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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
JMAR TECHNOLOGIES, INC.,
JMAR/XXX LITHOGRAPHY, INC.,
and
SEMICONDUCTOR ADVANCED LITHOGRAPHY, INC.
Dated: July 24, 2001
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND INTERPRETATION PROVISIONS.........................................1
1.1 Affiliate............................................................................1
1.2 Amendment Number 2...................................................................2
1.3 Average Trading Price................................................................2
1.4 Benefit Arrangement..................................................................2
1.5 Business Plan........................................................................2
1.6 Creditor Note Conditions.............................................................2
1.7 DI Modification Agreement............................................................2
1.8 Employee Plans.......................................................................2
1.9 Encumbrances.........................................................................3
1.10 ERISA..............................................................................3
1.11 ERISA Affiliate....................................................................3
1.12 Escrow Termination Date............................................................3
1.13 Exchange Act.......................................................................3
1.14 First Stockholder Conditions.......................................................3
1.15 GAAP...............................................................................3
1.16 Intellectual Property..............................................................3
1.17 JMAR Common Stock..................................................................4
1.18 JMAR Disclosure Schedule...........................................................4
1.19 Knowledge..........................................................................4
1.20 Major Stockholder..................................................................4
1.21 Material Adverse Effect............................................................4
1.22 Modification Agreement.............................................................4
1.23 Multiemployer Plan.................................................................4
1.24 NASD...............................................................................4
1.25 Nasdaq-NMS.........................................................................4
1.26 PBGC...............................................................................4
1.27 Pension Plan.......................................................................4
1.28 Permit.............................................................................5
1.29 Person.............................................................................5
1.30 Qualifying Order...................................................................5
1.31 Related Party......................................................................5
1.32 XXX Disclosure Schedule............................................................5
1.33 SEC................................................................................5
1.34 Second Stockholder Conditions......................................................5
1.35 Securities Act.....................................................................5
1.36 Source Delivery Extension..........................................................6
1.37 Stockholder........................................................................6
1.38 Stockholder Earn-Out Conditions....................................................6
1.39 Subsidiary.........................................................................6
1.40 Taxes..............................................................................6
1.41 Tax Returns........................................................................6
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1.42 Transaction Costs..................................................................6
1.43 Welfare Plan.......................................................................6
1.44 X-Ray System.......................................................................7
1.45 Other Defined Terms................................................................7
1.46 Interpretation Provisions..........................................................8
ARTICLE II. THE MERGER.......................................................................9
2.1 The Merger...........................................................................9
2.2 Effect of the Merger.................................................................9
2.3 Effective Time.......................................................................9
2.4 Directors and Officers..............................................................10
2.5 Certificate of Incorporation; Bylaws................................................10
2.6 Taking of Necessary Action; Further Action..........................................10
2.7 The Closing.........................................................................10
2.8 Tax Consequences....................................................................10
ARTICLE III. CONVERSION OF SECURITIES.......................................................11
3.1 Conversion of Securities............................................................11
3.2 Earn-Out Consideration..............................................................11
3.3 No Further Rights in XXX Stock......................................................13
3.4 Stock Transfer Books................................................................13
3.5 Escrow Account......................................................................13
3.6 Fractional Shares...................................................................14
3.7 Dissenting Shares...................................................................14
3.8 Surrender of Shares of XXX Stock; Issuance of Closing Shares........................15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF XXX...........................................16
4.1 Due Organization....................................................................16
4.2 Capitalization of XXX...............................................................16
4.3 Subsidiaries........................................................................17
4.4 Authorization.......................................................................17
4.5 Non-Contravention...................................................................17
4.6 Consents and Approvals..............................................................17
4.7 Financial Statements................................................................18
4.8 No Undisclosed Liabilities..........................................................19
4.9 No Changes..........................................................................19
4.10 Accounts Receivable...............................................................21
4.11 Title to and Condition of Assets..................................................22
4.12 Leases, Premises..................................................................22
4.13 Contracts and Commitments.........................................................22
4.14 Litigation, Proceedings and Applicable Law........................................23
4.15 Compliance with Law...............................................................23
4.16 Insurance.........................................................................24
4.17 Employee Benefit Plans............................................................24
4.18 Labor Matters.....................................................................28
4.19 Warranty..........................................................................28
4.20 Tax Matters.......................................................................28
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4.21 Environmental Matters.............................................................30
4.22 Customers and Suppliers...........................................................32
4.23 Books and Records.................................................................32
4.24 No Brokers........................................................................32
4.25 Powers of Attorney................................................................32
4.26 Transactions With Related Parties.................................................33
4.27 Intellectual Property.............................................................33
4.28 Identification of Depositories and Authorities....................................36
4.29 Governmental Permits..............................................................36
4.30 Legal and Tax Advice..............................................................36
4.31 Vote Required.....................................................................36
4.32 Disclosure........................................................................37
4.33 Tax Treatment.....................................................................37
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF JMAR AND ACQUISITION...........................37
5.1 Due Organization....................................................................37
5.2 Authorization.......................................................................37
5.3 Non-Contravention...................................................................38
5.4 SEC Documents.......................................................................38
5.5 Consents and Approvals..............................................................38
5.6 JMAR Common Stock...................................................................38
5.7 No Material Adverse Change..........................................................39
5.8 No Brokers..........................................................................39
ARTICLE VI. PRE-CLOSING COVENANTS...........................................................39
6.1 Conduct of Business by XXX Pending the Closing......................................39
6.2 Further Assurances..................................................................40
6.3 No Solicitation.....................................................................41
6.4 Affiliates' Letters.................................................................41
6.5 Access to Information, Properties and Personnel.....................................41
6.6 Confidential Information............................................................42
6.7 Notification of Certain Matters.....................................................42
6.8 Consents............................................................................43
6.9 Stockholder Approval................................................................43
6.10 XXX Stock Options; XXX Warrants and Convertible Debt..............................44
6.11 Public Statements and Press Releases..............................................44
6.12 Liabilities of XXX................................................................44
6.13 Updated Financial Information.....................................................44
ARTICLE VII. CONDITIONS TO CLOSING..........................................................45
7.1 Conditions to Each Party's Obligation to Effect the Merger..........................45
7.2 Conditions to SAL's Obligation to Effect the Merger.................................45
7.3 Conditions to JMAR and Acquisition's Obligations to Effect the Merger...............47
ARTICLE VIII. THE STOCKHOLDER/NOTEHOLDER REPRESENTATIVE.....................................50
8.1 Appointment.........................................................................50
8.2 Election and Replacement............................................................50
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8.3 Authority...........................................................................50
8.4 No Liability of JMAR................................................................50
8.5 Stockholder/Noteholder Representative Liability.....................................51
8.6 Fees and Expenses of Stockholder/Noteholder Representative..........................51
ARTICLE IX. POST-CLOSING COVENANTS..........................................................51
9.1 Litigation Support..................................................................51
9.2 Registration Statement for Resale of JMAR Common Stock..............................52
9.3 Board of Directors..................................................................52
9.4 Operation of Surviving Corporation..................................................52
9.5 Relocation..........................................................................52
9.6 Corporate Name......................................................................52
9.7 Tax Matters.........................................................................53
9.8 Creditor Settlements................................................................53
ARTICLE X. SURVIVAL; INDEMNIFICATION........................................................53
10.1 Survival of Representations, Etc..................................................53
10.2 Indemnification...................................................................54
10.3 Defense of Claims.................................................................55
10.4 Payment of Damages................................................................56
10.5 Exclusive Remedy..................................................................57
10.6 Limitations.......................................................................57
10.7 Indemnification Dispute Resolution Procedures.....................................57
ARTICLE XI. MISCELLANEOUS...................................................................57
11.1 Termination.......................................................................57
11.2 Further Assurances................................................................58
11.3 Assignment........................................................................59
11.4 Notices...........................................................................59
11.5 Entire Agreement; Amendments and Waivers..........................................60
11.6 Service of Process................................................................60
11.7 Multiple Counterparts.............................................................60
11.8 Headings..........................................................................60
11.9 Exhibits and Schedules............................................................60
11.10 Governing Law.....................................................................60
11.11 Construction......................................................................61
11.12 Expenses..........................................................................61
11.13 Invalidity........................................................................61
11.14 Cumulative Remedies...............................................................61
11.15 Specific Performance..............................................................61
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EXHIBITS
EXHIBIT A: CREDITOR NOTE EARN-OUT CONDITIONS
EXHIBIT B-1: CERTIFICATE OF MERGER
EXHIBIT B-2: AGREEMENT OF MERGER
EXHIBIT C: STOCKHOLDERS TABLE
EXHIBIT D-1: FORM OF EARN-OUT NOTES
EXHIBIT D-2: JMAR GUARANTEE
EXHIBIT E: ESCROW AGREEMENT
EXHIBIT F-1: ANNUAL FINANCIAL STATEMENTS
EXHIBIT F-2: INTERIM FINANCIAL STATEMENTS
EXHIBIT G: AFFILIATE LETTER
EXHIBIT H: STOCKHOLDERS AGREEMENT
EXHIBIT I: ASSUMED LIABILITIES
EXHIBIT J: OPINION OF XXXXXX X. XXXXXXXX, ESQ.
EXHIBIT K: EMPLOYMENT AGREEMENTS
EXHIBIT L-1: INVESTORS REPRESENTATION CERTIFICATE (U.S.)
EXHIBIT L-2: INVESTORS REPRESENTATION CERTIFICATE (NON-U.S.)
EXHIBIT M: OPINION OF GRAVEL AND XXXX
EXHIBIT N: INTELLECTUAL PROPERTY OPINION
EXHIBIT O: XXX REPRESENTATION LETTER
EXHIBIT P: JMAR REPRESENTATION LETTER
EXHIBIT Q: FORM OF CREDITOR NOTES
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Execution Version
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is entered
into as of July 24, 2001 by and among JMAR Technologies, Inc., a Delaware
corporation ("JMAR"), JMAR/XXX Lithography, Inc., a California corporation and
wholly-owned subsidiary of JMAR ("Acquisition"), and Semiconductor Advanced
Lithography, Inc., a Delaware corporation ("XXX"). Acquisition and XXX are
hereinafter sometimes collectively referred to as the "Constituent
Corporations."
RECITALS
A. The parties hereto desire to effect the merger (the "Merger")
of XXX with and into Acquisition in accordance with the Delaware General
Corporation Law (the "DGCL"), the Corporations Code of the State of California
(the "CCC") and the terms of this Agreement, pursuant to which Acquisition will
be the surviving corporation and will remain a wholly-owned subsidiary of JMAR.
B. Pursuant to the Merger, and the terms provided for herein,
the outstanding shares of Class AA Common Stock of XXX, par value $.01 per share
(the "XXX Class AA Common Stock"), and Class BB Common Stock of XXX, par value
$.01 per share (the "XXX Class BB Common Stock" and, together with the XXX Class
AA Common Stock, the "XXX Stock"), will be canceled and extinguished and
converted into the right to receive the Closing Shares (as defined below) and
the Earn-Out Consideration.
C. For federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Sections 368(a)(1)(A)
and 368(a)(2)(D) of the United States Internal Revenue Code of 1986, as amended
(the "Code").
D. JMAR, Acquisition and XXX desire to make certain
representations, warranties, covenants and agreements in connection with, and
establish various conditions precedent to, the Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements set forth in this Agreement, the parties
hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION PROVISIONS
As used herein, the following terms shall have the following meanings:
1.1 Affiliate. The term "Affiliate" shall mean, when used with reference
to a specified Person, (a) any Person who directly or indirectly controls, is
controlled by or is under common control with the specified Person, (b) any
Person who is an officer, partner or trustee of, or serves in a similar capacity
with respect to, the specified Person, or for which the specified Person is an
officer, partner or trustee or serves in a similar capacity, (c) any Person who,
directly or indirectly, is the beneficial owner of ten percent (10%) or more of
any class of equity
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securities of the specified Person, or of which the specified Person, directly
or indirectly, is the owner of ten percent (10%) or more of any class of equity
securities or (d) any spouse, parent, sibling or descendent of the specified
Person or of the spouse of the specified Person.
1.2 Amendment Number 2. The term "Amendment Number 2" shall mean that
certain Amended and Restated Amendment Number 2 to Technology License and
Installment Purchase Agreement dated as of July 9, 2001 by and among XXX, Xxxx
Xxxx KG-GmbH and Co. and Xxxx Xxxx America, Inc.
1.3 Average Trading Price. The term "Average Trading Price" shall mean
the volume-weighted average of the prices in all publicly-reported sales of JMAR
Common Stock on the Nasdaq-NMS, or other principal securities exchange or
quotation service on which the JMAR Common Stock is then listed for trading, for
the ten (10) trading day period ending on the trading day immediately preceding
the relevant determination date, with such closing prices adjusted appropriately
for any stock splits, stock combinations and the like occurring during such
ten-day trading period.
1.4 Benefit Arrangement. The term "Benefit Arrangement" shall mean any
employment, consulting, severance or other similar contract, arrangement or
policy and each plan, arrangement (written or oral), program, agreement or
commitment providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, life, health,
disability or accident benefits (including, without limitation, any "voluntary
employees' beneficiary association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits) or for deferred compensation,
profit-sharing bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement insurance,
compensation or benefits which (i) is not a Welfare Plan, Pension Plan or
Multiemployer Plan, (ii) is entered into, maintained, contributed to or required
to be contributed to, as the case may be, by XXX or an ERISA Affiliate or under
which XXX or any ERISA Affiliate may incur any liability, and (iii) covers any
employee or former employee of XXX or any ERISA Affiliate (with respect to their
relationship with such entities).
1.5 Business Plan. The term "Business Plan" shall mean the business plan
setting forth, among other things, the projected operating results, contemplated
financing requirements and related performance milestones of the Surviving
Corporation during such period.
1.6 Creditor Note Conditions. The term "Creditor Note Conditions" shall
mean the demonstration, on or prior to March 31, 2002, of satisfaction of the
conditions described on Exhibit A under the heading "Creditor Note Conditions."
1.7 DI Modification Agreement. The term "DI Modification Agreement"
shall mean that certain Note Modification Agreement dated as of June 1, 2001 by
and between XXX and DI Corporation.
1.8 Employee Plans. The term "Employee Plans" shall mean all Benefit
Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.
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1.9 Encumbrances. The term "Encumbrances" shall mean any claim, lien,
pledge, option, charge, easement, security interest, mortgage, right-of-way,
encumbrance, right of first refusal or first offer, restriction, reservation or
other similar right or interest of any nature of any third party.
1.10 ERISA. The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.11 ERISA Affiliate. The term "ERISA Affiliate" shall mean any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations" with, under "common control" with, or a member of an "affiliated
service group" with, XXX, as defined in Section 414(b), (c), (m) or (o) of the
Code, or under "common control" with XXX within the meaning of Section
4001(b)(1) of ERISA.
1.12 Escrow Termination Date. The term "Escrow Termination Date" shall
mean the date that is eighteen (18) months after the Closing Date.
1.13 Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.14 First Stockholder Conditions. The term "First Stockholder
Conditions" shall mean the demonstration, on or prior to September 30, 2002
(subject to the Source Delivery Extension), of satisfaction of the conditions
described on Exhibit A under the heading "First Stockholder Conditions."
1.15 GAAP. The term "GAAP" shall mean U.S. generally accepted accounting
principles, consistently applied.
1.16 Intellectual Property. The term "Intellectual Property" shall mean
all (a) inventions (whether patentable or unpatentable and whether or not
reduced to practice), (b) all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (c) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (d) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (e) all mask works and all applications,
registrations, and renewals in connection therewith, (f) all trade secrets and
confidential business information (including without limitation all ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (g) all computer software
(including all source code, data and related documentation) to the extent
developed by or exclusively for the businesses of XXX, (h) all Internet domain
names, URLs and any content therein, past or present, (i) all proprietary rights
to all content of all past and present publications of XXX, whether in print or
electronic form, (j) all other proprietary rights and (k) all copies and
tangible embodiments thereof (in whatever form or medium).
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1.17 JMAR Common Stock. The term "JMAR Common Stock" shall mean the
common stock of JMAR, par value $0.01 per share.
1.18 JMAR Disclosure Schedule. The term "JMAR Disclosure Schedule" shall
mean a schedule delivered by JMAR to XXX on the date hereof, which sets forth
exceptions to the representations and warranties contained in Article V hereof
and certain information called for by this Agreement.
1.19 Knowledge. The term "Knowledge" shall mean, with respect to XXX,
(i) the actual knowledge of Xxxxxx Xxxxxxx, after due and reasonable inquiry;
(ii) the actual knowledge of Xxxxxx Xxxxxx, after due and reasonable inquiry
with respect to Section 4.27; or (iii) the actual knowledge of any of the
officers or directors of XXX.
1.20 Major Stockholder. The term "Major Stockholder" shall mean any
Stockholder who is the direct or indirect beneficial owner of ten percent (10%)
or more of any class of securities of XXX.
1.21 Material Adverse Effect. The term "Material Adverse Effect" shall
mean changes, developments or occurrences which, individually or in the
aggregate, have materially adversely affected or would have a material adverse
effect on the business, prospects, financial position or results of operations
of the entity concerned, taken as a whole with such entity's consolidated
subsidiaries.
1.22 Modification Agreement. The term "Modification Agreement" shall
mean that certain Series D and Series E Modification Agreement to be executed in
a form reasonably satisfactory to JMAR prior to the Closing Date by and among
XXX and the holders of issued and outstanding Series D Subordinated Convertible
Promissory Notes of XXX and Series E Subordinated Convertible Promissory Notes
of XXX.
1.23 Multiemployer Plan. The term "Multiemployer Plan" shall mean any
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA which XXX or any
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or has maintained, administered, contributed to or was required
to contribute to, or under which XXX or any ERISA Affiliate has or may incur any
liability.
1.24 NASD. The term "NASD" shall mean the National Association of
Securities Dealers, Inc.
1.25 Nasdaq-NMS. The term "Nasdaq-NMS" shall mean the National
Association of Securities Dealers, Inc. Automated Quotation System - National
Market System.
1.26 PBGC. The term "PBGC" shall mean the Pension Benefits Guaranty
Corporation.
1.27 Pension Plan. The term "Pension Plan" shall mean any "employee
pension benefit plan" as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) which XXX or any ERISA Affiliate maintains, administers,
contributes to or is required to contribute to, or
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has maintained, administered, contributed to or was required to contribute to,
or under which XXX or any ERISA Affiliate has or may incur any liability.
1.28 Permit. The term "Permit" shall mean any approval, consent, waiver,
exemption, variance, franchise, certificate, order, permit, authorization or
license of or from any federal, state, local or foreign government, governmental
agency, board, tribunal, commission, court or other agency or body with
regulatory or governmental authority, including, without limitation, any
federal, state, local or foreign zoning, health, environmental protection,
pollution, sanitation, safety, siting or building permit or license or
authorization.
1.29 Person. The term "Person" shall mean any individual, corporation,
firm, limited liability company, partnership, association, trust, estate or
other entity or organization.
1.30 Qualifying Order. The term "Qualifying Order" shall mean an order
from a commercial semiconductor manufacturer for the purchase of an X-Ray System
with a sales price of not less than $6,000,000 that provides a positive gross
margin to the Surviving Corporation with payment terms that provide for a
minimum of ten percent (10%) of the purchase price to be paid on receipt of
order, a minimum of fifty percent (50%) of the purchase price to have been paid
on factory acceptance by the commercial semiconductor manufacturer at the
Surviving Corporation's facility; a minimum of seventy-five percent (75%) of the
purchase price to have been paid upon acceptance by the commercial semiconductor
manufacturer after installation at the commercial semiconductor manufacturer's
facility and the balance of the purchase price to have been paid upon
qualification by the commercial semiconductor manufacturer.
1.31 Related Party. The term "Related Party" shall mean any Major
Stockholder, any officer or director of XXX, any Affiliate of any Major
Stockholder, XXX or any of their respective officers or directors, or any
business or entity in which any Major Stockholder, XXX, any of the officers or
directors of XXX or any Affiliate of any such Person has any direct or material
indirect interest.
1.32 XXX Disclosure Schedule. The term "XXX Disclosure Schedule" shall
mean a schedule delivered by XXX to JMAR on the date hereof, which sets forth
exceptions to the representations and warranties contained in Article IV hereof
and certain information called for by this Agreement.
