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ASSET PURCHASE AGREEMENT
Between
DCI INC., CRYSTALOID TECHNOLOGIES, INC.,
XXXXXXX PRODUCTS, INC., AND ELECSYS
CORPORATION
December 23, 2002
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TABLE OF CONTENTS
1. Sale and Delivery of the Assets........................................................1
1.1 DELIVERY OF THE ASSETS...........................................................1
1.2 FURTHER ASSURANCES...............................................................2
1.3 PURCHASE PRICE...................................................................2
1.4 ALLOCATION OF PURCHASE PRICE.....................................................3
1.5 THE CLOSING......................................................................3
2. Representations and Warranties of the Seller...........................................3
2.1 CAPACITY OF THE SELLER...........................................................3
2.2 AUTHORIZATION....................................................................3
2.3 NO CONFLICT......................................................................4
2.4 LITIGATION.......................................................................4
2.5 OWNERSHIP OF THE ASSETS..........................................................4
2.6 ACCOUNTS RECEIVABLE..............................................................4
2.7 TAXES............................................................................4
2.8 INVENTORY........................................................................5
2.9 INTANGIBLE PROPERTY..............................................................5
3. Representations and Warranties of the Buyer............................................5
3.1 CAPACITY OF BUYER................................................................5
3.2 AUTHORIZATION....................................................................5
3.3 NO CONFLICT......................................................................5
4. Access to Information; Public Announcements............................................6
4.1 CONFIDENTIALITY..................................................................6
4.2 PUBLIC ANNOUNCEMENTS.............................................................6
5. Pre-Closing Covenants..................................................................6
5.1 CONDUCT OF BUSINESS..............................................................6
5.2 PRODUCTION FACILITY..............................................................7
5.3 SELECTED EQUIPMENT...............................................................7
5.4 SPECIFIED CUSTOMERS..............................................................7
5.5 COMMUNICATION WITH CUSTOMERS; ORDERS.............................................7
5.6 THE COMPLIANCE WITH LAWS.........................................................8
5.7 CONTINUING OBLIGATION TO INFORM..................................................8
5.8 EXCLUSIVE DEALING................................................................8
5.9 NO SECURITIES TRADING............................................................8
5.10 ACCESS TO SELLER'S FACILITY.....................................................8
5.11 RETENTION OF EMPLOYEES..........................................................9
5.12 INVENTORY VALUATION.............................................................9
5.13 UPDATED SCHEDULES...............................................................9
6. Conditions to Obligations to Close.....................................................9
6.1 OBLIGATIONS OF THE BUYER.........................................................9
6.2 OBLIGATIONS OF THE SELLER.......................................................10
6.3 OBLIGATION REGARDING CLOSING CONDITIONS.........................................10
6.4 CLOSING DELIVERIES OF SELLER....................................................10
6.5 CLOSING DELIVERIES OF BUYER.....................................................11
7. Termination of Agreement..............................................................11
7.1 TERMINATION BY LAPSE OF TIME....................................................11
7.2 TERMINATION BY AGREEMENT OF THE PARTIES.........................................11
7.3 TERMINATION BY REASON OF BREACH.................................................11
7.4 EFFECT OF TERMINATION...........................................................12
8. Post-Closing Agreements...............................................................12
8.1 NON-COMPETITION AGREEMENT: LCD PRODUCTS OTHER THAN AUTO-DARKENING PRODUCTS......12
8.2 NON-COMPETITION AGREEMENT: AUTO-DARKENING LENSES................................13
8.3 USE OF NAME.....................................................................13
8.4 REMOVAL OF ASSETS...............................................................13
8.5 PRODUCT CLAIMS..................................................................14
8.6 PRODUCT RETURNS.................................................................14
8.7 SUBCONTRACTS FOR OPEN PURCHASE ORDERS...........................................15
8.8 PAYMENT OF COLLECTED ACCOUNTS RECEIVABLE........................................15
9. Indemnification.......................................................................15
9.1 INDEMNIFICATION BY THE SELLER...................................................15
9.2 INDEMNIFICATION BY THE BUYER....................................................16
9.3 LIMITATIONS.....................................................................16
9.4 CLAIMS FOR INDEMNIFICATION......................................................17
9.5 DEFENSE BY THE INDEMNIFYING PARTY...............................................17
9.6 EXCLUSIVITY.....................................................................18
10. General Provisions...................................................................18
10.1 EXPENSES.......................................................................18
10.2 BOOKS AND RECORDS; AUDIT RIGHTS................................................18
10.3 EXECUTION IN COUNTERPARTS; BINDING EFFECT......................................18
10.4 GOVERNING LAW..................................................................18
10.5 NOTICES........................................................................19
10.6 TITLES AND HEADINGS............................................................20
10.7 SUCCESSORS AND ASSIGNS; BENEFICIARIES..........................................20
10.8 ENTIRE AGREEMENT...............................................................20
10.9 WAIVERS AND AMENDMENTS.........................................................20
10.10 SEVERABILITY..................................................................20
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Schedules to be provided by the Seller:
1.1(a)(iii) Personal Property and Equipment
1.1(a)(iv) Employee Non-Competition Agreements
2.5 Ownership of Assets
2.6 Accounts Receivable
2.8 Inventory
2.9 Intangible Property
Exhibits
A General Conveyance, Assignment, Xxxx of Sale and Assumption Agreement
B Trademark Assignment Agreement
C Domain Name Assignment Agreement
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ASSET PURCHASE AGREEMENT
Agreement made as of the 23rd day of December, 2002 (the "Effective
Date"), by and among DCI Inc., a Kansas corporation with its principal office in
Lenexa, Kansas (the "Buyer"), Crystaloid Technologies, Inc., a Delaware
corporation with its principal office in Hudson, Ohio ("CTI" or the "Seller"),
Xxxxxxx Products, Inc. ("Xxxxxxx"), a Delaware corporation with its principal
office in St. Xxxxxxx, Missouri, solely to evidence its agreement to the matters
set forth in Sections 8.1, and Elecsys Corporation ("Elecsys"), a Kansas
corporation with its principal office in Lenexa, Kansas, solely to evidence its
agreement to the matters set forth in Section 8.2.
