Contract
Exhibit
10.1
This
Asset Purchase Agreement is entered into as of April 30, 2007 (the “Agreement
Date”)
among
Accurel Systems International Corporation, a California corporation (the
“Seller”);
Implant Sciences Corporation, a Massachusetts corporation (the “Guarantor”)
and
Xxxxx Analytical Group LLC, a Delaware limited liability company (the
“Buyer”).
Capitalized terms used but not otherwise defined in the body of this Agreement
are defined in Appendix A.
Recitals
The
Seller desires to sell substantially all of the Assets of the Seller to the
Buyer on the terms set forth in this Agreement.
The
Buyer
desires to purchase substantially all of the Assets of the Seller on the
terms
set forth in this Agreement.
Agreement
The
Seller, the Guarantor and the Buyer, intending to be legally bound, agree
as
follows:
1. Purchase
and Sale of Assets.
1.1 Purchased
Assets.
Subject
to the terms and conditions set forth in this Agreement, and in reliance
upon
the representations, warranties, covenants and agreements of the Parties
herein,
at the Closing, the Seller will sell, assign, transfer, convey and deliver
to
the Buyer, and the Buyer shall purchase and acquire from the Seller, good
and
valid title to the following, free of any Encumbrances, except Permitted
Encumbrances:
(a) Seller
Intellectual Property.
All the
Seller Owned Intellectual Property and all Intellectual Property Rights related
thereto, and the Seller’s Intellectual Property Rights in and to the
Third-Person Intellectual Property, including the Intellectual Property listed
in Schedule 1.1(a);
(b) Computer
and Office Equipment.
All of
the Seller’s computer and office equipment, including the equipment listed in
Schedule 1.1(b);
(c) Laboratory
Equipment.
All of
the Seller’s laboratory equipment, and all of Seller’s components and spare
parts for laboratory equipment, including the equipment listed on Schedule
1.1(c);
(d) General
Equipment and Supplies.
Any
service equipment, telephones, pagers, computer peripherals, supplies, spare
parts and other tangible personal property owned by the Seller;
(e) Assumed
Contracts.
All of
the Seller’s rights, claims and obligations under the Seller Contracts listed in
Schedule
1.1(e)),
except
as contemplated by Section 1.3(b)(xii) (the “Assumed
Contracts”)
and
any cash deposits relating to the Assumed Contracts;
(f) Promotional
Materials.
All
brochures, pamphlets, stationery, letterhead and other promotional or marketing
materials (including all copies thereof) related to the Business or the
Trademarks;
(g) Business
Records.
All
Books and Records related to, necessary or useful for the conduct of the
Business which shall not include the Corporate Documents; provided, that
the
Seller may retain copies of all such Books and Records;
(h) Goodwill.
The
goodwill related to, or arising out of, the Business;
(i) Governmental
Authorizations.
All
rights of the Seller in or related to Governmental Authorizations necessary
or
useful for the conduct of the Business;
(j) Claims;
Credits. All
claims, causes of action, rights of recovery and rights of setoff against,
and
deposits, prepayments and credits with, third Persons (including insurance
companies), and all rights under or pursuant to all warranties, representations
and guarantees made by third Persons related to the ownership, development
or
Use of any Asset or the conduct of the Business, including those items listed
on
Schedule 1.1(j);
(k) Accounts
Receivable.
The
accounts
receivable recorded on the books of the Seller as of the Closing
Date;
(l) Inventory.
All of
the Seller’s raw materials, work in progress, finished products, supply and
packaging items and similar items with respect to the Business, in each case
wherever the same may be located;
(m) Fixtures
and Leasehold Improvements.
All of
Seller’s fixtures and leasehold improvements and all of Seller’s right, title
and interest in fixtures and leasehold improvements in Seller’s leased
facilities; and
(n) Other
Property. Except
as
provided in Section 1.2, all other Property of the Seller, whether or not
described elsewhere in this Section 1.1 or similar thereto.
Subject
to the exclusion of the Excluded Assets, the Property set forth in
Sections 1.1(a) through (l) is referred to in this Agreement as the
“Assets.”
1.2 Excluded Assets.
Notwithstanding anything in Section 1.1, the Assets shall not include any
of the following:
(a) Tax
Items.
Any
income tax deposits held as current assets on the balance sheet as of the
Closing Date, prepayment, refund, claim, offset or other right of the Seller
related to any Tax arising or resulting from or in connection with the ownership
of the Assets or operation of the Business and attributable to any Taxable
period ending on or prior to the Closing Date or, in the case of any Taxable
period which includes but does not end on the Closing Date, the portion of
such
Taxable period up to and including the Closing Date;
(b) Nontransferable
Governmental Authorizations.
Any
Governmental Authorization the transfer of which would violate applicable
Legal
Requirements;
(c) Rights
Under Certain Agreements. All
rights of the Seller under this Agreement (including any rights of the Seller
relating to the Excluded Assets and the right to receive the purchase price
hereunder), all rights of the Seller under any agreement, certificate,
instrument or other document executed and delivered by the Seller and the
Buyer
in connection with the transactions contemplated hereby, or any other agreement
between the Seller and the Buyer entered into during the Pre-Closing
Period;
(d) Corporate
Documents.
Corporate seals, certificates of incorporation, minute books, stock transfer
books or other records related to the corporate organization of the Seller
(the
“Corporate
Documents”);
and
(e) Correspondence.
All
rights to receive mail and other communications addressed to the Seller that
are
not related to any of the Assets or the Business or the Assumed
Liabilities.
(f) Deposit
Accounts; Cash; Accounts Receivable.
Any
balances in any deposit accounts, and any cash, cash equivalents, and marketable
securities held by the Seller as of the Closing Date, excluding any cash
deposits relating to the Assumed Contracts;
The
Property listed in this Section 1.2 is referred to in this Agreement as the
“Excluded
Assets.”
1.3 Liabilities.
(a) Assumed
Liabilities.
Subject
to the terms and conditions set forth in this Agreement, at the Closing,
the
Buyer shall assume the following Liabilities of the Seller (collectively,
the
“Assumed
Liabilities”)
by
executing and delivering to the Seller the Assignment and Assumption
Agreement:
(i) Assumed
Contracts.
The
obligations of the Seller under the Assumed Contracts; and
(ii) Trade
Accounts Payable.
The
obligations of the Seller for trade accounts payable incurred in the Ordinary
Course of Business on or prior to the Closing Date that are set forth on
Schedule
2.7(b).
(b) Excluded
Liabilities.
Notwithstanding the foregoing, and notwithstanding anything to the contrary
contained in this Agreement, the Buyer shall not assume any Liabilities other
than the Assumed Liabilities (collectively, the “Excluded
Liabilities”).
Without limiting the generality of the foregoing, the Assumed Liabilities
shall
not include, and the Buyer shall not be required to assume or to otherwise
perform or discharge, the following Excluded Liabilities whether arising
prior
to, at or after the Closing Date:
(i) any
Liability of the Guarantor or any Person other than the Seller;
(ii) any
Liability of the Seller arising out of or relating to the execution, delivery
or
performance of any of the Transaction Agreements;
(iii) any
Liability of the Seller for any fees, costs or expenses of the type referred
to
in Section 8.2;
(iv) except
for Assumed Liabilities under the Assumed Contracts, any Liability arising
from
or relating to any action taken by the Seller or its agents, or any failure
on
the part of the Seller or its agents to take any action, at any time, whether
prior to, at or after the Closing Date;
(v) except
for Assumed Liabilities under the Assumed Contracts, any Liability arising
from
or relating to the Business or any services performed for any Person by or
on
behalf of the Seller on or prior to the Closing Date;
(vi) except
for Assumed Liabilities under the Assumed Contracts, any Liability as
successor-in-interest to the Seller or under any rule or principle of successor
liability, continuity of enterprise, de facto merger, mere continuation or
similar rule or principle;
(vii) any
Liability under the Sunnyvale Lease (including all associated payments,
obligations and taxes related to the facility subject to the Sunnyvale Lease),
and any Liability relating to or in connection with the Sunnyvale Lease,
other
than any Liability arising from or relating to the performance and obligations
of Buyer under the Sunnyvale Sublease;
(viii) any
Liability of the Seller related to any Proceeding against the
Seller;
(ix) any
Tax
or Liability of the Seller for the payment of any Tax;
(x) any
Liability of the Seller to or on account of any Employee or former employee
of
the Seller under or with respect to employment, including any Liability relating
to any Benefit Plan, or wages or commissions, accrued vacation days or sick
days
or other paid time off, and any Liability for severance payments or other
obligations to or on account of Employees;
(xi) any
Liability of the Seller to the Guarantor or any other Related Party,
Representative or Affiliate of the Seller, including any Intercompany
Transactions and any payables due to the Guarantor, and including the
Liabilities listed on Schedule
1.3(b)(xi);
(xii) any
Liability of the Seller under any Seller Contract, if (A) the Seller shall
not
have obtained, prior to the Closing, any Consent required to be obtained
from
any Person with respect to the assignment or delegation to the Buyer of any
rights or obligations under such Seller Contract and (B) such Seller Contract
would have been an Assumed Contract but for the Seller’s failure to obtain such
Consent;
(xiii) any
Liability of the Seller under any Assumed Contract to the extent such Liability
(A) was required to be performed by the Seller before the Closing Date in
accordance with the terms of any Assumed Contracts, unless there exist accounts
payable collected by the Buyer, or (B) arises from or relates to any Breach
by
the Seller of any provision of any Assumed Contracts;
(xiv) any
bank
or other debt, loans or guarantee obligations of the Seller including, without
limitation, any capitalized leases, loans from the Guarantor, bank lines
of
credit, equipment installment notes or other notes payable (other than those
Assumed Liabilities under any Assumed Contracts listed in Schedule
1.1(e));
(xv) any
lease
obligations, including vehicle, office and equipment leases (other than those
Assumed Liabilities under any Assumed Contracts listed in Schedule
1.1(e));
(xvi) any
Liability of the Seller that arises or exists by virtue of any Breach of
(A) any representation or warranty made by the Seller or the Guarantor in
any of the Transaction Agreements, or (B) any covenant or obligation of the
Seller or the Guarantor contained in any of the Transaction
Agreements;
(xvii) any
Liability of the Seller arising out of or relating to the Seller Intellectual
Property and the Intellectual Property Rights thereto, other than obligations
of
the Seller arising after the Closing (A) under inbound and outbound licenses
for
Intellectual Property that are Assumed Contracts listed in Schedule
1.1(e)
or (B)
described in Section 1.3(a)(ii);
(xviii) any
Payable of the Seller that remains unpaid as of the Closing, except those
described in Section 1.3(a)(ii);
(xix) any
indemnity obligation of the Seller to any Person (other than indemnity
obligations that are Assumed Liabilities under any Assumed Contracts listed
in
Schedule
1.1(e));
(xx) any
Liability of the Seller or any Related Party that directly or indirectly
arises
from or relates to the presence of any Hazardous Material at any site owned,
leased, occupied or controlled by the Seller on or at any time prior to the
Closing or the generation, manufacture, production, transportation, importation,
use, treatment, refinement, processing, handling, storage, discharge,
Environmental Release or disposal of any Hazardous Material (whether lawfully
or
unlawfully) by or on behalf of the Seller prior to Closing; or
(xxi) any
Liability of the Seller that is not referred to specifically in Section
1.3(a).
1.4 Purchase
Price.
The
consideration to be paid by the Buyer to the Seller at the Closing in connection
with the Transactions shall be equal to Twelve Million Eight Hundred Eighty
Thousand Eight Hundred Ninety-Four Dollars ($12,880,894.00) minus
Net Debt
(the “Total
Net Consideration”)
payable as follows:
(a) The
Buyer
shall pay to the Seller on the Closing Date an amount equal to the Total
Net
Consideration minus
One
Million Dollars ($1,000,000.00) (the “Closing
Payment”);
(b) The
Buyer
shall deposit One Million Dollars ($1,000,000.00) with the Escrow Agent pursuant
to the terms of the Escrow Agreement, attached hereto as Exhibit
E, to
secure
the indemnification obligations of the Seller and the Guarantor pursuant
to this
Agreement.
1.5 Closing.
The
consummation of the purchase and sale of the Assets, the assignment of the
rights under the Assumed Contracts and the assumption of the Assumed Liabilities
contemplated by this Agreement (the “Closing”)
shall
occur on the Agreement Date or as soon as practicable thereafter, provided
that
all conditions to the Closing set forth in Sections 4 and 5 have been satisfied
or waived in writing by the Party entitled to waive such conditions. The
Closing
shall be effected by: (a) the delivery of those signature pages,
certificates, documents and opinions that are required to be delivered pursuant
to Sections 4 and 5 to the respective recipients set forth in Sections 4
and 5
via personal delivery or facsimile or electronic image transmission; and
(b) the transmission of a wire transfer to the accounts of the Seller in an
aggregate amount equal to the Closing Payment.
1.6 Sales
and Other Taxes.
(a) The
Seller shall (i) bear and pay all Taxes (including without limitation any
sales taxes, use taxes, transfer taxes, income or franchise taxes on capital
gain or depreciation recapture, documentary charges, recording fees or similar
taxes) and all charges, fees or expenses similar to or in the nature of taxes,
that may become payable in connection with the sale of the Assets to the
Buyer
or in connection with any pre-Closing distributions to the Guarantor; and
(ii) file all necessary Tax Returns and other documentation with respect to
such taxes; provided,
however,
that, if required by any Legal Requirement, the Buyer shall join in the
execution of any such Tax Returns and other documentation. No execution of
any
Tax Returns by the Buyer shall be deemed to create any Liability of the Buyer
to
the Seller or any other Person or shall affect the indemnification by the
Seller
and Guarantor under Section 6.2.
(b) Seller
shall be responsible for and shall pay any and all Taxes arising or resulting
from or in connection with the ownership of the Assets or operation of the
Business attributable to any Taxable period ending on the Closing Date or,
in
the case of any Taxable period which includes but does not end on the Closing
Date, the portion of such Taxable period up to and including the Closing
Date.