1.33 SEC. The term "SEC" shall mean the Securities and Exchange
Commission.
1.34 Second Stockholder Conditions. The term "Second Stockholder
Conditions" shall mean (a) the receipt by Surviving Corporation of a Qualifying
Order on or prior to December 31, 2002, and (b) the completion of all actions
such that the commercial semiconductor manufacturer is unconditionally obligated
to pay a minimum of ninety percent (90%) of the purchase price for the X-Ray
System ordered in the Qualifying Order in accordance with the terms and
conditions of the Qualifying Order within eighteen (18) months following receipt
of the Qualifying Order.
1.35 Securities Act. The term "Securities Act" shall mean the Securities
Act of 1933, as amended.
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1.36 Source Delivery Extension. The term "Source Delivery Extension"
shall mean an extension of a deadline for performing a specified activity or
satisfying a specified condition on a day for day basis by the number of days
after June 30, 2002 that JMAR Research, Inc., a California corporation and
wholly-owned subsidiary of JMAR, delivers to the Surviving Corporation an x-ray
source meeting the specifications described on Exhibit A under the heading
"X-Ray Source Specifications."
1.37 Stockholder. The term "Stockholder" shall mean a holder of the
capital stock of XXX.
1.38 Stockholder Earn-Out Conditions. The term "Stockholder Earn-Out
Conditions" shall mean the First Stockholder Conditions and the Second
Stockholder Conditions.
1.39 Subsidiary. The term "Subsidiary" shall mean (i) any corporation in
an unbroken chain of corporations beginning with XXX if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain; (ii) any partnership in which XXX is a
general partner; or (iii) any partnership in which XXX possesses a 50% or
greater interest in the total capital or total income of such partnership.
1.40 Taxes. The term "Taxes" (including, with correlative meaning, the
term "Tax") shall mean all taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, service, service use, ad valorem, transfer, franchise, profits, net
worth, license, lease, withholding, social security, payroll, employment,
excise, estimated, severance, stamp, recording, occupation, real and personal
property, gift, windfall profits or other taxes, customs, duties, fees,
assessments or charges of any kind whatsoever, whether computed on a separate,
consolidated, unitary, combined or other basis, together with any interest,
fines, penalties, additions to tax or other additional amounts imposed thereon
or with respect thereto imposed by the Internal Revenue Service or any taxing
authority (whether domestic or foreign) including, without limitation, any
state, county, local or foreign government or any subdivision or taxing agency
thereof, including a United States possession.
1.41 Tax Returns. The term "Tax Returns" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
1.42 Transaction Costs. The term "Transaction Costs" shall mean all
amounts incurred or accrued by XXX in connection with the negotiation,
preparation and execution of this Agreement and all other agreements, documents
and instruments contemplated hereby or otherwise in connection with the
preparation or carrying out of this Agreement.
1.43 Welfare Plan. "Welfare Plan" shall mean any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA which XXX or any ERISA
Affiliate maintains, administers, contributes to or is required to contribute
to, or under which XXX or any ERISA Affiliate has or may incur any liability.
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1.44 X-Ray System. The term "X-Ray System" shall mean a complete X-ray
lithography system including at least the wafer and mask handling, wafer
stepping, and x-ray source functions capable of at least 150 nm resolution and
75 nm alignment that is manufactured by Surviving Corporation.
1.45 Other Defined Terms. The following terms shall have the meanings
given them in the Sections of this Agreement set forth below:
Term Section
---- -------
Acquisition.....................................................Preamble
Agreement.......................................................Preamble
Affiliate Letter.....................................................6.4
Annual Financial Statements.......................................4.7(a)
Assumed Liabilities.................................................6.13
Business Plan.......................................................6.14
CCC.............................................................Recitals
Certificate of Merger................................................2.3
Claim...............................................................10.3
Claim Notice........................................................10.3
Cleanup.......................................................4.21(a)(i)
Closing..............................................................2.7
Closing Date.........................................................2.7
Closing Date Working Capital......................................4.7(c)
Closing Shares....................................................3.1(a)
Code............................................................Recitals
Competing Transaction................................................6.3
Confidentiality Agreement............................................6.6
Confidential Information.............................................6.6
Constituent Corporations........................................Preamble
Creditor Conversion Shares........................................9.8(b)
Creditor Notes....................................................9.8(b)
Damages..........................................................10.2(a)
DGCL............................................................Recitals
Dissenting Shares.................................................3.7(a)
Earn-Out Conditions...............................................3.2(b)
Earn-Out Consideration............................................3.2(a)
Earn-Out Conversion Shares........................................3.2(b)
Earn-Out Notes....................................................3.2(b)
Earn-Out Shares................................................3.2(c)(i)
Effective Date.......................................................2.3
Effective Time ......................................................2.3
Environmental Claim..........................................4.21(a)(ii)
Environmental Laws..........................................4.21(a)(iii)
Escrow Account....................................................3.1(a)
Escrow Agreement.....................................................3.5
Financial Statements..............................................4.7(a)
Guarantee.........................................................3.2(b)
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Hazardous Materials..........................................4.21(a)(iv)
Indemnification Threshold...........................................10.6
Indemnified Party................................................10.2(c)
Indemnifying Party...............................................10.2(c)
Information Statement................................................6.9
Instrument...........................................................8.3
Interim Date......................................................4.7(a)
Interim Financial Statements......................................4.7(a)
Investor Representation Certificate...............................7.3(i)
JMAR............................................................Preamble
JMAR Parties.....................................................10.2(a)
JMAR Reports.........................................................5.4
JMAR Shares.......................................................3.2(b)
Leases..............................................................4.12
Lease Agreement......................................................4.5
Liabilities..........................................................4.8
Majority.............................................................8.2
Material Contracts..................................................4.13
Material Customers..................................................4.22
Merger .........................................................Recitals
Registrations.......................................................4.27
Release.......................................................4.21(a)(v)
XXX.............................................................Preamble
XXX Class AA Common Stock.......................................Recitals
XXX Class BB Common Stock.......................................Recitals
XXX Intellectual Property...........................................4.28
XXX Nominee..........................................................9.3
XXX Parties......................................................10.2(b)
XXX Stock.......................................................Recitals
XXX Stock Option..................................................3.1(d)
XXX Warrant.......................................................3.1(e)
Securities Laws......................................................5.4
Stockholder.....................................................Recitals
Stockholder/Noteholder Representative................................8.1
Stockholders Agreement...............................................3.5
Stockholder's Table...............................................3.1(b)
Stock Option Plan.................................................3.1(d)
Surviving Corporation................................................2.1
Warranties..........................................................4.19
1.46 Interpretation Provisions.
(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and article, section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "or" is disjunctive but
not
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necessarily exclusive. The terms "include" and "including," however used, are
not limiting and mean "including without limitation."
(b) References to agreements and other documents shall be deemed
to include all subsequent amendments and other modifications thereto.
(c) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(e) The language used in this Agreement shall be deemed to be
the language chosen by the Parties to express their mutual intent, and no rule
of strict construction shall under any circumstances be applied against any
Party.
ARTICLE II.
THE MERGER
2.1 The Merger. At the Effective Time (as defined in Section 2.3
hereof), XXX shall be merged with and into Acquisition upon the terms and
conditions set forth herein, as permitted by and in accordance with the
applicable provisions of the CCC and the DGCL, and the separate existence of XXX
shall thereupon cease, and Acquisition, as the surviving corporation in the
Merger (the "Surviving Corporation"), shall continue its corporate existence in
accordance with the CCC.
2.2 Effect of the Merger. At the Effective Time, the separate existence
of XXX will cease, and the Surviving Corporation shall succeed to all the rights
and property, and be subject to all the debts and liabilities of the Constituent
Corporations, all without further act or deed and with the effects of a merger
as set forth in the DGCL and the CCC.
2.3 Effective Time. The consummation of the Merger shall be effected as
promptly as practicable after the satisfaction or waiver of the conditions set
forth in Article VII hereof, provided that this Agreement has not been
terminated pursuant to Section 11.1 hereof, and the parties hereto will cause
the Merger to be consummated by (i) filing with the Secretary of State of the
State of Delaware a Certificate of Merger in the form attached hereto as Exhibit
B-1 (the "Certificate of Merger"), duly executed in accordance with this
Agreement and the DGCL and (ii) filing with the Secretary of State of the State
of California an Agreement of Merger in the form attached hereto as Exhibit B-2
(the "Agreement of Merger") duly executed in accordance with this Agreement and
the CCC, together with an officers' certificate of both XXX and Acquisition
satisfying the requirements of the CCC. The date on which the Merger shall
become effective is referred to herein as the "Effective Date," and the time on
the Effective Date at which the Merger shall become effective is referred to
herein as the "Effective Time." If the Secretary of State of the State of
Delaware requires any changes in the Certificate of Merger as a condition to
filing or to issuing its certificate to the effect that the Merger is effective,
or if the Secretary of State of the State of California requires any changes in
the Agreement of Merger as a condition to filing or to issuing its certificate
to the effect that the Merger is effective, the parties shall
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execute any necessary revisions incorporated in such changes, provided such
changes are not inconsistent with and do not result in any material change to
the terms of this Agreement.
2.4 Directors and Officers. From and after the Effective Time, the
directors and officers of the Surviving Corporation shall remain the directors
and officers of Acquisition immediately prior to the Effective Time. Such
directors and officers of the Surviving Corporation shall hold office for the
term specified in, and subject to the provisions contained in, the Bylaws of the
Surviving Corporation, applicable law and any agreements between any of such
directors or officers and Acquisition or the Surviving Corporation entered into
as of the Effective Time. If, at or after the Effective Time, a vacancy shall
exist on the Board of Directors of the Surviving Corporation or in any of the
offices of the Surviving Corporation, such vacancy shall be filled in the manner
provided in the Bylaws of the Surviving Corporation.
2.5 Certificate of Incorporation; Bylaws. From and after the Effective
Time and until further amended in accordance with applicable law, the
Certificate of Incorporation of Acquisition shall remain the Certificate of
Incorporation of the Surviving Corporation. From and after the Effective Time
and until further amended in accordance with applicable law, the Bylaws of
Acquisition as in effect immediately prior to the Effective Time shall remain
the Bylaws of the Surviving Corporation.
2.6 Taking of Necessary Action; Further Action. JMAR, Acquisition and
XXX, respectively, each shall use its best efforts to take all such action as
may be necessary or appropriate to effectuate the Merger under the DGCL and CCC
at the time specified in Section 2.3 hereof. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of
this Agreement and to vest the Surviving Corporation with full right and title
to and possession of all assets, property, rights, privileges, powers and
franchises of either of the Constituent Corporations, the officers of the
Surviving Corporation are fully authorized in the name of each Constituent
Corporation or otherwise to take, and shall take, all such lawful and necessary
action.
2.7 The Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to the
provisions of Section 11.1, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 9:00 a.m. (Pacific time) on the
second business day after the satisfaction or waiver of all conditions set forth
in Article VII hereof, or at such other time and date as JMAR and XXX may
mutually agree (such date and time on and at which the Closing occurs being
referred to herein as the "Closing Date"). The Closing shall take place at the
offices of Gravel and Xxxx, or at such other location as JMAR and XXX may
mutually agree, and will be effective as of the Effective Time.
2.8 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code, and each of
JMAR, Acquisition and XXX hereby adopts this Agreement as a "plan of
reorganization" for purposes of the Code.
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ARTICLE III.
CONVERSION OF SECURITIES
3.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of JMAR, Acquisition, XXX, the
Surviving Corporation or the holder of any securities of the foregoing:
(a) Each share of XXX Stock issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares) shall be canceled and
extinguished and shall be converted in the right to receive upon surrender of
the certificate representing such XXX Stock a fraction of a share of JMAR Common
Stock, the numerator of which is 603,051, and the denominator of which is the
number of shares of XXX Stock issued and outstanding immediately prior to the
Effective Date. The shares of JMAR Common Stock to be issued upon conversion of
XXX Stock as of the Closing Date are subject to adjustments for stock dividends,
splits, reverse splits, combinations, recapitalizations and the like occurring
after the date hereof and prior to the Closing Date and are hereinafter referred
to as the "Closing Shares."
(b) The Closing Shares shall be allocated among the Stockholders
in the manner set forth on the stockholders table attached hereto as Exhibit C
(the "Stockholders Table").
(c) JMAR's only obligation to register the Closing Shares under
the Securities Laws shall be pursuant to Article IX.
(d) As of the Effective Time, each outstanding option to
purchase a share of XXX Stock (each, a "XXX Stock Option") granted by XXX under
the 1997 XXX, Inc. Stock Option Plan (the "Stock Option Plan"), shall be
canceled and shall cease to be outstanding, without further consideration to the
holder thereof, and such holder shall be deemed to have no further rights
pertaining to such XXX Stock Option.
(e) As of the Effective Time, each outstanding warrant to
purchase a share of XXX Stock (each a "XXX Warrant"), shall be canceled and
shall cease to be outstanding, without further consideration to the holder
thereof, and such holder shall be deemed to have no further rights pertaining to
such XXX Warrant.
(f) Each share of XXX Stock issued and outstanding immediately
prior to the Effective Time and owned or held in treasury by XXX shall be
canceled and extinguished, and no payment shall be made with respect thereto.
(g) Each share of common stock of Acquisition issued and
outstanding immediately prior to the Effective Time shall remain an issued and
outstanding share of the Surviving Corporation.
3.2 Earn-Out Consideration.
(a) Upon the satisfaction of the Stockholder Earn-Out
Conditions, the Stockholders (other than Stockholders who have relinquished
their right to receive the Earn-Out Consideration pursuant to a written
agreement with JMAR, XXX and Acquisition) shall have the
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right to receive the aggregate additional consideration set forth in Sections
3.2(b) and 3.2(c) (collectively, the "Earn-Out Consideration") in accordance
with the remaining terms of this Section 3.2.
(b) Upon the satisfaction of the First Stockholder Conditions,
the Stockholders (other than Stockholders who have relinquished their right to
receive the Earn-Out Consideration pursuant to a written agreement with JMAR,
XXX and Acquisition) shall have the right to receive, in the aggregate,
promissory notes of the Surviving Corporation in substantially the form attached
hereto as Exhibit D-1 (the "Earn-Out Notes") (which notes shall be guaranteed by
JMAR pursuant to the terms of that certain Guarantee of JMAR in substantially
the form attached hereto as Exhibit D-2 (the "Guarantee")) in an aggregate
principal amount of Five Hundred Thousand Dollars ($500,000), which shall be
convertible in accordance with their terms into shares of JMAR Common Stock (the
"Earn-Out Conversion Shares" and together with the Closing Shares, the Earn-Out
Shares and the Creditor Conversion Shares, the "JMAR Shares").
(c) Upon the satisfaction of the Second Stockholder Conditions,
the Stockholders (other than Stockholders who have relinquished their right to
receive the Earn-Out Consideration pursuant to a written agreement with JMAR,
XXX and Acquisition) shall have the right to receive, in the aggregate, the
following additional consideration:
(i) 354,736 shares of JMAR Common Stock (the "Earn-Out
Shares") (subject to adjustments for stock dividends, splits, reverse splits,
combinations, recapitalizations and the like occurring after the date hereof and
prior to the date the Earn-Out Consideration is delivered to the Stockholders in
accordance with Section 3.2(f)), and
(ii) Earn-Out Notes in an aggregate principal amount of
Eight Hundred Thousand Dollars ($800,000), which shall be convertible into
Earn-Out Conversion Shares.
(d) Notwithstanding the foregoing, if a Qualifying Order is
received after December 31, 2002, but prior to March 31, 2003, and the X-Ray
System ordered thereby shall have been accepted by the commercial semiconductor
manufacturer making such order in accordance with the terms and conditions of
the Qualifying Order within eighteen (18) months following receipt of the
Qualifying Order, the Second Stockholder Conditions shall be deemed to have been
met; provided, however, that the Earn-Out Consideration to be paid to the
Stockholders for such sale shall be reduced as follows:
(i) If the Qualifying Order is received during January
2003, the Earn-Out Consideration will be reduced to 266,052 shares of JMAR
Common Stock, which shares shall be deemed Earn-Out Shares for the purposes of
this Agreement, and promissory notes of the Surviving Corporation and guaranteed
by JMAR in an aggregate principal amount of Six Hundred Thousand Dollars
($600,000), which notes shall be deemed Earn-Out Notes for the purposes of this
Agreement.
(ii) If the Qualifying Order is received during February
2003, the Earn-Out Consideration will be reduced to 177,368 shares of JMAR
Common Stock, which shares shall be deemed Earn-Out Shares for the purposes of
this Agreement, and promissory notes of the Surviving Corporation and guaranteed
by JMAR in an aggregate principal amount of
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Four Hundred Thousand Dollars ($400,000), which notes shall be deemed Earn-Out
Notes for the purposes of this Agreement.
(iii) If the Qualifying Order is received during March
2003, the Earn-Out Consideration will be reduced to 88,684 shares of JMAR Common
Stock, which shares shall be deemed Earn-Out Shares for the purposes of this
Agreement, and promissory notes of the Surviving Corporation and guaranteed by
JMAR in an aggregate principal amount of Two Hundred Thousand Dollars
($200,000), which notes shall be deemed Earn-Out Notes for the purposes of this
Agreement.
(e) It is understood by the parties that the deadlines for
receipt of a Qualifying Order as part of the Second Stockholder Conditions and
as set forth in Section 3.2(d) shall be subject to adjustment for any Source
Delivery Extension.
(f) Subject to the indemnification and setoff provisions of the
Earn-Out Notes, if the Earn-Out Conditions are satisfied, JMAR shall provide the
Earn-Out Consideration to the Stockholders within thirty (30) days of the
satisfaction of such conditions. Upon conversion on or prior to the later of (i)
the Escrow Termination Date or (ii) with respect to any portion of the Earn-Out
Notes that is reasonably necessary to satisfy a previously asserted
indemnification claim, the date such indemnification claim is resolved, JMAR
will cause the Earn-Out Conversion Shares and the Creditor Conversion Shares to
be deposited into an escrow account (the "Escrow Account") to be available for
the satisfaction of Claims pursuant to Article X. The Escrow Account will be
administered in accordance with Section 3.5.
(g) The Earn-Out Consideration shall be allocated among the
Stockholders in the manner set forth on the Stockholders Table.
(h) JMAR's only obligation to register the Earn-Out Shares and
the Earn-Out Conversion Shares under the Securities Laws shall be pursuant to
Article IX.
3.3 No Further Rights in XXX Stock. The shares of JMAR Common Stock and
the Earn-Out Consideration delivered or issued upon conversion of the shares of
XXX Stock in accordance with the terms of this Agreement shall be deemed to have
fully satisfied all rights pertaining to the shares of XXX Stock.
3.4 Stock Transfer Books. As of the date hereof, the stock transfer
books of XXX shall be closed, and, except for the conversion of outstanding
convertible securities and the exercise of outstanding warrants or stock
options, there shall be no further registration of transfers of XXX Stock
hereafter on the records of XXX. From and after the Effective Time, the
Stockholders shall cease to have any rights with respect to the XXX Stock and
any other securities of XXX except as otherwise provided in this Agreement or by
law.
3.5 Escrow Account. The Escrow Account will be administered by an
independent escrow agent acceptable to the Parties pursuant to an agreement in
the form attached hereto as Exhibit E (the "Escrow Agreement") to be executed by
JMAR, such escrow agent and each holder of an Earn-Out Note or Creditor Note who
elects to convert such note prior to the later of (i) the Escrow Termination
Date or (ii) with respect to any portion of the Earn-Out Notes or Creditor Notes
that is reasonably necessary to satisfy a previously asserted indemnification
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claim, the date such indemnification claim is resolved. Any fees or charges on
the Escrow Account shall be paid by JMAR. Any dividends or other distributions
on the shares held in the Escrow Account will be added to the shares held in the
Escrow Account and will be released along with the shares and any other property
in the account in accordance with the Escrow Agreement and the following terms
and conditions. The shares and other property, if any, held in the Escrow
Account will be released to the Stockholders within ten (10) business days after
the Escrow Termination Date, except to the extent of any previously asserted
indemnity claim (as to which the number of shares reasonably necessary to
satisfy such claim shall continue to be held in the Escrow Account). For
purposes of this Section 3.5 and the Escrow Agreement, the value of one share of
JMAR Common Stock shall be deemed to be equal to the Average Trading Price on
the business day immediately preceding the date any indemnity claim is finally
resolved under the Escrow Agreement. Any and all Taxes on the dividend and other
income of the Escrow Account shall be the sole responsibility of the
Stockholders, which may be satisfied via the assets of the Escrow Account.