Preliminary Statement
WHEREAS, the Buyer desires to purchase, and the Seller desires to sell,
the Assets (defined below), for the consideration set forth below, subject to
the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
1. Sale and Delivery of the Assets
1.1 Delivery of the Assets.
(a) Subject to and upon the terms and conditions of this
Agreement, at the closing of the transactions contemplated by this
Agreement (the "Closing"), the Seller shall sell, transfer, convey,
assign and deliver to the Buyer, and the Buyer shall purchase from the
Seller, all of Seller's right, title and interest in and to the
following assets, claims, rights and interests (collectively, the
"Assets"):
(i) all of the accounts and accounts receivable existing on
the Closing Date (defined below) which arose from the Seller's
business as conducted prior to the Closing and to which the
Assets relate (the "Seller's Business"), and which are payable to
the Seller, including any security held by the Seller for the
payment thereof (collectively, the "Accounts Receivable");
(ii) all raw material, work-in-process and finished goods
inventory of the Seller existing on the Closing Date
(collectively, the "Inventory");
(iii) the fixed assets of the Seller listed on Schedule
1.1(a)(iii) attached hereto, as updated on an updated
Schedule 1.1(a)(iii) to be delivered pursuant to Section
5.3 (collectively, the "Personal Property and Equipment");
(iv) the Intangible Property (defined below) as generally
described on Schedule 2.9 attached hereto. "Intangible
Property" means the following intangible property of Seller
solely to the extent such property is primarily attributable to
the operation of the Seller's Business or the use or
ownership of the Assets: (A) trade names, trademarks, service
names, and service marks of Seller, including but not limited to,
the "Crystaloid Technologies" name, (B) all of Seller's right,
title and interest in and to all patents and patent applications,
(C) all software owned or licensed by the Seller, including among
others (i) SAGE Enterprise Suite ERP System, (ii) Paradigm ERP
System, (iii) Best FAS Fixed Asset Management System, and (iv)
Goldmine Contract Management System, provided however, the Seller
shall not be expected to transfer any off the shelf software
except to the extent any of the software specifically referred to
in (i)-(iv) above is off the shelf software, (D) all engineering
drawings and packets and art work of the Seller associated with
the products manufactured by Seller, (E) Seller's customer lists
and files, (F) Seller's vendor lists and files, (G) the internet
URL for the Seller, (H) any marketing material of Seller, (I) all
non-competition agreements listed on Schedule 1.1(a)(iv)
(the "Non-Competition Agreements") between the Seller and its
employees to the extent they are assignable provided that the
Buyer acknowledges and agrees that the Seller is not making any
representation or warranty as to the enforceability of any such
assignment;
(v) to the extent transferable, all rights of the Seller
under express or implied warranties from the suppliers of
products utilized by the Seller in the operation of the Seller's
Business and existing on the Closing Date; and
(vi) all production records, technical, manufacturing and
procedural manuals, studies, reports or summaries of the Seller
relating to the general condition of the Assets.
provided, any assets of the Seller not listed above shall be
retained by the Seller and are referred to herein as the excluded
assets (the "Excluded Assets").
1.2 Further Assurances. At any time and from time to time after
the Closing, at the Buyer's reasonable request and sole expense for any
out-of-pocket expenses incurred by the Seller, the Seller promptly shall
execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take such other action, without warranty
or recourse, as the Buyer may reasonably request to more effectively
transfer, convey and assign to the Buyer, and to confirm the Buyer's title
to, all of the Assets.
1.3 Purchase Price.
(a) The cash purchase price payable by the Buyer to the Seller at
Closing for the Assets (other than the Accounts Receivable) shall be
$750,000, reduced by all amounts paid to the Seller by the Buyer in
advance of the Closing Date for Equipment pursuant to Section 5.3.
(b) In addition to the amount described in Section 1.3(a), the
Buyer shall pay to the Seller at the Closing a cash amount equal to
75% of the Accounts Receivable balances that are 60 days old or less
from the date of invoice, as of the date of Closing, as set forth on
the updated Schedule 2.6 delivered pursuant to Section 5.13.
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(c) To the extent permitted by law, the Buyer shall bear and pay
all sales, use, and similar transfer taxes imposed (the "Transaction
Taxes"). To the extent the Seller is required to collect and remit any
Transaction Taxes for which the Buyer is responsible hereunder, the
Buyer shall pay the amount of any such costs or taxes to the Seller at
the Closing.
(d) (i) At the Closing, the Buyer shall deliver to Seller all
amounts due and payable under Sections 1.3(a) and 1.3(b) by wire
transfer of immediately available funds to the account designated by
Seller. The Buyer shall deliver any other amounts due and payable to
Seller pursuant to Section 5.3, in cash, by cashier's or certified
check, or by wire transfer of immediately available funds, at the
Seller's sole discretion, to an account designated by the Seller.
Buyer shall ensure that the funds payable at the Closing are delivered
to Seller's account and confirmed received by the Seller's bank on the
Closing Date.
1.4 Allocation of Purchase Price. The aggregate amount of the purchase
price payable under Section 1.3 and the non-competition agreement set forth
in Section 8.2 shall be allocated among the Assets in a manner mutually
acceptable to the parties and agreed upon in writing on or before January
31, 2003. The parties agree (a) that such allocations will be made in
accordance with the Internal Revenue Code of 1986, as amended, or any
amending or superseding tax laws of the United States of America, (b) to
treat and report for income tax purposes the transactions contemplated by
this Agreement in a manner consistent with such allocation, and (c) not to
take any action for income tax purposes inconsistent with such allocation.
The parties acknowledge and agree that the allocations made pursuant to
this Section 1.4 are solely for income tax purposes.
1.5 The Closing. The Closing shall take place at the offices of
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx,
Xxxxxxxx 00000 at 9:00 a.m. local time, on December 31, 2002, or at such
other place, time or date as may be mutually agreed upon in writing by the
parties hereto. The transfer of the Assets by the Seller to the Buyer shall
be deemed to occur at 11:59 p.m. local time, on the date of the Closing
(the "Closing Date").
2. Representations and Warranties of the Seller
The Seller hereby represents and warrants to the Buyer as follows:
2.1 Capacity of the Seller. Seller is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. The
Seller has all requisite power and authority (corporate or otherwise) to
own, lease and otherwise to hold and operate the Assets, to carry on the
Seller's Business as now conducted and to enter into this Agreement, the
agreements and instruments referred to herein and the transactions
contemplated hereby.
2.2 Authorization. The execution and delivery by the Seller of this
Agreement, and the agreements to be executed by the Seller hereunder and to
be delivered by Seller at Closing, and the consummation by the Seller of
all transactions contemplated hereby, have been duly authorized by all
requisite corporate action of the Seller (none of which actions or approval
has been modified or rescinded and all of which actions and approval are in
full force and effect). This Agreement and all such other agreements and
obligations entered into and undertaken in connection with the transactions
contemplated hereby to which the Seller is a
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party constitute the valid and legally binding obligations of the Seller,
enforceable against the Seller in accordance with their respective terms
subject to applicable bankruptcy, insolvency or other similar laws relating
to or affecting the enforcement of creditors' rights generally and to
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
2.3 No Conflict. Neither the execution and delivery of this Agreement
nor the performance by the Seller of the transactions contemplated hereby
shall (a) except for contractual provisions that may prohibit the Seller
from subcontracting certain Open Purchase Orders (defined below) to the
Buyer, require any consent or approval from, action by or in respect of, or
filing with, any third parties, court, arbitrator or any local state,
federal or foreign governmental or regulatory authority, body or agency or
the staff thereof related to the execution, delivery and performance of
this Agreement or the transfer of Inventory, Accounts Receivable, and
Equipment (other than notices that have been given and consents that have
been obtained, copies of which have been or shall be furnished to the
Buyer); (b) violate the provisions of the charter or bylaws of the Seller;
(c) except for matters arising out of the Seller's obligations under any
Open Purchase Order (defined below) violate or constitute a default, in any
material respect, under any mortgage, indenture, deed of trust, lease,
contract, agreement, license or other instrument to which the Seller is a
party, or any order, judgment or ruling of any court, arbitrator or any
local, state, federal or foreign governmental or regulatory authority, body
or agency or the staff thereof under which any Asset is bound; (d) result
in the creation of any lien, pledge, mortgage, security interest, lease,
charge, option, right of first refusal, easement, servitude, transfer
restriction under any stockholder or similar agreement, tax liens,
liabilities or any encumbrances of any kind (collectively, "Liens") upon
the Assets; or (e) violate any provision of any law, rule or regulation
applicable to Seller or the Assets.