The Buyer shall be responsible for and shall pay any and all Taxes arising
or
resulting from or in connection with the ownership or use of the Assets or
operation of the Business by the Buyer attributable to any Taxable period
beginning after the Closing Date or, in the case of any Taxable period which
includes but does not end on the Closing Date, the portion of such Taxable
period beginning on the day after the Closing Date. Any and all other Taxes
due
pursuant to the Transaction contemplated hereby, including any and all transfer
taxes, sales taxes, bulk transfer taxes, share transfer taxes, taxes related
to
excess depreciation re-capture, and/or taxes resulting from the structure
of
this Transaction shall be borne by Seller and any associated legal and other
expenses incurred by Seller shall be borne by Seller.
1.7 Allocation.
(a)
The
consideration referred to in Section 1.4 (and any other amount required for
federal income Tax purposes to be included in the determination of the Purchase
Price) is to be allocated among the Assets (the “Allocation”)
in a
manner consistent with Schedule
1.7.
All
fixed assets shall be valued at fair market value, such value to be determined,
if necessary, through an independent appraisal at the expense of the Buyer.
Further, for the purpose of determining the value of the fixed assets, buyer
and
Seller will agree to a valuation based on a “free standing” versus a “transfer
in place” value for similar used fixed assets, to the extent consistent with
applicable income Tax regulations.
(b) The
Seller and the Buyer will cooperate in preparing and filing with the Internal
Revenue Service their respective IRS Forms 8594. No Party shall take a position
on any Tax Return (including IRS Form 8594), before any Tax authority or
in any
Proceeding that is in any manner inconsistent with the allocation set forth
in
Schedule
1.7
without
the prior written consent of the Buyer or the Seller, as the case may be,
or
unless specifically required pursuant to a determination by an applicable
Tax
authority. Each Party shall promptly advise the Buyer or the Seller, as the
case
may be, of the existence of any Tax audit, controversy or Proceeding related
to
the allocation of the Purchase Price among the Assets.
1.8 Confirmation
of Net Debt. As
soon
as reasonably practicable after the Closing, but in any event not later than
fifteen (15) business days thereafter, the Buyer and the Seller shall use
commercially reasonable efforts to confirm the Net Debt set forth in
Schedule
2.7(c)
as of
the Closing. If either the Buyer or the Seller determines that the Net Debt
amounts set forth in Schedule
2.7(c)
were
incorrect, such Party shall recalculate the Total Net Consideration using
the
corrected Net Debt and provide notice thereof to the other Party. If the
Buyer
and the Seller are unable to resolve any disputed amounts within ten (10)
business days after delivery of such notice to the Seller, then the disputed
amounts shall be submitted to arbitration in accordance with Section 6.2.
Upon
final determination of the Total Net Consideration, the Buyer shall promptly
pay
to the Seller any excess of the final Total Net Consideration over the Total
Net
Consideration determined as of the Closing, or the Seller shall promptly
pay to
the Buyer any excess of the Total Net Consideration determined as of the
Closing
over the final Total Net Consideration.
2. Representations
and Warranties of the Seller. The
Seller and Guarantor jointly and severally represent and warrant to and for
the
benefit of the Buyer Indemnitees, as follows, except as set forth in the
Disclosure Schedule; provided, that a particular representation or warranty
shall be deemed to be qualified by a particular item of disclosure only if,
and
to the extent that, the disclosure is set forth in the Schedule having the
number corresponding to the particular Section in this Section 2 that contains
the representation or warranty being qualified (all such Schedules having
a
number corresponding to any Section in this Section 2 shall be referred to
collectively as the “Disclosure
Schedule”
and all
references to Schedules in this Section 2 shall be deemed references to
Schedules in the Disclosure Schedule).
2.1 Due
Organization; No Subsidiaries; Etc.
The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of California and has full power and authority
under
applicable Legal Requirements to own, lease and operate its Property and
to
carry on the Business. The Seller is duly qualified and is authorized to
do
business and is in good standing as a foreign corporation under the laws
of each
of the jurisdictions listed in Schedule 2.1.
2.2 Articles
of Incorporation and Bylaws; Records.
The
Seller has delivered to the Buyer accurate and complete copies of the following,
each as in effect as of the Agreement Date: (i) the Articles of
Incorporation and Bylaws of the Seller, including all amendments thereto
(collectively, the “Charter
Documents”);
and
(ii) the portion of the minutes and other records of meetings and actions
taken
by written consent without a meeting, of the Guarantor, the Seller Board
and all
committees of the Seller Board (collectively, the “Seller Minutes”)
directly relating to the Transaction.
2.3 Authority;
Binding Nature of Agreements.
The
Seller has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under each of the Transaction Agreements
to
which it is or may become a party and the other agreements, certificates
and
instruments to be executed by Seller pursuant to this Agreement and to
consummate the Transactions. The execution, delivery and performance by the
Seller of the Transaction Agreements to which it is or may become a party
have
been duly authorized by all necessary action on behalf of the Seller, the
Seller
Board and the Guarantor. This Agreement has been, and each other Transaction
Agreement to which the Seller is a party will be, duly executed and delivered
by
or on behalf of the Seller. This Agreement constitutes the legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights generally, and (ii) laws
relating to the availability of specific performance, injunctive relief,
or
other equitable remedies (collectively, the “Enforceability
Limitations”).
Upon
the execution and delivery at the Closing of each of the Transaction Agreements
to which the Seller will be a party, each of such Transaction Agreements
to
which the Seller will be a party will constitute the legal, valid and binding
obligation of the Seller and will be enforceable against the Seller in
accordance with its terms, except as may be limited by the Enforceability
Limitations.
2.4 Non-Contravention.
Subject
to the receipt of the consents and approvals set forth on Schedule
2.5,
the
execution and delivery of any of the Transaction Agreements to which the
Seller
is or will be a party by the Seller, the consummation of the Transactions
and
the performance of any Transaction Agreement to which the Seller is or will
be a
party will not directly or indirectly, with or without notice or lapse of
time:
(a) contravene,
conflict with or result in a violation of, or give any Governmental Body
or
other Person the right to challenge any of the Transactions or to exercise
any
remedy or obtain any relief under, any Legal Requirement or any Order to
which
the Seller or any Property of the Seller is subject;
(b) contravene,
conflict with or violate any provision of the Charter Documents;
(c) contravene,
conflict with or violate any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate
or
modify, any Governmental Authorization that is held by the Seller or, to
the
Seller’s Knowledge, any Employee;
(d) contravene,
conflict with or result in a Breach of any provision of any Seller Contract,
except as set forth on Schedule
2.4(d);
(e) give
any
Person the right to (i) declare a default or exercise any remedy under any
Seller Contract, (ii) accelerate the maturity or performance of any Seller
Contract, or (iii) cancel, terminate or modify any Seller Contract, except
as
set forth on Schedule
2.4(e);
(f) result
in
the imposition or creation of any Encumbrance upon any of the assets of the
Seller, except as set forth on Schedule
2.4(f).
2.5 Consents.
Except
as set forth in Schedule 2.5,
the
Seller was not, is not and will not be required to make any filing with or
give
any notice to, or to obtain any Consent from, any Person in connection with
(a) the execution and delivery of any of the Transaction Agreements to
which the Seller is or will be a party, (b) the consummation of any of the
Transactions or (c) the performance of any of the Transactions.
2.6 Capitalization. All
of
the issued and outstanding Stock is held of record and owned by the Guarantor.
No action has been taken by the Guarantor, the Seller or the Seller Board
to
authorize or issue any other Stock. No action has been taken by the Guarantor,
the Seller or the Seller Board to authorize or issue any Stock
Right.
2.7 Financial
Statements.
(a) Financial
Statements.
The
following financial statements are attached to this Agreement as Exhibit
A
(collectively, the “Financial
Statements”):
(a) the unaudited balance sheets of the Seller as of June 30, 2005 and June
30, 2006, and the related statements of income for the years then ended,
together with all the notes thereto, and (b) the unaudited balance sheet
of the
Seller as of March 31, 2007 (the “Most
Recent Balance Sheet”),
and
the related statements of income for the period then ended, together with
all
notes thereto. The Financial Statements are accurate and complete in all
material respects, have been prepared in accordance with GAAP consistently
applied throughout the periods covered and present fairly the financial position
of the Seller as of the respective dates thereof and the results of operations
of the Seller for the periods covered thereby.
(b) Accounts
Receivable and Accounts Payable.
The
accounts receivable and accounts payable of the Seller as of the Closing
Date
are listed on the attached Schedule
2.7(b).
All
such accounts receivable and accounts payable are reflected properly on the
Seller’s books and records and are bona fide, valid receivables or payables
representing amounts due or payable with respect to actual transactions in
the
Ordinary Course of Business. To the Knowledge of the Seller none of such
receivables are subject to valid counterclaims or setoffs, other than refunds,
waivers, discounts or write-offs of customer receivables in the Ordinary
Course
of Business which have not exceeded $25,000 in the aggregate since July 1,
2006.
(c) Net
Debt. Schedule
2.7(c) sets
forth true, correct and complete statements of (a) all Seller accounts payable
that, as of the Closing, are more than 30 days past their due dates, and
(d) all
Transaction expenses of the Seller or the Guarantor payable by the Buyer
after
the Closing.
2.8 Liabilities.
(a) The
Seller does not have any Liabilities of any nature and there is no Basis
for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Company giving rise to a Liability,
other than (i) Liabilities as and to the extent specifically set forth on
the
Most Recent Balance Sheet, (ii) Liabilities set forth in Schedule 2.8(a),
and
(iii) Liabilities that have been incurred by the Seller in bona fide
transactions entered into in the Ordinary Course of Business after the date
of
the Most Recent Balance Sheet in amounts consistent with past practice none
of
which is in excess of $25,000 (individually, or collectively for any group
of
related transactions) and none of which result from, arise out of, relate
to,
are in the nature of, or were caused by any breach of contract, breach of
warranty, tort, infringement or violation of any Legal Requirement.
(b) Schedule
2.8(b)
provides
an accurate and complete breakdown of (i) the aging of the accounts payable
of the Seller as of the Closing Date; (ii) any customer deposits or other
deposits held by the Seller as of the Closing Date; (iii) all notes payable
and other indebtedness of the Seller as of the Closing Date (the “Payables”).
(c) Since
March 9, 2005, the Seller has not (i) made a general assignment for the
benefit of creditors, (ii) filed, or had filed against it, any bankruptcy
petition or similar filing, (iii) suffered the attachment or other judicial
seizure of all or a substantial portion of its Property, (iv) admitted in
writing its inability to pay its debts as they become due, (v) been
convicted of, or pleaded guilty or no contest to, any felony, or (vi) taken
or been the subject of any Proceeding that may have an adverse effect on
its
ability to comply with or perform any of its covenants or obligations under
any
of the Transaction Agreements to which the Seller is or will be a party,
except
as set forth on Schedule
2.8(c).
(d) Except
as
set forth on Schedule
2.8(d),
since
March 9, 2005, the Seller has not guaranteed or otherwise agreed to cause,
insure or become liable for, and the Seller has never pledged any of its
Property to secure, the performance or payment of any Liability of any other
Person.
(e) There
are
no Encumbrances on any of the assets of the Seller, other than Permitted
Encumbrances.
2.9 Absence
of Changes.
Since
the date of the Most Recent Balance Sheet:
(a) No
Material Adverse Effect has occurred, and no Prior Event has occurred that
could
reasonably be expected to have a Material Adverse Effect;
(b) There
has
been no damage, destruction or loss affecting the Property of the Seller,
or any
interruption in the use thereof, whether or not covered by
insurance;
(c) The
Seller has not entered into any lease of or license for any Property from
any
Person, other than in the Ordinary Course of Business or
pursuant
to Seller Contracts listed in Schedule
2.13(a)(ii);
(d) The
Seller has not sold or otherwise transferred, or entered into any lease of
any
Property to any Person, other than in the Ordinary Course of Business or
pursuant to Seller Contracts listed in Schedule
2.13(b);
(e) The
Seller has not written off as uncollectible, or established any extraordinary
reserve with respect to, any account receivable or other indebtedness to
the
Seller, except as set forth on Schedule
2.9(e);
(f) The
Seller has not (i) established or adopted any Benefit Plan, or
(ii) paid any bonus or made any profit-sharing or similar payment to, or
increased the amount of the wages, salary, commissions, fees, fringe benefits
or
other compensation or remuneration payable to, any of its directors, officers,
Employees or independent contractors or any other Person;
(g) No
Contract by which the Seller or any Property owned or used by the Seller
is or
was bound, or under which the Seller has or had any rights or interest, has
been
amended or terminated;
(h) The
Seller has not incurred, assumed or otherwise become subject to, any Liability,
other than accounts payable that are of the type that would be reflected
as
current Liabilities in a balance sheet prepared in accordance with GAAP and
that
were incurred by the Seller in bona fide transactions entered into in the
Ordinary Course of Business in amounts consistent with past
practices;
(i) The
Seller has not discharged any Encumbrance or discharged or paid any indebtedness
or other Liability, other than accounts payable that (i) are reflected as
current Liabilities in the Most Recent Balance Sheet or have been incurred
by
the Seller in bona fide transactions entered into in the Ordinary Course
of
Business in amounts that are consistent with past practice and are not material,
and (ii) have been discharged or paid in the Ordinary Course of
Business;
(j) The
Seller has not forgiven any debt or otherwise released or waived any right
or
claim;
(k) The
Seller has not changed any of its methods of accounting or accounting practices
in any respect;
(l) The
Seller has not suffered any adverse change or any threat of an adverse change
in
its relations with, or any loss or threat of loss of, any of its material
vendors, clients, customers or distributors;
(m) The
Seller has not failed to pay or discharge when due any Liabilities;
(n) The
Seller has not instituted, settled or agreed to settle any
Proceeding;
(o) The
Seller has not granted or suffered the imposition of any Encumbrances on
any of
its Property, other than Permitted Encumbrances;
(p) The
Seller has not entered into any transaction outside the Ordinary Course of
Business, except as set forth in the Transaction Agreements; and
(q) The
Seller has not agreed, committed or offered, in writing or otherwise, to
take
any of the actions referred to in clauses (c) through (p) above.