3.6 Fractional Shares. No fractional shares of JMAR Common Stock and no
certificates or scrip certificates therefor shall be issued to represent any
such fractional interest pursuant to this Agreement. In lieu of any such
fractional shares, each Stockholder who would otherwise have been entitled to a
fractional share of JMAR Common Stock upon surrender of certificates for
exchange will be paid an amount in cash (without interest), rounded to the
nearest cent, equal to the product of (a) the fraction of one share to which
such Stockholder otherwise would have been entitled, multiplied by (b) the
Average Trading Price.
3.7 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary,
shares of XXX Stock which are issued and outstanding immediately prior to the
Effective Time and which are held by a Stockholder who has exercised or remains
eligible to exercise the right (to the extent such right is available by law) to
demand and receive payment for the fair value of such shares pursuant to the
DGCL (the "Dissenting Shares") shall not be converted into the right to receive
any of the Closing Shares or the Earn-Out Consideration until such holder shall
have failed to perfect or shall have effectively withdrawn or lost such right
under the DGCL, as the case may be. If such holder shall have so failed to
perfect or shall have effectively withdrawn or lost such right, each of such
holder's shares shall thereupon be deemed to have been converted at the
Effective Time into the right to receive, without any interest thereon, the
Closing Shares such holder is entitled to receive under Section 3.1 and that
portion of the Earn-Out Consideration such holder is entitled to receive under
Section 3.2. If the holder of any shares of XXX Stock shall become entitled to
receive payment for such shares pursuant to the DGCL, such payment shall be made
by the Surviving Corporation.
(b) XXX shall give JMAR (i) copies of all instruments and
documents served pursuant to Section 262 of the DGCL with respect to any demand
for payment for shares, (ii) prompt notice of any withdrawal of such a demand
and (iii) the opportunity to direct all negotiations and proceedings with
respect to such a demand. XXX shall not, except with the prior written consent
of JMAR, voluntarily make any payment with respect to any demand for payment for
shares or offer to settle or settle any such demand.
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3.8 Surrender of Shares of XXX Stock; Issuance of Closing Shares.
(a) At the Closing, the Stockholders shall surrender to JMAR for
cancellation the certificates representing shares of issued and outstanding XXX
Stock and shall be entitled to receive in exchange therefor (i) the Closing
Shares into which the XXX Stock theretofore represented by the certificate or
certificates so surrendered shall have been converted as provided in this
Agreement and (ii) in the case of a stockholder who would otherwise be entitled
to receive a fractional share interest in JMAR Common Stock, cash in accordance
with the provisions of Section 3.6.
(b) If any certificate for shares of JMAR Common Stock is to be
issued in a name other than that in which the corresponding certificate for
shares of XXX Stock so surrendered is then registered, such surrender shall be
accompanied by payment of any applicable transfer taxes and documents required
for a valid transfer.
(c) Until so surrendered, each certificate theretofore
representing shares of issued and outstanding XXX Stock shall, except as set
forth below, be deemed for all corporate purposes to evidence the Closing Shares
into which such shares of XXX Stock shall have been converted. Until any such
certificate shall be so surrendered, the holder of such certificate shall not
have any right to receive any dividends paid or other distributions made to
holders of record of JMAR Common Stock after the Effective Time. Upon surrender
as provided herein of a certificate representing XXX Stock, the holder of record
thereof shall receive, together with Closing Shares to which such holder shall
be entitled, all dividends and other distributions which shall have been paid or
made to holders of record of JMAR Common Stock after the Effective Time with
respect to the Closing Shares, without interest thereon.
(d) In the event that any certificates evidencing shares of XXX
Stock have been lost, stolen or destroyed, JMAR shall issue in exchange for such
lost, stolen or destroyed certificates upon the making of an affidavit of that
fact by the holder thereof, the Closing Shares and such cash for fractional
shares, if any, as may be required pursuant to Section 3.6; provided, however,
that JMAR may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificates to
deliver a bond in such sum as JMAR may reasonably direct as indemnity against
any claim that may be made against JMAR with respect to the certificates alleged
to have been lost, stolen or destroyed.
(e) Notwithstanding the foregoing provisions of this Section
3.8, JMAR may, in its discretion, also require execution and delivery of an
Investor Representation Certificate from a Stockholder, as required under
Section 7.3(i) of this Agreement, as a condition to JMAR's issuance of a
certificate for shares of JMAR Common Stock pursuant to the Merger, and until
such certification is received, the rights of the Stockholder shall be the same
as those of a Stockholder who has not surrendered a certificate for XXX Stock.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF XXX
Except as is otherwise set forth with appropriate section references in
the XXX Disclosure Schedule, XXX hereby makes the representations and warranties
set forth below to JMAR and Acquisition as of the date hereof.
4.1 Due Organization. XXX is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to own, lease and operate its
properties and conduct its business as it is presently conducted and as proposed
to be conducted. XXX is duly qualified to do business as a foreign corporation
or other entity and is in good standing in each jurisdiction in which such
qualification is necessary under the applicable law as a result of the conduct
of its business or the ownership of its properties, except where the failure to
be so qualified would not have a Material Adverse Effect on XXX. Each
jurisdiction in which XXX is qualified to do business as a foreign corporation
or other entity is listed in Section 4.1 of the XXX Disclosure Schedule. The
copies of SAL's certificate of incorporation, bylaws and other organizational
documents which have been furnished to JMAR reflect all currently effective
amendments made thereto at any time prior to the date of this Agreement and are
complete and correct in all material respects. The stock certificate books, the
stock record books and all books and records reflecting the proceedings of the
Stockholders and Board of Directors of XXX which have been furnished to JMAR are
complete and correct in all material respects. XXX is not in default under or in
violation of any provision of its certificate of incorporation or in default or
in violation of any provision of its bylaws.
4.2 Capitalization of XXX. The authorized capital stock of XXX consists
of:
(a) 5,000,000 shares of XXX Class AA Common Stock, of which (i)
415,625 shares are duly issued and outstanding, fully paid and non-assessable;
(ii) 2,266,799 are expected to be duly issued and outstanding, fully paid and
non-assessable as of the Effective Time; and (iii) 1,851,174 shares have been
reserved for issuance (x) upon the exercise of outstanding options granted
pursuant to the Stock Option Plan, (y) upon the exercise of outstanding
warrants, and (z) to creditors pursuant to Amendment No. 2, the Modification
Agreement and the DI Modification Agreement; and
(b) 500,000 shares of XXX Class BB Common Stock, none of which
are issued and outstanding.
Section 4.2 of the XXX Disclosure Schedule contains a true, complete and correct
list of the Stockholders, including the number, class and series of XXX Stock
held of record and beneficially by each of them. All the outstanding XXX Stock
and other securities of XXX are duly authorized, validly issued, fully paid and
nonassessable and free of all liens, claims and Encumbrances, and were issued in
compliance with applicable preemptive rights and securities laws. The option
holders of XXX and the number and terms of the XXX Stock Options, including the
number of shares of XXX Stock they may be exercised for, held by each of them
are set forth in Section 4.2 of the XXX Disclosure Schedule. The warrant holders
of XXX and the number and terms of the XXX Warrants, including the number of
shares of XXX Stock they may be exercised
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for, held by each of them are set forth in Section 4.2 of the XXX Disclosure
Schedule. Except as set forth in Section 4.2 of the XXX Disclosure Schedule, XXX
has not issued any securities that are currently outstanding, including, but not
limited to, options, warrants or other securities convertible into or
exercisable for shares of capital stock of XXX or other securities of XXX, nor
has XXX repurchased, redeemed or otherwise acquired any of its outstanding
shares of capital stock. Except as set forth in Section 4.2 of the XXX
Disclosure Schedule, XXX is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock.
4.3 Subsidiaries. Except as set forth in Section 4.3 of the XXX
Disclosure Schedule, XXX has not at any time since January 1, 1998 owned any
stock, partnership interest, membership interest, joint venture interest or any
other security or ownership interest issued by any other corporation, or by any
partnership, limited liability company, organization or other entity. XXX
currently does not own any stock, partnership interest, membership interest,
joint venture interest or any other security or ownership interest issued by any
other corporation, or by any partnership, limited liability company,
organization or other entity. XXX has no outstanding Liabilities related to
Singapore Advanced Lithography Pte. Ltd. or X-Ray Mask Company.
4.4 Authorization. XXX has all necessary corporate power and authority,
and, except for Stockholder approval, has taken all corporate action necessary,
to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations hereunder. The execution and
delivery of this Agreement by XXX and the consummation by XXX of the
transactions contemplated hereby have been or will be prior to the Effective
Time duly approved by the Board of Directors of XXX. Other than Stockholder
approval, no other corporate proceedings on the part of XXX are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by XXX and is a legal, valid and
binding obligation of XXX, enforceable against XXX in accordance with its terms,
subject to general principles of equity and laws of general application relating
to bankruptcy, insolvency, moratorium or similar laws affecting creditors'
rights generally, regardless of whether considered in a proceeding in equity or
at law.
4.5 Non-Contravention. The execution, delivery and performance of this
Agreement by XXX and the consummation by XXX of the transactions contemplated
hereby do not and will not, with or without the giving of notice or the lapse of
time, or both, violate, conflict with, result in the breach of or a default
under, or accelerate the performance required by or result in any Material
Adverse Effect under any of the terms, conditions or provisions of, the charter,
bylaws or other organizational documents of XXX or any covenant, agreement,
commitment or understanding (including any license or sub-license agreement,
covenant not to compete, employment agreement or consulting agreement) to which
XXX is a party or by which any of its assets are bound, or any Permit,
authorization, order, ruling, decree, judgment, injunction or arbitration award,
other than its Lease Agreement with the Investors Corporation of Vermont, dated
March 3, 1998, as amended (the "Lease Agreement"), or any law, rule, statute,
regulation or stipulation, to which XXX or any of its assets is subject, or
result in the creation of any Encumbrance upon any of the properties or assets
of XXX.
4.6 Consents and Approvals. No consent, approval or authorization of, or
declaration, filing or registration with, any federal, state, local, foreign or
other governmental or
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regulatory authority, or any other Person, is required to be made or obtained by
XXX or by the Stockholders in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, except for (a) compliance with applicable securities laws,
(b) the filing of all documents necessary to consummate the Merger with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of California and (c) the approval by the Stockholders of the transactions
contemplated hereby, as provided under Delaware law, California law and the
charter, bylaws or other organizational documents of XXX.
4.7 Financial Statements.
(a) The audited financial statements of XXX as of and for the
years ended December 31, 1999 and 2000 (the "Annual Financial Statements"), as
set forth in Exhibit F-1 hereto, and the unaudited balance sheet of XXX as of
May 31, 2001 (the "Interim Date") and the unaudited income statement of XXX for
the five-month period ended on the Interim Date, in each case as set forth in
Exhibit F-2 hereto (the "Interim Financial Statements" and, together with the
Annual Financial Statements, the "Financial Statements"), (i) are complete,
correct and accurate and are consistent with the books and records of XXX (which
are complete, correct and accurate in all material respects), (ii) have been
prepared in accordance with GAAP consistently applied as of the dates and for
the periods covered thereby and (iii) fairly present, in accordance with GAAP
consistently applied as of the dates and for the periods covered thereby, the
financial condition and results of operations of XXX as of the dates and for the
periods then ended and include no change in the application of accounting
principles; provided, however, that the Interim Financial Statements do not
include footnote disclosures in accordance with GAAP and are subject to year-end
adjustments (which adjustments and omitted footnote disclosures are not in the
aggregate material).
(b) The projected operating results and other financial
information contained in the Business Plan have been prepared in good faith on
the basis of assumptions by XXX which XXX believes to be reasonable.
(c) As of the Closing Date, the "Closing Date Working Capital"
will be not less than Seventy-Five Thousand Dollars ($75,000). For purposes of
this representation, "Closing Date Working Capital" shall mean the amount
computed as of the Closing Date equal to the difference resulting from (a) the
sum of (i) cash, as determined by the total of XXX General Ledger account
numbers 1500, 1504, 1505, 1506, 1510 and 1512, and (ii) accounts receivable,
represented by XXX General Ledger account number 1515, minus (b) the sum of (v)
accounts payable, represented by XXX General Ledger account number 2600 (after
satisfaction of the Transaction Costs), (w) accrued liabilities, represented by
XXX General Ledger account numbers 2615-2647, inclusive, and 2652, (x) deferred
income, represented by XXX General Ledger account number 2649, and (y) line of
credit, represented by XXX General Ledger account number 2668. As of the Closing
Date, there will be no amounts of accrued interest owing, whether recorded on
the balance sheet, in the general ledger accounts or otherwise, other than
amounts included in the liabilities listed in item 3 of Exhibit I hereto, which
will be satisfied in full after the Closing in accordance with the terms of the
agreements referenced in item 3 of Exhibit I. All items of cash, accounts
receivable, accounts payable, accrued liabilities, deferred income and line of
credit amounts are included in the above-
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referenced XXX General Account categories and no reclassification or addition of
new General Ledger accounts has been made since May 31, 2001.
(d) All items of xxxxxxxx in excess of cost are included in XXX
General Ledger account number 2650. As of the Closing Date, the amount of
xxxxxxxx in excess of costs, represented by XXX General Ledger account number
2650, will not be in excess of $675,000. Payment of all of the commitments
included in the xxxxxxxx in excess of cost as of the Closing Date are fully
reflected in the Business Plan. In addition, payment of all of SAL's purchase
orders which are outstanding as of the Closing Date are fully reflected in the
Business Plan.
4.8 No Undisclosed Liabilities. At the Interim Date, XXX had no
liabilities, obligations or commitments of any nature (absolute, accrued,
contingent or otherwise) matured or unmatured (collectively, "Liabilities"),
except (a) Liabilities which are adequately reflected or reserved against in the
Interim Financial Statements, (b) Liabilities disclosed in Section 4.8 of the
XXX Disclosure Schedule and (c) Liabilities either disclosed in Sections 4.12
and 4.13 of the XXX Disclosure Schedule or that would be required to be
disclosed in Sections 4.12 and 4.13 of the XXX Disclosure Schedule but for the
quantitative thresholds set forth in Sections 4.12 and 4.13 hereof. XXX has not
taken any action which has resulted in a waiver or extension of the statute of
limitations applicable to any of its Liabilities. Except as set forth in Section
4.8 of the XXX Disclosure Schedule, XXX has not, since the Interim Date, and
will not, prior to the Closing, incur any Liabilities except in the ordinary
course of business, none of which will have a Material Adverse Effect on XXX.
Following completion of the actions set forth in Section 9.8, all of SAL's
obligations to the creditors of XXX identified in Section 9.8 of the XXX
Disclosure Schedule shall be completely satisfied and XXX and the Surviving
Corporation shall have no further obligations to such creditors other than to
perform its obligations under the Creditor Notes and the Earn-Out Notes issued
by the Surviving Corporation under Section 9.8(b) -- (d).
4.9 No Changes. Except as set forth in Section 4.9 of the XXX Disclosure
Schedule, since the Interim Date, XXX has conducted its business only in the
ordinary course. Without limiting the generality of the foregoing sentence,
except as set forth in Section 4.9 of the XXX Disclosure Schedule, since the
Interim Date there has not been:
(a) any event, incident, action, failure to act, transaction or
change, other than changes that would not cause the Closing Date Working Capital
to be less than Seventy Five Thousand Dollars ($75,000), which has had or could
reasonably be expected to have a Material Adverse Effect on the financial
condition, assets, liabilities, net worth or business of XXX;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties in the aggregate or
business of XXX, or any deterioration (other than in the ordinary course of
business) in the operating condition of SAL's assets;
(c) any Encumbrance of any kind on any of SAL's assets, tangible
or intangible not disclosed in Section 4.11 of the XXX Disclosure Schedule;
(d) any strike, walkout, labor trouble or any other new or
continued event, development or condition of similar character at XXX;
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(e) any declaration, setting aside or payment of a dividend or
other distribution in respect of any of the stock of XXX, or any direct or
indirect redemption, purchase or other acquisition of any stock of XXX or any
rights to purchase such stock or securities convertible into or exchangeable for
such stock;
(f) any increase in the salaries or other compensation payable
or to become payable to, or any advance (excluding advances for ordinary
business expenses) or loan to, any officer, director, employee, agent or
Stockholder of XXX, or any increase in, or any addition to, other benefits
(including without limitation any bonus, profit sharing, pension or other plan)
to which any of SAL's officers, directors, employees, agents or Stockholders may
be entitled, or any payments to any pension, retirement, profit sharing, bonus
or similar plan except payments in the ordinary course of business and
consistent with past practice made pursuant to the employee benefit plans
described in Section 4.17(a) of the XXX Disclosure Schedule, or any other
payment of any kind to or on behalf of any such officer, director, employee,
agent or Stockholder other than payment of base compensation and reimbursement
or advance for reasonable business expenses in the ordinary course of business;
(g) any making or authorization of any capital expenditures in
excess of $10,000;
(h) any cancellation or waiver of any right material to the
operation of SAL's business;
(i) any acceleration, termination, modification, cancellation or
waiver of any agreement, contract, lease, license, instrument, indebtedness,
claim or other arrangement material to the operation of SAL's business;
(j) other than in connection with payments received or to be
received pursuant to the terms of that certain Subcontract Agreement
00-12-XXX-01 between JMAR Research, Inc. and XXX, Inc., dated December 18, 2000,
as amended, any material delay or postponement of the payment of accounts
payable or other Liability, obligation or expense, nor has it accelerated or
advanced the collection of receivables or the selling of accounts;
(k) any sale, lease, transfer, assignment or other disposition
of any assets (tangible or intangible) of XXX outside of the ordinary course of
business;
(l) any payment, discharge or satisfaction of any Liability by
XXX, other than the payment, discharge or satisfaction, in the ordinary course
of business, of Liabilities shown or reflected on the Interim Financial
Statements or incurred in the ordinary course of business after the Interim Date
and other than pursuant to the Modification Agreement, Amendment Number 2 and
the DI Modification Agreement;
(m) any material adverse change or, to the Knowledge of XXX, any
threat of any material adverse change in SAL's relations with, or any loss or,
to the Knowledge of XXX, threat of loss of, any of SAL's customers, clients or
suppliers, licensees and licensors;
(n) any grant of any license or sublicense of any rights under
or with respect to any of SAL's Intellectual Property;
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(o) any write-offs as uncollectable of any material notes or
accounts receivable of XXX or write-downs of the value of any material assets by
XXX;
(p) any change by XXX in any method of accounting or keeping its
books of account, accounting practices, investment practices, or claims, payment
and processing practices or policies;
(q) any creation, incurrence, assumption or guarantee by XXX of
any Liabilities, except in the ordinary course of business, or any creation,
incurrence, assumption or guarantee by XXX of any indebtedness for money
borrowed (other than renewals on comparable terms of Liabilities reflected on
the Interim Financial Statements);
(r) any payment, loan or advance of any amount to or in respect
of, or any sale, transfer or lease of any properties or assets (whether real,
personal or mixed, tangible or intangible) to, or entering into of any
agreement, arrangement or transaction with, any Related Party except for
compensation to the officers and employees of XXX at rates not exceeding the
rates of compensation disclosed in Section 4.9 of the XXX Disclosure Schedule or
as permitted in clause (f) of this Section 4.9;
(s) any disposition of or failure to keep in effect any rights
in, to or for the use of any patent, trademark, service xxxx, trade name or
copyright, or any disclosure to any Person not an employee or Related Party
(other than disclosures to XXX, JMAR or those made in the ordinary course of
business pursuant to an effective confidentiality agreement or to attorneys,
accountants and others with confidentiality obligations to XXX) or other
disposal of any trade secret, process or know-how used by XXX in its business;
(t) any transaction, agreement or event outside the ordinary
course of SAL's business, except as expressly contemplated by this Agreement;
(u) any amendment to the charter, bylaws or other organizational
documents of XXX; or
(v) any failure to maintain in full force and effect
substantially the same level and types of insurance coverage as in effect on the
Interim Date.