2.4 Litigation. The Seller is not a party to any litigation, suit,
action, investigation or proceeding pending or threatened before any court,
Governmental Authority or arbitrator nor, to the best of the Seller's
knowledge, is there any investigation that, in each case: (i) seeks to
prevent this Agreement from being consummated, or (ii) relates to the title
to or Seller's use of any of the Assets.
2.5 Ownership of the Assets. The Seller is, and at the Closing shall
be, the true and lawful owner of the Assets, and, as of the Closing Date,
shall be vested with title to the Assets, which title shall be free and
clear of all Liens other than those described on Schedule 2.5 attached
hereto.
2.6 Accounts Receivable. Schedule 2.6 attached hereto sets forth a
true, correct and complete list of all Accounts Receivable as of the date
of this Agreement. All Accounts Receivable arose out of the sales of
inventory or the provision of services in the ordinary course of the
Seller's Business.
2.7 Taxes. The Seller has timely filed or will file all income tax
returns and all personal property tax returns required to have been or to
be filed relating to the Assets, and the Seller has paid all taxes,
assessments, penalties and deficiencies of the Seller shown to be due on
such returns.
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2.8 Inventory. Schedule 2.8 attached hereto sets forth a true, correct
and complete list of each item of Inventory as of November 30, 2002.
2.9 Intangible Property.
(a) Schedule 2.9 attached hereto sets forth a general description
of the Intangible Property, and the Intangible Property constitutes
all intangible property of the Seller that is primarily attributable,
and material, to the operation of the Seller's Business or the use or
ownership of the Assets, but does not include the Excluded Assets.
True, correct and complete copies of all licenses and other agreements
relating to the Intangible Property will be prior to closing, or have
been previously, delivered by the Seller to the Buyer.
(b) Except as otherwise disclosed on Schedule 2.9 attached hereto
and for Intangible Property licensed by the Seller and to be
transferred to the Buyer hereunder, the Seller is the sole and
exclusive owner of all Intangible Property. Except as disclosed on
Schedule 2.9 attached hereto, no third party (including any customer
of Seller) has the right to use the Intangible Property. The Seller
has received no notice of, and has no knowledge of any claim against
it, alleging the infringement or misappropriation of any item of
Intangible Property. The Seller has no disputes with or claims against
any third party for infringement by such third party of any item of
Intangible Property.
3. Representations and Warranties of the Buyer
The Buyer represents and warrants to the Seller as follows:
3.1 Capacity of Buyer. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Kansas and has all
requisite power and authority (corporate or otherwise) to enter into and
perform the terms of this Agreement, the agreements and instruments
referred to hereby and the transactions contemplated hereby.
3.2 Authorization. The execution and delivery by the Buyer of this
Agreement and the agreements to be executed by the Buyer hereunder and to
be delivered by Buyer at Closing, and the consummation by the Buyer of all
transactions contemplated hereby, have been duly authorized by all
requisite corporate action of the Buyer (none of which actions or approval
has been modified or rescinded and all of which actions and approval are in
full force and effect). This Agreement and all such other agreements and
written obligations entered into and undertaken in connection with the
transactions contemplated hereby constitute the valid and legally binding
obligations of the Buyer, enforceable against the Buyer in accordance with
their respective terms subject to applicable bankruptcy, insolvency or
other similar laws relating to or affecting enforcement of creditors'
rights generally and to general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law).
3.3 No Conflict. Neither the execution and delivery of this
Agreement nor the performance of the transactions contemplated hereby shall
(a) require consent or notice (other than notices that have been given and
consents that have been obtained, copies of which have been or will be
furnished to the Seller; (b) violate the provisions of the charter or
bylaws of the Buyer; (c) violate or constitute a default, in any material
respect, under any mortgage, indenture, deed of trust, lease, contract,
agreement, license or other instrument to which the Buyer is a
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party, or any order, judgment or ruling of any court, arbitrator or any
local, state, federal or foreign governmental or regulatory authority, body
or agency or the staff thereof under which any of its property is bound; or
(d) violate the provisions of any law, rule or regulation applicable to the
Buyer.
4. Access to Information; Public Announcements
4.1 Confidentiality. Neither party shall disclose any Confidential
Information (defined below) of the other party to any third party (other
than their respective officers, directors, shareholders, employees,
auditors, financial advisors, financing sources and attorneys, who have a
need to know such information) without the disclosing party's written
consent or unless required by law, regulation, legal process, stock
exchange, or order of any court or governmental body having jurisdiction.
In the event that the transactions contemplated hereby shall not be
consummated, all such Confidential Information which shall be in writing
shall be returned to the party furnishing the same, including, to the
extent reasonably practicable, all copies or reproductions thereof which
may have been prepared, and neither party shall at any time thereafter
disclose to third parties, or use, directly or indirectly, for its own
benefit, any such Confidential Information except as otherwise provided for
herein. For purposes of this Agreement, "Confidential Information" of a
party shall mean all non-public information relating primarily to the use,
ownership or operation of the Assets, as well as any non-public information
about customers and any information regarding customer pricing, including
pricing margins, disclosed by such party to the other party in connection
with the transactions contemplated hereby, including the terms and
conditions of this Agreement. Notwithstanding the foregoing, Confidential
Information shall not include information that (i) is now or subsequently
becomes generally available to the public through no fault or breach of the
receiving party; (ii) the receiving party can demonstrate to have had
lawfully in its possession without an obligation of confidentiality prior
to disclosure hereunder; or (iii) the receiving party lawfully obtains from
a third party who has the right to transfer or disclose it and who provides
it without any obligation to maintain the confidentiality of such
information. This Section 4.1 shall survive for a period of 12 months
following the termination of this Agreement pursuant to Article 7.
4.2 Public Announcements. The parties agree that prior to and on the
Closing Date, except as otherwise required by law, any and all public
announcements or other public communications concerning this Agreement and
the purchase of the Assets by the Buyer shall be subject to the approval of
both parties, which approval shall not be unreasonably withheld.
5. Pre-Closing Covenants
5.1 Conduct of Business. From and after the Effective Date and
until the Closing Date, except as contemplated by this Agreement, the
Seller shall not materially alter the operation of the Seller's Business
provided that the Seller may ship or deliver any quantity of products in
excess of normal shipment or delivery levels upon prior consultation with
the Buyer. The Seller shall use customary efforts to pay any payables and
collect any receivables in the ordinary course of business. All of the
Assets shall be used, operated, repaired and maintained in a normal
business manner consistent with past practices. Notwithstanding the
foregoing, subsequent to completion of the updated schedules referred to in
Section 5.13 below, the Seller shall not make any changes to its Inventory
or collect any Accounts Receivable.
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5.2 Production Facility. The Seller shall close its production
facility on or after December 20, 2002 but no later than December 31, 2002
(the "Facility Shutdown Date").