2.10 Tangible
Property. Schedule 2.10
accurately identifies all equipment, materials, prototypes, tools, supplies,
vehicles, furniture, fixtures, improvements and other tangible Property owned
or
leased by the Seller with
an
individual book value of greater than $5,000.
Each
item of Property identified or required to be identified in Schedule 2.10,
other
than equipment identified on Schedule
2.10
as being
in storage or held on consignment for sale: (i) is free of defects and
deficiencies and in good condition and repair, ordinary wear and tear excepted;
and (ii) complies in all respects with, and is being operated and otherwise
used in full compliance with, all applicable Legal Requirements. Other than
equipment identified on Schedule
2.10
as being
in storage or held on consignment for sale [or relating to third party
servicing], each item of equipment listed on Schedule
1.1(c)
that is
also identified on Schedule
2.10
is
performing at or above the standards communicated to Seller’s customers for the
tests for which such equipment is used. Schedule 2.10
identifies all Seller Contracts pursuant to which any tangible Property is
leased to the Seller.
2.11 Title
to Assets. The
Seller owns and has good and valid title to all of the Assets, free of any
Encumbrance other than Encumbrances set forth on Schedule
2.11,
including all rights of the Seller under the Assumed Contracts. The Assets
collectively constitute, as of the Closing, all of the Property necessary
to
enable the Buyer to conduct the Business.
2.12 Real
Property.
Since
March 9, 2005, the Seller has not owned any real property or any interest
in
real property, except for (a) the leaseholds created under real property
leases
that have expired or been terminated and (b) under the real property leases
identified in Schedule 2.12.
The
Seller enjoys peaceful and undisturbed possession of the real property that
it
leases.
2.13 Intellectual
Property.
(a) As
of
Closing Date,
Seller
exclusively owns, or is authorized to Use, legally enforceable Intellectual
Property Rights in and to all Seller Intellectual Property.
(i) Schedule
2.13(a)(i)
hereto
sets forth all United States and foreign: (i) patents and patent
applications, (ii) registered or applied for trademarks, trade names, brand
names and corporate names, and service marks, (iii) Internet domain name
registrations and applications and (iv) copyright registrations and
applications owned or licensed by Seller in each case described in clauses
(i)
through (iv), that are material to the operations of the Business as presently
conducted, specifying as to each item, as applicable: (A) the title of the
item; (B) the jurisdictions in which the item is issued or registered or in
which an application for issuance or registration has been filed; and
(C) the issuance, registration or application numbers and
dates.
(ii) Schedule
2.13(a)(ii)
hereto
sets forth all material licenses, sublicenses and other agreements or
permissions under which the Seller is a licensor or licensee or otherwise
is
authorized to use or practice any Intellectual Property. Seller has provided
to
Buyer a true and complete copy of all such licenses, sublicenses and other
agreements or permissions listed on Schedule
2.13(a)(ii).
(iii) Schedule
2.13(a)(iii)
hereto
sets forth and describes the status of any material agreements involving
Intellectual Property currently in negotiation or proposed by the
Seller.
(b) Except
as
set forth on Schedule
2.13(b)
hereto,
the Seller owns, free and clear of all Liens other than Permitted Encumbrances
or has the right to use all Intellectual Property used in the Business or
that
is necessary for the operation of the Business.
(c) Except
as
set forth on Schedule
2.13(c)
hereto,
the Seller has not been, during the three years preceding the date of this
Agreement, a party to any Claim, nor, to the Knowledge of the Seller, is
any
Claim threatened in writing, that challenges the validity, enforceability,
ownership or right to use, sell or license any Intellectual Property, except
for
Claims that, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect. To the Knowledge of the Seller, no third
party is infringing upon any Intellectual Property except for infringements
that, individually or in the aggregate, and could not reasonably be expected
to
have a Material Adverse Effect.
(d) Since
March 9, 2005, the Seller has taken all reasonable precautions to protect
the
secrecy, confidentiality, and value of its trade secrets and the proprietary
nature and value of the technology included in the Intellectual Property,
except
for failures to take such precautions that, individually or in the aggregate,
have not resulted and could not reasonably be expected to have a Material
Adverse Effect. To the Seller’s Knowledge, prior to March 9, 2005 the Seller has
taken all reasonable precautions to protect the secrecy, confidentiality,
and
value of its trade secrets and the proprietary nature and value of the
technology included in the Intellectual Property, except for failures to
take
such precautions that, individually or in the aggregate, have not resulted
and
could not reasonably be expected to have a Material Adverse Effect.
(e) The
Seller is not, and, as a result of the execution and delivery of this Agreement
or its performance of its obligations hereunder, will not be, in violation
of
any agreement relating to any Intellectual Property used in the Business,
except
for violation that, individually or in the aggregate, could not reasonably
be
expected to result in a Material Adverse Effect. After the completion of
the
transactions contemplated by this Agreement, the Buyer will own all right,
title
and interest in and to or have a license to use all Intellectual Property
used
in the Business, except for failures to own or have available for use that,
individually or in the aggregate, have not resulted and could not reasonably
be
expected to result in a Material Adverse Effect.
2.14 Contracts.
(a) Schedule 2.14
identifies, with reasonable specificity, each material Seller Contract. Each
Seller Contract is valid and in full force and effect. Schedule
2.14
also
identifies and provides an accurate description of each proposed Contract
as to
which any current bid, offer, written proposal, term sheet or similar document
has been submitted or received by the Seller in writing.
(b) The
Seller has not Breached any Seller Contract, other than a Breach that could
not
reasonably be expected to have a Material Adverse Effect on Buyer or such
Seller
Contract. To the Seller’s Knowledge, no other Person has Breached any Seller
Contract. The Seller has not waived any Breach of any Seller Contract by
another
party thereto, and no other party to any Seller Contract has waived any Breach
of any Seller Contract by the Seller. Since March 9, 2005, no Prior Event
has
occurred that might, with or without notice or lapse of time, (i) result in
a Breach of any Seller Contract by the Seller or, to the Seller’s Knowledge, any
other Person, or (ii) give the Seller or, to the Seller’s Knowledge, any
other Person the right to (A) exercise any remedy under any Seller Contract,
(B) claim or receive a material refund, rebate, chargeback or penalty under
any Seller Contract, (C) accelerate the maturity or performance of any
Seller Contract, or (D) cancel, terminate or modify any Seller Contract.
The Seller has not received any notice or other communication, in writing
or
otherwise, regarding any actual, alleged, possible or potential material
Breach
of any Seller Contract by the Seller or any other Person, other than a Breach
that could not reasonably be expected to have a Material Adverse Effect on
Buyer
or such Seller Contract.
(c) The
performance of the Seller Contracts by the Seller in accordance with the
express
terms thereof does not and will not result in any violation of or failure
to
comply with any Legal Requirement.
(d) Neither
the Seller nor any other Person is currently renegotiating any amount paid
or
payable to or by the Seller under any Seller Contract or any other term or
provision of any Seller Contract.
(e) The
Seller has no Knowledge of any objection by any party to any Seller Contract,
or
any reasonable basis therefor, to the performance of such Seller Contract
by the
Buyer or any Affiliate thereof or the assignment to the Buyer or any Affiliate
thereof of any right under such Seller Contract.
2.15 Customers. Schedule 2.15
accurately identifies, and provides an accurate and complete breakdown of
the
revenues received from, each customer of the Seller for the fiscal year
beginning July 1, 2005 and ending June 30, 2006 and for the first nine (9)
months of the fiscal year ending June 30, 2007, in excess of $5,000. Except
as
set forth on Schedule
2.15,
the
Seller has not received any notice or other communication, in writing or
otherwise, or other information, indicating that any customer may cease dealing
with the Seller or might otherwise reduce the volume of business transacted
by
such customer with the Seller.
2.16 Compliance
with Legal Requirements.
(a) The
Seller is and at all times has been in full compliance with each Legal
Requirement that is applicable to it or to the conduct of its Business or
the
ownership or use of any of its Property and for which the consequences of
noncompliance could reasonably be expected to have a Material Adverse
Effect.
(b) No
event
has occurred, and no condition or circumstance exists, that might, with or
without notice or lapse of time, constitute or result directly or indirectly
in
a violation by the Seller of, or a failure on the part of the Seller to comply
with, any applicable Legal Requirement,
the
consequences of which could reasonably be expected to have a Material Adverse
Effect.
(c) The
Seller has not received any notice from any Governmental Body or any other
Person regarding any actual, alleged, possible or potential violation of,
or
failure to comply with, any Legal Requirement. To the Seller’s Knowledge, no
Governmental Body has proposed or is considering any Legal Requirement that
does
not apply similarly to the business of the Buyer that, if adopted or otherwise
put into effect, (i) could reasonably be expected to have a Material
Adverse Effect or adversely affect the ability of the Seller to comply with
or
perform any covenant or obligation under any of the Transaction Agreements
to
which it is or will be a party, or (ii) could reasonably be expected to
prevent, delay, make illegal or interfere with any of the
Transactions.
2.17 Governmental
Authorizations. Schedule 2.17
identifies each Governmental Authorization that is held by the Seller and
each
currently pending application by Seller for a Governmental Authorization
other
than those the lack of which could not be reasonably expected to have a Material
Adverse Effect. The Seller has delivered to the Buyer accurate and complete
copies of all of the Governmental Authorizations identified in Schedules 2.17,
including all renewals thereof and all amendments thereto. Other than pending
applications, each Governmental Authorization identified or required to be
identified in Schedules 2.17
(each a
“Seller
Governmental Authorization”)
is
valid and in full force and effect.
(a) Since
March 9, 2005, the Seller is and has been in full compliance with all of
the
terms and requirements of each Seller Governmental Authorization, and to
the
Seller’s Knowledge the Seller has been in full compliance with all of the terms
and requirements of each Seller Governmental Authorization prior to March
9,
2005, except to the extent that noncompliance could not be reasonably expected
to have a Material Adverse Effect. To the Seller’s Knowledge, no event has
occurred, and no condition or circumstance exists, that might, with or without
notice or lapse of time, (i) constitute or result directly or indirectly in
a violation
of or a failure to comply
with any term or requirement of any Seller Governmental Authorization, or
(ii) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, termination or modification of any Seller Governmental
Authorization.
(b) Since
March 9, 2005, the Seller has not received any notice or other communication,
in
writing or otherwise, from any Governmental Body or any other Person regarding
(i) any actual, alleged, possible or potential violation of or failure to
comply with any term or requirement of any Seller Governmental Authorization,
(ii) any actual, proposed, possible or potential revocation, withdrawal,
suspension, cancellation, termination or modification of any Seller Governmental
Authorization, or (iii) the Seller’s failure to obtain any necessary
Governmental Authorization, and to the Seller’s Knowledge the Seller has not
received any such notice or other communication prior to March 9,
2005.
(c) All
applications required to have been filed for the renewal of the Seller
Governmental Authorizations have been duly filed on a timely basis with the
appropriate Governmental Bodies, and each other notice or filing required
to
have been given or made with respect to such Seller Governmental Authorizations
has been duly given or made on a timely basis with the appropriate Governmental
Body.
(d) The
Seller Governmental Authorizations constitute all of the Governmental
Authorizations necessary (i) to enable the Seller to conduct the Business
as it is currently conducted, and (ii) to permit the Seller to own and use
its Property in the manner in which they are currently owned and used, in
each
case other than those the lack of which could not be reasonably expected
to have
a Material Adverse Effect.
2.18 Tax
Matters.
(a) Since
March 9, 2005, each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by the Seller has been duly paid in full
on a
timely basis. Since March 9, 2005, any Tax required to have been withheld
or
collected by the Seller has been duly withheld and collected, and each such
Tax
has been duly and timely paid to the appropriate Governmental Body or the
amount
of each such Tax has been properly set aside in accounts for such purpose
and
will be duly and timely paid to the appropriate Governmental Body. Other
than
Taxes incurred in the ordinary course of business, the Seller has no liability
for unpaid Taxes accruing after the date of the Most Recent Balance
Sheet.
(b) Schedule 2.18(b)
accurately identifies each examination or audit of any Tax Return of the
Seller
since March 9, 2005 that has been conducted or is currently being conducted
by a
Governmental Body. The Seller has delivered to the Buyer accurate and complete
copies of all audit reports and similar documents relating to such Tax Returns.
(c) The
Seller has not requested nor granted any currently effective waiver or extension
of any statute of limitations with respect to the assessment or filing of
any
Tax or Tax Return with respect thereto.
(d) No
claim
or other Proceeding is pending or, to the Seller’s Knowledge, has been
Threatened against the Seller in respect of any Tax. The Seller has no
unsatisfied Liabilities for Taxes. The Seller has not received any notice
of
deficiency or similar document, other than deficiencies that have been fully
paid and satisfied.
(e) The
Seller has no Liability for the Taxes of any other Person (i) under
Treasury Regulation Section 1.1502-6 (or any similar Legal Requirement),
except
with respect to the Seller Group, (ii) as a transferee or successor,
(iii) by Contract or (iv) otherwise.
(f) None
of
the Assets are subject to any Liens for Taxes.
(g) No
Taxing
authority has raised any issue with respect to Taxes which, by application
of
similar principles, could result in the issuance of a notice of deficiency
or
similar notice of intention to assess Taxes by any taxing authority to
Seller.
2.19 Employee
and Labor Matters.
(a) Schedule
2.19(a)
accurately sets forth, with respect to each current employee of the Seller,
including any employee who is on a leave of absence (each an “Employee”):
(i)
the name and title of such Employee; (ii) the annualized salary and the bonus
received by such Employee from the Seller with respect to services performed
in
the calendar year 2006; (iii) the nation(s) of which such Employee is a citizen;
and (iv) if such Employee is not a US citizen, such Employee’s immigration or
residency status and to the Knowledge of the Seller the status of any pending
applications for any visa, residency permit or similar Governmental
Authorization for such Employee.
(b) Schedule 2.19(b)
accurately identifies each former employee of the Seller or spouse or other
dependent of such former employee who is receiving or is scheduled to receive
any benefits from the Seller relating to such former employee’s employment with
the Seller, and accurately describes such benefits.
(c) Except
as
set forth on Schedule
2.19(c),
the
employment of each Employee is terminable by the Seller at will, and no Employee
is entitled to severance pay or other benefits following termination or
resignation or upon the execution and delivery of this Agreement or the
consummation of any of the Transactions.