4.10 Accounts Receivable. All of the accounts and notes receivable of
XXX as set forth in its Financial Statements fairly state, consistent with GAAP,
amounts receivable for services actually provided or merchandise actually
delivered (or, in the case of non-trade accounts or notes, represent amounts
receivable in respect of other bona fide business transactions) and have arisen
in the ordinary course of business. All such receivables are valid and not
subject to material set-offs or counterclaims and no fact or circumstance has
come to the actual knowledge of XXX that would provide a reasonable basis to
conclude that such receivables are not fully-collectible in the normal and
ordinary course of business. Section 4.10 of the XXX Disclosure Schedule sets
forth (a) the total amount of accounts receivable of XXX outstanding as May 31,
2001 and (b) the agings of such receivables based on the following schedule:
0-30 days, 31-60 days and over 60 days, from the due date thereof.
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4.11 Title to and Condition of Assets.
(a) XXX does not own any real property. Section 4.11 of the XXX
Disclosure Schedule contains a complete and accurate list of all real property
(including, without limitation, offices, buildings and other structures) leased
by XXX and any rights that XXX may have in real property (including, without
limitation, easements and rights-of-way and access). Section 4.11 of the XXX
Disclosure Schedule identifies all tangible personal property and rights in
tangible personal property of XXX with individual asset fair market values in
excess of $10,000. All tangible properties and assets owned or leased by XXX
are, except for changes in the ordinary course of business after the Interim
Date, reflected in the Interim Financial Statements in accordance with GAAP. XXX
owns good and marketable fee, or valid leasehold, title to the real and personal
property owned or leased by it, free and clear of all Encumbrances, except (i)
as reflected in the Financial Statements, (ii) for Encumbrances created by the
lessors thereof, (iii) for Encumbrances related to Taxes not yet due and payable
by XXX and (iv) as set forth in Section 4.11 of the XXX Disclosure Schedule
(none of which Encumbrances impairs the current use or diminishes the value of
any material item of property to any material extent).
(b) Each material item of the equipment and tangible personal
property owned or leased by XXX and necessary for the conduct of its business is
in good operating condition and repair (subject to normal wear and tear) and is
suitable for the purposes used.
4.12 Leases, Premises. Section 4.12 of the XXX Disclosure Schedule lists
all real property leases, subleases, amendments, options and other leasehold
interests to which XXX is a party (the "Leases"), copies of which have been
previously provided to JMAR. All of the Leases are valid and binding, in full
force and effect and enforceable against XXX and the other parties thereto in
accordance with their terms, subject to general principles of equity and laws of
general application relating to bankruptcy, insolvency, moratorium or similar
laws affecting creditors' rights generally, regardless of whether considered in
a proceeding in equity or at law. XXX is not, and to the Knowledge of XXX, no
other party is in default under any Lease, and no event exists which with notice
or lapse of time or both would constitute a default or an event of default
thereunder other than in respect of the transactions contemplated under this
Agreement under the Lease Agreement. Such leased properties are not subject to
any Encumbrances, encroachments, zoning ordinances, administrative regulations
or building or use restrictions which interfere with or impair the present and
continued use thereof in the usual and normal conduct of the business of XXX.
4.13 Contracts and Commitments. Except as set forth in Section 4.13 of
the XXX Disclosure Schedule, XXX is not a party to any written or oral:
(a) contract, agreement, commitment or personal property lease
which requires XXX to make payments thereunder in excess of $10,000, other than
purchase orders issued in the ordinary course of business in amounts not in
excess of $25,000;
(b) note, loan or evidence of indebtedness on the part of XXX
not reflected in its Financial Statements of more than $10,000;
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(c) contracts, agreements or commitments not otherwise described
in (a) or (b) above which are not in the ordinary course of SAL's business or
which materially affect SAL's business;
(d) guarantee of any Liability or obligation of XXX in excess of
$10,000;
(e) assignment, license, indemnification or agreement with
respect to any form of Intellectual Property of XXX;
(f) contracts, agreements or commitments containing covenants
limiting the freedom of XXX to engage in any line of business or compete with
any other Person;
(g) contracts for the employment of any officer, individual,
employee or other person or entity on a full-time, part-time, consulting or
other basis, or other agreement providing severance benefits or relating to
loans to officers, directors, employees or Affiliates;
(h) partnership or joint venture agreements; or
(i) contracts, agreements or commitments which have an unexpired
term in excess of twelve (12) months from the date hereof, other than those
which can be terminated on not more than thirty (30) days notice without
Liability to XXX, JMAR or the Surviving Corporation.
Neither XXX nor, to the Knowledge of XXX, any other party thereto is in default
(nor does any circumstance exist which, with notice or the lapse of time or
both, would result in such a default) under any agreement, contract, lease or
commitment described in this Section 4.13 (the "Material Contracts"). Each of
the Material Contracts is in full force and effect, is valid and binding and is
enforceable against XXX and, to the Knowledge of XXX, each other party thereto
in accordance with its terms, subject to general principles of equity and laws
of general application relating to bankruptcy, insolvency, moratorium or similar
laws affecting creditors' rights generally, regardless of whether considered in
a proceeding in equity or at law. XXX has delivered to JMAR true and correct
copies of the Material Contracts. Copies of each personal property lease have
been provided to JMAR and Section 4.13 of the XXX Disclosure Schedule sets forth
a list of such leases.
4.14 Litigation, Proceedings and Applicable Law. There is no action,
investigation, suit or other proceeding (including arbitration proceedings)
pending or, to the Knowledge of XXX, threatened against XXX. XXX is not in
default with respect to any judgment, order, writ, injunction or decree of any
court, governmental agency, commission, board, bureau, agency or
instrumentality. XXX is subject to no outstanding order, ruling, decree,
judgment or stipulation by or with any court, administrative agency, arbitration
panel or other similar authority.
4.15 Compliance with Law. Except with respect to any environmental
matters, as to which Section 4.21 shall be applicable and instances of
noncompliance which would not have or could not reasonably be expected to have a
Material Adverse Effect, (a) XXX has complied and is now in compliance with all
federal, state, local and foreign laws, ordinances and regulations (including,
without limitation, those relating to employment and employment practices and
occupational safety and health, but excluding any laws, ordinances and
regulations relating to
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occupational safety and health which are covered by Section 4.18) applicable to
XXX, (b) no written claims or complaints have been received by XXX from any
governmental authorities or other parties that XXX is in violation of any such
laws, ordinances and regulations, including any applicable building, zoning,
occupational safety and health or similar law, ordinance or regulation (but
excluding any laws, ordinances and regulations relating to occupational safety
and health which are covered by Section 4.18) in relation to its offices,
buildings or other structures or equipment, or the operation thereof, or of any
applicable fair employment, equal opportunity or similar law, ordinance or
regulation and no such claims or complaints have been threatened and (c) XXX has
not received any notice from any governmental authorities of any pending
proceedings to take all or any part of the properties of XXX (whether leased or
owned) by condemnation or right of eminent domain and no such proceedings are
threatened.
4.16 Insurance. Section 4.16 of the XXX Disclosure Schedule sets forth
(a) a complete and accurate list of all casualty, business interruption,
directors and officers liability, general liability, workers' compensation and
other types of insurance maintained by or for the benefit of XXX, together with
the names of the policyholder, carriers and insureds, additional insureds and
loss payees, and the liability limits and expiration date for each such policy
and (b) a description of any risks for which XXX is self-insured and the amount
of reserves established for such purpose. Each policy is in force, and no notice
has been received by XXX from any insurance carrier purporting to cancel or
refuse renewal, reduce or dispute coverage under any such policy. All premiums
or other payments due under all such policies have been paid in full. Section
4.16 of the XXX Disclosure Schedule identifies which insurance policies are
"occurrence" or "claims made." XXX is not in default under any of such policies
or binders, and XXX has not failed to give any notice or to present any claim
under any such policy or binder in a due and timely fashion. No policy
aggregates, limits or maximums affecting the coverage available on SAL's
insurance policies have been reached or exceeded for any policy years commencing
on or after the date of incorporation of XXX.
4.17 Employee Benefit Plans.
(a) Section 4.17 of the XXX Disclosure Schedule contains a
complete list of Employee Plans which cover or have covered employees of XXX or
a Subsidiary (with respect to their relationship with such entities). True and
complete copies of each of the following documents have been delivered or made
available by XXX to JMAR: (i) each Welfare Plan and Pension Plan (and, if
applicable, related trust agreements) which covers or has covered employees of
XXX or a Subsidiary at any time since June 1, 1998 (with respect to their
relationship with such entities) and all amendments thereto, all written
interpretations thereof and written descriptions thereof which have been
distributed to SAL's employees and all annuity contracts or other funding
instruments, (ii) each Benefit Arrangement which covers or has covered employees
of XXX or a Subsidiary at any time since June 1, 1998 (with respect to their
relationship with such entities) including written interpretations thereof and
written descriptions thereof which have been distributed to SAL's employees
(including descriptions of the number and level of employees covered thereby)
and a complete description of any such Benefit Arrangement which is not in
writing, (iii) the most recent determination letter issued by the Internal
Revenue Service, (iv) for the three most recent plan years, Annual Reports on
Form 5500 Series required to be filed with any governmental agency for each
Pension Plan which covers or has covered employees of XXX or a Subsidiary (with
respect to their relationship with
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such entities) (v) all actuarial reports prepared for the last three plan years
for each Pension Plan which covers or has covered employees of XXX or a
Subsidiary (with respect to their relationship with such entities), (vi) a
description of complete age, salary, service and related data as of the last day
of the last plan year for employees and former employees of XXX and each
Subsidiary currently covered by its Welfare Plans, Benefits Plans or Pension
Plans or which have been covered by such plans since June 1, 1998, and (vii) a
description setting forth the amount of any liability of XXX as of the Closing
Date for payments more than thirty days past due with respect to each Welfare
Plan which covers or has covered employees or former employees of XXX or a
Subsidiary.
(b) Pension Plans.
(i) Neither XXX nor any ERISA Affiliate maintains, or
has ever maintained a Pension Plan that is covered by Title IV of ERISA or
Section 412 of the Code. In addition, neither XXX nor any ERISA Affiliate
contributes to or is required to contribute to or has contributed to or been
required to contribute to any Pension Plan that is covered by Title IV of ERISA
or Section 412 of the Code. Neither XXX nor any ERISA Affiliate has, or in the
past had, or is, has been, or has ever been deemed to have any liability or
obligations with respect to any Pension Plan that is covered by Title IV of
ERISA or Section 412 of the Code.
(ii) Neither XXX nor any ERISA Affiliate has any
liability for unpaid contributions with respect to any Pension Plan.
(iii) Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument which covers or has
covered employees or former employees of XXX or a Subsidiary with respect to
their relationship with such entities is qualified and tax-exempt under the
provisions of Code Sections 401(a) (or 403(a), as appropriate) and 501(a) and
has been so qualified during the period from its adoption to date.
(iv) Each Pension Plan, each related trust agreement,
annuity contract or other funding instrument which covers or has covered
employees or former employees of XXX or a Subsidiary with respect to their
relationship with such entities presently complies and has been maintained in
compliance with its terms and, both as to form and in operation, with the
requirements prescribed by any and all statutes, orders, rules and regulations
which are applicable to such plans, including but not limited to ERISA and the
Code. Neither XXX nor any ERISA Affiliate has engaged in a transaction described
in Section 4069 of ERISA
(c) Multiemployer Plans. Neither XXX nor any ERISA Affiliate is
a party to or has, at any time, contributed to, or been required to contribute
to, a Multiemployer Plan. Neither XXX nor any ERISA Affiliate has engaged in a
transaction described in Section 4212(c) of ERISA.
(d) Welfare Plans.
(i) Each Welfare Plan which covers or has covered
employees or former employees of XXX or a Subsidiary with respect to their
relationship with such entities has been maintained in compliance with its terms
and, both as to form and operation, with the
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requirements prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Welfare Plan, including but not limited to ERISA
and the Code.
(ii) None of XXX, any ERISA Affiliate or any Welfare
Plan has any present or future obligation to make any payment to or with respect
to any present or former employee of XXX or any ERISA Affiliate pursuant to any
retiree medical benefit plan, or other retiree Welfare Plan, and no condition
exists which would prevent XXX from amending or terminating any such benefit
plan or Welfare Plan.
(iii) Each Welfare Plan which covers or has covered
employees or former employees of XXX or a Subsidiary and which is a "group
health plan," as defined in Section 607(1) of ERISA, has been operated in
compliance with the provisions of Part 6 of Title I of ERISA and Sections 162(k)
and 4980B of the Code at all times.
(iv) Neither XXX nor any ERISA Affiliate has incurred
any liability with respect to any Welfare Plan that is a "multiemployer plan,"
as defined in Section 3(37) of ERISA, under the terms of such Welfare Plan, any
collective bargaining agreement or otherwise resulting from any cessation of
contributions, cessation of obligations to make contributions or other form of
withdrawal from such Welfare Plan.
(v) If, as of the Closing Date, XXX (and all ERISA
Affiliates) were to have a cessation of contributions, cessation of obligations
to make contribution or other form of withdrawal from all Welfare Plans that are
"multiemployer plans," as defined in Section 3(37) of ERISA, it (and they) would
incur no liabilities with respect to any such Welfare Plans under the terms of
such Welfare Plans, any collective bargaining agreement or otherwise.
(e) Benefit Arrangements. Each Benefit Arrangement which covers
or has covered employees or former employees of XXX or a Subsidiary with respect
to their relationship with such entities has been maintained in compliance with
its terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such Benefit Arrangement,
including but not limited to the Code. Except as set forth in Section 4.17 of
the XXX Disclosure Schedule, and except as provided by law, the employment of
all persons presently employed or retained by XXX or a Subsidiary is terminable
at will.
(f) Unrelated Business Taxable Income. No Employee Plan (or
trust or other funding vehicle pursuant thereto) is subject to any tax under
Code Section 511.
(g) Deductibility of Payments. There is no contract, agreement,
plan or arrangement covering any employee or former employee of XXX or a
Subsidiary with respect to their relationship with such entities that,
individually or collectively, provides for the payment by XXX of any amount (i)
that is not deductible under Section 162(a)(1) or 404 of the Code or (ii) that
is an "excess parachute payment" pursuant to Section 280G of the Code.
(h) Foreign Subsidiaries and Employees. There are no Foreign
Subsidiaries and none of the Employee Plans which covers any employee or former
employee of XXX or a Subsidiary covers any person who is employed in any country
other than the United States.
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(i) Fiduciary Duties and Prohibited Transactions. Neither XXX
nor any plan fiduciary of any Welfare Plan or Pension Plan which covers or has
covered employees or former employees of XXX or any ERISA Affiliate, has engaged
in any transaction in violation of Sections 404 or 406 of ERISA or any
"prohibited transaction," as defined in Section 4975(c)(1) of the Code, for
which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or
(d) of the Code, or has otherwise violated the provisions of Part 4 of Title I,
Subtitle B of ERISA. XXX has not knowingly participated in a violation of Part 4
of Title I, Subtitle B of ERISA by any plan fiduciary of any Welfare Plan or
Pension Plan (or other employee benefit plan subject to ERISA) and has not been
assessed any civil penalty under Section 502(1) of ERISA.
(j) Litigation. None of XXX, any ERISA Affiliate nor any
Employee Plan which covers or has covered employees or former employees of XXX
or a Subsidiary with respect to their relationship with such entities is a party
to any litigation relating to or seeking benefits under any Employee Plan.
(k) No Amendments. Neither XXX nor any ERISA Affiliate has any
announced plan or legally binding commitment to create any additional Employee
Plans which are intended to cover employees or former employees of XXX or a
Subsidiary with respect to their relationship with such entities or to amend or
modify any existing Employee Plan which covers or has covered employees or
former employees of XXX or a Subsidiary with respect to their relationship with
such entities.
(l) Unpaid Contributions. Neither XXX nor any ERISA Affiliate
has any liability for unpaid contributions under Section 515 of ERISA with
respect to any Pension Plan or Welfare Plan.
(m) Insurance Contracts. No Employee Plan holds as an asset any
interest in any annuity contract, guaranteed investment contract or any other
investment or insurance contract issued by an insurance company that is the
subject of bankruptcy, conservatorship or rehabilitation proceedings.
(n) No Other Material Liability. No event has occurred in
connection with which XXX or any ERISA Affiliate or any Employee Plan, directly
or indirectly, could be subject to any material liability (i) under any statute,
regulation or governmental order relating to any Employee Plans or (ii) pursuant
to any obligation of XXX or any Subsidiary to indemnify any person against
liability incurred under, any such statute, regulation or order as they relate
to the Employee Plans.
(o) No Acceleration or Creation of Rights. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will result in the acceleration or creation of any rights of
any person to benefits under any Employee Plan (including, without limitation,
the acceleration of the vesting or exercisability of any stock options, the
acceleration of the vesting of any restricted stock, the acceleration of the
accrual or vesting of any benefits under any Pension Plan or the acceleration or
creation of any rights under any severance, parachute or change in control
agreement).
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4.18 Labor Matters. XXX is not a party to any labor agreement with
respect to its employees with any labor organization, union, group or
association and there are no employee unions (nor any other similar labor or
employee organizations) under local statutes, custom or practice. In the last
five years, XXX has not experienced any attempt by organized labor or its
representatives to make XXX conform to demands of organized labor relating to
its employees or to enter into a binding agreement with organized labor that
would cover the employees of XXX. There is no labor strike or labor disturbance
pending or threatened against XXX nor is any grievance currently being asserted,
and XXX has not experienced a work stoppage or other labor difficulty since the
date of its incorporation. XXX is in compliance with all applicable laws
respecting employment practices, employee documentation, terms and conditions of
employment and wages and hours and is not and has not engaged in any unfair
labor practice. There is no unfair labor practice charge or complaint against
XXX pending before the National Labor Relations Board or any other domestic or
foreign governmental agency arising out of SAL's activities, and there are no
facts or information which would give rise thereto.
4.19 Warranty. Each product manufactured or sold by XXX has been
produced in conformity with all applicable contractual commitments and
specifications and all express and implied warranties (collectively,
"Warranties"), and XXX neither has, nor is there any basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand giving rise to, any Liability or other damages in connection
with any Warranties. The aggregate amount charged, reserved or expensed for
Warranty matters in the Financial Statements was sufficient to cover all Losses
under the Warranties for products manufactured or sold by XXX during the periods
covered by such Financial Statements. Except to the extent set forth in Section
4.19 of the XXX Disclosure Schedule, no product provided by the XXX is subject
to any guaranty, warranty or other indemnity granted by XXX beyond the SAL's
standard terms and conditions of sale or service. Section 4.19 of the XXX
Disclosure Schedule includes copies of the standard terms and conditions of
product sales by XXX (containing applicable guaranty, warranty and indemnity
provisions).
4.20 Tax Matters.
(a) XXX has timely filed all Tax Returns required to be filed by
it. All such Tax Returns are true, correct and complete. XXX has made timely
payment of all Taxes required to be paid on or before the date hereof and
adequate reserves for unpaid Tax liabilities (excluding reserves for deferred
Taxes to reflect timing differences between book and taxable income) have been
established on the Financial Statements. XXX has no liability in excess of the
Taxes so paid plus the amount of Reserves so established. XXX has fulfilled all
withholding obligations relating to Taxes and has paid or remitted to the
appropriate governmental authorities the proper amounts with respect to the
foregoing.
(b) XXX has not waived any statute of limitations in respect of
Taxes or agreed to an extension of time with respect to the period for
assessment or collection of Taxes. Neither the Internal Revenue Service nor any
foreign, state, local or other taxing authority is now asserting or threatening
to assert any claim for assessment or collection of any Taxes against XXX. There
is no power of attorney relating to Taxes that is currently in force.