5.3 Selected Equipment. Between the Effective Date and the Closing
Date, the Buyer shall have the right to purchase and take possession of any
of the Personal Property and Equipment (the "Selected Equipment"). The
purchase price payable pursuant to Section 1.3(a) for the remaining Assets
at Closing shall be reduced by the amount paid by the Buyer for the
Selected Equipment purchased under this Section 5.3. The Buyer shall give
the Seller notice of the Selected Equipment it proposes to purchase, and
the date of the proposed purchase (the "Purchase Date") at least 24 hours
prior to such Purchase Date. Upon receipt of such notice from the Buyer,
notwithstanding the first sentence of this Section 5.3, the Seller shall
inform the Buyer which pieces of the Selected Equipment it is no longer
using in the conduct of the Seller's Business that the Buyer may purchase
on the Purchase Date. The Buyer and Seller shall mutually agree on the
price attributable to the Selected Equipment prior to the Purchase Date. On
the Purchase Date, the Buyer shall deliver to the Seller the agreed upon
purchase price for the Selected Equipment in accordance with the payment
delivery terms set forth in Section 1.3(d). Upon the Buyer's delivery of
such purchase price, Seller shall afford Buyer and its authorized
representatives access to Seller's facility for purposes of removing such
Selected Equipment provided that Buyer shall remove such Selected Equipment
in accordance with the terms of Section 8.4.
5.4 Specified Customers. If, on any date prior to the Closing (each, a
"Determination Date"), after exercising commercially reasonable efforts
consistent with past practices, the Seller determines that it will be
unable to fulfill its contractual obligation under the Xxxxxx Aerospace
contract (the "Relevant Contract") in effect on the Effective Date between
Seller and Xxxxxx Aerospace (the "Specified Customer") to supply products
for which the Seller is an approved supplier of such Specified Customer
(the "Approved Products"), the Seller shall so notify the Buyer and shall
not be required to close its production facility or to consummate the
transactions contemplated hereby until such time as Seller has fulfilled
its contractual obligation under the Relevant Contract to supply the
Approved Products, provided that Seller shall exercise commercially
reasonable efforts consistent with past practices to supply such products
as soon as reasonably practicable; or the Specified Customer fully releases
the Seller from all of its obligations, including the obligation to supply
the Approved Products, under the Relevant Contract. The period of time
between a Determination Date and the occurrence of the event specified in
(a) or (b) above, as the case may be, shall be referred to herein as the
"Extension Period." Notwithstanding the other provisions of this Agreement,
the parties agree that the Seller shall not be deemed to be in breach of
Section 5.2 of this Agreement during any Extension Period and any deadlines
for the taking of actions or otherwise specified herein, including the
Termination Date (defined below), shall be extended by the same number of
days as the duration of the Extension Period.
5.5 Communication with Customers; Orders.
(a) After the Effective Date, the Seller shall cease to accept
customer orders in the ordinary course of business.
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(b) The Seller and the Buyer shall cooperate in communicating
with suppliers and customers regarding the transactions contemplated
hereby.
5.6 Compliance with Laws. The Seller will comply with all laws and
regulations applicable to it or to the conduct of the Seller's Business and
will perform and comply with all contracts, commitments and obligations by
which it is bound other than those set forth in any Open Purchase Order
(defined below) of the Seller.
5.7 Continuing Obligation to Inform. From the Effective Date through
the Closing Date, Seller shall deliver or cause to be delivered to the
Buyer the monthly operating report for the Seller's Business including such
information (including the "Grey Book") and in a format consistent with the
past practices of Seller. Notwithstanding the foregoing, none of the
supplemental information provided under this Section 5.7 shall constitute
an amendment of any statement, representation or warranty in this Agreement
or any Schedule, Exhibit or document furnished pursuant hereto. The
confidentiality of any data or information acquired by the Buyer pursuant
to this Section 5.7 shall be maintained by the Buyer and its authorized
representatives in accordance with the terms of Section 4.1.
5.8 Exclusive Dealing. From the Effective Date until the earlier to
occur of the Closing Date and the date on which this Agreement is
terminated pursuant to Article 7, the Seller shall not, directly or
indirectly, through any officer, director, agent or otherwise, solicit,
initiate or encourage submission of proposals or offers from any person
relating to an acquisition or purchase of all or a material portion of the
Assets.
5.9 No Securities Trading. The Seller acknowledges that the sole
stockholder of DCI, Elecsys Corporation ("Elecsys"), is a publicly held
company and that either (a) the improper dissemination of information
concerning this Agreement and the transactions contemplated hereby, or (b)
the trading of that public company's stock by any party to this Agreement
or by any party receiving information concerning this Agreement or the
transactions contemplated hereby from any party to this Agreement prior to
the proper public release or announcement of this Agreement could result in
a violation of the United States Securities and Exchange Commission's (the
"SEC") xxxxxxx xxxxxxx regulations. Seller agrees to refrain from
disseminating such information (except as permitted by Section 4.1) or
engaging in such trading prior to the Closing Date without the prior
written consent of DCI.
5.10 Access to Seller's Facility. From the Effective Date
through January 31, 2003, the Seller shall afford to the Buyer and its
authorized representatives, upon at least two Business Days' notice and at
Buyer's sole expense and risk, reasonable access during normal business
hours to the Seller's facility, books and records relating to the Assets
and will furnish to the Buyer such additional information as the Buyer may
reasonably request in connection therewith. Notwithstanding the foregoing,
the Seller shall not be required to provide the access or disclosure
referred to in the preceding sentence to the extent the provision of such
access or disclosure would (a) violate the terms of any agreement to which
the Seller is bound or any law, rule or other regulation to which the
Seller is subject; (b) result in any loss of attorney-client or other
privilege; or (c) significantly disrupt Seller's operations. The
confidentiality of any data or information acquired by the Buyer pursuant
to this Section 5.10 shall be maintained by the Buyer and its authorized
representatives in accordance with the terms of Section 4.1.
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5.11 Retention of Employees. The Seller shall use reasonable efforts
to retain Xxxxxxx Xxxxx, Xxxxx Xxxxxxx, and Xxxxxxx Xxxxxx through December
31, 2002; provided that the Buyer acknowledges and agrees that the Seller
has no contractual agreement with any such employees and cannot require
their continued employment with Seller after the Effective Date.
5.12 Inventory Valuation. The Seller shall conduct a final physical
inventory of the Inventory beginning on or about December 18, 2002 and
ending on or about December 20, 2002. The physical inventory shall be
conducted exclusively by the Seller's personnel, while the Buyer and the
Buyer's accountant, BKD L.L.C. ("BKD"), observe the process. Once the
physical inventory is completed, the Seller shall give to the Buyer a
listing of the final Inventory along with a final Inventory value
calculated as described in Section 1.3(a)(ii).
5.13 Updated Schedules. On December 30, 2002, the Seller shall deliver
to the Buyer the following Schedules updated as of the close of business on
Friday, December 27, 2002: Schedule 2.6, Schedule 2.8, and Schedule
1.1(a)(iii). The updated Schedule 2.8 shall be derived from the year-end
physical inventory of the Inventory described in Section 5.12 and reflect
only the changes in physical inventory since completion of the Inventory
count described at section 5.12. The Seller shall deliver to the Buyer
Schedule 2.8 both immediately after completion of the inventory valuation
process described in Section 5.12 and on December 30, 2002, updated to
December 27, 2002.
6. Conditions to Obligations to Close
6.1 Obligations of the Buyer. The obligation of the Buyer to
consummate the transactions contemplated hereby shall be subject to the
satisfaction of the following conditions at or prior to Closing:
(a) Continued Truth of Representations and Warranties of
the Seller; Compliance with Covenants and Obligations.