(d) Seller
has not received any notice that an Employee intends to terminate his employment
prior to the Closing, or that an Employee has received an offer to join a
business other than Buyer that competes with the Business. To the Knowledge
of
Seller, no Employee is a party to or is bound by any confidentiality
agreement, non-competition agreement or other Contract that may have an adverse
effect on (A) the performance by such Employee of any of his duties or
responsibilities as an Employee of the Seller or (B) the
Business.
(e) Since
March 9, 2005, the Seller is not engaged in any unfair labor practice of
any
nature, and to the Seller’s Knowledge the Seller has not engaged in any unfair
labor practice or any nature prior to March 9, 2005. Since March 9, 2005,
there
has not been any slowdown, work stoppage, labor dispute or union organizing
activity, or any similar activity or dispute, affecting the Seller or any
of its
Employees, and, to the Seller’s Knowledge, no Person has threatened to commence
any such slowdown, work stoppage, labor dispute or union organizing activity
or
any similar activity or dispute. The Seller is not a party to or bound by,
and
has not been a party to or bound by, any union Contract, collective bargaining
agreement or similar Contract.
(f) Schedule 2.19(f)
sets
forth the name of each independent contractor or consultant to whom the Seller
has made or owes any payment of any nature in fiscal years 2005 and 2006
and the
first nine (9) months of fiscal year 2007, and in the case of payments owed,
shows detail regarding such payment including due date, basis for payment,
recurrence and necessary withholdings, if any.
(g) None
of
the current officers, directors or, to the Seller’s Knowledge, Employees of the
Seller have been convicted of, or pleaded guilty or no contest to, any
felony.
2.20 Benefit
Plans; ERISA.
(a) Schedule 2.20
lists
all Benefit Plans currently maintained by the Seller. The Seller has, with
respect to each such plan, delivered to the Buyer true and complete copies
of
all plan texts and agreements and related trust agreements, insurance policies
and service provider agreements.
(b) With
respect to each Benefit Plan, to the Seller’s Knowledge, no event has occurred,
and there exists no condition or set of circumstances in connection with
which
the Seller could, directly or indirectly, be subject to any Liability under
ERISA, the Code or any other applicable law, except Liability for benefits
claims and funding obligations payable in the Ordinary Course of
Business.
(c) No
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code, or breach of fiduciary duty under Title I of ERISA has
occurred with respect to any Benefit Plan or with respect to the
Seller.
(d) The
Seller and each Affiliate of the Seller have made all payments due from them
to
date with respect to each Benefit Plan.
(e) Since
March 9, 2005, the Seller has not effectuated (i) a “plant closing” or
partial “plant closing” (as defined in the federal Worker Adjustment and
Retraining Notification Act (the “WARN
Act”)
or any
similar Legal Requirement) affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of
the
Seller, (ii) a “mass layoff” (as defined in the WARN Act or any similar
Legal Requirement) affecting any site of employment or facility of the Seller,
or (iii) a “mass layoff” or “relocation” or “termination” at any “covered
establishment” (as defined in California Labor Code Sections 1400 through 1408)
of the Seller.
2.21 Environmental
Matters. The
Seller’s operation of the Business is, and has been at all times since March 9,
2005, in compliance with all Environmental Laws, Environmental Permit
requirements, Use restrictions, and waste control requirements. The Seller
has
obtained all Environmental Permits necessary to conduct the Business, and
all
such Environmental Permits are currently in effect. Schedule
2.21
sets
forth a list of all Hazardous Materials used by the Seller in the Business.
During the Seller’s occupancy of the Seller Real Property since March 9, 2005,
no Environmental Release of any Hazardous Materials has occurred on any Seller
Real Property, and, to the Seller’s Knowledge, no such Environmental Release
occurred prior to the Seller’s occupancy. There is no Environmental Claim
pending or, to the Seller’s Knowledge, Threatened against the Seller, and no
Governmental Body has served upon the Seller any notice claiming any outstanding
violation of any Environmental Law or Environmental Claim or otherwise
requesting data or access, requiring testing or other investigation relating
to
the Environment, or requiring any change in the Seller’s means or methods of
conducting the Business. To the Seller’s Knowledge, there is no reasonable basis
for any Environmental Claim against the Seller or arising out of or relating
to
the Business except as set forth on Schedule
2.21.
2.22 Conduct
of the Business.
Since
April 30, 2004, the Business was conducted properly and in full conformity
with
the terms and requirements of all applicable warranties and other Contracts
and
with all applicable Legal Requirements. The Seller has not incurred or otherwise
become subject to any Liability arising directly or indirectly from the Business
or any services performed with respect thereto. There is no claim pending or, to
the Seller’s Knowledge, Threatened against the Seller relating to the Business
and, to the Seller’s Knowledge, there is no basis for the assertion of any such
claim.
2.23 Insurance.
(a) Schedule 2.23(a)
identifies each insurance policy covering comprehensive liability and other
risks that the Seller currently has in force (each, an “Insurance
Policy”)
and
identifies coverage limits for each such Insurance Policy. Each Insurance
Policy
is of the type and in such amounts that are sufficient for compliance with
all
Seller Contracts. Each Insurance Policy is valid, enforceable and in full
force
and effect, and has been issued by an insurance carrier that, to the Seller’s
Knowledge, is solvent, financially sound and reputable.
(b) Schedule 2.23(b)
identifies each insurance claim made by the Seller since March 9, 2005. No
Prior
Event has occurred since March 9, 2005, or prior to such date to Seller’s
Knowledge, that might, with or without notice or lapse of time, directly
or
indirectly give rise to or serve as a basis for any insurance claim. The
Seller
has not received any written notice regarding (i) the actual or Threatened
cancellation or invalidation of any Insurance Policy; (ii) any actual or
Threatened refusal of coverage under, or any actual or Threatened rejection
of
any claim under, any Insurance Policy; or (iii) any indication that the
issuer of any Insurance Policy may be unwilling or unable to perform any
of its
obligations thereunder.
2.24 Related
Party Transactions.
No
Related Party: (a) has any direct or, to the Seller’s Knowledge, indirect
interest of any nature in any of the assets of the Seller, including any
Seller
Intellectual Property; (b) has any direct or, to the Seller’s Knowledge,
indirect financial interest in, any Seller Contract, transaction or business
dealing of any nature involving the Seller; (d) is competing, or has at any
time
competed, directly or, to the Seller’s Knowledge, indirectly, with the Seller;
or (e) to the Seller’s Knowledge, has any claim or right against the Seller. No
Prior Event has occurred that might, with or without notice or lapse of time,
directly or indirectly give rise to or serve as a basis for any claim or
right
in favor of any Related Party against the Seller.
2.25 Proceedings;
Orders.
(a) There
is
no pending Proceeding or, to the Seller’s Knowledge, any Threatened Proceeding:
(i) that involves the Seller or relates to or might affect the Business or
any Property of the Seller; or (ii) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
any of the Transactions. To the Seller’s Knowledge, there is no pending or
Threatened Proceeding to which the Seller is not a party that relates to
or
might affect the Business or any Property of the Seller. To the Seller’s
Knowledge, no event has occurred, and no claim, dispute or other condition
or
circumstance exists, that might directly or indirectly give rise to or serve
as
a basis for the commencement of any such Proceeding.
(b) Schedule 2.25(b)
lists
each Proceeding that has been commenced by or against the Seller since march
9,
2005 and includes a brief background of each such Proceeding and the status
or
outcome of each such Proceeding.
(c) Schedule 2.25(c)
lists
(i) each instance since March 9, 2005, in which a Proceeding was Threatened
by or, to the Seller’s Knowledge, against the Seller and (ii) each current
or former dispute between the Seller and any other Person (other than those
settled prior to March 9, 2005) which reasonably could be or could have been
the
basis for a Proceeding which could be or could have resulted in a Material
Adverse Effect (each, a “Dispute”).
Schedule 2.25(c)
includes
a brief background of each Dispute and each Threatened Proceeding and the
status
or outcome of each such Dispute and each Threatened Proceeding.
(d) There
is
no Order to which the Seller or any of its Property is subject; and, to the
Seller’s Knowledge, none of the Seller or any other Related Party is subject to
any Order that relates to the Business or to any of the Seller’s Property. To
the Seller’s Knowledge, no Employee is subject to any Order that may prohibit
the Employee from engaging in or continuing any conduct, activity or practice
relating to the Business. To the Seller’s Knowledge, there is no proposed Order
that, if issued or otherwise put into effect, (i) could have a Material
Adverse Effect or an adverse effect on the ability of the Seller to comply
with
or perform any covenant or obligation under any of the Transaction Agreements,
or (ii) could have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the Transactions.
2.26 Brokers.
The
Seller has not agreed or become obligated to pay, or has taken any action
that
might result in any Person claiming to be entitled to receive, any brokerage
commission, finder’s fee or similar commission or fee in connection with any of
the Transactions other than the fee payable to Legend Merchant Group, and
Buyer
shall have no liability for payment of the fee payable to Legend Merchant
Group.
2.27 No
Other Agreement to Sell Assets or Stock of the Seller.
Except
as set forth in the Transaction Agreements, the Seller does not have, and
has
not authorized any Representative of the Seller to enter into on behalf of
the
Seller, and, to the Seller’s Knowledge, no one has, any agreement, commitment or
legal obligation, absolute or contingent, with any Person (a) to sell,
exclusively license, assign, transfer or effect a sale of any portion of
the
assets of the Seller (other than inventory and products in the Ordinary Course
of Business), (b) to sell or effect a sale of any Stock, (c) to effect
any merger, acquisition, consolidation, liquidation, dissolution or other
reorganization of the Seller or (d) to enter into any Contract or cause the
entering into of a Contract with respect to the foregoing.
2.28 Provision
of Documents.
The
Seller has provided to the Buyer true, correct and complete copies of all
Contracts, documents and other material referred to in the Disclosure
Schedule.
2.29 Import
and Export Control Laws.
The
Seller has at all times as to which the applicable statute of limitations
has
not yet expired, conducted its Business in accordance with (i) all applicable
U.S. import, export and re-export controls, including without limitation
(A) the
United States Export Administration Act (50
USC §§
2401-2420)
and the
Export Administration Regulations promulgated thereunder, (B) the Arms Export
Control Act (22
U.S.C.
§§2778 et seq.) and International
Traffic in Arms Regulations (22 CFR Chapter I, Subchapter M, Part 120 et
seq.),
(C) the Trading with the Enemy Act of the United States of America (50 U.S.C.
App. §§ 1 et seq.), (D) the Foreign Assets Control Regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended), and
any
enabling legislation, regulation or executive order relating to any of the
foregoing, and (ii) all other applicable import/export controls in other
countries in which the Seller conducts material business (collectively,
“Import
and Export Control Laws”).
Without limiting the foregoing:
(a) The
Seller has obtained, and is in material compliance with, all material export
licenses, license exceptions and other consents, notices, waivers, approvals,
orders, authorizations, registrations, declarations, classifications and
filings
with any Governmental Body required for (i) the export and re-export of
products, services, software and technologies and (ii) releases of technologies
and software to foreign nationals located in the United States and abroad
(“Export
Approvals”);
(b) There
are
no pending or, to the knowledge of the Seller, threatened claims against
the
Seller with respect to such Export Approvals;
(c) To
the
Seller’s Knowledge, there are no actions, conditions or circumstances pertaining
to the Seller’s import or export transactions that may give rise to any future
claims;
(d) No
Export
Approvals for the transfer of export licenses to Buyer are required, or such
Export Approvals can be obtained expeditiously without material
cost;
(e) None
of
the Seller or any of its Affiliates is a party to any Contract or bid with,
or
has conducted business with (directly or, to the Knowledge of the Seller,
indirectly), a third party located in, or otherwise has any operations in,
or
sales to, Cuba, Iran, Syria, Sudan, Burma (Myanmar), or North
Korea.
(f) Since
March 9, 2005, the Seller has not received written notice to the effect that
a
Governmental Body claimed or alleged that the Seller was not in compliance
in a
material respect with any applicable Legal Requirements relating to the export
of goods and services to any foreign jurisdiction against which the United
States or the United Nations maintains sanctions or export controls, including
applicable regulations of the United States Department of Commerce and the
United States Department of State; and
(g) Xxxxx
Xxxxx 0, 0000, xxxx of the Seller or any of its Affiliates has made any
voluntary disclosures to, or has been subject to any fines, penalties or
sanctions from, any Governmental Body regarding any past import or export
control violations.
(h) The
Seller has trained relevant Seller personnel on compliance with Import and
Export Control Laws.
2.30 Foreign
Corrupt Practices Act.
To the
Knowledge of the Seller, neither the Seller nor any of its officers, directors,
agents, distributors, employees or other Person associated with or acting
on its
behalf has, directly or indirectly, taken any action which would cause it
to be
in material violation of the Foreign Corrupt Practices Act of 1977, as amended,
or any rules or regulations thereunder or any similar anti-corruption or
anti-bribery Laws applicable to the Seller in any jurisdiction other than
the
United States (collectively, the “FCPA”),
or,
to the Knowledge of the Seller, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, made, offered or authorized any unlawful payment to foreign
or domestic government officials or employees, whether directly or indirectly,
or made, offered or authorized any bribe, rebate, payoff, influence payment,
kickback or other similar unlawful payment, whether directly or indirectly,
except for any of the foregoing which is no longer subject to potential claims
of violation as a result of the expiration of the applicable statute of
limitations. The Seller has trained relevant Seller personnel on FCPA
compliance.
2.31 Full
Disclosure.
None of
the Transaction Agreements to which the Seller is or becomes a party contains
or
will contain any untrue statement of fact with respect to the
Seller.
3. Representations
and Warranties of the Buyer. The
Buyer
hereby represents and warrants, to and for the benefit of the Seller, as
follows:
3.1 Authority;
Binding Nature of Agreements.