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(c) Except as set forth in Section 4.20(c) of the XXX Disclosure
Schedule, XXX has no net operating losses, tax credit carryovers or other tax
attributes presently subject to limitation under Section 382, 383 or 384 of the
Code, Treasury Regulation Section 1.1502-15T 21T or otherwise. For its taxable
period that began January 1, 2000 and will end the close of business on the
Effective Date, XXX has not and will not recognize any taxable income for
federal, state or local income tax purposes, and neither the Surviving
Corporation nor JMAR will recognize any taxable income for any such purposes as
a result of the transactions contemplated herein or by the Modification
Agreement, the DI Modification Agreement or other transactions occurring in
connection therewith or in connection with the restructuring of the debt of XXX.
(d) XXX is not a party to, bound by, or subject to any liability
with respect to, any tax sharing, tax allocation, tax indemnity or similar
agreement.
(e) XXX has not made any payments, is not obligated to make any
payments, and is not a party to any agreement, contract, arrangement or plan
that will obligate it to make any payments not deductible under Section 280G of
the Code or otherwise with respect to the transactions contemplated hereby or
any other transaction (past, present or future). XXX has not agreed to make, nor
will it be required to make as a result of any of the transactions contemplated
hereby, any adjustment under Section 481 of the Code (or any similar provision
of the Tax laws of any jurisdiction).
(f) XXX has not filed a consent under Section 341(f) of the Code
(or any similar provision of state, local or foreign law) concerning collapsible
corporations, and will not file such a consent.
(g) Except as set forth in Section 4.20(g) of the XXX Disclosure
Schedule, no Stockholder is a "foreign person" as defined in Code Section
1445(f)(3). XXX has not been a United States Real Property Holding Corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code and JMAR is not required to
withhold tax on the purchase of stock of XXX by reason of Code Section 1445,
Code Section 3406 or otherwise.
(h) XXX (i) has not been a member of an affiliated group filing
a consolidated federal income tax return and (ii) has no Liability for the Taxes
of any Person (other than any Taxes of XXX) under Treasury Regulation Section
1.1502-6 (or any similar state, local or foreign law), as a transferee or
successor, or otherwise.
(i) There are no liens for Taxes (other than for current taxes
not yet due and payable) upon any of the assets of XXX.
(j) XXX has not taken any positions on its federal income Tax
Returns that would require disclosure in order to avoid a substantial
understatement penalty within the meaning of Section 6662 of the Code.
(k) XXX has furnished to JMAR (i) true, complete and correct
copies of all federal, foreign, state and local income or franchise Tax Returns
filed for XXX with respect to all open Tax years; (ii) true, complete and
correct copies of all audit reports, statements of deficiencies, closing or
other agreements received by XXX from Tax authorities related to Taxes,
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including, without limitation, all reports, statements, memoranda and opinions,
whether formal or informal, regarding audits and examinations that have begun
but have not been completed; (iii) a list of all elections in effect with
respect to Taxes that will survive the Closing; and (iv) a schedule that
contains an accurate and complete description of any carryovers of Tax
attributes.
(l) XXX has complied with all reporting and recordkeeping
requirements under Code Sections 6038A and 6038B.
(m) XXX has no Liability pursuant to Section 6901 of the Code or
otherwise under applicable law by virtue of any transfer of an asset or assets
to it, and neither JMAR nor the Surviving Corporation will be subject to such
Liability as a result of any of the transactions contemplated hereby.
(n) XXX has not distributed stock of a "controlled corporation"
(within the meaning of Section 355(a) of the Code) in a transaction subject to
Code Section 355 within the past two years.
(o) XXX has not made an election, and is not required to treat
any of its assets, as owned by another person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Capital Reform Act of 1986, or as
tax-exempt bond financed property within the meaning Section 168(g) of the Code
or as tax-exempt use property within the meaning of Section 168(h)(1) of the
Code.
(p) Assuming compliance by JMAR and Acquisition with the
obligations under this Agreement the non-compliance of which would cause the
Merger not to qualify as a reorganization pursuant to Section 368(a)(1)(A) of
the Code, the Merger shall qualify as a reorganization pursuant to Section
368(a)(1)(A) of the Code.
4.21 Environmental Matters.
(a) As used in this Agreement:
(i) "Cleanup" means all actions required to (A) cleanup,
remove, treat or remediate Hazardous Materials in the indoor or outdoor
environment; (B) prevent the Release of Hazardous Materials so that they do not
migrate, endanger or threaten to endanger public health or welfare of the indoor
or outdoor environment; (C) perform pre-remedial studies and investigations and
post-remedial monitoring and care or (D) respond to any government requests for
information or documents in any way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or remediation of Hazardous
Materials in the environment.
(ii) "Environmental Claim" means any claim, action,
cause of action, investigation or notice (written or oral) by any Person
alleging potential Liability (including, without limitation, potential Liability
for investigatory costs, Cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (A) the presence, or Release into the
environment, of
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any Hazardous Materials at any location, whether or not owned or operated by XXX
or (B) any violation of any Environmental Law.
(iii) "Environmental Laws" means all federal, state,
local and foreign laws and regulations relating to pollution or protection of
human health or the environment, including without limitation, laws relating to
Releases or threatened Releases of Hazardous Materials into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, disposal, transport
or handling of Hazardous Materials and all laws and regulations with regard to
recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials, and all laws relating to endangered or threatened species
of fish, wildlife and plants and the management or use of natural resources.
(iv) "Hazardous Materials" means all substances defined
as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil
and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
(v) "Release" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the environment (including, without limitation,
ambient air, surface water, groundwater and surface or subsurface strata) or
into or out of any property, including the movement of Hazardous Materials
through or in, the air, soil, surface water, groundwater or property.
(b) XXX is in compliance with all applicable Environmental Laws
(which compliance includes, but is not limited to, the possession by XXX of all
Permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof) except
instances of noncompliance which would not have and could not reasonably be
expected to have a Material Adverse Effect. XXX has not received any
communication (written or oral), whether from a governmental authority or a
third party, that alleges that XXX is not in such compliance, and there are no
past or present actions, activities, circumstances, conditions, events or
incidents of XXX that may prevent such compliance in the future. All Permits and
other governmental authorizations currently held by XXX pursuant to applicable
Environmental Laws are identified in Section 4.21 of the XXX Disclosure
Schedule.
(c) No transfers of Permits or other governmental authorizations
under Environmental Laws, and no additional Permits or other governmental
authorizations under Environmental Laws, will be required for XXX to conduct its
business in full compliance with all applicable Environmental Laws immediately
following the Closing.
(d) There is no material Environmental Claim pending or, to the
Knowledge of XXX, threatened against XXX or against any Person whose liability
for any such Environmental Claim XXX has or may have retained or assumed either
contractually or by operation of law.
(e) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the presence or Release of any Hazardous
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Material, which are reasonably likely to form the basis of any material
Environmental Claim against XXX or against any Person whose Liability for any
Environmental Claim XXX has or may have retained or assumed either contractually
or by operation of law.
(f) XXX has not, and, to the Knowledge of XXX, no other Person
has, Released, placed, buried or dumped Hazardous Materials produced by, or
resulting from, any business, commercial or industrial activities, operations or
processes, on or beneath any property currently or formerly owned, operated or
leased by XXX.
(g) XXX has delivered or otherwise made available for inspection
to JMAR true, complete and correct copies and results of any reports, studies,
analyses, tests or monitoring data possessed or initiated by XXX pertaining to
Hazardous Materials in, on, beneath or adjacent to any property currently or
formerly owned, operated or leased by XXX, or regarding SAL's compliance with
applicable Environmental Laws.
(h) Without in any way limiting the generality of the foregoing,
any properties owned, operated or leased by XXX do not contain any: (i)
underground storage tanks; asbestos; polychlorinated biphenyls; (ii) underground
injection xxxxx; (iii) radioactive materials or (iv) septic tanks or waste
disposal pits in which process wastewater or any Hazardous Materials have been
discharged or disposed.
4.22 Customers and Suppliers. Except as set forth in Section 4.22 of the
XXX Disclosure Schedule, no customer or supplier accounted for more than 10% of
SAL's sales or purchases in SAL's last fiscal year or current fiscal year to
date. Section 4.22 of the XXX Disclosure Schedule sets forth a complete and
accurate list of SAL's top ten customers (the "Material Customers") in terms of
gross sales volume for SAL's last fiscal year or current fiscal year to date.
XXX is not involved in any material claim with any Material Customer and is not
involved in any dispute with other customers which in the aggregate is
reasonably likely to be deemed material. No customer or supplier material to the
business of XXX has terminated or altered, or notified XXX in writing of any
intention to terminate or alter, its relationship with XXX, and XXX has no
Knowledge that a customer or supplier material to the business of XXX will
terminate or materially alter its relationship with XXX.
4.23 Books and Records. XXX has made and kept books, records and
accounts which accurately reflect its activities and the acquisition and
disposition of its assets in all material respects.
4.24 No Brokers. Other than with respect to an agreement with Agile
Equity, whose fees, in the event the Closing occurs, shall be satisfied in
accordance with Section 9.8(a), XXX has not entered into nor will it enter into
any contract, agreement, arrangement or understanding with any Person which will
result in an obligation of XXX, JMAR or Acquisition to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
contemplated hereby.
4.25 Powers of Attorney. Section 4.25 of the XXX Disclosure Schedule
contains a complete and accurate list of all outstanding powers of attorney or
similar authorizations given by XXX.
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4.26 Transactions With Related Parties. XXX has not entered into a
transaction with any Related Party other than at arms' length, and no Related
Party:
(a) has borrowed money from or loaned money to XXX which will
not be repaid on or before the Closing Date or the assumption of which by
Acquisition has not been approved by JMAR and Acquisition under this Agreement;
(b) has any contractual or other claim, express or implied, of
any kind whatsoever against XXX; or
(c) has been engaged, since June 1, 1999, in any other
transaction with XXX (other than employment relationships at no greater than the
current salaries disclosed in Section 4.26 of the XXX Disclosure Schedule).
4.27 Intellectual Property (a) Ownership and Adequacy. Except as would
not have or could not reasonably be expected to have a Material Adverse Effect,
XXX owns or, as of the Closing Date, will own, or has the right or, as of the
Closing Date, will have the right to use all Intellectual Property necessary for
the operation of the businesses of XXX as presently conducted and as proposed to
be conducted, or that is controlled or used, by and/or on behalf of XXX, or in
which XXX has any material interest whatsoever (the "XXX Intellectual
Property"), except for Intellectual Property the absence of which would not have
any Material Adverse Effect. XXX has taken all commercially reasonable action(s)
to perfect its ownership of, maintain, protect, and safeguard all of the
patents, patent applications, patent rights, trademarks, trademark applications,
trade names, service marks, service xxxx applications, copyright registrations,
copyright applications, domain names and licenses owned by XXX (collectively,
the "Registrations"). Each item of XXX Intellectual Property owned or used by
XXX immediately prior to the Effective Time will be owned or available for use
by Acquisition on identical terms and conditions immediately subsequent to the
Closing hereunder. Section 4.27(a) of the XXX Disclosure Schedule lists and
identifies all of the Registrations. True and correct copies of all of the
Registrations (including all pending applications and application related
documents and materials) owned, controlled or used by or on behalf of XXX or in
which XXX has any material interest, as amended prior to the Closing Date, have
been provided or made available to JMAR. With respect to each item of XXX
Intellectual Property:
(i) XXX possesses all right, title, and interest in and
to the item, free and clear of all liens, claims and Encumbrances or other
restrictions other than liens, claims and Encumbrances to be discharged on or
before the closing;
(ii) all necessary assignments, documents, and
certificates in connection with the Registrations have been filed with the
relevant patent, trademark, copyright, or other authorities in the United States
for purposes of maintaining such Registrations;
(iii) except as set forth in Section 4.27(a) of the XXX
Disclosure Schedule, the item is valid and subsisting, and all necessary
annuities, filing, registration, maintenance, renewal fees in conjunction with
the Registrations have been paid;
(iv) each such patent application, contains an accurate
written description sufficient to enable practice of the invention and includes
the best mode of practicing
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the invention known to XXX and/or the inventors as of the date of such
application; no undisclosed information, including without limitation, any
algorithm, is necessary to provide adequate written description, to enable, or
to disclose the best mode;
(v) except as set forth in Section 4.27(a) of the
Disclosure Schedule, there are no actions that must be taken within ninety (90)
days of the Closing Date for the purposes of obtaining, maintaining, perfecting,
preserving, or renewing any XXX Intellectual Property;
(vi) in each case where XXX has acquired any XXX
Intellectual Property from any Person, or jointly developed XXX Intellectual
Property with any Person, XXX has obtained a valid, enforceable, and irrevocable
transfer of all right, title, and interest to the such XXX Intellectual
Property;
(vii) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(viii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, enforceability, use, or ownership of
the item;
(ix) XXX has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other conflict with
respect to the item; and
(x) Other than pursuant to that certain License
Agreement by and between XXX and Xxxx Xxxx KG-GmbH and Co. dated as of June 9,
2001, XXX has not granted to any Person any currently effective license, option
or other rights to use in any manner any XXX Intellectual Property whether
requiring the payment of royalties or not, with respect to the item.
(b) Third Party Rights. Section 4.27(b) of the XXX Disclosure
Schedule identifies each material item of Intellectual Property that any third
party owns and that XXX uses pursuant to license, sublicense, agreement, or
permission. XXX has delivered to JMAR correct and complete copies of all such
licenses, sublicenses, agreements, and permissions, as amended prior to the
Closing Date. XXX does not and will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with any Intellectual Property
rights of third parties as a result of the past or continued operation of its
business as presently conducted or as proposed to be conducted prior to the
Closing. Except as set forth in Section 4.27(b) of the XXX Disclosure Schedule,
XXX does not have any contractual obligation to compensate any Person for the
use of any XXX Intellectual Property. With respect to each item of Intellectual
Property required to be identified in Section 4.27(b) of the XXX Disclosure
Schedule, and except as set forth therein:
(i) the license, sublicense, agreement, or permission
covering such item is legal, valid, binding, enforceable, and in full force and
effect;
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(ii) the license, sublicense, agreement, or permission
covering such item will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby;
(iii) XXX is not, and to its Knowledge, no other party
to the license, sublicense, agreement, or permission covering such item is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iv) XXX is not, and to its Knowledge, no other party to
the license, sublicense, agreement, or permission covering such item has
repudiated any provision thereof;
(v) with respect to each sublicense, the representations
and warranties set forth in subsections (i) through (iv) above are true and
correct with respect to the underlying license;
(vi) no Person who has licensed Intellectual Property to
XXX has any ownership rights or license or permission to use any improvements
made by XXX in such Intellectual Property;
(vii) the underlying item of Intellectual Property is
not subject to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(viii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, or enforceability of the underlying
item of Intellectual Property;
(ix) XXX has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission covering such
item; and
(x) XXX shall provide, before and after Closing, all
reasonable cooperation necessary to effectuate the proper and valid assignment
and transfer of each license, sublicense, agreement or permission covering such
item in Section 4.27(b) of the XXX Disclosure Schedule to JMAR.
(c) Enforceability, Validity, and Absence of Claims. To the
Knowledge of XXX, there are no facts or circumstances (including any information
or fact that would constitute prior art) that would render any XXX Intellectual
Property unpatentable, invalid, unenforceable or infringed, or would adversely
effect any pending application for any XXX Intellectual Property. XXX has not
misrepresented, or failed to disclose and has no Knowledge of any
misrepresentation or failure to disclose, any fact or circumstances in any
application for any XXX Intellectual Property that would constitute fraud or
misrepresentation or breach of the duty of candor with respect to such
application or that would otherwise affect the patentability, validity,
enforceability or infringement of any XXX Intellectual Property. XXX has not
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of any third party, and neither
XXX nor its directors, officers, employees or agents has ever received any
charge, complaint, claim, demand, or notice alleging such interference,
infringement, misappropriation, or violation (including any claim that XXX must
license or
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refrain from the use, or offer of a license under, any Intellectual Property
rights of any third party). To the Knowledge of XXX, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of XXX. XXX has never made any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the third
party must license or refrain from using, or offer of a license under, any
Intellectual Property rights of XXX.)
4.28 Identification of Depositories and Authorities. Section 4.28 of the
XXX Disclosure Schedule sets forth a complete and accurate list of the names and
addresses of all banks, trust companies, savings and loan associations and other
financial institutions in which XXX has assets, deposits or safe deposit boxes
and the signatories thereunder.
4.29 Governmental Permits. Section 4.29 of the XXX Disclosure Schedule
sets forth and XXX owns, holds or possesses, in respect of its business, all
Permits issued or necessary to entitle it to own or lease, operate and use its
properties and to carry on and conduct its business as currently conducted,
except for those environmental Permits as to which Section 4.21 applies. XXX has
fulfilled and performed in all material respects its respective obligations
under each of such Permit, all such Permits are in full force and effect and are
not subject to any appeals or further proceedings or to any unsatisfied
conditions (other than normal renewal procedures on comparable terms) and no
event has occurred or condition or state of facts exists which constitutes or,
after notice or lapse of time or both, would constitute a material breach or
default under any such Permit. No notice of cancellation, of default or of any
material dispute concerning any such Permit, or of any event, condition or state
of facts described in the preceding sentence, has been received by XXX. There is
no proceeding pending or, to the Knowledge of XXX, threatened to revoke,
suspend, rescind, modify, cancel or otherwise fail to renew any such Permit.
Each Permit is valid, subsisting and in full force and effect and may be
assigned and transferred to Acquisition in accordance with this Agreement
without (i) the occurrence of any breach, default or forfeiture of material
rights thereunder or (ii) the consent, approval of, or the making of any filing
with, any governmental body, regulatory commission or other party.
4.30 Legal and Tax Advice. XXX has had an opportunity to discuss this
Agreement with counsel of its choosing, and to have the legal consequences of
this Agreement and the transactions contemplated hereby explained by such
counsel. The Stockholders also have had an opportunity to seek and obtain the
advice of competent tax professionals with respect to the tax consequences of
this Agreement and the transactions contemplated hereby. Neither XXX nor any
Stockholder is relying upon JMAR, Acquisition or any of their respective
stockholders, members, directors, officers, attorneys, accountants, agents or
representatives for purposes of interpreting the provisions of this Agreement or
assessing the consequences hereof.
4.31 Vote Required. The approval of the Merger and this Agreement and
the consummation of the transactions contemplated hereby by the affirmative vote
or written consent of Stockholders holding shares of XXX Stock representing a
majority of the votes entitled to be cast by all holders of XXX Stock, voting
together as a single class, are the only votes or consents of the holders of any
class or series of the capital stock of XXX required to approve the Merger and
this Agreement and the transactions contemplated hereby. The Board of Directors
of XXX
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has: (a) unanimously approved the Merger and this Agreement and the consummation
of the transactions contemplated hereby; (b) determined that the Merger and this
Agreement and the consummation of the transactions contemplated hereby are fair
to, and in the best interests of, the Stockholders; and (c) resolved to
recommend the Merger and this Agreement and the consummation of the transactions
contemplated hereby to the Stockholders for approval and adoption and directed
that the consummation of the transactions contemplated hereby be submitted to
such Stockholders.
4.32 Disclosure. This Agreement, the Information Statement and all
information or documents included therein or attached thereto, the XXX
Disclosure Schedule and the Closing bring-down certificates furnished or to be
furnished to JMAR by or on behalf of XXX pursuant to or in connection with this
Agreement (a) do not and will not contain any untrue statement of a material
fact and (b) do not and will not omit to state a material fact necessary, in
light of the circumstances under which made, to make the statements contained
herein and therein not misleading.
4.33 Tax Treatment. Neither XXX nor, to SAL's Knowledge, any Affiliate
of XXX has taken or agreed to take any action that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
XXX is not aware of any agreement, plan or other circumstance that would prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF JMAR AND ACQUISITION
Except as is otherwise set forth with appropriate section references in
the JMAR Disclosure Schedule, JMAR and Acquisition, jointly and severally,
hereby make the representations and warranties set forth below to XXX as of the
date hereof.
5.1 Due Organization. Each of JMAR and Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all requisite corporate power and
authority to own, lease and operate its properties and conduct its business as
it is presently being conducted. JMAR is not in default under or in violation of
any provisions of its certificate of incorporation. JMAR is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is necessary as a result of the conduct of its
business in the ownership of its properties, except where the failure to be so
qualified would not have a Material Adverse Effect. JMAR owns all of the issued
and outstanding shares of Acquisition Common Stock.