The representations and warranties of the Seller in this Agreement
shall be true in all material respects on and as of the Closing Date
as though such representations and warranties were made on and as of
such date, except (i) inaccuracies that do not constitute a Material
Adverse Effect (defined below); (ii) for any changes consented to in
writing by the Buyer; (iii) to the extent such representations and
warranties expressly speak as of an earlier date such as "the
Effective Date", "the date hereof" or "the date of this Agreement"
(in which case such representations and warranties shall be
true and correct as of such earlier date); and (iv) inaccuracies that
arise solely because of actions that are required or permitted to be
taken under this Agreement. The Seller shall have performed and
complied in all material respects with all covenants and obligations
required by this Agreement to be performed or complied with by it
prior to or as of the Closing Date. For purposes of this Section
6.1(a), "Material Adverse Effect" means any change, circumstance or
effect that, individually or in the aggregate with other changes
circumstances and effects, is materially adverse to (i) the Assets,
taken as a whole, or (ii) the validity or enforceability of this
Agreement or the ability of Seller to perform its obligations
hereunder in a timely fashion.
(b) Third Party Order. As of the Closing Date, no temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of
9
competent jurisdiction preventing the consummation of the transactions
contemplated by this Agreement (brought by a third party not
affiliated with Buyer) shall be in effect.
6.2 Obligations of the Seller. The obligation of the Seller to
consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction of the following conditions at or prior to Closing:
(a) Continued Truth of Representations and Warranties of the
Buyer; Compliance with Covenants and Obligations. The representations
and warranties of the Buyer in this Agreement shall be true on and as
of the Closing Date as though such representations and warranties were
made on and as of such date, except (i) inaccuracies that do not
constitute a Material Adverse Effect (defined below); (ii) for any
changes consented to in writing by the Seller; (iii) to the extent
such representations and warranties expressly speak as of an earlier
date such as "the Effective Date", "the date hereof" or "the date of
this Agreement" (in which case such representations and warranties
shall be true and correct as of such earlier date); and (iv)
inaccuracies that arise solely because of actions that are required or
permitted to be taken under this Agreement. The Buyer shall have
performed and complied in all material respects with all covenants and
obligations required by this Agreement to be performed or complied
with by it prior to or as of the Closing Date. For purposes of this
Section 6.2(a), "Material Adverse Effect" means, with respect to
Buyer, any change, circumstance or effect that, individually or in the
aggregate with other changes circumstances and effects, is materially
adverse to the validity or enforceability of this Agreement or the
ability of Buyer to perform its obligations hereunder in a timely
fashion.
(b) No Extension Period. The events giving rise to an Extension
Period shall not have occurred and be continuing.
(c) Third Party Order. As of the Closing Date, no temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction preventing the
consummation of the transactions contemplated by this Agreement
(brought by a third party not affiliated with Seller) shall be in
effect.
6.3 Obligation Regarding Closing Conditions. Subject to Section 5.4,
the Seller shall use commercially reasonable efforts to ensure that the
conditions set forth in Section 6.1 shall be satisfied on or prior to the
Termination Date (except to the extent that Buyer shall have agreed in
writing to waive one or more of such conditions). The Buyer shall use
commercially reasonable efforts to ensure that the conditions set forth in
Section 6.2 shall be satisfied on or prior to the Termination Date (except
to the extent that Seller shall have agreed in writing to waive one or more
conditions).
6.4 Closing Deliveries of Seller. At the Closing, the Seller shall
deliver or cause to be delivered to Buyer each of the following items:
(a) a General Conveyance, Assignment, Xxxx of Sale and Assumption
Agreement in the form of Exhibit A attached hereto (the "Xxxx of Sale
and Assignment Agreement"), executed by Seller;
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(b) an officer's certificate of the Seller stating that, to such
officer's knowledge, the condition in Section 6.1(a) has been
satisfied;
(c) a release of the Liens listed on Schedule 2.5;
(d) a Trademark Assignment Agreement, which shall assign from the
Seller to the Buyer the "Crystaloid Technologies" name in the form of
Exhibit B attached hereto, and a Domain Name Assignment Agreement,
which shall assign from the Seller to the Buyer the Crystaloid
Technologies internet URL in the form of Exhibit C attached hereto,
executed by the Seller; and
(e) a list of all of the Seller's unfilled purchase orders (the
"Open Purchase Orders") as of the Closing Date, along with the
Seller's selling price for such orders, and indicating which of the
Open Purchase Orders that it will offer to the Buyer as subcontracts
pursuant to Section 8.7;
(f) a cross receipt executed by the Seller.
6.5 Closing Deliveries of Buyer. At Closing, the Buyer shall deliver
or cause to be delivered to the Seller each of the following items:
(a) payment of the cash purchase price set forth in Sections
1.3(a) and 1.3(b) in the form required pursuant to Section 1.3(d);
(b) the Xxxx of Sale and Assignment Agreement, executed by Buyer;
(c) an officer's certificate of the Buyer stating that, to such
officer's knowledge, the condition in Section 6.2(a) has been
satisfied; and
(d) a cross receipt executed by the Buyer.
7. Termination of Agreement
7.1 Termination by Lapse of Time. This Agreement shall terminate on
January 15, 2003 (the "Termination Date") if the Closing has not occurred
on or prior to such date, unless such Termination Date is extended as a
result of an Extension Period or otherwise by the written consent of the
parties hereto as provided herein.
7.2 Termination by Agreement of the Parties. This Agreement may be
terminated at any time prior to the Closing by the mutual written agreement
of the parties hereto.
7.3 Termination by Reason of Breach. This Agreement may be terminated
at any time prior to the Closing:
(a) by the Seller in the event (i) Seller is not in breach of
this Agreement and none of its representations and warranties shall
have become and continue to be untrue in a manner that would cause the
conditions set forth in Section 6.1(a) not to be satisfied, and (ii)
there shall have been a material breach of the Buyer's representations
and warranties in
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this Agreement or a material failure by the Buyer to perform its
covenants in this Agreement; and
(b) by the Buyer in the event (i) Buyer is not in breach of this
Agreement and none of its representations and warranties shall have
become and continue to be untrue in a manner that would cause the
conditions set forth in Section 6.2(a) not to be satisfied, and (ii)
there shall have been a material breach of the Seller's
representations and warranties in this Agreement or a material failure
by the Seller to perform its covenants in this Agreement.
7.4 Effect of Termination. In the event of the termination of this
Agreement, this Agreement shall forthwith become void, and thereafter no
party hereto shall have any further obligation or liability hereunder other
than liabilities arising from a willful breach of such party's
representations and warranties set forth in this Agreement or the
intentional failure of such party to perform its covenants under this
Agreement prior to such termination.
8. Post-Closing Agreements
8.1 Non-Competition Agreement: LCD Products other than Auto-Darkening
Products.