The
Buyer has the absolute and unrestricted corporate right, power and authority
to
enter into and perform its obligations under each of the Transaction Agreements
to which it is or may become a party (the “Buyer
Agreements”)
and the
other agreements, certificates and instruments to be executed by Buyer pursuant
to this Agreement and and to consummate the Transactions. The execution,
delivery and performance by the Buyer of the Buyer Agreements have been duly
authorized by all necessary action on the part of the Buyer. This Agreement
has
been duly executed and delivered by the Buyer and constitutes the legal,
valid
and binding obligation of each of the Buyer, enforceable against it in
accordance with its terms, except as may be limited by the Enforceability
Limitations. Upon the execution and delivery of the other Transaction Agreements
at the Closing, each Buyer Agreement will constitute the legal, valid and
binding obligation of the Buyer, enforceable against it, as applicable, in
accordance with its terms, except as may be limited by the Enforceability
Limitations.
3.2 No
Conflicts.
The
execution and delivery of the Buyer Agreements by the Buyer and the consummation
by the Buyer of the transactions contemplated thereby do not and will not
(i)
require any filing with, or Consent of, any Governmental Body, (ii) violate
any
Legal Requirement or Order applicable to the Buyer or any Property of the
Buyer,
or (iii) conflict with or result in the breach of any term or provision of,
or
violate or constitute a default under, any charter provision or bylaw or
under
any material agreement to which the Buyer is a party.
3.3 Brokers.
The
Buyer has not become obligated to pay or has taken any action that might
result
in any Person claiming to be entitled to receive, any brokerage commission,
finder’s fee or similar commission or fee in connection with any of the
Transactions.
3.4 Organization
and Good Standing.
The
Buyer is a limited liability company duly organized, validly existing and
in
good standing under the laws of the State of Delaware.
3.5 Full
Disclosure.
None of
the Transaction Agreements to which the Buyer is or becomes a party contains
or
will contain any untrue statement of fact with respect to the
Buyer.
4. Conditions
Precedent to the Buyer’s Obligation to Close. The
obligation of the Buyer to purchase the Assets and assume the Assumed
Liabilities at the Closing is subject to the fulfillment, on or prior to
the
Closing, of each of the following conditions, any of which may be waived
by the
Buyer, in whole or in part, in writing:
4.1 Accuracy
of Representations.
All of
the representations and warranties made by the Guarantor and the Seller in
this
Agreement, considered collectively, and each of such representations and
warranties, considered individually, shall be true and correct in all respects
as of the Closing Date, with the same effect as though such representations
and
warranties were made at and as of the Closing.
4.2 Consents.
Each of
the Consents and assignment instrument identified in Schedule 2.5
shall
have been obtained and shall be in full force and effect.
4.3 Compliance.
Seller
has performed and complied with all the covenants and agreements required
by
this Agreement to be performed or complied with by it at or prior to the
Closing, including without limitation the delivery of all items required
to be
delivered by it pursuant to this Agreement.
4.4 Authorization.
The
authorization of the Transactions by the requisite vote of the shareholders
and
directors of Seller shall have been duly obtained in accordance with the
Charter
Documents.
4.5 Release
of Liens.
The
Seller shall have delivered to the Buyer evidence reasonably satisfactory
to the
Buyer of the release of all Liens on the Assets.
4.6 No
Material Change.
No event
shall have occurred and no condition or circumstance shall exist that could
be
expected to give rise to any Material Adverse Effect. There shall not be
any
material problem or Liability with respect to the Seller or the
Business.
4.7 No
Proceedings.
No (a)
Order, stay or injunction shall have been entered, issued or enforced by
any
court of competent jurisdiction prohibiting the Transactions, (b) action
shall
have been commenced or Threatened by any Governmental Body, or (c) Legal
Requirement enacted, entered, enforced or deemed applicable to the Transactions
that, in any such event, (i) makes the consummation of any of the
Transactions illegal, (ii) could reasonably deprive the Buyer of any of the
material anticipated benefits of the Transactions, taken as a whole, or
(iii) could have the effect of preventing, delaying or otherwise
interfering with any of the Transactions.
4.8 Secretary’s
Certificate.
The
Seller and the Guarantor each shall have delivered to the Buyer a certificate
executed by its Secretary, dated as of the Closing Date, certifying:
(a) the resolutions of its Board authorizing and approving the execution,
delivery and performance of this Agreement and each of the other Transaction
Agreements to which the Seller or the Guarantor will be a party and the
consummation of the Transactions, (b) the Charter Documents and
(d) the name, title, incumbency and signatures of the officers authorized
to execute this Agreement and the Transaction Agreements to which the Seller
or
the Guarantor is a party.
4.9 Opinion
of Seller’s Counsel.
The
Buyer shall have received an opinion letter from Ellenoff Xxxxxxxx & Schole
LLP, counsel to the Seller, dated the Closing Date, in form attached hereto
as
Exhibit
F.
4.10 Documents.
(a) Assignment
and Assumption Agreement.
The
Seller shall have executed and delivered to the Buyer the Assignment and
Assumption Agreement in the form of Exhibit
B
(the
“Assignment
and Assumption Agreement”).
(b) Seller
Non-Competition Agreement.
The
Seller and the Guarantor shall have executed and delivered to the Buyer a
Non-Competition Agreement in the form of Exhibit
C
(the
“Seller
Non-Competition Agreement”).
Seller, Guarantor and Buyer shall agree that the Seller Non-Competition
Agreement is an integral part of the bargain and consideration for the
transactions contemplated by this Agreement.
(c) Sunnyvale
Sublease.
The
Seller shall have executed and delivered to the Buyer the Sublease in the
form
of Exhibit
D
(the
“Sunnyvale
Sublease”).
5. Conditions
Precedent to the Seller’s Obligation to Close. The
Seller’s obligation to sell the Assets and to take the other actions required to
be taken by the Seller at the Closing is subject to the satisfaction, at
or
prior to the Closing, of each of the following conditions, any of which may
be
waived by the Seller, in whole or in part, in writing:
5.1 Accuracy
of Representations.
All of
the representations and warranties made by the Buyer in this Agreement,
considered collectively, and each of such representations and warranties,
considered individually, shall be true and correct in all respects as of
the
Closing Date with the same effect as though such representations and warranties
were made at and as of the Closing.
5.2 No
Proceedings.
No (a)
Order, stay or injunction shall have been entered, issued or enforced by
any
court of competent jurisdiction prohibiting the Transactions, (b) action
shall
have been commenced or Threatened by any Governmental Body, or (c) Legal
Requirement enacted, entered, enforced or deemed applicable to the Transactions
that, in any such event, (i) makes the consummation of any of the Transactions
illegal, or (ii) could have the effect of preventing, delaying or otherwise
interfering with any of the Transactions.
5.3 Documents.
(a) Assignment
and Assumption Agreement.
The
Buyer shall have executed and delivered to the Seller the Assignment and
Assumption Agreement in the form of Exhibit
B.
(b) Sunnyvale
Sublease.
The
Seller shall have executed and delivered to the Buyer the Sunnyvale Sublease
in
the form of Exhibit
D.
(c) List
of Employees. The
Buyer
shall have delivered to Seller a list of employees to be offered employment
by
the Buyer immediately after the Closing. Buyer shall promptly after Closing
offer employment to such designated employees under standard terms and
conditions of employment. All such hired employees shall be given credit
for
time employed by Seller prior to Closing in any calculations of seniority
or
longevity with the Buyer.
5.4 Consents.
All
necessary Governmental Authorizations for the Transactions have been obtained
and all necessary governmental notices have been given.
5.5 Compliance.
Buyer
has performed and complied with all the covenants and agreements required
by
this Agreement to be performed or complied with by it at or prior to the
Closing, including without limitation the delivery of all items required
to be
delivered by it pursuant to this Agreement.
5.6 Authorization.
The
authorization of the Transactions by the requisite vote of members or managers
of the Buyer shall have been duly obtained in accordance with the Certificate
of
Formation and Operating Agreement of the Buyer.
5.7 Secretary’s
Certificate.
The
Buyer shall have executed and delivered to Seller a certificate of the Secretary
of Buyer certifying, as complete and accurate as of the Closing, attached
copies
of the Buyer Agreements, certifying and attaching all requisite resolutions
or
actions of Buyer’s board of directors and shareholders approving the execution
and delivery of this Agreement, the Transaction Agreements and the consummation
of the Transactions and certifying to the incumbency and signatures of the
officers of Buyer executing this Agreement, the Transaction Agreements and
any
other document relating to the Transactions.
5.8 Opinion
of Buyer’s Counsel.
The
Seller shall have received an opinion letter from Xxxxxxx Xxxxxx, counsel
to the
Buyer, dated the Closing Date, in form attached hereto as Exhibit
G.
6. Indemnification,
Defense of Claims.
6.1 Survival
of Representations and Warranties.
(a) The
representations and warranties of the Buyer and the Seller set forth in or
pursuant to this Agreement, including any representations and warranties
in the
Disclosure Schedule, or any other Transaction Agreement (each, a “Representation”),
shall
survive (i) the Closing; (ii) any sale or other disposition of any or
all of the Assets by the Buyer; and (iii) the death or dissolution of any
Party, and shall remain in full force and effect and survive for a period
of
thirty-six (36) months after the Closing Date. Notwithstanding the preceding
sentence, (x) the Representations set forth in Section 2.18 (Tax Matters),
and
Section 2.21 (Environmental Matters) shall survive until the date that is
thirty
(30) days after the expiration of the applicable statute of limitations,
including any extensions thereof, and (y) the Representations set forth in
Section 2.11 (Title to Assets) shall survive for a period of forty-eight
(48)
months (each such period, the “Survival
Period”).
(b) If
notice
of an indemnification claim under Section 6.3 relating to any Representation
is
given to the Seller Representative on or prior to the end of the applicable
Survival Period, then, notwithstanding anything to the contrary contained
in
this Section 6.1, that Representation shall not expire, but rather shall
remain
in full force and effect solely with respect to such pending indemnification
claim (and not for any other claim or purpose) until such time as each such
pending indemnification claim has been fully and finally resolved, either
by
means of a written settlement agreement executed on behalf of the Seller
Representative and the Buyer or by means of a final, non-appealable judgment
issued by a court of competent jurisdiction.
6.2 Dispute
Resolution.
Notwithstanding anything in this Agreement to the contrary, absent fraud,
any
Post-Closing economic disputes between the Parties, not including disputes
related to the Seller Non-Competition Agreements, shall be decided by
negotiation, and, if necessary, binding arbitration under the expedited
procedures of the Judicial Arbitration and Mediation Service in Santa Clara,
California. In the event the Parties enter into binding arbitration, the
Buyer
(one the one hand) and the Seller and Guarantor (on the other hand) shall
present in writing a final offer of settlement to the other and the arbitrator.
The arbitrator, in rendering his judgment, shall be limited to choosing between
such two final offers, selecting the one which he judges to be the most fair.
In
the event of any post-closing arbitration or litigation between the Parties,
the
loser (i.e. the party whose final offer was not selected) of such action
will
indemnify the prevailing party against the reasonable costs of such
action.
6.3 Indemnification
by the Seller and the Guarantor.
Subject
to the limitations set forth in Sections 6.1 and 6.7, the Seller and the
Guarantor (each, an “Indemnifying
Party”)
jointly and severally shall hold harmless and indemnify each of the Buyer
Indemnitees from and against, and shall compensate and reimburse each of
the
Buyer Indemnitees for, any Damages that are directly or indirectly suffered
or
incurred by any of the Buyer Indemnitees or to which any of the Buyer
Indemnitees otherwise becomes subject at any time, and that arise directly
or
indirectly from or as a direct or indirect result of, or are directly or
indirectly connected with:
(a) any
Breach of any Representation;
(b) any
Breach of any covenant or obligation made by the Seller in this Agreement
or any
of the other Transaction Agreements;
(c) any
Excluded Liability;
(d) any
failure of Seller’s operation of the Business to comply with all Environmental
Laws, Environmental Permit requirements, Use restrictions, and waste control
requirements, or any Environmental Release of any Hazardous Materials on
any
Seller Real Property during Seller’s occupancy of the Seller Real
Property;
(e) any
fees
and expenses of the Seller described in Section 8.3; and
(f) any
Proceeding alleging facts or circumstances that, if true, would constitute
a
Breach of any Representation or any covenant or obligation of the Seller
under
any Transaction Agreement.
6.4 Indemnification
by the Buyer.
Subject
to the limitations set forth in Sections 6.1 and 6.7, the Buyer shall hold
harmless and indemnify each of the Seller and the Guarantor from and against,
and shall compensate and reimburse each of the Seller and the Guarantor for,
any
Damages that are directly or indirectly suffered or incurred by any of the
Seller or the Guarantor or to which the Seller or the Guarantor otherwise
becomes subject at any time, and that arise directly or indirectly from or
as a
direct or indirect result of, or are directly or indirectly connected
with:
(a) any
Breach of any representation or warranty of the Buyer;
(b) any
Breach of any covenant or obligation made by the Buyer in this Agreement
or any
of the other Transaction Agreements;
(c) any
fees
and expenses of the Buyer described in Section 8.3; or
(d) any
Assumed
Liabilities.
6.5 Defense
of Third Party Claims.
(a) The
Buyer
shall have the right to assume the defense of any claim or Proceeding, whether
against any Party, any Indemnitee or any other Person, with respect to which
any
Indemnifying Party may become obligated to indemnify, hold harmless, compensate
or reimburse any Person pursuant to this Section 6; provided, however, that
the
Seller shall have the right to assume the defense of any claim or Proceeding
if
the sole remedy claimed is monetary Damages and the Seller assumes the
obligation to pay all monetary Damages resulting from such claim or Proceeding.
The Buyer shall also have the right, at its election, to designate the Seller
to
assume the defense of any such claim or Proceeding.
(b) If
the
Buyer assumes the defense of any such claim or Proceeding:
(i) The
Buyer
shall proceed to defend such claim or Proceeding in a diligent manner and
in
good faith;
(ii) The
Seller and the Guarantor shall make available to the Buyer any documents
and
materials in the possession or control of the Seller and the Guarantor that
may
reasonably be necessary to the defense of such claim or Proceeding and related
thereto, subject to a court’s determination regarding privilege;
(iii) The
Buyer
shall keep the Seller informed of all material developments and events relating
to such claim or Proceeding;
(iv) The
Seller shall have the right to participate in the defense of such claim or
Proceeding at its own expense; and
(v) The
Buyer
shall have the right to settle, adjust or compromise such claim or Proceeding
with the consent of the Seller; provided,
however,
that the Seller shall not unreasonably withhold such consent.