5.2 Authorization. Each of JMAR and Acquisition has all necessary
corporate power and authority, and has taken or will take prior to the Effective
Time all corporate action necessary, to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. The execution and delivery of this Agreement by JMAR and Acquisition
and the consummation by JMAR and Acquisition of the transactions contemplated
hereby have been duly approved or will be prior to the Effective Time by all
requisite corporate action on the part of JMAR and Acquisition. No other
corporate proceedings on the part of JMAR or Acquisition are necessary to
authorize this Agreement and the
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transactions contemplated hereby. This Agreement has been duly executed and
delivered by JMAR and Acquisition and is a legal, valid and binding obligation
of each of them, enforceable against each of them in accordance with its terms,
subject to general principles of equity and laws of general application relating
to bankruptcy, insolvency, moratorium or similar laws affecting creditors'
rights generally, regardless of whether considered in a proceeding in equity or
at law.
5.3 Non-Contravention. The execution, delivery and performance of this
Agreement by JMAR and Acquisition and the consummation by JMAR and Acquisition
of the transactions contemplated hereby do not, with or without the giving of
notice or the lapse of time, or both, violate, conflict with, result in the
breach of or a default under, or accelerate the performance required by or
result in any Material Adverse Effect under any of the terms, conditions or
provisions of, the charter or bylaws of JMAR or Acquisition or any covenant,
agreement, commitment or understanding (including any license or sub-license
agreement, covenant not to compete, employment agreement or consulting
agreement) to which JMAR or Acquisition is a party, or any Permit,
authorization, order, ruling, decree, judgment or arbitration award, or any law,
rule, regulation or stipulation, to which JMAR or Acquisition is subject, or
result in the creation of any Encumbrance upon any of the properties or assets
of JMAR or Acquisition.
5.4 SEC Documents. JMAR has timely filed all required forms, reports and
documents with the SEC since January 1, 1999 (collectively, the "JMAR Reports").
As of their respective dates, the JMAR Reports (a) complied in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder (the "Securities Laws")
and (b) did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets of JMAR included
in or incorporated by reference into the JMAR Reports (including the related
notes and schedules) fairly presents in all material respects the consolidated
financial position of JMAR as of its date and each of the consolidated
statements of operations, stockholders equity and cash flows of JMAR included in
or incorporated by reference into the JMAR Reports (including any related notes
and schedules) fairly presents in all material respects the results of
operations, stockholders equity or cash flows, as the case may be, of JMAR for
the periods set forth therein (subject, in the case of unaudited statements, to
the absence of footnotes and to normal, year-end audit adjustments which would
not be material in amount or effect), in each case in accordance with GAAP,
except as may be noted therein or in the notes thereto and except, in the case
of the unaudited statements, as permitted by the Exchange Act.
5.5 Consents and Approvals. Other than forms which may be required to be
filed by JMAR with the SEC or state securities commissioners after the Closing,
no consent, approval, authorization, declaration, filing or registration with
any governmental or regulatory authority, or any other Person, is required to be
made or obtained by JMAR in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
5.6 JMAR Common Stock. All of the shares of JMAR Common Stock to be
issued pursuant to this Agreement have been duly authorized and, when issued in
accordance with the
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terms of this Agreement, will be validly issued, fully paid and nonassessable
and free of all liens, claims and Encumbrances (other than transfer restrictions
imposed on such shares by federal and state securities laws) created by JMAR.
5.7 No Material Adverse Change. Since the date of the last JMAR Report,
there has not been any Material Adverse Effect on JMAR.
5.8 No Brokers. Neither JMAR nor Acquisition has entered into nor will
they enter into any contract, agreement, arrangement or understanding with any
Person which will result in the obligation of XXX, JMAR or Acquisition to pay
any finder's fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby.
ARTICLE VI.
PRE-CLOSING COVENANTS
6.1 Conduct of Business by XXX Pending the Closing. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, XXX covenants and agrees that,
unless JMAR shall otherwise agree in writing, XXX shall conduct its business in
the ordinary course of business and consistent with past practice. Without
limiting the generality of the foregoing, XXX shall not directly or indirectly
do, or propose to do, except as set forth in Section 6.1 of the XXX Disclosure
Schedule, any of the following without the prior written consent of JMAR, in its
sole discretion:
(a) amend or otherwise change SAL's charter, bylaws or other
organizational documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any of its stock or
any options, warrants, convertible securities or other rights of any kind to
acquire any of its stock, or any other ownership interest in XXX or any of its
Affiliates;
(c) sell, pledge, dispose of or encumber any assets of XXX
(other than sales of inventory in the ordinary course of business and in a
manner consistent with past practice);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its stock, (ii) split, combine or reclassify any of its stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for its stock or (iii) amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire any of its securities, including, without limitation, its
stock or any option, warrant or right, directly or indirectly, to acquire its
stock, or propose to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary course of business consistent with past
practice; (iii) enter into or amend any Material Contract other than in the
ordinary course of business
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(including, without limitation, any agreement between XXX and any officer,
director, employee or stockholder of XXX (or any Affiliate of such Persons));
(iv) authorize any capital expenditures or purchase of fixed assets which are,
in the aggregate, in excess of $10,000 or (v) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters prohibited by
this Section 6.1(e);
(f) increase the compensation payable or to become payable to
its directors, officers or employees, or grant any severance or termination pay
to, or enter into or amend any employment or severance agreement with any
director, officer or other employee of XXX, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors, officers or
employees, except, in each case, as may be required by law;
(g) take any action to change any accounting policies or
procedures;
(h) make any Tax election inconsistent with past practice or
settle or compromise any federal, state, local or foreign Tax Liability or agree
to an extension of a statute of limitations or engage in any transaction that
would cause XXX to recognize taxable income under U.S. federal or applicable
state or local law;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
except in connection with the consummation of the transactions contemplated by
this Agreement;
(j) take any action inconsistent with characterization of the
Merger as a reorganization pursuant to Code Section 368(a); or
(k) take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.1(a) through 6.1(j), or any action which would
make any of the representations or warranties of XXX contained in this Agreement
untrue or incorrect or cause XXX not to perform its covenants hereunder.
6.2 Further Assurances. Upon the terms and subject to the conditions
contained herein, the parties agree, both before and after the Closing, (a) to
use all commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (b) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder and (c) to cooperate with each other in
connection with the foregoing. Without limiting the foregoing, the parties agree
to use their respective commercially reasonable efforts (i) to obtain all
necessary waivers, consents and approvals from other parties to consummate the
transactions contemplated by this Agreement, (ii) to obtain all necessary
Permits as are required to be obtained under any laws, statutes, ordinances,
rules or regulations, (iii) to defend all actions challenging this Agreement or
the consummation of the transactions contemplated hereby, (iv) to lift or
rescind any injunction or restraining order or other court order adversely
affecting the
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ability of the parties to consummate the transactions contemplated hereby, (v)
to give all notices to, and make all registrations and filings with, third
parties, including without limitation submissions of information requested by
governmental authorities and (vi) to fulfill all conditions to this Agreement.
6.3 No Solicitation. XXX and its Stockholders, directors, officers,
representatives and agents, shall not, directly or indirectly, solicit, initiate
or otherwise participate with respect to any inquiries or proposals concerning a
sale of assets or securities of XXX, or any acquisition, merger, consolidation
or similar transaction involving XXX (a "Competing Transaction"). For purposes
hereof, "participate" shall not include (i) actions performed in a purely
ministerial capacity (e.g., secretaries or receptionists taking phone messages)
which are not performed to circumvent the above restrictions or (ii) responses
to unsolicited contacts by third parties which are limited to "cannot discuss
the matter."
(a) XXX agrees to immediately notify JMAR after receipt of any
Competing Transaction proposal, or any modification of or amendment to any
Competing Transaction proposal, or any request for access to the properties,
books or records of XXX by any Person that has informed or concurrently informs
the Board of Directors of XXX that it is considering making, or has made, a
Competing Transaction proposal. Such notice shall be made in writing.
(b) XXX shall immediately cease and cause to be terminated any
existing discussions or negotiations with any Persons (other than JMAR)
conducted heretofore with respect to any Competing Transaction proposal. XXX
agrees not to release any third party from the confidentiality provisions of any
confidentiality agreement to which XXX is a party.
(c) XXX shall advise its Stockholders, directors, officers,
representatives and agents of the restrictions described in this Section 6.3.
6.4 Affiliates' Letters. The Affiliates of XXX as of the date of this
Agreement are listed in Section 6.4 of the XXX Disclosure Schedule. XXX shall
deliver to JMAR prior to the Closing a letter identifying all Persons who are
Affiliates of XXX as of the Closing Date. XXX shall cause each Person who is
identified as an Affiliate in the letter referred to above to deliver, at or
prior to the Closing, a signed, written agreement, in the form attached as
Exhibit G hereto (each, an "Affiliate Letter"), to the effect that such Person
will not sell or otherwise transfer any shares of JMAR Common Stock issued to
such Person pursuant to the Merger, except as set forth therein.
6.5 Access to Information, Properties and Personnel. XXX shall allow
JMAR, through its employees, agents and representatives, prior to the Closing,
on reasonable prior notice and without any material disruptions of SAL's
business activities, to make such investigation of the business, properties,
plants, books, records and employees of XXX, including, without limitation,
financial statements, internal financial reports, projections and other
materials, and to conduct such examination of the condition (financial or
otherwise) of XXX as JMAR reasonably deems necessary or advisable. Prior to the
Closing, XXX will cooperate with JMAR in all reasonable respects in the planning
in advance for the future operations of the business of XXX. JMAR shall allow
XXX, through its employees, agents and representatives, prior to the Closing, on
reasonable prior notice and without any material
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disruptions of JMAR's business activities, to make such investigation of the
business, properties, plants, books, records and employees of JMAR, including,
without limitation, financial statements, internal financial reports,
projections and other materials, and to conduct such examination of the
condition (financial or otherwise) of JMAR as XXX reasonably deems necessary or
advisable.
6.6 Confidential Information. In connection with the negotiation of this
Agreement and the preparation for the consummation of the transactions
contemplated hereby, the parties acknowledge that each has had access to
confidential information relating to each other, including technical or
marketing information, ideas, methods, developments, inventions, improvements,
business plans, trade secrets, scientific or statistical data, diagrams,
drawings, specifications or other proprietary information relating thereto,
together with all analyses, compilations, studies or other documents, records or
data prepared by XXX, the Stockholders, JMAR or their respective representatives
which contain or otherwise reflect or are generated from such information
("Confidential Information"). The term "Confidential Information" does not
include information which (a) at the time of disclosure or thereafter is
generally available to and known by the public (other than as a result of its
disclosure by the receiving party or its representatives), (b) other than
information designated as confidential under that certain Proprietary Rights and
Non-Disclosure Agreement dated August 7, 2000 (the "Confidentiality Agreement"),
was available to the receiving party on a non-confidential basis from a source
other than the disclosing party or its representatives, (c) has been
independently obtained from a third party without breach of such third party's
obligations of confidentiality or (d) is required by law to be disclosed by the
receiving party, provided that the receiving party gives the disclosing party
prompt written notice of such requirement prior to such disclosures and
assistance in obtaining an order granting confidentiality with respect to such
information or protecting such information from public disclosure. Prior to the
Closing Date, each of the parties shall treat all Confidential Information as
confidential, preserve the confidentiality thereof and not disclose any
Confidential Information, except to their representatives and agents who the
receiving party believes need to know such Confidential Information in
connection with the transactions contemplated hereby. The parties shall use all
reasonable efforts to cause their representatives and agents to treat all
Confidential Information as confidential, preserve the confidentiality thereof
and not disclose any Confidential Information. Each party shall be responsible
for any breach of this Agreement by any of its representatives or agents. In the
event that the receiving party or any of its representatives is requested
pursuant to, or required by, applicable law, regulation or legal process to
disclose any of the Confidential Information, the receiving party will notify
the disclosing party promptly so that the disclosing party may seek a protective
order or other appropriate remedy or, in the disclosing party's sole discretion,
waive compliance with the terms of this Agreement. In the event that no such
protective order or other remedy is obtained, or that the disclosing party
waives compliance with the terms of this Agreement, the receiving party will
furnish only that portion of the Confidential Information which it is advised by
counsel is legally required and will exercise all reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded the Confidential
Information. This Section 6.6 shall supersede the Confidentiality Agreement in
its entirety.
6.7 Notification of Certain Matters. Each party hereto shall give prompt
notice to the other parties of (a) the occurrence or nonoccurrence of any event
the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of such party
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contained in this Agreement to be materially untrue or inaccurate or (b) any
failure of such party materially to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.7
shall not limit or otherwise affect the remedies available hereunder to the
non-breaching parties.
6.8 Consents.
(a) As soon as practicable, each of XXX and JMAR shall commence
to take all reasonable action required to obtain all consents, approvals, and
agreements of, and to give all notices and make all filings with, any third
parties, including federal, state, local, and foreign governmental authorities,
necessary to authorize, approve or permit the Merger. In addition, subject to
the terms and conditions herein provided, each of the parties hereto covenants
and agrees to use its commercially reasonable efforts to take, or cause to be
taken, all action to do or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated hereby.
(b) JMAR, Acquisition and XXX shall cooperate and use their
respective reasonable efforts (i) to prepare all documentation, to effect all
filings and to obtain all Permits, consents, approvals and authorizations of all
third parties and other governmental authorities necessary to consummate the
transactions contemplated by this Agreement and (ii) to cause the transactions
contemplated by this Agreement to be consummated as expeditiously as is
reasonably practicable.
6.9 Stockholder Approval. XXX shall use diligent good faith efforts to
solicit and obtain, within ten (10) days after the execution of this Agreement,
the affirmative vote or written consent of the holders of XXX Stock as to the
Merger and this Agreement and the consummation of the transactions contemplated
hereby. If XXX obtains such consent and such consent is not unanimous, XXX shall
send notice promptly after the execution of this Agreement to the Stockholders
in accordance with Section 228 of the DGCL. The Board of Directors of XXX shall
recommend the Merger, this Agreement and the transactions contemplated hereby
for approval and adoption by the Stockholders, and shall not subsequently amend,
modify or withdraw such recommendation in any manner adverse to JMAR. Prior to
or at the time of the initial solicitation of the Stockholders, XXX shall
provide to the Stockholders an information statement (the "Information
Statement") to be prepared by JMAR and XXX, which shall contain information
provided by JMAR regarding itself (including financial statements), information
provided by XXX regarding XXX (including financial statements), a description of
the Merger and the material terms of this Agreement, the recommendation of SAL's
Board of Directors that stockholders vote for or grant their consent to the
Merger and this Agreement and the consummation of the transactions contemplated
hereby, information provided by XXX regarding the United States federal income
tax consequences of the Merger, information regarding dissenters' rights
available to the Stockholders under the DGCL, information provided by XXX
regarding all material interests of the officers and directors of XXX in the
transactions contemplated hereby, and all other information required under the
DGCL and applicable securities laws. Each of JMAR and XXX will reasonably
cooperate with the other in connection with the preparation of the Information
Statement, including furnishing all information concerning itself to the other
as may be reasonably requested in connection with the preparation
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of such Information Statement, which information shall be true and correct in
all material respects without the omission of any material fact which is
required to make such information not false or misleading. In addition, XXX
shall use all reasonable efforts to cause each Stockholder to execute and
deliver to JMAR a Stockholders Agreement in the form attached hereto as Exhibit
H (the "Stockholders Agreement").
6.10 XXX Stock Options; XXX Warrants and Convertible Debt. XXX and its
Board of Directors shall take all necessary actions such that all XXX Stock
Options shall have been exercised or terminated on or prior to the Effective
Time. In addition to the foregoing, XXX shall cause the Stock Option Plan to be
terminated on or prior to the Effective Time, and shall establish to the
reasonable satisfaction of JMAR that no person or entity (whether or not a
participant in the Stock Option Plan) has or will have any right to acquire any
interest in XXX, JMAR or the Surviving Corporation as a result of the exercise
of options or other rights or warrants or other securities convertible into XXX
Stock on or after the Effective Time. To that end, XXX shall use all reasonable
efforts to cause (a) all of the XXX Warrants to be exercised, canceled or
terminated at or prior to the Effective Time and (b) any outstanding debt of XXX
that is convertible into shares of XXX Stock to be converted or amended and
modified in a manner acceptable to JMAR at or prior to the Effective Time.
6.11 Public Statements and Press Releases. Subject to the provisions of
Section 6.6, neither XXX, or JMAR, nor any of their respective Affiliates, shall
issue or release any written public announcement, press release, statement or
acknowledgment of the existence of, or the terms, conditions and status of, the
transactions provided for herein, without the prior approval of the other as to
the content and time of release of and the media in which such statement or
announcement is to be made and that they will use commercially reasonable
efforts to consult with one another before making other public statements or
responding to any press inquiry with respect to this Agreement or the
transactions contemplated hereby, except as may be required by law or any
governmental agency or the rules of the NASD. Nothing contained herein shall
prevent either party at any time from furnishing any information to any
governmental agency if required by applicable law nor prevent XXX or JMAR from
issuing any release in accordance with the provisions of Section 6.6 when it
believes, based upon advice of counsel, it is legally required to do so.
6.12 Liabilities of XXX. XXX agrees to take all reasonable action
necessary to cause the Liabilities of XXX at Closing, including without
limitation the Transactions Costs, the indebtedness of XXX in favor of Xxxxxx
Bank and any expenses of XXX required to be paid to Agile Equity in connection
with the consummation of the transactions contemplated hereby, to be
extinguished or satisfied, other than the Liabilities set forth on Exhibit I
attached hereto (the "Assumed Liabilities").
6.13 Updated Financial Information. XXX agrees to take all action
necessary to cause to be prepared and delivered to JMAR prior to Closing (a) the
unaudited financial statements as of and for the six-month period ended on June
30, 2001, (b) the total amount of accounts receivable of XXX outstanding as June
30, 2001 and the agings of such receivables based on the following schedule:
0-30 days, 31-60 days and over 60 days, (c) a list of all of SAL's outstanding
purchase orders as of June 30, 2001 and (d) a detailed trial balance (indicating
each General Ledger account balance) as of June 30, 2001.
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ARTICLE VII.
CONDITIONS TO CLOSING
7.1 Conditions to Each Party's Obligation to Effect the Merger. Unless
waived in writing, the respective obligation of each party to effect the Merger
provided for hereby shall be subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions:
(a) No action or proceeding shall have been instituted before a
court or other governmental body or by any governmental agency or public
authority to restrain or prohibit the transactions contemplated by this
Agreement or to obtain an amount of damages or other material relief in
connection with the execution of this Agreement or the consummation of the
Merger; and no governmental agency shall have given notice to any party hereto
to the effect that consummation of the transactions contemplated by this
Agreement would constitute a violation of any law or that it intends to commence
proceedings to restrain consummation of the Merger;
(b) The Merger and this Agreement and the consummation of the
transactions contemplated hereby shall have been approved by the Boards of
Directors of JMAR and XXX and by the requisite vote or written consent of the
holders of the outstanding shares of XXX Stock;
(c) All consents, approvals and waivers from third parties,
including federal, state, local, foreign and other governmental authorities,
necessary to consummate the transactions contemplated hereby shall have been
obtained, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Time and except where the
failure to have obtained or made any such consent, authorization, order,
approval, filing or registration would not have a Material Adverse Effect on the
business of the Surviving Corporation following the Effective Time;
(d) JMAR, Acquisition and XXX shall have executed and delivered
the Certificate of Merger and any other appropriate certificates or documents
for filing with the Secretary of State of the State of Delaware and any other
appropriate governmental authorities; and
(e) JMAR, Acquisition and XXX shall have executed and delivered
the Agreement of Merger and any other appropriate certificates or documents for
filing with the Secretary of State of the State of California and any other
appropriate governmental authorities;
7.2 Conditions to SAL's Obligation to Effect the Merger. Unless waived
by XXX in writing, the obligation of XXX to effect the Merger provided for
hereby shall be subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions:
(a) The representations and warranties of JMAR and Acquisition
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date as if such representations and warranties were
made at and as of the Closing Date, except (i) as and to the extent that the
facts and conditions upon which such representations and warranties are based
are expressly required or permitted to be changed by the terms hereof and (ii)
as and to the extent that such representations or warranties that speak as of a
specific date or time other than
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the Closing Date, which need be true and correct in all material respect only as
of the specified date or time;
(b) JMAR shall have performed, and shall have caused Acquisition
to perform, all agreements and covenants required hereby to be performed by it
prior to or at the Closing; provided, however, that XXX shall not be entitled to
refuse to consummate the transaction in reliance upon its own breach or failure
to perform.