(a) Until the fifth anniversary of the Closing Date, neither the
Seller, Xxxxxxx Products, Inc. nor any subsidiary thereof shall
manufacture, market or sell any LCD product that has the same or
substantially the same form, function and primary application as any
LCD product currently manufactured by the Seller other than
auto-darkening products used or sold by the Seller, Xxxxxxx Products,
Inc. or any subsidiary thereof for the welding industry, the personal
safety products industry and each other market segment in which the
Seller, Xxxxxxx Products, Inc. or any subsidiary thereof currently
conducts business (the "Auto-Darkening Products"), or engage in any
business competitive with the Seller's Business as conducted on the
Effective Date or on the Closing Date, in the United States or any
other country in which the Seller conducted the Seller's Business
during the two years prior to the Closing Date; provided, that neither
clause (i) nor clause (ii) shall prohibit Seller, Xxxxxxx Products,
Inc. or any subsidiary thereof from engaging in the business relating
to the Auto-Darkening Products for the welding industry, the personal
safety products industry and each other market segment in which the
Seller, Xxxxxxx Products, Inc. or any subsidiary thereof currently
conducts business. Notwithstanding the foregoing, the Seller, Xxxxxxx
Products, Inc. or any subsidiary thereof may purchase or otherwise
acquire up to (but not more than) 2% of any class of securities of any
enterprise the principal business of which is other than that
described in clause (ii) above. Notwithstanding the foregoing, the
Buyer expressly acknowledges and agrees that the restrictions
contained in this Section 8.1 shall not apply to any Auto-Darkening
Products for the welding industry, the personal safety products
industry and each other market segment in which the Xxxxxxx Products,
Inc. currently conducts business or any other auto-darkening products
or applications of auto-darkening products that may be developed or
produced in the future or any business relating thereto ("Future Auto
Darkening Products").
(b) The parties hereto agree that the duration and geographic
scope of the non-competition provision set forth in this Section 8.1
are reasonable. In the event that any court determines that the
duration or the geographic scope, or both, are unreasonable and that
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such provision is to that extent unenforceable, the parties hereto
agree that the provision shall remain in full force and effect for the
greatest time period and, in the greatest area that would not render
it unenforceable. The parties intend that this non-competition
provision shall be deemed to be a series of separate covenants, one
for each and every county of each and every state of the United States
of America and each and every political subdivision of each and every
country outside the United States of America where this provision is
intended to be effective. The Seller agrees that damages are an
inadequate remedy for any breach of this provision and that the Buyer
shall, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or
threatened breach of this non-competition provision.
8.2 Non-Competition Agreement: Auto-Darkening Lenses.
(a) Until the fifth anniversary of the Closing Date, neither the
Buyer, Elecsys nor any subsidiary thereof shall (i) manufacture,
market or sell Auto-Darkening Products to the welding industry, the
personal safety products industry and each other market segment in
which the Seller, Xxxxxxx Products, Inc. or any subsidiary thereof
currently conducts business, or (ii) engage in any business
competitive with the Seller's Auto-Darkening Product manufacturing
business for the welding industry, the personal safety products
industry and each other market segment in which the Seller, Xxxxxxx
Products, Inc. or any subsidiary thereof currently conducts business
as conducted on the Effective Date or on the Closing Date, or at any
time during the term of this non-competition provision, in the United
States or any other country in which the Seller conducted its business
during the two years prior to the Closing Date.
(b) The parties hereto agree that the duration and geographic
scope of the non-competition provision set forth in this Section 8.2
are reasonable. In the event that any court determines that the
duration or the geographic scope, or both, are unreasonable and that
such provision is to that extent unenforceable, the parties hereto
agree that the provision shall remain in full force and effect for the
greatest time period and, in the greatest area that would not render
it unenforceable. The parties intend that this non-competition
provision shall be deemed to be a series of separate covenants, one
for each and every county of each and every state of the United States
of America and each and every political subdivision of each and every
country outside the United States of America where this provision is
intended to be effective. The Seller agrees that damages are an
inadequate remedy for any breach of this provision and that the Buyer
shall, whether or not it is pursuing any potential remedies at law, be
entitled to equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or
threatened breach of this non-competition provision.
8.3 Use of Name. The Seller shall cease using the name
"Crystaloid Technologies" or any derivation thereof in connection with any
business related to, competitive with, or an outgrowth of, the Seller's
Business as soon as reasonably practicable following the Closing but in no
event more than 60 days following the Closing.
8.4 Removal of Assets. The Buyer shall, as soon as reasonably
practicable but in no event later than 31 days after the Closing (unless
extended in writing by Seller), remove the Inventory, Personal Property and
Equipment, and Intangible Property from the Seller's facility. The Buyer
shall ensure that such Inventory, Personal Property and Equipment, and
Intangible
13
Property are removed in a manner that does not cause damage to such
facility of Seller or to any Excluded Assets. Buyer shall solely bear all
risks and expenses with respect to the repair of damage done to the
Seller's facility or property in connection with the removal of the
Inventory, Personal Property and Equipment, and Intangible Property.
8.5 Product Claims. Notwithstanding the terms of Section 8.6
and Article 9, the Buyer shall (a) promptly furnish to Seller any claim,
demand, notice, lawsuit or other correspondence of which Buyer becomes
aware and that is reasonably likely to be related to the CTI Claims
(defined below); (b) except as provided in clause (d) below, make any
agreement or commitment of any nature regarding the repair or remediation
of services or products if such agreement or commitment is reasonably
likely to give rise to, or result in, an obligation of Seller under a CTI
Claim; (c) not enter into any agreement with any of the customers of Seller
with respect to matters that are related to the CTI Claims; or
notwithstanding the foregoing, at Seller's request and sole expense, use
commercially reasonable efforts to cooperate with Seller in resolving any
claims or potential liability for CTI Claims including providing goods and
services on commercially reasonable terms to replace or repair or otherwise
provide the repairs that may be requested to resolve any CTI Claims. "CTI
Claim" means any claim for any loss, damage or expense arising out of
Seller's provision of services or sale of products related to the Assets
prior to the Closing Date.
8.6 Product Returns.
(a) The Seller agrees to retain $60,000 of the purchase
price it receives at Closing under this Agreement, create a
product return escrow account (the "Escrow"), and keep that money
in the Seller and segregated in that account for this purpose.
The Escrow shall be used to reimburse the Buyer (i) for a period
of 90 days from the date of Closing or (ii) for a period of time
so long as the total reimbursement requests submitted by the
Buyer to the Seller for a payment from the Escrow is less than or
equal to $60,000, whichever is shorter (the "Reimbursement
Period"), for all commercially reasonable amounts incurred by the
Buyer for any services rendered, products produced or purchased
or refunds given in connection with the repair or replacement or
issuance of a refund in lieu of repair or replacement of
defective products or services which (x) were sold by Seller
prior to the Closing Date, (y) are covered under Seller's
warranty as provided to the purchaser of such product or service
at the time of sale by Seller and (z) for which the failure to
satisfy the warranty under which such products or services are
covered is reasonably likely to result in Buyer's failure to
collect the Accounts Receivable balance related to such defective
products or services. The Buyer shall submit to Seller no more
frequently than every 30 days during the Reimbursement Period an
accounting (the "Monthly Accounting") of all costs incurred by
Buyer in connection with the repairs, replacements or refunds
referred to in the foregoing sentence. During the Reimbursement
Period, the Seller shall pay the Buyer, within 5 days of its
receipt of a Monthly Accounting, for all properly documented
amounts incurred in accordance with this Section 8.6, unless the
Seller can show that such request is not commercially reasonable.
(b) At the expiration of the Reimbursement Period, and to
the extent the Escrow is not subject to a pending claim for
refund, any remaining funds in the Escrow shall be distributed to
the Seller's general account, and the Buyer will no longer have
the right to reimbursement from such Escrow.