(c) If
the
Seller assumes the defense of any such claim or Proceeding:
(i) The
Seller
shall
proceed to defend such claim or Proceeding in a diligent manner and in good
faith with counsel reasonably satisfactory to the Buyer;
(ii) The
Buyer
shall make available to the Seller any documents and materials in the possession
of the Buyer that may reasonably be necessary to the defense of such claim
or
Proceeding and related thereto, subject to a court’s determination regarding
privilege;
(iii) The
Seller shall keep the Buyer and its Representatives informed of all material
developments and events relating to such claim or Proceeding;
(iv) The
Buyer
shall have the right to participate in the defense of such claim or Proceeding
at its own expense;
(v) The
Seller shall not settle, adjust or compromise such claim or Proceeding without
the prior written consent of the Buyer, which consent shall not be unreasonably
withheld; and
(vi) Notwithstanding
the prior designation of the Seller to assume the defense of such claim or
Proceeding, the Buyer may at any time, in its reasonable discretion, assume
the
defense of such claim or Proceeding unless the sole remedy claimed is monetary
Damages and the Seller has assumed the obligation to pay all monetary Damages
resulting from such claim or Proceeding.
(d) Subject
to the limitations set forth in Section 6.7, (i) all fees, expenses, charges
or
costs of any nature, including any reasonable legal fee, expert fee, accounting
fee or advisory fee, relating to the defense of a claim or Proceeding for
which
indemnification pursuant to Section 6.3 is claimed, whether or not incurred
by
the Seller and whether or not the Buyer shall assume the defense of any such
claim or Proceeding, shall be borne and paid exclusively by the Seller and
the
Guarantor, and (ii) all fees, expenses, charges or costs of any nature,
including any reasonable legal fee, expert fee, accounting fee or advisory
fee,
relating to the defense of a claim or Proceeding for which indemnification
pursuant to Section 6.4 is claimed, whether or not incurred by the Seller
and
whether or not the Buyer shall assume the defense of any such claim or
Proceeding, shall be borne and paid exclusively by the Buyer.
6.6 Right
to Indemnification Not Affected by Knowledge.
The
Representations, covenants and obligations of the Seller and the Guarantor,
and
the rights and remedies that may be exercised by the Buyer Indemnitees based
on
such Representations, covenants and obligations, will not be limited or affected
by any investigation conducted with respect to, or any knowledge acquired
(or
capable of being acquired) by the Buyer Indemnitees at any time, whether
before
or after the execution and delivery of this Agreement or the Closing, with
respect to the accuracy or inaccuracy of or compliance with any such
Representation, warranty, covenant or obligation.
6.7 Limitations
on Indemnification.
(a) The
Seller and Guarantor shall not be required to indemnify any Buyer Indemnitee
pursuant to Section 6.3(a) until such time as the aggregate amount of Damages
for which Buyer Indemnitees are otherwise entitled to indemnification pursuant
to this Agreement exceeds $150,000, at which time the Seller and Guarantor
shall
be obligated to indemnify the Buyer Indemnitees for the full amount of such
Damages including such $150,000 amount, subject to the limitations of this
Section 6. The standard of what is “material” for purposes of determining
whether a Representation that is qualified by the words “material” or
“materially” or “Material Adverse Effect” is breached shall be $50,000 per item
or group of related items; provided, however, that if such a Representation
is
breached then Damages for such breach shall nonetheless include all Damages
below the threshold of materiality. Notwithstanding anything to the contrary
in
this Section 6.6(a), the threshold limits imposed by this Section 6.6(a)
shall
not apply to any Damages arising out of or in connection with indemnification
regarding (i) the Representations set forth in Section 2.18 (Tax Matters),
Section 2.21 (Environmental Matters), or Section 2.7(c) (Net Debt), (ii)
any
Excluded Liability, or (iii) acts of fraud, deceit, or intentional
misrepresentation by the Seller or the Guarantor or any of their
Representatives.
(b) All
or
any portion of any amounts paid to the Buyer Indemnitees by the Seller or
the
Guarantor shall reduce, on a dollar-for-dollar basis, the maximum aggregate
Liability of the Seller and Guarantor set forth in this Section 6.7, where
applicable.
(c) The
aggregate maximum amount payable by the Seller and Guarantor with respect
to any
and all claims for indemnification under this Agreement shall not exceed
Four
Million Dollars ($4,000,000.00); provided, however, that such $4,000,000
limit
shall not apply to Damages arising from (i) a breach of the Representations
set
forth in Section 2.8(a) (Liabilities), Section 2.11 (Title to Assets), Section
2.18 (Tax Matters), or Section 2.21 (Environmental Matters), (ii) any Excluded
Liability, or
(iii)
acts of fraud, deceit, or intentional misrepresentation by the Seller or
the
Guarantor or any of their Representatives.
(d) Notwithstanding
anything to the contrary herein, the Seller and the Guarantor shall not be
obligated to indemnify against any Damages to the extent such Damages are
taken
into account in determining the Net Debt of the Seller as of the Closing
Date.
(e) For
the
avoidance of doubt, notwithstanding the fact that Seller’s Liability for any
breach of the Representations set forth in this Agreement is an “Excluded
Liability” pursuant to Section 1.3(b), the exclusion of Excluded Liabilities
from the limitations in Section 6.7(a) and 6.7(c) shall not affect the
application of such limitations to Seller’s obligations to indemnify Buyer
Indemnitees for Damages arising under a claim for breach of Section 2 of
this
Agreement, but Seller shall be obligated nonetheless to indemnify Buyer
Indemnitees under Section 6.3(c) without regard for the limitations under
Section 6.7(a) and Section 6.7(c) to the extent that Buyer Indemnitees suffer
Damages that arise directly or indirectly from or as a direct or indirect
result
of, or are directly or indirectly connected with any Excluded Liabilities
other
than Damages under a claim for breach of Section 2 of this
Agreement.
(f) The
Buyer
shall not be required to indemnify any Seller Indemnitee pursuant to Section
6.4(a) until such time as the aggregate amount of Damages for which Seller
Indemnitees are otherwise entitled to indemnification pursuant to this Agreement
exceeds $150,000, at which time the Buyer shall be obligated to indemnify
the
Seller Indemnitees for the full amount of such Damages including such $150,000
amount, subject to the limitations of this Section 6. The standard of what
is
“material” for purposes of determining whether a Representation that is
qualified by the words “material” or “materially” or “Material Adverse Effect”
is breached shall be $50,000 per item or group of related items; provided,
however, that if such a Representation is breached then Damages for such
breach
shall nonetheless include all Damages below the threshold of materiality.
The
aggregate maximum amount payable by the Buyer with respect to any and all
claims
for indemnification under this Agreement shall not exceed Four Million Dollars
($4,000,000.00); provided, however, that such $4,000,000 limit shall not
apply
to claims for Damages arising from acts of fraud, deceit, or intentional
misrepresentation by the Buyer or any of its Representatives. All or any
portion
of any amounts paid by Buyer to the Seller Indemnitees shall reduce, on a
dollar-for-dollar basis, the maximum aggregate Liability of the Buyer set
forth
in this Section 6.7(f).
6.8 Purchase
Price Adjustment.
The
Parties agree to treat any indemnity payments under this Agreement as an
adjustment to the Purchase Price for all Tax purposes and shall take no position
contrary thereto unless required to do so by applicable Tax law pursuant
to a
determination as defined in Section 1313(a) of the Code.
7. Post-Closing
Covenants.
7.1 Further
Actions. From
and
after the Closing, each of the Buyer, Seller and Guarantor shall cooperate
with
the each other and their respective Affiliates and Representatives, and shall
execute and deliver such documents and take such other actions as such parties
may reasonably request, for the purpose of evidencing the Transactions and
putting the Buyer in possession and control of the Assets.
7.2 Use
of Name. As
soon
as reasonably practicable after the Closing, the Seller shall change its
corporate name to a name that does not include “Accurel” and shall change the
corporate name of any entity over which it has control to a name that does
not
include “Accurel”.
7.3 Public
Announcements. The
parties hereto have agreed upon the text of their respective press releases
announcing, among other things, the execution of this Agreement, which press
releases may be disseminated promptly following the execution
hereof. For
a
period of thirty (30) days following the Closing Date, the Seller, the Guarantor
and the Buyer shall consult with each other before issuing any additional
press
releases or otherwise making any additional public statements with respect
to
this Agreement and the transactions contemplated hereby and shall not issue
any
such press release or may any such public statement prior to such consultation
or as to which the other party promptly and reasonably objects, except as
may be
required by any Legal Requirement based on the advice of such party’s counsel or
by obligations pursuant to any listing agreement with any securities exchange
or
inter-dealer quotation system, in which case the party proposing to issue
such
press release or make such public announcement shall use its best efforts
to
consult in good faith with the other party before issuing such press release
or
making any such public announcements.
7.4 Payment
of Creditors; Dissolution, Liquidation and Winding Up.
From and
after the Agreement Date, the Seller shall not authorize or make any
distribution to the Guarantor without paying or providing for all amounts
due
the creditors of the Seller in accordance with all Legal Requirements. As
soon
as practicable following the Closing, the Seller shall pay all amounts owed
by
the Seller to its creditors, and, if reasonably requested by the Buyer, shall
furnish to the Buyer reasonable documentation or confirmation of such payments;
provided, however, that such immediate payment obligation shall not apply
with
respect to any debt disputed in good faith by the Seller as long as the Seller
sets aside, and does not distribute to its Guarantor, the full amount in
dispute. From and after the Closing Date, the Buyer shall provide the Seller
with copies of or reasonable access to Books and Records included in the
Assets
if and to the extent reasonably necessary in connection with the liquidation
and
winding up of the Seller and its business; provided, however, that the Buyer
shall not be obligated to provide any access to Books and Records if such
access
would materially interfere with the Business.
8. Miscellaneous
Provisions.
8.1 Further
Assurances.
Each
Party shall execute or cause to be delivered to each other Party hereto such
instruments and other documents, and shall take such other actions, as such
other Party may reasonably request, prior to, at or after the Closing, for
the
purpose of carrying out or evidencing any of the Transactions.
8.2 Fees
and Expenses.
Each
Party shall pay its own fees and expenses incident to the negotiation,
preparation and execution of this Agreement, including the fees and expenses
of
counsel, accountants, investment bankers and other experts. None of the Parties
shall have any obligation to pay any of the fees or expenses of any other
Party.
8.3 Attorneys’
Fees.
If any
Proceeding relating to any of the Transaction Agreements or the enforcement
of
any provision of any of the Transaction Agreements is brought against any
Party
to this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys’ fees, costs and disbursements, in addition to any other relief to
which the prevailing party may be entitled.
8.4 Notices.
Any
notice or other communication required or permitted to be delivered to any
Party
shall be in writing and shall be deemed properly delivered, given and received
when delivered, by hand, by registered mail, by courier or express delivery
service, by facsimile, or by e-mail to the address or facsimile number set
forth
beneath the name of such Party below, or to such other address or facsimile
number as such Party shall have specified in a written notice given to the
other
Parties:
if
to the
Seller or the Guarantor:
Implant
Sciences Corporation
000
Xxxxxxx Xxxx, #0
Xxxxxxxxx,
XX 00000-0000
Attention:
Xxxxx Xxxx
Facsimile:
(000) 000-0000
Email: xxxxx@xxxxxxxxxxxxxxx.xxx
with
a
copy to:
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000-0000
Attention:
Xxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
Email: xxxxxxxxxx@xxxxxx.xxx
if
to the
Buyer: Xxxxx
Analytical Group LLC
000
Xxxxx
Xxxx
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxx
Facsimile:
(000) 000-0000
E-mail:
xxxxxx@xxxxxxx.xxx
8.5 Headings.
The
headings contained in this Agreement are for convenience of reference only,
shall not be deemed to be a part of this Agreement and shall not be referred
to
in connection with the construction or interpretation of this
Agreement.
8.6 Execution;
Counterparts; Delivery.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. Any signature page delivered by facsimile or electronic image
transmission shall be binding to the same extent as an original signature
page.
Any Party that delivers a signature page by facsimile or electronic image
transmission shall deliver an original counterpart to any other party that
requests such original counterpart.
8.7 Governing
Law; Venue.
(a) This
Agreement shall be construed in accordance with, and governed in all respects
by, the internal laws of the State of Massachusetts, without giving effect
to
principles of conflicts of laws.
(b) Other
than with respect to any arbitration under Section 6.2, any Proceeding relating
to this Agreement or the enforcement of any provision of this Agreement may
be
brought or otherwise commenced in any state or federal court located in the
County of Middlesex, Massachusetts. Each Party:
(i) expressly
and irrevocably consents and submits to the jurisdiction of each state and
federal court located in the County of Middlesex, Massachusetts and each
appellate court located in the State of Massachusetts, in connection with
any
such Proceeding;
(ii) agrees
that each state and federal court located in the County of Middlesex,
Massachusetts shall be deemed to be a convenient forum;
(iii) agrees
not to assert, by way of motion, as a defense or otherwise, in any such
Proceeding commenced in any state or federal court located in the County
of
Middlesex, Massachusetts any claim that such Party is not subject personally
to
the jurisdiction of such court, that such Proceeding has been brought in
an
inconvenient forum, that the venue of such Proceeding is improper or that
this
Agreement or the subject matter of this Agreement may not be enforced in
or by
such court; and
(iv) agrees
that service in any action may be made by giving notice in accordance with
Section 8.4.
8.8 Successors
and Assigns; Parties in Interest; No Third-Party
Beneficiaries.
(a) This
Agreement shall be binding upon: the Seller and such Seller’s personal
representatives, executors, administrators, estate, heirs, successors and
assigns, if any; and the Buyer and its successors and assigns, if any. This
Agreement shall inure to the benefit of: the Seller; the Buyer; the other
Indemnitees; and the respective successors and assigns (if any) of the
foregoing.
(b) The
Buyer
shall not be permitted to assign any of its rights or delegate any of its
obligations under this Agreement without the Seller’s prior written consent;
provided, however, that the Buyer may freely assign any or all of its rights
under this Agreement, including its indemnification rights under Section 6,
in whole or in part, to any Affiliate of Buyer without obtaining the consent
or
approval of the Seller. The Seller shall not be permitted to assign any of
its
rights or delegate any of its obligations under this Agreement without the
Buyer’s prior written consent (which consent shall not be unreasonably
withheld).
(c) None
of
the provisions of this Agreement is intended to provide any rights or remedies
to any Person other than the Parties and their respective successors and
assigns, if any.
8.9 Equitable
Remedies.
Notwithstanding anything to the contrary contained in this Agreement, the
Parties agree that: (a) in the event of any Breach or Threatened Breach by
a Party of any covenant, obligation or other provision set forth in this
Agreement, the other Party shall be entitled, in addition to any other remedy
that may be available to it, to (i) an Order of specific performance or
mandamus against the Party in Breach or Threatened Breach to enforce the
observance and performance of such covenant, obligation or other provision,
and
(ii) an injunction or other equitable remedy restraining such Breach or
Threatened Breach; and (b) neither the Buyer, Seller nor any other
Indemnitee shall be required to provide any bond or other security in connection
with any such Order or injunction or in connection with any related Proceeding.
The Parties acknowledge and agree that the other Parties would be damaged
irreparably in the event any provision of this Agreement is not performed
in
accordance with its specific terms or otherwise is breached, so that the
other
Party shall be entitled to injunctive relief to prevent breaches of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in addition to any other remedy to which such Party may
be
entitled, at law or in equity. The Parties acknowledge that the Seller’s
Business is unique and recognize and affirm that in the event a Party breaches
this Agreement, money damages would be inadequate and the other Party would
have
no adequate remedy at law, so that the other Party shall have the right,
in
addition to any other rights and remedies existing in its favor, to enforce
its
rights and the first Party’s obligations hereunder not only by action for
damages but also by action for specific performance, injunctive, and/or other
equitable relief.
8.10 Waiver.
(a) No
failure on the part of any Person to exercise any power, right, privilege
or
remedy under this Agreement, and no delay on the part of any Person in
exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single
or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege
or
remedy.
(b) No
Person
shall be deemed to have waived any claim arising out of this Agreement, or
any
claim, power, right, privilege, condition or remedy under this Agreement,
unless
the waiver of such claim, power, right, privilege, condition or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have
any
effect except in the specific instance in which it is given.
8.11 Amendments.
This
Agreement may not be amended, modified, altered or supplemented other than
by
means of a written instrument duly executed and delivered on behalf of the
Buyer
and the Seller.
8.12 Severability.
In the
event that any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of
this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void
or
unenforceable, shall not be impaired or otherwise affected and shall continue
to
be valid and enforceable to the fullest extent permitted by law.
8.13 Entire
Agreement.
The
Transaction Agreements set forth the entire understanding of the Parties
relating to the subject matter thereof and supersede all prior agreements
and
understandings among or between any of the parties relating to the subject
matter thereof.
8.14 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.
The Parties intend that each representation, warranty, and covenant contained
herein have independent significance. If any Party has breached any
representation, warranty or covenant contained herein in any respect, the
fact
that there exists another representation, warranty or covenant relating to
the
same subject matter (regardless of the relative levels of specificity) that
the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty or
covenant.
8.15 Terms
and Usage.
Whenever required by the context, any pronoun shall include the corresponding
masculine, feminine and neuter forms, and the singular shall include the
plural,
and vice versa. The word “dollar” and the symbol “$” shall refer to United
States dollars. All references in this Agreement to Sections or Schedules
or
Exhibits shall be deemed to refer to Sections of or Schedules or Exhibits
to
this Agreement unless the context shall otherwise require. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation” and are intended by the Parties to be by way of example rather than
limitation. All accounting terms not defined herein shall have the meaning
provided by United States generally accepted accounting principles, as
established by the Financial Accounting Standards Board. The words “hereof”,
“herein” and “hereunder” and words of similar import shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
References to a Person are also to its successors and permitted assigns.
Unless
otherwise expressly provided, any agreement, instrument or Legal Requirement
defined or referred to herein means such agreement, instrument or Legal
Requirement as from time to time amended, modified or supplemented, including
(in the case of agreements or instruments) by waiver or consent and (in the
case
of Legal Requirements) by succession of comparable successor Legal Requirements.
Any reference to any law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires
otherwise.
8.16 Incorporation
of Exhibits and Schedules.
The
Exhibits and Schedules identified in this Agreement are incorporated herein
by
reference and made a part hereof as if set forth in full herein.
[Remainder
of this page intentionally left blank; signature page
follows]
The
Parties have caused this Agreement to be executed and delivered by their
duly
authorized representatives as of the date first written above.
|
ACCUREL
SYSTEMS INTERNATIONAL CORPORATION
By:
Name:
Title:
|
XXXXX
ANALYTICAL GROUP LLC
By:
Name:
Title:
|
|
IMPLANT
SCIENCES CORPORATION
By:
Name:
Title:
|
|
Signature
Page to the Asset Purchase Agreement
Appendix
A
Certain
Definitions
For
purposes of the Agreement (including this Appendix A)
the
terms listed below have the respective meanings set forth below or in the
indicated part of the Agreement:
Affiliate.
Any
Person controlling, controlled by or under common control with any other
Person,
such control being exercised through the ownership or control, directly or
indirectly, of more than 40% of the voting power of the shares entitled to
vote
for the election of directors or other governing authority, as of the Agreement
Date or hereafter, provided that such Person shall be considered an Affiliate
of
that Person only during the time such ownership or control exists.
Agreement.
The
Asset Purchase Agreement to which this Appendix
A is
attached, including the Disclosure Schedule and this Appendix
A,
as it
may be amended from time to time.
Agreement
Date.
Shall
have the meaning given to it in the Preamble.
Allocation.
Section
1.7
Assets.
Section
1.1.
Assignment
and Assumption Agreement.
Section
4.8(a).
Assumed
Contracts.
Section
1.1(e).
Assumed
Liabilities.
Section
1.3(a).
Benefit
Plan. Any
employee benefit plan, arrangement, policy or commitment, whether or not
an
employee benefit plan within the meaning of Section 3(3) of ERISA, including
any
employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
Stock, Stock Right, Stock purchase or severance pay plan, any life, health,
dental, disability or accident insurance plan or any holiday or vacation
practice, as to which the Seller has or in the future could have any direct
or
indirect, actual or contingent Liability.
Best
Efforts.
The
efforts that a reasonable Person desiring to achieve a particular result
would
use in order to ensure that such result is achieved as expeditiously as
possible.
Books
and Records.
All
business records, tangible data, documents, management information systems,
files, customer lists, supplier lists, blueprints, specifications, designs,
drawings, plans, operation or maintenance manuals, bids, personnel records,
invoices, and all other books and records maintained by the Seller.
Breach.
Any
(a) inaccuracy in or breach, including any inadvertent or innocent breach,
of, or any failure, including any inadvertent failure, to comply with or
perform, any representation, warranty, covenant, obligation or other provision,
or (b) default or violation of or under any covenant, obligation or other
provision. When used as a verb in the Agreement, the term “Breach” means to
cause or suffer a Breach.
Business.
The
business of the Seller as conducted before or as of the Agreement Date or
the
Closing Date, as applicable, or as intended to be conducted.
Buyer
Agreements.
Section
3.1.
Buyer.
Preamble.
Buyer
Indemnitees.
The
following Persons: (a) the Buyer; (b) the Buyer’s current and future
Affiliates; (c) the respective officers, directors and employees of the
Persons referred to in clauses (a) and (b) above; and (d) the respective
successors and assigns of the Persons referred to in clauses (a), (b) and
(c)
above; provided, however, that in no event shall an Indemnitee be the
Seller.
CERCLA.
The
Comprehensive Environmental Response, Compensation, and Liability Act of
1980,
42 U.S.C. §§ 9601 et seq.
Charter
Documents. Section
2.2.
Closing.
Section
1.5.
Closing
Date.
The date
on which the Closing occurs.
Closing
Payment.
Section
1.4(a).
Code.
The
Internal Revenue Code of 1986, as amended.
Consent.
Any
approval, consent, ratification, permission, waiver or authorization, including
any Governmental Authorization.
Contract.
Any
written, oral, implied or other agreement, contract, lease, license,
understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy, benefit plan, commitment,
covenant, assurance or undertaking of any nature.
Copyrights.
All
copyright rights, and all other literary property and author rights, whether
or
not registered, and all rights, title and interests in all copyrights, whether
or not registered, copyright registrations, certificates of copyright and
copyrighted interests throughout the world.
Corporate
Documents.
Section
1.2(g).
Damages.
Any
loss, damage, injury, Liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee, including any reasonable legal fee, expert fee,
accounting fee or advisory fee, charge, cost, including any cost of
investigation, or expense of any nature, whether or not arising or incurred
as a
result of any claim by a third party, and
including but not limited to the fees, costs and expenses of any related
Proceeding.
Disclosure
Schedule.
Section
2.
Dispute.
Section
2.26(c).
Employee.
Section
2.19(a).
Encumbrance.
Any
lien, pledge, hypothecation, mortgage, security interest, encumbrance, trust,
equitable interest, claim, preference, right of possession, lease, tenancy,
license, encroachment, covenant, infringement, Order, proxy, option, right
of
first refusal, preemptive right, community property interest, legend,
impediment, exception, reservation, limitation, imperfection of title, condition
or restriction of any nature, including any restriction on the transfer of
any
asset, any restriction on the receipt of any income derived from any asset,
any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any
asset.
Enforceability
Limitations.
Section
2.3.
Entity.
Any
corporation, including any non-profit corporation, general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
cooperative, foundation, society, political party, union, company, including
any
limited liability company or joint stock company, firm or other enterprise,
association, organization, Governmental Body or entity.
Environment.
Soil,
land surface or subsurface strata, surface waters (including navigable waters,
ocean waters, streams, ponds, drainage basins and wetlands), groundwaters,
drinking water supply, stream sediments, ambient air (including indoor air),
plant and animal life, and any other environmental medium or natural
resource.
Environmental
Law.
Any
Legal Requirement, in effect and in each case as amended as of the Closing,
and
any judicial or administrative interpretation thereof as of the Closing,
including any judicial or administrative Order relating to:
(a)
advising appropriate authorities, employees, and the public of intended or
actual releases of pollutants or hazardous substances or materials, violations
of discharge limits, or other prohibitions and of the commencements of
activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b)
preventing or reducing to acceptable levels the release of pollutants or
hazardous substances or materials into the Environment;
(c)
reducing the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated;
(d)
assuring that products are designed, formulated, packaged, and used so that
they
do not present unreasonable risks to human health or the Environment when
used
or disposed of;
(e)
protecting resources, species, or ecological amenities;
(f)
reducing to acceptable levels the risks inherent in the transportation of
hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g)
cleaning up pollutants that have been released, preventing the threat of
release, or paying the costs of such clean up or prevention; or
(h)
making responsible parties pay private parties, or groups of them, for damages
done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets;
including
CERCLA; RCRA; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 6901
et seq.;
the
Clean Water Act, 33 U.S.C. §§ 1251 et seq.;
the
Clean Air Act, 42 U.S.C. §§ 7401 et seq.;
the
Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.;
the
Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.;
the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq.;
the
Occupational Safety and Health Act, 29 U.S.C. §§ 651 et seq.
Environmental
Permits.
All
permits, approvals, identification numbers, licenses and other authorizations
required under any applicable Environmental Law.
Environmental
Release. Any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the Environment or as otherwise
defined in or pursuant to any Environmental Law.
ERISA.
The
Employee Retirement Income Security Act of 1974.
ERISA
Affiliate.
Any
Person that is, was or could be treated as a single employer with any of
the
Specified Entities under Section 414 of the Code.
Escrow
Agent.
Zions
First National Bank.
Escrow
Agreement. The
Agreement dated as of the Agreement Date by and among Seller, Guarantor,
Buyer
and Zions First National Bank providing for the Escrow Account.
Excluded
Liabilities.
Section
1.3(b).
Financial
Statements.
Section
2.7.
Free
Intellectual Property.
Licensed
Intellectual Property, including any open source software that is Licensed
Intellectual Property, that is licensed by the Seller without charge for
Use,
modification or distribution.
GAAP.
United
States generally accepted accounting principles, consistently
applied.
Governmental
Authorization.
Any:
(a) permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority
of
any Governmental Body or pursuant to any Legal Requirement; or (b) right
under any Contract with any Governmental Body.
Governmental
Body.
Any:
(a) nation, principality, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental division,
subdivision, department, agency, bureau, branch, office, commission, council,
board, instrumentality, officer, official, representative, organization,
unit,
body or Entity and any court or other tribunal); (d) multi-national
organization or body; or (e) individual, Entity or body exercising, or
entitled to exercise, any executive, legislative, judicial, administrative,
regulatory, police, military or Taxing authority or power of any
nature.
Hazardous
Material.
Any:
(i) chemicals, materials, waste or other substance that is listed, defined,
designated or classified as, or otherwise determined to be, hazardous,
radioactive or toxic or a pollutant or a contaminant under or pursuant to
any
Environmental Law, including any admixture or solution thereof;
(ii) petroleum or petroleum products and all derivatives thereof or
synthetic substitutes therefor, friable asbestos, urea formaldehyde, foam
insulation, radon gas and transformers or other equipment that contains
dielectric fluid containing polychlorinated biphenyls, and (iii) other
chemical, material or substance, exposure to which is prohibited, limited
or
regulated by any Governmental Body.
Indemnifying
Party.
Section
6.2.
Indemnitees.
The
Buyer Indemnitees and the Seller Indemnitees.
Insurance
Policy.
Section
2.24.
Intellectual
Property.