(c) There shall be delivered to XXX a certificate signed by an
officer of JMAR certifying as to JMAR's compliance with the conditions set forth
in Section 7.2(a) and 7.2(b);
(d) JMAR and Acquisition shall have furnished to XXX an opinion
of Xxxxxx X. Xxxxxxxx, Esq., counsel to JMAR and Acquisition, dated as of the
Closing Date and substantially in the form attached hereto as Exhibit J;
(e) From the date of this Agreement through the Effective Time,
no Material Adverse Effect of JMAR shall have occurred and there shall exist no
fact or circumstance which could reasonably be expected to have a Material
Adverse Effect of JMAR;
(f) Acquisition will establish a stock option plan that provides
for the grant to employees and officers of Acquisition to purchase Acquisition
capital stock. Five percent (5%) of the capital stock of Acquisition shall be
reserved for issuance under the plan to officers and employees of XXX;
(g) Each of Xxxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxx and Xxx
Xxxxx shall have executed and delivered to JMAR an employment agreement in
substantially the form attached hereto as Exhibit K; and
(h) On or prior to the Closing Date, JMAR shall have delivered
to XXX each of the following:
(i) a copy of each of (A) the text of the resolutions
adopted by the respective Boards of Directors of JMAR and Acquisition
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and (B) the Bylaws of JMAR
and Acquisition, along with certificates executed on behalf of each of JMAR and
Acquisition by its corporate secretary certifying to XXX that such copies are
true and complete copies of such resolutions and Bylaws, respectively, and that
such resolutions and Bylaws were duly adopted and have not been amended or
rescinded;
(ii) incumbency certificates executed on behalf of each
of JMAR and Acquisition by each of their corporate secretaries certifying the
signature and office of each officer executing this Agreement, the Certificate
of Merger, the Agreement of Merger and such other agreements contemplated in
this Agreement as XXX may request;
(iii) a copy of the Certificate of Incorporation of
JMAR, as amended, certified by the Secretary of State of the State of Delaware,
and a Certificate of Good Standing from the Secretary of State of the State of
Delaware; and
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(iv) a copy of the Certificate of Incorporation of
Acquisition, certified by the Secretary of State of the State of Delaware, and a
Certificate of Good Standing from the Secretary of State of the State of
Delaware.
7.3 Conditions to JMAR and Acquisition's Obligations to Effect the
Merger. Unless waived by JMAR in writing, the obligations of JMAR and
Acquisition to effect the Merger provided for hereby shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions:
(a) The representations and warranties of XXX contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date as if such representations and warranties were made at and as of
the Closing Date, except (i) as and to the extent that the facts and conditions
upon which such representations and warranties are based are expressly required
or permitted to be changed by the terms hereof and (ii) as and to the extent
that such representations or warranties that speak as of a specific date or time
other than the Closing Date, which need be true and correct in all material
respect only as of the specified date or time;
(b) XXX shall have performed all agreements and covenants
required hereby to be performed by it prior to or at the Closing Date; provided,
however, that neither JMAR nor Acquisition shall be entitled to refuse to
consummate the transaction in reliance upon its own breach or failure to
perform;
(c) There shall be delivered to JMAR and Acquisition a
certificate signed by an officer of XXX certifying as to SAL's compliance with
the conditions set forth in Section 7.3(a) and 7.3(b);
(d) From the date of this Agreement through the Effective Time,
no Material Adverse Effect of XXX shall have occurred and there shall exist no
fact or circumstance which could reasonably be expected to have a Material
Adverse Effect of XXX; provided, that, for the purposes of this Section 7.3(d),
changes that do not cause the Closing Date Working Capital to be less than
Seventy Five Thousand Dollars ($75,000) will not deemed to be a Material Adverse
Effect;
(e) The Merger and this Agreement and the consummation of the
transactions contemplated hereby shall have been approved and adopted by the
requisite vote of the holders of XXX Stock;
(f) JMAR shall have received from each Person who is an
Affiliate of XXX an executed Affiliate Letter;
(g) Each of Xxxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxx and Xxx
Xxxxx shall have executed and delivered to JMAR an employment agreement in
substantially the form attached hereto as Exhibit K;
(h) JMAR shall have received executed Stockholders Agreements
from holders of issued and outstanding shares of XXX Stock representing no less
than ninety percent (90%) of the total number of shares of XXX Stock issued and
outstanding as of the Closing Date;
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(i) JMAR shall have received from each Stockholder an executed
investors representation certificate ("Investor Representation Certificate"), in
substantially the form attached hereto as Exhibit L-1 if such Stockholder is
acquiring any JMAR Shares within in the United States and in substantially the
form attached hereto as Exhibit L-2 if such Stockholder is acquiring the JMAR
Shares outside the United States;
(j) XXX shall have completed the actions set forth in Section
6.10 regarding the termination and expiration of the XXX Stock Options, the
Stock Option Plan, the XXX Warrants and any outstanding debt of XXX that is
convertible into shares of XXX Stock;
(k) XXX shall have furnished to JMAR and Acquisition an opinion
of Gravel and Xxxx, counsel to XXX, dated as of the Closing Date and
substantially in the form attached hereto as Exhibit M;
(l) XXX shall have furnished to JMAR and Acquisition an opinion
of Xxxxxx Xxxx, Esq., intellectual property counsel to XXX, dated as of the
Closing Date and substantially in the form attached hereto as Exhibit N;
(m) XXX and Acquisition shall have received from Gravel and
Xxxx, counsel to XXX, an opinion dated as of the Closing Date, in form and
substance and based upon representations, warranties and assumptions reasonably
satisfactory to JMAR, stating that the Merger will qualify for U.S. Federal and
all applicable state and local income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code and all applicable state and local
counterparts thereof. The issuance of such opinion shall be conditioned upon
receipt by such counsel on the Closing Date of a representation from XXX in the
form and content attached hereto as Exhibit O and a representation letter from
JMAR in the form attached hereto as Exhibit P;
(n) Holders of issued and outstanding shares of XXX Stock
representing no more than fifteen percent (15%) of the total number of shares of
XXX Stock issued and outstanding, shall remain eligible to demand appraisal
rights under Section 262 of the DGCL, and JMAR shall have received a certificate
from XXX to that effect;
(o) All Liabilities of XXX other than the Assumed Liabilities,
including without limitation the Transactions Costs, the indebtedness of XXX in
favor of Xxxxxx Bank and any expenses of XXX required to be paid to Agile Equity
in connection with the consummation of the transactions contemplated hereby,
shall have been extinguished or satisfied in full;
(p) JMAR shall have determined in its reasonable discretion that
the issuance of the JMAR Shares to the Stockholders shall be exempt from
registration under the Securities Laws;
(q) JMAR shall have received the documents and instruments
contemplated by Section 3.8;
(r) JMAR shall have received from XXX evidence satisfactory to
JMAR that the Investors Corporation of Vermont has consented to the Merger and
the transactions contemplated hereby under the Lease Agreement
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(s) XXX shall have received the following documents, duly
executed and delivered by the creditors of XXX: (i) Modification Agreement; (ii)
Amendment Number 2 and (iii) DI Modification Agreement;
(t) JMAR shall have received the documents and instruments
contemplated by Section 6.13;
(u) The Business Plan shall have been approved by JMAR, which
approval shall not be unreasonably withheld;
(v) The XXX Disclosure Schedule shall be in form and substance
satisfactory to JMAR, in its sole discretion regardless of any delivery to JMAR
of such XXX Disclosure Schedule prior to the date hereof; and
(w) On or prior to the Closing Date, XXX shall have delivered to
JMAR each of the following:
(i) SAL's minute books, stock transfer records,
corporate seal and other materials related to SAL's corporate administration;
(ii) a copy of the Certificate of Incorporation of XXX,
as amended, certified by the Secretary of State of the State of Delaware, and
Certificates of Good Standing from the Secretaries of State of the States of
Delaware and any other states listed in Section 4.1 of the XXX Disclosure
Schedule evidencing the good standing of XXX in each such jurisdiction;
(iii) a copy of each of (A) the text of the resolutions
adopted by the Board of Directors of XXX authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby and (B) the Bylaws of XXX, along with certificates executed
on behalf of XXX by its corporate secretary certifying to JMAR that such copies
are true and complete copies of such resolutions and Bylaws, respectively, and
that such resolutions and Bylaws were duly adopted and have not been amended or
rescinded;
(iv) incumbency certificates executed on behalf of XXX
by its corporate secretary certifying the signature and office of each officer
executing this Agreement, the Certificate of Merger, the Agreement of Merger and
such other agreements contemplated by this Agreement as JMAR may request; and
(v) a tax clearance certificate or similar document(s)
from each state in which XXX is subject to Tax, showing that XXX has paid its
Taxes in such state.
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ARTICLE VIII.
THE STOCKHOLDER/NOTEHOLDER REPRESENTATIVE
8.1 Appointment. As used in this Agreement, the "Stockholder/Noteholder
Representative" shall mean Green Mountain Capital, L.P., or any Person appointed
as a successor Stockholder/Noteholder Representative pursuant to Section 8.2
hereof.
8.2 Election and Replacement. From and after the Closing Date until the
date when all obligations under this Agreement have been discharged (including
all indemnification obligations under Article X hereof), the Stockholders who
immediately prior to the Effective Time held an aggregate number of shares of
XXX Stock which exceeded 50% of the number of shares of XXX Stock outstanding
immediately prior to the Effective Time (a "Majority"), may, from time to time
upon written notice to the Stockholder/Noteholder Representative and JMAR,
remove the Stockholder/Noteholder Representative (including any appointed by
JMAR) or appoint a new Stockholder/Noteholder Representative to fill any vacancy
created by the death, incapacitation, resignation or removal of the
Stockholder/Noteholder Representative. Furthermore, if the
Stockholder/Noteholder Representative dies, becomes incapacitated, resigns or is
removed by a Majority, the Majority shall appoint a successor
Stockholder/Noteholder Representative to fill the vacancy so created. If the
Majority is required to but has not appointed a successor Stockholder/Noteholder
Representative within fifteen (15) business days from a request by JMAR to
appoint a successor Stockholder/Noteholder Representative, JMAR shall have the
right to appoint a Stockholder/Noteholder Representative to fill any vacancy so
created from the directors of XXX prior to the Merger, and shall advise all
those who were holders of XXX Stock immediately prior to the Effective Time of
such appointment by written notice. A copy of any appointment by the Majority of
any successor Stockholder/Noteholder Representative shall be provided to JMAR
promptly after it shall have been effected.
8.3 Authority. The Stockholder/Noteholder Representative shall be
authorized to discuss, negotiate, resolve and fully and finally settle on behalf
of the Stockholders any claims for indemnification by JMAR against the
Stockholders under Article X hereof, to the extent such claim is satisfied in
whole or in part with any portion of the Earn-Out Conversion Shares or the
Creditor Conversion Shares deposited in the Escrow Account or in a reduction in
the aggregate principal amount of the Earn-Out Notes or the Creditor Notes, and
to take any action to nominate the XXX Nominee for election to the Board of
Directors of JMAR and to make and deliver any certificate, notice, consent or
instrument required or permitted to be made or delivered under this Agreement or
under the documents referred to in this Agreement (an "Instrument") which the
Stockholder/Noteholder Representative determines in his discretion to be
necessary, appropriate or desirable, and, in connection therewith, to hire or
retain, at the sole expense of the Stockholders, such counsel, investment
bankers, accountants, representatives and other professional advisors as he or
she determines in his or her sole and absolute discretion to be necessary,
advisable or appropriate in order to carry out and perform his or her rights and
obligations hereunder. Any party receiving an Instrument from the
Stockholder/Noteholder Representative shall have the right to rely in good faith
upon such Instrument, and to act in accordance with the Instrument without
independent investigation.
8.4 No Liability of JMAR. JMAR (and the Surviving Corporation) shall
have no Liability to any of the Stockholders or otherwise arising out of the
acts or omissions of the
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Stockholder/Noteholder Representative or any disputes among the Stockholders or
between the Stockholders and the Stockholder/Noteholder Representative. JMAR may
rely entirely on its dealings with, and notices to and from, the
Stockholder/Noteholder Representative to satisfy any obligations it might have
under this Agreement or otherwise to the Stockholders. The Stockholders shall
indemnify JMAR and Acquisition for any damages suffered, including, but not
limited to, attorneys' fees and other costs, as a result of JMAR or
Acquisition's good faith reliance on the acts or omissions of the
Stockholder/Noteholder Representative.
8.5 Stockholder/Noteholder Representative Liability. The
Stockholder/Noteholder Representative shall not suffer any liability or loss for
any act performed or omitted to be preformed by him or her under this Agreement
in the absence of a judicated gross negligence, willful neglect or bad faith.
The Stockholder/Noteholder Representative may consult with counsel and other
experts as may be reasonably necessary to advise him or her with respect to his
rights and obligations hereunder and shall be fully protected by any act taken,
suffered, permitted or omitted in good faith in accordance with the advice of
such counsel and experts. The Stockholder/Noteholder Representative shall not be
responsible for this sufficiency or accuracy of the form, execution, validity,
or genuineness of documents or agreements provided to him or her nor shall he or
she be responsible or liable in any respect on account of the identity,
authority, or rights of the persons executing or delivering or purporting to
execute or deliver any such document or agreement, and the
Stockholder/Noteholder Representative shall be fully protected and relying upon
any written notice, demand, certificate or document which he or she in good
faith believes to be genuine.
8.6 Fees and Expenses of Stockholder/Noteholder Representative.
Acquisition, in consideration of the undertakings and agreements of the
Stockholder/Noteholder Representative in this Article VIII, is authorized and
directed to pay to the Stockholder/Noteholder Representative the amount of any
statements presented to Acquisition and approved by Xxxxxx X. Xxxxxxx (or, if
Xxxxxx X. Xxxxxxx is unavailable, approved by the XXX Nominee) subject to the
provisions of the following sentence. The obligation of Acquisition to pay such
amounts shall accrue only at the time Acquisition becomes obligated to make
payments to holders of the Creditor Notes or Earn-Out Notes in accordance with
their terms, whereupon Acquisition shall pay the approved amount and offset such
payment against the amount otherwise payable to the holders of Earn-Out or
Creditor Notes, pro rata in accordance with the outstanding principal amount of
all such notes to the extent currently payable. JMAR or Acquisition agree to
provide reasonable administrative assistance, at its cost, to assist the
Stockholder/Noteholder Representative in fulfilling its obligations to
communicate with the Stockholders and holders of Earn-Out Notes and Creditor
Notes.
ARTICLE IX.
POST-CLOSING COVENANTS
9.1 Litigation Support. In the event and for so long as any party hereto
is actively contesting or defending any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand of third parties after the
Closing in connection with (a) any transaction contemplated by this Agreement or
(b) any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing involving XXX, each of the other parties shall cooperate in
the defense or
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contest, make available their personnel, and provide such testimony and access
to their books and records as shall be necessary in connection with the defense
or contest, all at the sole cost and expense of the initiating party (unless
such party is entitled to indemnification therefor under Article X); provided,
however, that any party so requesting the cooperation of another party who is
not an employee of JMAR or Acquisition shall compensate such other party for the
reasonable value of their time to be provided as described in this Section 9.1.
9.2 Registration Statement for Resale of JMAR Common Stock. JMAR shall
take all reasonable actions to cause the JMAR Shares to be registered under the
Securities Laws in accordance with the terms of the Stockholders Agreement.
9.3 Board of Directors. For so long after the Closing as the Earn-Out
Conditions remain eligible for satisfaction, JMAR shall take all actions
reasonably necessary to (i) appoint to the Board of Directors of JMAR one person
designated by the Stockholders Representative (the "XXX Nominee") and (ii)
support the nomination and election to the XXX Nominee to the Board of Directors
of JMAR at each annual meeting of JMAR's stockholders.
9.4 Operation of Surviving Corporation. The parties acknowledge that
following the Effective Time, JMAR shall have complete operational control over
the Surviving Corporation, including the right to operate the Surviving
Corporation on a cash neutral basis with its only obligation to provide to the
Surviving Corporation funding of Two Hundred Fifty Thousand Dollars ($250,000)
during each of the third and fourth calendar quarters of 2001 and Three Hundred
Fifty Thousand Dollars ($350,000) during each of the first and second calendar
quarters of 2002, with no obligation during such periods to provide funding in
excess of such amounts or in any amount after the second calendar quarter of
2002. Notwithstanding the foregoing, JMAR shall have the right, in its sole
discretion, to accelerate all or a portion of the funding requirements set forth
in the immediately preceding sentence; provided, however, such acceleration
shall not modify or increase JMAR's aggregate obligation to provide (a) no more
than Two Hundred Fifty Thousand Dollars ($250,000) during the third calendar
quarter of 2001, (b) no more than an aggregate of Five Hundred Thousand Dollars
($500,000) during the third and fourth calendar quarters of 2001, (c) no more
than an aggregate of Eight Hundred Fifty Thousand Dollars ($850,000) during the
third and fourth calendar quarters of 2001 and the first calendar quarter of
2002, and no more than an aggregate One Million Two Hundred Thousand Dollars
($1,200,000) during all four calendar quarters.
9.5 Relocation. The parties agree that prior to the first anniversary of
the Closing no person employed by XXX or any material part of SAL's operations
immediately prior to the Effective Time shall be relocated from South
Burlington, Vermont without the approval, which approval shall not be
unreasonably withheld or delayed, of either (a) Xxxxxx Xxxxxxx or (b) the XXX
Nominee. Notwithstanding the foregoing, JMAR shall have the right to request
that such XXX employees perform reasonable travel, including to JMAR's
facilities in California incident to the performance of their employment
responsibilities.
9.6 Corporate Name. Without the approval, which approval shall not be
unreasonably withheld or delayed, of either (a) Xxxxxx Xxxxxxx or (b) the XXX
Nominee, for a period of not less than eighteen (18) months following the
Closing, JMAR shall cause the name of the Surviving Corporation to remain
JMAR/XXX Lithography, Inc.
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9.7 Tax Matters. The final federal and state income tax returns for XXX
through the Effective Time shall be prepared by Xxxxxxxxx, Xxxxx & Company, PLC,
under the direction of the Stockholder/Noteholder Representative, upon due
consultation with JMAR, and with its consent, such consent not to be
unreasonably withheld. The final federal and state income tax returns for XXX
shall be prepared consistent with existing elections and past practice (but in
any event consistent with applicable law).
9.8 Creditor Settlements. In connection with the consummation of the
transactions contemplated by the Modification Agreement, Amendment Number 2 and
the DI Modification Agreement and in satisfaction of all of SAL's obligations to
the creditors of XXX identified in Section 9.8 of the XXX Disclosure Schedule,
JMAR agrees to take, or to cause the Surviving Corporation to take, the
following actions:
(a) promptly following the Closing, make cash payments in an
aggregate amount not to exceed One Million Two Hundred Thousand Dollars
($1,200,000) to the Persons and in the amounts set forth in Section 9.8(a) of
the XXX Disclosure Schedule;
(b) promptly following the Closing, cause the Surviving
Corporation to issue promissory notes of the Surviving Corporation in
substantially the form attached hereto as Exhibit Q (the "Creditor Notes")
(which notes shall be guaranteed by JMAR pursuant to the terms of the Guarantee)
in an aggregate principal amount of One Million Two Hundred Thousand Dollars
($1,200,000) which shall be convertible in accordance with their terms into
shares of JMAR Common Stock (the "Creditor Conversion Shares") to the creditors
of XXX and in the amounts set forth in Section 9.8(b) of the XXX Disclosure
Schedule;
(c) promptly, and in any event within thirty (30) days,
following satisfaction of the Creditor Note Conditions, cause the Surviving
Corporation to issue Earn-Out Notes in aggregate principal amount of Five
Hundred Thousand Dollars ($500,000) to the creditors of XXX and in the amounts
set forth in Section 9.8(c) of the XXX Disclosure Schedule; and
(d) promptly, and in any event within thirty (30) days,
following satisfaction of the Earn-Out Conditions, cause the Surviving
Corporation to issue, at the same time and in the same manner the Surviving
Corporation issues the Earn-Out Consideration to the Stockholders under Section
3.2, Earn-Out Notes in aggregate principal amount of Four Hundred Thousand
Dollars ($400,000) to the creditors of XXX and in the amounts set forth in
Section 9.8(d) of the XXX Disclosure Schedule.
ARTICLE X.
SURVIVAL; INDEMNIFICATION
10.1 Survival of Representations, Etc. All of the representations,
warranties, covenants and agreements made in this Agreement or in any
attachment, exhibit, the XXX Disclosure Schedule, the JMAR Disclosure Schedule,
certificate, document or list delivered pursuant hereto shall survive the
Closing hereunder (even if the other party knew or had reason to know of any
misrepresentation or breach of warranty at the time of such Closing, unless the
other party expressly waives in writing any such breach at or before the time of
such Closing) and shall continue in full force and effect until the Escrow
Termination Date, except that the
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representations and warranties set forth in Sections 4.2, 4.4 and 4.28 shall
survive the Closing and continue in full force and effect forever thereafter and
the representations and warranties set forth in Sections 4.20 and 4.21 shall
survive the Closing and continue in full force and effect until the expiration
of the applicable statute of limitations (with extensions thereof) plus sixty
(60) days. Each party hereto shall be entitled to rely upon the representations
and warranties of the other party set forth in this Agreement. The termination
of the representations and warranties provided herein shall not affect the
rights of either party in respect of any Claim made by such party in a writing
and received by the other party prior to the expiration of the applicable
survival period provided herein.
10.2 Indemnification.
(a) XXX (prior to Closing only), each of the Persons holding
Creditor Notes, each of the Persons holding Earn-Out Notes (to the extent such
notes are required to be issued hereunder) and each of the Stockholders,
severally but not jointly and subject to the provisions of Sections 10.5 and
10.6 below, shall indemnify, defend, save and hold harmless JMAR, Acquisition,
each of their Affiliates and subsidiaries, and each of their respective
representatives (the "JMAR Parties"), from and against any and all costs, losses
(including, without limitation, diminution in value), Taxes, Liabilities,
obligations, damages, lawsuits, deficiencies, claims, demands, and expenses,
including, without limitation, interest, penalties, lost profits and other
losses resulting from any shutdown or curtailment of operations, attorneys' fees
and all amounts paid in investigation, defense or settlement of any of the
foregoing ("Damages") (provided, however that Damages shall exclude lost
profits, special, consequential, incidental, and punitive damages and Damages
shall be net of any insurance proceeds or net tax benefit actually received by
the Indemnified Party in connection with the circumstances giving rise to the
right of indemnification), incurred in connection with, arising out of,
resulting from or incident to (i) any breach of any representation or warranty
or the inaccuracy of any representation made by XXX in or pursuant to this
Agreement or in any attachment, exhibit, certificate, document or list delivered
pursuant hereto or the XXX Disclosure Schedule; (ii) any breach of any covenant
or agreement made by XXX in or pursuant to this Agreement or in any attachment,
exhibit, certificate, document or list delivered pursuant hereto or the XXX
Disclosure Schedule; (iii) any Liabilities of XXX other than the Assumed
Liabilities; (iv) any and all Taxes imposed with respect to the income, gains,
revenue, sales, events, assets or circumstances of XXX through the Effective
Time (including Taxes arising as a result of the transactions contemplated
herein); (v) any breach of Section 4.24; (vi) any breach of the Stockholder's
indemnification obligations set forth in Section 8.4; (vii) any amount JMAR or
Acquisition is obligated to pay to the Stockholder/Noteholder Representative
pursuant to Section 8.6; or (viii) any claim made by a Stockholder exercising
appraisal rights as a dissenting stockholder pursuant to Section 262 of the
DGCL.
(b) JMAR and Acquisition, jointly and severally, shall
indemnify, defend, save and hold harmless the Stockholders and each of their
respective representatives, heirs and Affiliates (the "XXX Parties"), from and
against any and all Damages incurred in connection with, arising out of,
resulting from or incident to (i) any breach of any representation or warranty
or the inaccuracy of any representation, made by JMAR and/or Acquisition in or
pursuant to this Agreement; (ii) any breach of any covenant or agreement made by
JMAR and/or Acquisition in or pursuant to this Agreement and (iii) any Assumed
Liability.
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(c) The term "Damages" as used in this Section 10.2 is not
limited to matters asserted by third parties against a JMAR Party or XXX Party
(an "Indemnified Party"), but includes Damages incurred or sustained by the
Indemnified Party in the absence of third party claims. Payments by an
Indemnified Party of amounts for which the Indemnified Party is indemnified
shall not be a condition precedent to recovery. The obligation of a party from
whom indemnification is sought (an "Indemnifying Party") to indemnify an
Indemnified Party shall not limit any other rights, including, without
limitation, rights of contribution and subrogation, which the Indemnified Party
may have under statute or common law. Anything contained in this Agreement to
the contrary notwithstanding, none of the holders of the Creditor Notes, the
holders of Earn-Out Notes or the Stockholders shall not have any right of
contribution or indemnification from, or subrogation against, XXX. Subject to
Sections 10.1, 10.5 and 10., JMAR and Acquisition are relying on the truth and
accuracy of the representations and warranties made by XXX in this Agreement,
and XXX, each holder of Creditor Notes and each holder of Earn-Out Notes (to the
extent such notes are required to be issued hereunder) and each of the
Stockholders shall be liable pursuant to this Section 10.2 for breach of such
representations and warranties without regard to any knowledge, information or
belief JMAR or Acquisition has, should have or will have to the effect that such
representations and/or warranties may not be, in whole or in part, true,
accurate and complete, after giving effect to the XXX Disclosure Schedule.
Subject to Sections 10.1, 10.5 and 10.6, the Stockholders are relying on the
truth and accuracy of the representations and warranties made by JMAR and
Acquisition in this Agreement, and JMAR and Acquisition shall be liable pursuant
to this Section 10.2 for breach of such representations and warranties without
regard to any knowledge, information or belief the Stockholders have, should
have or will have to the effect that such representations and/or warranties may
not be, in whole or in part, true, accurate and complete, after giving effect to
the JMAR Disclosure Schedule.
(d) The Indemnified Party shall cooperate in all reasonable
respects with the Indemnifying Party and its attorneys in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom;
provided, however, that the Indemnified Party may, at its own cost, participate
in the investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall cooperate with each other in any
notifications to insurers.
10.3 Defense of Claims. If a claim for Damages (a "Claim") is to be made
by an Indemnified Party against an Indemnifying Party, the Indemnified Party
shall, subject to Section 10.1, give written notice (a "Claim Notice") to the
Indemnifying Party as soon as practicable after the Indemnified Party becomes
aware of any fact, condition or event which may give rise to Damages for which
indemnification may be sought under Section 10.2. Such Claim Notice shall set
forth (a) the specific representation, warranty or covenant alleged to have been
breached, (b) the nature and amount of the Claim asserted, together with
sufficient facts relating thereto so that the Indemnifying Party may reasonably
evaluate such Claim and (c) a calculation or good faith estimate, if such can be
reasonably calculated, of the aggregate Damages to which the claimant believes
it is entitled in connection with the Claim. If any lawsuit or enforcement
action is filed against any party entitled to the benefit of indemnity
hereunder, written notice thereof shall be given to the Indemnifying Party as
promptly as practicable (and in any event within fifteen (15) days after the
service of the citation or summons). The failure of any Indemnified Party to
give timely notice hereunder shall not affect rights to indemnification,
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except to the extent that the Indemnifying Party is actually prejudiced by such
failure. After such notice, if the Indemnifying Party shall acknowledge in
writing to the Indemnified Party that the Indemnifying Party shall be obligated
under the terms of its indemnity hereunder in connection with such lawsuit or
action, then the Indemnifying Party shall be entitled, if it so elects, (i) to
take control of the defense and investigation of such lawsuit or action, (ii) to
employ and engage attorneys of its own choice to handle and defend the same, at
the Indemnifying Party's cost, risk and expense unless the named parties to such
action or proceeding include both the Indemnifying Party and the Indemnified
Party and the Indemnified Party has been advised in writing by counsel that
there may be one or more legal defenses available to such Indemnified Party that
are different from or additional to those available to the Indemnifying Party
and (iii) to compromise or settle such Claim, which compromise or settlement
shall be made only with the written consent of the Indemnified Party, such
consent not to be unreasonably withheld or delayed. If the Indemnifying Party
fails to assume the defense of such Claim within fifteen (15) days after receipt
of the Claim Notice, the Indemnified Party against which such Claim has been
asserted will (upon delivering notice to such effect to the Indemnifying Party)
have the right to undertake, at the Indemnifying Party's reasonable cost and
expense, the defense, compromise or settlement of such Claim on behalf of and
for the account and risk of the Indemnifying Party; provided, however, that such
Claim shall not be compromised or settled without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
No Indemnifying Party shall be required to consent to the entry of any judgment
or to enter into any settlement that does not include as an unconditional term
the giving by the claimant or plaintiff of a release from all Liability in
respect of such Claim. In the event the Indemnified Party assumes the defense of
the Claim, the Indemnified Party will keep the Indemnifying Party reasonably
informed of the progress of any such defense, compromise or settlement. Subject
to Sections 10.5 and 10.6, the Indemnifying Party shall be liable for any
settlement of any action effected pursuant to and in accordance with this
Section 10.3 and for any final judgment (subject to any right of appeal), and
the Indemnifying Party agrees to indemnify and hold harmless the Indemnified
Party from and against any Damages by reason of such settlement or judgment. For
purposes of this Article X, any notice required to be given to one of the
Stockholders, and the holders of Creditor Notes and Earn-Out Notes (to the
extent they are also Stockholders) or any decision to be made or action to be
taken by one of the Stockholders, and the holders of Creditor Notes and Earn-Out
Notes (to the extent they are also Stockholders) shall be deemed to have been
properly given, made or taken, as the case may be, if such notice is delivered
to the Stockholder/Noteholder Representative or such decision is made by or such
action is taken by the Stockholder/Noteholder Representative.
10.4 Payment of Damages. After the amount of any Damages to which any
JMAR Party may become entitled by reason of the provisions of this Article X is
finally determined in accordance with the provisions of Section 10.3, such
amount shall be set-off on a pro rata basis from the outstanding amount of the
Creditor Notes. If the Creditor Notes no longer remain outstanding, such amount
shall be set-off on a pro rata basis from the outstanding amount of the Earn-Out
Notes. If the Creditor Notes and the Earn-Out Notes no longer remain outstanding
and shares of JMAR Common Stock are then held in the Escrow Account, such amount
shall be paid in accordance with the provisions of the Escrow Agreement. Any
amounts to which any XXX Party or any JMAR Party (to the extent payment to a
JMAR Party is unavailable under the two immediately preceding sentences) may
become entitled by reason of the provisions of this Article X shall be paid by
the appropriate Indemnifying Party to such XXX Party or JMAR Party,
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as the case may be, within fifteen (15) days after the amount of any Damages is
determined in accordance with the provisions of Section 10.3.
10.5 Exclusive Remedy. Except in the case of fraud or willful breach,
from and after the Effective Time, recourse of JMAR to the Creditor Notes issued
pursuant to Sections 9.8(b), the Creditor Conversion Shares issued upon
conversion of such notes, the Earn-Out Notes issued pursuant to Sections 3.2,
9.8(c) and 9.8(d) and the Earn-Out Conversion Shares issued upon conversion of
such notes (to the extent JMAR is obligated to issue the Creditor Notes and
Earn-Out Notes under such sections) for indemnification Claims as provided in
this Agreement shall be the sole and exclusive remedy of JMAR for any breach of
this Agreement or otherwise in connection with the transactions contemplated
hereby and no other remedy shall be had in contract, tort or otherwise against
the Stockholders, all such remedies being hereby expressly waived, except that
nothing in this Section 10.5 shall prevent JMAR from seeking injunctive or other
equitable relief. As between the Creditor Notes, the Creditor Conversion Shares,
the Earn-Out Notes and the Earn-Out Conversion Shares, JMAR shall seek recourse
first to the Creditor Notes, followed by the Earn-Out Notes, followed by the
Creditor Conversion Shares and then the Earn-Out Conversion Shares.
10.6 Limitations. Notwithstanding anything herein to the contrary,
except in the case of willful or intentional fraud, no Indemnifying Party shall
be liable under this Article X for any Damages (other than Damages resulting
from or incident to Sections 10.2(a)(iii) through (viii), inclusive) (a) until
the aggregate amounts otherwise due any other party or parties entitled to
indemnification hereunder exceeds Thirty-Five Thousand Dollars ($35,000) in the
aggregate (the "Indemnification Threshold"), in which case such Indemnifying
Party will be liable to the Indemnified Party(ies) for the full amount due
(including the amount below the Indemnification Threshold) and (b) in excess of
the consideration actually paid by JMAR to such Stockholder (determined
severally) under this Agreement. The Stockholders as a group shall be treated as
a single Indemnifying Party or other party, as the case may be, for purposes of
this Section 10.6.
10.7 Indemnification Dispute Resolution Procedures. Any unresolved
dispute, controversy or claim arising out of or relating to the indemnification
obligations under this Article X shall be settled in accordance with the dispute
resolution provisions of the Escrow Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 Termination.
(a) Generally. This Agreement may be terminated at any time
prior to the Closing:
(i) By mutual written consent of JMAR and XXX;
(ii) By JMAR or XXX if the Closing shall not have
occurred on or before July 31, 2001; provided, however, that this provision
shall not be available to JMAR if XXX has the right to terminate this Agreement
under clause (v) of this Section 11.1, and this
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provision shall not be available to XXX if JMAR has the right to terminate this
Agreement under clause (iv) of this Section 11.1;
(iii) By JMAR or XXX if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Closing;
(iv) By JMAR if there is a material breach of any
representation or warranty set forth in Article IV hereof, in the Stockholders
Agreement or any covenant or agreement to be complied with or performed by XXX
and/or any Stockholder pursuant to the terms of this Agreement or the failure of
a condition set forth in Section 7.1 (with respect to XXX or the Stockholders)
or 7.3 hereof to be satisfied (and such condition is not waived in writing by
JMAR) on or prior to the Closing Date, or the occurrence of any event which
results or would result in the failure of a condition set forth in Section 7.1
(with respect to XXX or the Stockholders) or 7.3 hereof to be satisfied on or
prior to the Closing Date; provided, however, that JMAR may not terminate this
Agreement prior to the Closing Date if XXX has not had at least twenty (20) days
to cure any such failure of a condition; or
(v) By XXX if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant or
agreement to be complied with or performed by JMAR pursuant to the terms of this
Agreement or the failure of a condition set forth in Section 7.1 (with respect
to JMAR or Acquisition) or 7.2 to be satisfied (and such condition is not waived
in writing by XXX) on or prior to the Closing Date, or the occurrence of any
event which results or would result in the failure of a condition set forth in
Section 7.1 (with respect to JMAR or Acquisition) or 7.2 to be satisfied on or
prior to the Closing Date; provided, however, that XXX may not terminate this
Agreement prior to the Closing Date if JMAR has not had at least twenty (20)
days to cure any such failure of a condition.
(b) Effect of Termination. In the event of termination of this
Agreement:
(i) Each party will promptly redeliver all documents,
work papers and other material (and all copies thereof) of any other party
relating to the transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same;
(ii) The provisions of Sections 6.6 and 6.11 shall
continue in full force and effect; and
(iii) No party hereto shall have any Liability to any
other party to this Agreement, except (A) with respect to breaches arising out
of Section 6.6 or 11.10 hereof or out of subsection (i) of this Section 11.1(b)
and (B) for any breach of this Agreement occurring prior to its proper
termination. The foregoing provisions shall not limit or restrict the
availability of specific performance or other injunctive relief to the extent
that specific performance or such other relief would otherwise be available to a
party hereunder.
11.2 Further Assurances. On and after the Closing Date, XXX, the
Stockholders and JMAR shall use commercially reasonable efforts to take all
appropriate action and execute any
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documents of any kind which may be reasonably necessary or desirable to carry
out the provisions hereof.
11.3 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of the other party; provided, however, that JMAR may, without such
consent, assign all such rights to any Affiliate of JMAR or to any Person that
acquires JMAR or substantially all of the assets of JMAR or survives any merger
with JMAR. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, and no other Person shall have any right, benefit or
obligation under this Agreement as a third party beneficiary or otherwise.
11.4 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by facsimile, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
upon receipt, if sent by certified or registered mail, return receipt requested.
In each case notice shall be sent to:
If to XXX, addressed to:
Semiconductor Advanced Lithography, Inc.
00 Xxxxxxx Xxxxx, Xxxxx 0
Xxxxx Xxxxxxxxxx, Xxxxxxx 05403-6033
Fax: (000) 000-0000
Attn: Dr. Xxxxxx Xxxxxxx
with a copy to:
Gravel and Xxxx
X.X. Xxx 000
76 St. Xxxx Street, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxx, Esq.
If to the Stockholder/Noteholder Representative, addressed
to:
Green Mountain Capital, L.P.
R.F.D. #1 Box 1503
Xxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Attn: I. Xxxxxxx Xxxxxxxx
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If to JMAR or Acquisition, addressed to:
JMAR Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: General Counsel
with a copy to:
Xxxxxx & Xxxxxxx
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxx, Esq.
or to such other place and with such other copies as any party may designate as
to itself by written notice to the others.
11.5 Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits and schedules hereto (including the Disclosure Schedules)
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. This Agreement may not
be amended except by an instrument in writing signed by or on behalf of each of
the parties hereto. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
11.6 Service of Process. Each of the parties hereto irrevocably consents
to the service of any process, pleading, notices or other papers by the mailing
of copies thereof by registered, certified or first class mail, postage prepaid,
to such party at such party's address set forth herein, or by any other method
provided or permitted under Vermont or California law.
11.7 Multiple Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
11.9 Exhibits and Schedules. The Exhibits and Schedules attached to this
Agreement are incorporated herein and shall be a part of this Agreement for all
purposes.
11.10 Governing Law. All questions with respect to the effects of the
Merger and other corporate law questions relating to the transactions
contemplated by this Agreement shall be
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governed and construed in accordance with the DGCL and CCC, as applicable. All
other questions concerning the construction, validity and interpretation of this
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Vermont, without regard to principles of conflict of laws.
11.11 Construction. Differences in language as between similar
provisions covering similar matters may reflect differences in style rather than
a different substantive intent and should be construed accordingly.
11.12 Expenses. Except as otherwise specified in this Agreement, each
party hereto shall pay its own out-of-pocket expenses, including, but not
limited to, legal and accounting fees, incurred in connection with the
negotiation, preparation and execution of this Agreement and all other
agreements, documents and instruments contemplated hereby, or otherwise in
connection with the preparation for carrying this Agreement into effect.
11.13 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other document or instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such document or instrument.
11.14 Cumulative Remedies. All rights and remedies of either party
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
11.15 Specific Performance. The parties agree that it would be difficult
to measure damages which might result from a breach of this Agreement by JMAR,
Acquisition, XXX or the Stockholders and that money damages would be an
inadequate remedy for such a breach. Accordingly, if there is a breach or
proposed breach of any provision of this Agreement by JMAR, Acquisition, XXX or
the Stockholders, the non-breaching party shall be entitled, in addition to any
other remedies which it may have, to an injunction or other appropriate
equitable relief to restrain such breach without having to show or prove actual
damage.
Signature Page Follows
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
JMAR TECHNOLOGIES, INC.,
a Delaware corporation ("JMAR")
By:
---------------------------------
Name:
----------------------------
Its:
-----------------------------
JMAR/XXX LITHOGRAPHY, INC.,
a California corporation
("Acquisition")
By:
---------------------------------
Name:
----------------------------
Its:
-----------------------------
SEMICONDUCTOR ADVANCED
LITHOGRAPHY, INC.,
a Delaware corporation ("XXX")
By:
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: President