14
8.7 Subcontracts for Open Purchase Orders. The Buyer shall give to the
Seller by January 15, 2003, a quote for any of the Open Purchase Orders it
decides to fulfill, including the price at which it will deliver the
products or perform the services, as the case may be, required to be
delivered or performed under each such Open Purchase Order and the date on
which the Buyer will agree to deliver such products or perform such
services, as the case may be (the "Quote"). If the Seller determines that
the Buyer's Quote is competitive, Seller shall so notify the Buyer and the
parties will enter into a subcontract agreement based on the terms of the
Quote and such other terms as the parties may agree upon. However, in the
event that the Seller determines that the Buyer's Quote is not competitive,
then the Seller shall so notify Buyer and Buyer will as soon as reasonably
practicable after receipt of such notification grant to the Seller a
temporary license to use the technical drawings necessary to permit a third
party to manufacture the relevant products or perform the relevant services
(the "Licensed IP") and shall deliver hard copies of such Licensed IP to
Seller. The license of the Licensed IP by Buyer to Seller shall include the
grant to Seller of the right to use and disclose the Licensed IP to solicit
other bids to fill the applicable Open Purchase Order and the right to
sublicense the use of the Licensed IP to a third party subcontractor in
order to allow such subcontractor to produce and deliver the applicable
products or perform the applicable services thereunder. Immediately
following the satisfactory delivery of any subcontracted products or
performance of any subscontracted services described in the preceding
sentence, the Seller will return hard copies of the Licensed IP to the
Buyer. Any sublicense by the Seller of the right to use the Licensed IP as
provided in this Section 8.7 shall prohibit the relevant subcontractor from
using the Licensed IP for any other purpose than performing the relevant
subcontract, shall require return of all tangible forms of the Licensed IP
upon completion of the subcontract, and following the termination of the
relevant subcontract agreement, using or disclosing the Licensed IP or from
directly soliciting orders from the other party to the relevant Open
Purchase Order for products or services substantially the same as those
produced or performed by such subcontractor pursuant to the relevant
subcontract agreement.
8.8 Payment of Collected Accounts Receivable. The Seller acknowledges
that payments for any Accounts Receivable may be paid to a lock box, which
is maintained by the Seller's bank. The Seller agrees to promptly forward
to the Buyer all Accounts Receivable payments received directly by it or
made to the lock box, along with any information concerning such payments.
9. Indemnification
9.1 Indemnification by the Seller. Subject to the other terms
of this Article 9, the Seller shall be responsible to assume the defense
of, and indemnify and hold the Buyer, Elecsys, and their respective
directors, officers and employees (collectively, the "Buyer Group")
harmless from, any and all losses, damages, costs and expenses other than
consequential damages, lost profits or exemplary damages (including,
without limitation, court costs and reasonable outside attorneys' fees)
(hereinafter individually, a "Loss" and collectively, "Losses") suffered or
incurred by any member of the Buyer Group that relate to, or arise out of
or in connection with any breach of any representation or warranty made by
the Seller contained in this Agreement; (b) a breach of any other covenant
or agreement by the Seller contained in this Agreement; and (c) the
Excluded Assets and obligations and liabilities relating to the use,
15
ownership or operation of the Assets prior to the Closing (other than any
Selected Equipment sold to the Buyer pursuant to Section 5.3 prior to
Closing.
9.2 Indemnification by the Buyer. The Buyer shall be responsible to
assume the defense of, and indemnify and hold the Seller, Xxxxxxx Products,
Inc., and their respective directors, officers and employees (collectively,
the "Seller Group") harmless from, any and all Losses suffered or incurred
by any member of the Seller Group that relate to, or arise out of or in
connection with (a) any breach of any representation or warranty made by
the Buyer contained in this Agreement; (b) a breach of any other covenant
or agreement by the Buyer contained in this Agreement; and (c) all
obligations and liabilities relating to the use, ownership or operation of
(i) any Selected Equipment sold prior to the Closing and (ii) the Assets
after the Closing (including the sale of products and provision of
services).
9.3 Limitations.
(a) Notwithstanding anything to the contrary in any other Section
of this Agreement, in no event shall there by any liability under
Section 9.1(a) until the aggregate amount of all Losses suffered by
the Buyer Group arising from matters covered by the indemnity
contained in Section 9.1(a) exceeds $25,000 (the "Indemnification
Floor"). Once the Buyer Group has suffered Losses arising from matters
covered by the indemnity contained in Section 9.1(a) in an amount
equal to the Indemnification Floor, subject to the other terms of this
Article 9, the liability of the Seller under Section 9.1(a) shall be
equal to the total amount of all such Losses in excess of the
Indemnification Floor.
(b) Sellers' maximum aggregate liability under 9.1(a) shall not
exceed the cash purchase price for the Assets purchased hereunder.
(c) Notwithstanding the foregoing, the limitation contained in
Section 9.3(b) shall not apply to any claim arising from a breach of a
representation or warranty contained in Sections 2.1 or 2.2
(collectively, the "Excluded Items").
(d) EXCEPT FOR THE EXPRESS REPRESENTATIONS SET FORTH IN ARTICLE
2, THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT ALL OF THE ASSETS ARE
BEING SOLD AND TRANSFERRED ON AN "AS IS, WHERE IS" BASIS WITH ALL
FAULTS AND DEFECTS, AND THE SELLER HEREBY DISCLAIMS ANY AND ALL
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND
WHATSOEVER, AS TO ANY MATTERS CONCERNING THE ASSETS, INCLUDING ANY
WARRANTY OF TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, THE PHYSICAL CONDITION OF THE ASSETS AND ANY DEFECTS THEREOF,
OR THE ENFORCEABILITY OF THE ASSIGNMENT OF ALL NON-COMPETITION
AGREEMENTS AND BUYER HEREBY WAIVERS, RELINQUISHES AND RELEASES SELLER
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION
(INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES,
COSTS AND EXPENSES (INCLUDING FEES AND EXPENSES OF COUNSEL) OF ANY AND
EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, THAT BUYER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLER BY REASON OF THE FOREGOING MATTERS.
IN NO EVENT
16
SHALL ANY PARTY TO THIS AGREEMENT BE LIABLE FOR ANY CONSEQUENTIAL
(INCLUDING LOST PROFITS), PUNITIVE OR EXEMPLARY DAMAGES ALLEGED TO
HAVE RESULTED FROM A BREACH BY ANY PARTY OF ANY PROVISION OF THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR RELATED HERETO OR
THERETO, AND IN NO EVENT SHALL AN ARBITRATOR BE ABLE TO AWARD ANY SUCH
DAMAGES
9.4 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder the party seeking indemnification (the
"Indemnified Party") shall promptly notify the party from whom
indemnification is sought (the "Indemnifying Party") of the claim and, when
known, the facts constituting the basis for such claim. In the event of any
such claim for indemnification hereunder resulting from or in connection
with any claim or legal proceedings by a third party, the notice to the
Indemnifying Party shall specify, if known, the amount or an estimate of
the amount of the liability arising therefrom. The Indemnified Party shall
not settle or compromise any claim by a third party for which it is
entitled to indemnification hereunder without the prior written consent of
the Indemnifying Party, which shall not be unreasonably withheld, unless
suit shall have been instituted against it and the Indemnifying Party shall
not have taken control of such suit within a reasonable period of time
after notification thereof as provided in Section 9.5 of this Agreement.