Means
all of the following as they exist in all jurisdictions throughout the world,
in
each case, to the extent owned by, licensed to or otherwise used by the Seller:
(A) patents, patent applications, and other patent rights (including any
divisions, continuations, continuations-in-part, substitutions, or reissues
thereof, whether or not patents are issued on any such applications and whether
or not any such applications are modified, withdrawn, or resubmitted); (B)
trademarks, service marks, trade dress, trade names, brand names, Internet
domain names, websites, designs, logos, or corporate names, whether registered
or unregistered, and all registrations and applications for registration
thereof; (C) copyrights, including all renewals and extensions, copyright
registrations and applications for registration, and non-registered copyrights;
(D) trade secrets or any confidential and proprietary concepts, ideas, designs,
research, processes, procedures, techniques, methods, know-how, data,
discoveries, inventions, improvements, and other proprietary rights (whether
or
not patentable or subject to copyright or trade secret protection); and (E)
computer software programs, including all source code, object code, and
documentation related thereto.
Intellectual
Property Rights.
All
rights to any Intellectual Property including claims against third Persons
for
infringement whether or not heretofore asserted, rights of priority, rights
to
Use and any other similar tangible or intangible proprietary rights, including
all rights in any other Intellectual Property existing under judicial or
statutory law of any country in the world, or under any treaty.
IRS.
The U.S.
Internal Revenue Service.
Knowledge.
The
knowledge, awareness or belief of Xxxx Xxxxx, Xxxx Xxxxxxxxxx, Xxxxx Xxxx,
Xxxxxx Xxxxxxx, or Xxxxxx Xxxxxxx following his or her due inquiry with respect
to the subject matter of the representation or warranty being given. As used
herein, “due
inquiry”
means
that the person has diligently reviewed the Seller’s relevant books, records and
files with respect to the representation or warranty being given and has
made
inquiry of the relevant employees primarily responsible for the subject matter
of the representation or warranty being given.
Legal
Requirement.
Any (i)
federal, state, local, municipal, foreign or other law, statute, legislation,
constitution, rule or principle of common law, resolution, ordinance, code,
edict, decree, proclamation, treaty, convention, rule, regulation, ruling,
directive, pronouncement, policy, requirement, specification, determination,
decision, opinion or interpretation issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by or under the
authority of any Governmental Body or (ii) law, principle, duty or other
obligation arising at common law or in equity.
Liability.
Any
debt, obligation, duty or liability of any nature, including any unknown,
undisclosed, unmatured, unaccrued, unasserted, contingent, indirect,
conditional, implied, vicarious, derivative, joint, several or secondary
liability, regardless of whether such debt, obligation, duty or liability
would
be required to be reflected, disclosed or reserved against in a balance sheet
prepared in accordance with GAAP and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
Licensed
Intellectual Property.
Intellectual Property of Persons other than the Seller that the Seller is
authorized to Use pursuant to licenses, sublicenses and other
Contracts.
Liens.
Any
claim, lien, mortgage, security interest, pledge, deposit, option, easement,
encroachment or encumbrance of any kind.
Material
Adverse Effect.
Any
event, change, condition or other matter that has a material adverse effect
on
the Seller, the Business or the Seller’s condition (financial or other), assets,
Property, Liabilities, affairs, operations or prospects taken as a whole
or any
material impairment of the right or ability of the Seller to carry on the
Business.
Net
Debt.
The sum
of (a) any of the Seller’s accounts payable that, as of the Closing, are more
than 30 days past their due dates; plus
(b) any
fees or other charges payable by the Buyer necessary to assume the Assumed
Contracts; plus
(c) any
transaction expenses of the Seller or the Guarantor payable by the Buyer
after
the Closing.
Order.
Any:
(a) order, judgment, injunction, edict, decree, ruling, pronouncement,
determination, decision, opinion, verdict, sentence, subpoena, writ or award
issued, made, entered, rendered or otherwise put into effect by or under
the
authority of any court, administrative agency or other Governmental Body
or any
arbitrator or arbitration panel; or (b) Contract with any Governmental Body
entered into in connection with any Proceeding.
Parties.
The
Seller, the Buyer, the Seller and the Seller Representative.
Patents.
All
patent rights and all rights, title and interest in all letters patent or
equivalent rights and applications for letters patent or rights, industrial
and
utility models, industrial designs, xxxxx patents, patents of importation,
patents of addition, certificates of invention and other government issued
or
granted indicia of invention ownership including any reissue, extension,
division, continuation or continuation-in-part applications throughout the
world.
Payables.
Section
2.8(b).
PBGC.
The
Pension Benefit Guaranty Corporation.
Pension
Plan. Any
Benefit Plan which is a pension plan within the meaning of Section 3(2) of
ERISA, regardless of whether the plan is covered by ERISA.
Permitted
Encumbrances.
(a)
Statutory liens for Taxes that are not yet due and payable or liens for Taxes
being contested in good faith by any appropriate proceedings for which adequate
reserves have been established; (b) statutory liens to secure obligations
to
landlords, lessors or renters under leases or rental agreements; (c) deposits
or
pledges made in connection with, or to secure payment of, workers’ compensation,
unemployment insurance or similar programs mandated by applicable law; (d)
statutory liens in favor of carriers, warehousemen, mechanics and materialmen
to
secure claims for labor, materials or supplies and other like liens arising
in
the Ordinary Course of Business that are not material to the business,
operations and/or financial condition of the Property so encumbered or to
the
Business; and (e) liens in favor of customs and revenue authorities arising
as a
matter of Legal Requirements to secure payments of customs duties in connection
with the importation of goods.
Person.
Any
individual, Entity or Governmental Body.
Pre-Closing
Period.
The
period prior to the Closing.
Prior
Event. Any
event, condition or circumstance or series of events, conditions or
circumstances, taken as a whole, that (i) has occurred prior to the Closing
Date, (ii) is the primary cause of the effect referred to in the specific
representation, and (iii) could reasonably be expected to have such an effect,
absent the post-Closing adoption or amendment of any Legal Requirement or
any
post-Closing Use by the Seller of any asset that differs materially from
the
Seller’s Use of such asset prior to the Closing.
Proceeding.
Any
action, suit, litigation, arbitration, mediation, proceeding, including any
civil, criminal, administrative, investigative or appellate proceeding and
any
informal proceeding, prosecution, contest, hearing, inquiry, inquest, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Body or any arbitrator or
arbitration panel.
Profit
Sharing.
Section
1.10.
Property.
Any
kind
of property, asset or right, whether real, personal or mixed, tangible or
intangible, wherever located (including money), and any interest
therein.
Proprietary
Information Agreement.
Section
2.13(d)(i).
Purchase
Price.
Section
1.4.
RCRA.
Resource
Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.
Related
Party.
(a) Each natural Person who is, or who has at any time been, an officer,
director or stockholder of the Seller; (b) each member of the family of
each of the natural Persons referred to in clause (a) above; and
(c) any Entity (other than the Seller) in which any one of the natural
Persons referred to in clauses (a) and (b) above holds or held (or in which
more
than one of such individuals collectively hold or held), beneficially or
otherwise, a material voting, equity or other interest.
Representation.
Section
6.1(a).
Representatives.
The
officers, directors, employees, agents, attorneys, accountants, advisors
and
representatives of a Person.
Seller
Board.
The
board of directors of the Seller.
Seller
Contract.
Any
Contract: (a) to which the Seller is a party; (b) by which the Seller
or any of its Property is or may become bound or under which the Seller has,
or
may become subject to, any obligation; or (c) under which the Seller has or
may acquire any right or interest.
Seller
Governmental Authorization.
Section
2.17.
Seller
Group. The
“affiliated group” of corporations (as defined in Code Section 1504(a)(1)) of
which Guarantor is the parent.
Seller
Indemnitees. The
following Persons: (a) the Seller; (b) the Seller’s current and future
Affiliates; (c) the respective officers, directors and employees of the
Persons referred to in clauses (a) and (b) above; and (d) the respective
successors and assigns of the Persons referred to in clauses (a), (b) and
(c)
above.
Seller
Intellectual Property.
Any
Intellectual Property owned by, licensed to, Used by, incorporated in Products
or Services of or being developed by the Seller, but excluding any Excluded
Assets.
Seller
Minutes.
Section
2.2.
Seller
Non-Competition Agreement.
Section
4.8(b).
Seller
Owned Intellectual Property. The
Seller Intellectual Property that is owned by the Seller.
Seller
Patents.
All
Patents owned by or exclusively licensed to the Seller.
Seller
Real Property.
Any real
property that is, or that has at any time been, owned by, leased to, controlled
by or used by the Seller or any predecessor.
Seller
Representative.
Any
officer, director, employee, agent, attorney, accountant, advisor or
representatives of Seller.
Stock.
Common
stock, preferred stock and any and all other outstanding capital stock of
the
Seller.
Guarantor.
Preamble.
Stock
Right.
All:
(i) outstanding subscriptions, options, calls, warrants or any other
rights, whether or not currently exercisable, to acquire any shares of Stock,
other securities or another Stock Right of the Seller; (ii) outstanding
securities, instruments or obligations that are or may become convertible
into
or exchangeable or exercisable for any shares of Stock, other securities
or
another Stock Right of the Seller; and (iii) Contracts under which the
Seller is or may become obligated to sell or otherwise issue any shares of
Stock, other securities or another Stock Right. Without limiting the foregoing,
the term Stock Right includes each option to purchase Common Stock issued
under
the Plan.
Sunnyvale
Lease.
Section
4.8(c).
Survival
Period.
Section
6.1(a).
Tax.
Any tax,
including any income tax, franchise tax, capital gains tax, estimated tax,
gross
receipts tax, value-added tax, surtax, excise tax, ad
valorem
tax,
transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
occupation tax, inventory tax, occupancy tax, withholding tax or payroll
tax,
levy, assessment, tariff, impost, imposition, toll, duty, including any customs
duty, deficiency or fee, and any related charge or amount, including any
fine,
penalty or interest, that is, has been or may in the future be (a) imposed,
assessed or collected by or under the authority of any Governmental Body,
or
(b) payable pursuant to any tax-sharing agreement or similar
Contract.
Tax
Return.
Any
return, including any information return, report, statement, declaration,
estimate, schedule, notice, notification, form, election, certificate or
other
document or information that is, has been or may in the future be filed with
or
submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection or payment
of
any Tax or in connection with the administration, implementation or enforcement
of or compliance with any Legal Requirement relating to any Tax.
Threatened.
Any
claim, Proceeding or other matter will be deemed to have been “Threatened” if
any demand or statement has been made (orally or in writing) or any notice
has
been given (orally or in writing), or if any other event has occurred or
any
other circumstances exist, that would lead a prudent Person to conclude that
such a claim, Proceeding, dispute, action or other matter is likely to be
asserted, commenced, taken or otherwise pursued in the future.
Trademarks. All
trademark and service xxxx rights arising under the common law, state law,
federal law and laws of foreign countries and all rights, title and interest
in
all trademarks, service marks, trademark and service xxxx applications and
registrations and trademark and service xxxx interests throughout the
world.
Transaction
Agreements.
All of:
(a) this Agreement, (b) the Seller Non-Competition Agreement, (c) the
Assignment and Assumption Agreement, and (d) the Sunnyvale
Sublease.
Transactions.
All of
the transactions contemplated by the respective Transaction Agreements,
including: (a) the sale of the Assets by the Seller to the Buyer in
accordance with the Agreement and (b) the performance by the Seller, the
Seller and the Buyer of their respective obligations under each Transaction
Agreement, and the exercise by the Seller, the Seller and the Buyer of their
respective rights under each Transaction Agreement.
Use.
To make,
have made, run, use, test, import, copy, reproduce, practice, distribute,
display, perform, adapt, modify, sell, offer for sale, license or prepare
derivatives of.
WARN
Act.
Section
2.20(m).
Welfare
Plan. Any
Benefit Plan which is a welfare plan within the meaning of Section 3(l) of
ERISA, regardless of whether the plan is covered by ERISA.
List
of Exhibits
Exhibit
A
- Financial Statements
Exhibit
B
- Assignment and Assumption Agreement
Exhibit
C
- Seller Non-Competition Agreement
Exhibit
D
- Sunnyvale Sublease
Exhibit
E
- Escrow Agreement
Exhibit
F
- Seller Counsel Opinion
Exhibit
G
- Buyer Counsel Opinion
List
of Schedules
Schedule
1.1(a) - Intellectual Property
Schedule
1.1(b) - Computer and Office Equipment
Schedule
1.1(c) - Laboratory Equipment
Schedule
1.1(e) - Assumed Contracts
Schedule
1.1 (j) - Third Party Claims
Schedule
1.3(b)(xi) - Related Party Liabilities
Schedule
1.6(a) - Tax Documents
Schedule
1.7 - Allocation
Schedule
2.1 - Jurisdictions In Which Doing Business
Schedule
2.4(d) - Non-contravention
Schedule
2.4(e) - Non-contravention
Schedule
2.4(f) - Non-contravention
Schedule
2.5 - Consents
Schedule
2.7(b) - Accounts Receivable and Accounts Payable
Schedule
2.7(c) - Net Debt
Schedule
2.8(a) - Liabilities
Schedule
2.8(b) - Payables
Schedule
2.8(c) - Proceedings
Schedule
2.8(d) - Guarantees
Schedule
2.9(e) - Write-Offs
Schedule
2.10 - Tangible Property
Schedule
2.11 Encumbrances
Schedule
2.12 - Real Property Leases
Schedule
2.13(a)(i) - Seller Owned Intellectual Property
Schedule
2.13(a)(ii) - Seller-Licensed Intellectual Property
Schedule
2.13(a)(iii) - Proposed Intellectual Property Agreements
Schedule
2.13(b) - Intellectual Property Encumbrances
Schedule
2.13(c) - Intellectual Property Claims
Schedule
2.14 - Seller Contracts
Schedule
2.15 - Revenue Breakdown By Customer
Schedule
2.17 -Governmental Authorizations Held By Seller
Schedule
2.18(b) - Tax Audits
Schedule
2.19(a) - Employees
Schedule
2.19(b) - Former Employees Receiving Benefits
Schedule
2.19(c) - Employment Contracts
Schedule
2.19(f) - Independent Contractors
Schedule
2.20 - Benefit Plans
Schedule
2.21 - Hazardous Materials
Schedule
2.23(a) - Insurance Policies
Schedule
2.23(b) - Insurance Claims
Schedule
2.25(b) - Proceedings Against Seller
Schedule
2.25(c) - Threatened Proceedings
