, Buyers shall
afford to Seller and its counsel, accountants and other representatives full and
reasonable access during normal business hours (with the right to make copies)
to the books, files and business, financial and accounting records of JPSI
relating to the operation of JPSI's business prior to the Closing Date, as may
be reasonably necessary (a) to comply with governing laws, regulations and
accounting requirements applicable to Seller, or (b) for the prosecution or
defense of any claim or controversy of any sort whatsoever. In addition, Seller
intends to hire one of JPSI's current accounting employees and Buyers and JPSI
agree to permit such person to work at JPSI's facility in the accounting
department for a minimum of one month, and for such longer time as is necessary,
to complete the Seller's quarterly accounting, to collect materials required for
Seller's year-end audit and tax returns and to assist in payment of the payables
assumed by Seller and collection of the receivables assigned to Seller under
this Agreement. Such access shall be subject to reasonable confidentiality
protections.
7.3 JPSI WEBSITE. Promptly after the Closing Date, JPSI shall assume
control of the JPSI website; provided, however, Seller shall have previously
removed all references and links to the JMAR corporate website. In the event
that the JPSI website has not been modified to remove all references to Seller
and all links to Seller's website, Seller shall continue to have reasonable
access to JPSI's website after the Closing Date to make such changes as are
necessary to complete those actions.
7.4 USE OF NAMES. Within 30 days after the Closing, Seller and Buyer
will work together to cause JPSI to amend its articles of incorporation to
change the name of JPSI to a name that does not contain the word "JMAR". To the
extent that the name "Pacific Precision Laboratories, Inc.", "PPL" or similar
derivations, are available under corporate or trademark laws, Seller agrees that
the Buyer may make use of such names. Promptly following the Closing Date, JPSI
shall commence the process to phase-out the use of its name, including sending
out notices to its customers and suppliers of its name change and reprinting its
purchase orders and invoices and related documents. As soon as practicable after
the Closing, JPSI shall replace its marketing materials and other documentation
as the older materials are depleted and new materials are re-ordered. As soon as
practicable after the Closing, but no later than 9 months after the Closing,
JPSI shall replace its building signage to reflect its new name.
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7.5 ACCESS TO DATAWORKS; TRANSFER OF SYSTEM. For a period of six months
after the Closing Date, JPSI shall continue to have network access to that
portion of the DataWorks server that contains data relevant to JPSI's ongoing
operations. Seller shall continue to maintain the DataWorks server and software,
but JPSI shall be responsible for retaining such consultants as may be needed
for training its employees in the operation of the DataWorks software system.
Within six months after the Closing Date, the Seller intends to transition to a
new financial and accounting software system and once it has done so, it will
transfer the DataWorks software and server to JPSI at no cost other than the
cost to JPSI of the installation of the server and reconfiguration of the
software at JPSI. In the event that the transition by Seller to a new software
system is underway, but is not yet complete at the end of such six month period,
Seller shall have such additional time as is necessary to complete such
transition so long as JPSI shall continue to have access to the DataWorks
software and server. Buyers and JPSI acknowledge that the DataWorks software
system is several years old and that there may no future software updates or
other revisions to the software issued by the DataWorks software developer.
7.6 START-UP AND TRANSITION EXPENSES. Buyers acknowledge and agree that
there will be expenses associated with the transfer of the ownership of JPSI
from Seller to Buyers. These costs may include: the costs of opening new bank
accounts; printing new letterhead, business cards and marketing materials;
notifying customers of the change in ownership; changing signage; signing up
with new internet service providers; reconfiguring the local area computer
network; and other costs not specifically assumed by Seller under this Agreement
(all such costs referred to hereinafter as "Transition Costs"). Buyers agree
that all Transition Costs are JPSI's and Buyers' responsibility after the
Closing.
ARTICLE VIII
INDEMNIFICATION
8.1 Seller hereby agrees to indemnify and hold Buyers harmless against
all claims, damages, losses, liabilities, costs and expenses (including, without
limitation, settlement costs and any legal, accounting or other expenses for
investigating or defending any actions or threatened actions) relating to or
arising directly or indirectly out of: (i) any breach of any representation,
warranty, covenant, agreement or obligation of Seller contained in this
Agreement or any other agreement or instrument delivered to Buyer in connection
with this Agreement, and (ii) any Excluded Liabilities. No indemnification shall
be required by Seller unless and to the extent that the aggregate of all
indemnification claims exceeds $10,000.
8.2 Buyers and JPSI hereby agree, jointly and severally, to indemnify
and hold Seller harmless against all claims, damages, losses, liabilities, costs
and expenses (including, without limitation, settlement costs and any legal,
accounting or other expenses for investigating or defending any actions or
threatened actions) relating to or arising directly or indirectly out of: (i)
any breach of any representation, warranty, covenant, agreement or obligation of
Buyers or JPSI contained in this Agreement or any other agreement or instrument
delivered to Seller in connection with this Agreement, (ii) any liabilities of
JPSI not assumed by Seller under this
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Agreement, and (iii) any actions or omissions by Buyers or JPSI related to the
operation of the business of JPSI after the Closing Date. No indemnification
shall be required by Buyers or JPSI in excess of the total purchase price
hereunder and no indemnification shall be required unless and to the extent that
the aggregate of all indemnification claims exceeds $10,000.
8.3 Whenever any claim shall arise for indemnification hereunder, the
party entitled to indemnification hereunder (the "Indemnified Party") shall
promptly notify the party or parties from whom indemnification is sought
(collectively, the "Indemnifying Party") of the claim and, when known, the facts
constituting the basis for such claim. In the event of any such claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice to the Indemnifying Party shall
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom.
8.4 Upon receipt of any such notice resulting from a claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party shall be entitled to participate in the defense of such claim, and may
assume the defense of such claim if and only if: (i) the Indemnifying Party
confirms in writing its obligations to indemnify the Indemnified Party with
respect to such claim and (ii) the Indemnified Party in its reasonable
discretion does not notify the Indemnifying Party that it has determined a
conflict of interest makes separate representation by the Indemnified Party's
own counsel advisable. The parties acknowledge and agree that the Indemnified
Party shall be entitled to retain its own counsel to participate in the defense
of any claim at its own cost and expense.
8.5 Any dispute between Buyers and Seller involving the interpretation
or application of this Article VIII shall be resolved by binding arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association, in Los Angeles County, California, before a single arbitrator. The
arbitrator shall have the authority to permit discovery, to the extent deemed
appropriate by the arbitrator, upon request of a party. The arbitrator shall
have no power or authority to add to or detract from the agreements of the
parties, and the arbitrator shall determine who shall be responsible for the
cost of the arbitration. The arbitrator shall have the authority to grant any
temporary, preliminary or injunctive relief in a form substantially similar to
that which would otherwise be granted by a court of law. The arbitrator shall
have no authority to award punitive or consequential damages. The resulting
arbitration award may be enforced, or injunctive relief may be sought, in any
court of competent jurisdiction. The parties expressly stipulate that the
Superior Court of the County of Los Angeles, California, or the United States
District Court for the Central District of California are courts of competent
jurisdiction for this purpose.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 WAIVER AND AMENDMENT. Any term or provision of this Agreement may
be waived at any time by the party which is entitled to the benefits thereof,
but only in a writing signed by
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such party, and this Agreement may be amended or supplemented at any time, but
only by written agreement of Seller and Buyers. Any such waiver with respect to
a failure to observe any such provision shall not operate as a waiver of any
subsequent failure to observe such provision unless otherwise expressly provided
in such waiver.
9.2 EXPENSES AND TRANSFER TAXES.
(a) Seller and Buyers shall each pay their respective expenses
separately incurred in connection with this Agreement and the
transactions contemplated hereby and thereby.
(b) Buyers shall pay all sales, use and transfer taxes arising
in connection with this transaction.
9.3 ENTIRE AGREEMENT. This Agreement and the additional written
agreements called for herein together contain the entire agreement between
Seller and Buyers with respect to the purchase and sale of the JPSI Stock and
the related transactions and supersede all prior arrangements or understandings
with respect thereto, including without limitation that certain letter of
intent, dated July 7, 2003, between Seller and Xxxxxx Xxxxxxx, and there have
been no oral representations or warranties and neither party has relied on any
representation not contained herein.
9.4 DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
9.5 NOTICES. All notices, consents, requests, instructions, approvals
and other communications provided for herein shall be validly given, made or
served, if in writing and delivered personally or sent by registered mail, or by
Federal Express or a comparable delivery service, postage prepaid, to:
SELLER:
JMAR Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
BUYERS:
Xxxxxx Xxxxxxx
00000 Xxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
or to such other address as any party hereto may, from time to time, designate
in a written notice given in a like manner. Notice given by registered mail as
set out above shall be deemed delivered three days after the date the same is
postmarked and notice given by Federal Express or
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comparable delivery service shall be deemed delivered on the date delivery is
confirmed by such service.
9.6 ASSIGNMENT. This Agreement and each other agreement entered into
pursuant hereto and all of the provisions hereof and thereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder and thereunder, shall be assigned by
either party hereto or thereto without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
9.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
9.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California (without regard to the
conflicts of laws principles thereof) and, subject to the provisions of Section
8.5 above, each of the parties hereto hereby submits to the jurisdiction of the
state courts of the State of California and the federal courts of the United
States of America that are located in the State of California.
9.9 SEVERABILITY. If any provision of this Agreement is declared
unenforceable by a court of competent jurisdiction, such provision shall be
enforced to the greatest extent permitted by law, and such declaration shall not
affect the validity of any other provision of this Agreement.
9.10 INTERPRETATION. The parties acknowledge that this Agreement has
been negotiated by both parties and that neither this Agreement nor any of its
provisions should be interpreted for or against any party on the basis said
party or its attorney drafted the Agreement or the provision in question.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
BUYERS:
/s/ Xxxxxx Xxxxxxx
_____________________________________________
Xxxxxx Xxxxxxx
/s/ Xxxxx Xxxx
_____________________________________________
Xxxxx Xxxx
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SELLER:
JMAR TECHNOLOGIES, INC.
By /s/ Xxxxxx X. Xxxxxxxx
__________________________________________
Xxxxxx X. Xxxxxxxx, Senior Vice President
& General Counsel
JPSI:
JMAR PRECISION SYSTEMS, INC.
By /s/ Xxxxxx X. Xxxxxxxx
__________________________________________
Xxxxxx X. Xxxxxxxx, Acting President
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