9.5 Defense by the Indemnifying Party. In connection with any
claim which may give rise to indemnity hereunder resulting from or arising
out of any claim or legal proceeding by a person other than the Indemnified
Party, the Indemnifying Party, at the sole cost and expense of the
Indemnifying Party, may, upon written notice to the Indemnified Party,
assume the defense of any such claim or legal proceeding if the
Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party
with respect to all elements of such claim. If the Indemnifying Party
assumes the defense of any such claim or legal proceeding, the Indemnifying
Party shall select counsel reasonably acceptable to the Indemnified Party
to conduct the defense of such claims or legal proceedings and at the sole
cost and expense of the Indemnifying Party shall take all steps necessary
in the defense or settlement thereof. The Indemnified Party shall
thereafter be entitled to participate in and assume control of the defense
of any such action if the Indemnified Party has a reasonable basis for
concluding that its interests would be better served. The Indemnifying
Party shall not consent to a settlement of, or the entry of any judgment
arising from, any such claim or legal proceeding, without the prior written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its
own counsel and at its own expense. If the Indemnifying Party does not
assume the defense of any such claim or litigation resulting therefrom
within 30 days after the date such claim is made: (a) the Indemnified Party
may defend against such claim or litigation in such manner as it may deem
appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party, on
such terms as the Indemnified Party may deem appropriate, and (b) the
Indemnifying Party shall be entitled to participate in (but not control)
the defense of such action, with its counsel and at its own expense. If the
Indemnifying Party thereafter seeks to question the manner in which the
Indemnified Party defended such third party claim or the amount or nature
of any such settlement, the Indemnifying Party shall have the
17
burden to prove by a preponderance of the evidence that the Indemnified
Party did not defend or settle such third party claim in a reasonably
prudent manner.
9.6 Exclusivity. The parties agree that the indemnities provided under
this Article 9 shall be the exclusive remedies arising from this Agreement;
provided, however, that this Section 9.6 shall not be deemed to be a waiver
by the parties of any right to specific performance or injunctive relief.
10. General Provisions
10.1 Expenses. Subject to Section 1.3(b) and except for taxes covered
by Section 1.3(b), all fees, commissions and other expenses incurred by the
Buyer or the Seller in connection with the negotiation of this Agreement
and in preparing to consummate the transactions contemplated hereby,
including the fees and expenses of their respective counsel and other
advisors, shall be borne by the party incurring such fee, commission or
expense. Each party shall be responsible for paying the fee of any broker
or investment banker retained by such party.
10.2 Books and Records; Audit Rights. The Buyer shall keep and
maintain, in accordance with generally accepted accounting principles in
the United States, consistently applied, such books of account or other
records as shall be necessary to accurately and contemporaneously record
all transactions in connection with the calculation and payment to the
Buyer of the amounts payable to the Seller hereunder. Such books and
records shall be maintained and preserved by the Buyer for a period of one
year after the later to occur of the Closing Date or the relevant payment
date (the "Audit Period"). The Seller, or its designated representative,
shall have the right, at any time during the Audit Period to audit the
books and records of the Buyer pertaining to Buyer's payment obligations
hereunder and shall have reasonable access to the Buyer's personnel and
facilities for such purpose. If such audit reveals that the Buyer has
underpaid the Seller, then the Buyer shall immediately pay to the Seller
any amounts due, plus accrued interest on any past-due amounts from the due
date until the date of actual payment at the rate of one and one half
percent per month or the highest rate allowed by law, whichever is lower.
Furthermore, if any audit reveals that the Buyer has underpaid the Seller
by five percent or more, then the Buyer shall pay the Seller's costs and
expenses in conducting such audit. Neither the acceptance by the Seller of
any information or payment, nor the inspection or audit of the Buyer's
books and records shall prejudice any rights or remedies of the Seller
hereunder, and therefore shall not prevent the Seller or its
representatives from later disputing the accuracy or completeness of any
payment made or information supplied by the Buyer. This Section 10.2 shall
survive the Closing.
10.3 Execution in Counterparts; Binding Effect. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall be considered one and the same
agreement, and shall become a binding agreement when one or more
counterparts have been signed by each party and delivered to the other
party.
10.4 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Kansas, without
reference to principles of conflicts or choice of law.
18
10.5 Notices. Any other notices or other communications required or
permitted under this Agreement, shall be given in writing and shall be
sufficiently given if delivered personally, sent by facsimile, mailed first
class or sent by overnight courier guaranteeing next-day delivery,
addressed as follows:
If to the Buyer:
DCI Inc.
00000 Xxxx 000xx Xxxxxx
Xxxxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
with a copy to:
Elecsys Corporation
00000 Xxxx 000xx Xxxxxx
Xxxxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
Two Pershing Square
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to the Seller:
Xxxxxxx Products, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
19
Notices or communications required or permitted under this Agreement shall
be deemed to have been received by the addressee (a) on the date delivered,
if delivered personally by facsimile; (b) five days after the date of
deposit, if mailed by first class mail; (c) one day after delivery to a
courier, if sent by overnight courier guaranteeing next-day delivery; or
(d) upon confirmation of transmission, if by facsimile. Any party may
change the person or address for service of process upon it or delivery of
notices or other communications to it under this Agreement by delivering
notice of such change to the other party in accordance with this Section
10.5.
10.6 Titles and Headings. Titles and headings to Articles and Sections
herein are inserted for convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this
Agreement.
10.7 Successors and Assigns; Beneficiaries. This Agreement shall inure
to the benefit of, and be binding upon, the parties hereto and their
respective successors and permitted assigns; provided, however, that no
party shall assign any rights or delegate any of its obligations created
under this Agreement without the prior written consent of the other party
except that Buyer may assign as collateral this Agreement and Buyer's
rights and interests hereunder to a financial lending institution at any
time to secure indebtedness advanced to Buyer or its parent without the
consent of Seller provided that Buyer shall provide Seller with prior
written notice of any such assignment. Notwithstanding the foregoing, no
assignment shall relieve the assigning party of any of its representations,
warranties or obligations contained herein. Nothing in this Agreement shall
confer upon any person or entity not a party to this Agreement, or the
legal representatives of such person or entity, any rights or remedies of
any nature or kind whatsoever under or by reason of this Agreement.
10.8 Entire Agreement. This Agreement represents the entire agreement
and understanding of the parties with reference to the transactions set
forth herein and therein, and no representations or warranties have been
made in connection with such transactions other than those expressly set
forth herein and therein. This Agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings and agreements
among the parties relating to the subject matter of this Agreement.
10.9 Waivers and Amendments. The parties may, but shall not be
obligated to, by written notice to each other (a) extend the time for the
performance of any of the obligations or other actions of the others; (b)
waive any inaccuracies in the representations or warranties of the others
contained in this Agreement; (c) waive compliance with any of the covenants
of the others created under this Agreement; or (d) waive fulfillment of any
of the conditions to its own obligations under this Agreement. The waiver
by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach,
whether or not similar. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the parties hereto.
10.10 Severability. This Agreement shall be deemed severable and the
invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other
term or provision hereof.
20
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
IN WITNESS WHEREOF, the parties have executed this Agreement, all as of
the day and year first above written.
CRYSTALOID TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer, Vice
President & Secretary
DCI INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
XXXXXXX PRODUCTS, INC., solely to evidence its agreement
to the matters set forth in Section 8.1
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer, Vice
President & Secretary
ELECSYS CORPORATION, solely to evidence its agreement to
the matters set forth in Section 8.2
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman
