EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into
as of the 30th day of August, 1996, by and among 3D SYSTEMS, INC., a California
corporation ("Buyer"), KELTOOL, INC., a Minnesota corporation ("Seller"), and
XXXXX XXXXXXXX, an individual ("Xxxxxxxx"), on the following terms and
conditions:
1. DEFINITIONS.
(a) 3M PATENTS. "3M Patents" shall have the meaning set forth in
Paragraph 7(s)(ii).
(b) ADJUSTED BOOK VALUE. "Adjusted Book Value" shall mean the
aggregate book value of all Purchased Assets on the Asset list which would, in
accordance with generally accepted accounting principles ("GAAP"), be classified
as assets on financial statements of the Seller prepared on a basis and recorded
in a manner consistent with the June 30, 1996 balance sheet of Seller, decreased
by any amounts reflected on the June 30, 1996 balance sheet with respect to
goodwill, contracts, trade secrets, patents, trademarks or service marks and
other Intangible Property and assets.
(c) ASSET LIST. "Asset List" shall mean the list setting forth the
categories and book values of the Purchased Assets, in form and substance
reasonably satisfactory to Buyer, dated as of June 30, 1996.
(d) ASSUMED LIABILITIES. "Assumed Liabilities" shall mean only those
liabilities of Seller assumed by Buyer as identified on SCHEDULE 3(b) hereto.
(e) CLOSING. "Closing" shall mean the purchase and sale of the
Assets on the Closing Date.
(f) CLOSING ASSET LIST. "Closing Asset List" shall mean the revised
list setting forth the categories and book values of the Purchased Assets,
consistent in all respects in form and substance with the Asset List, adjusted
to reflect changes in the values of the items set forth on the Asset List
through the Closing, which shall include a deduction for a fixed monthly
depreciation for fixed assets (which shall be in the amount of $1,800 per month
for production equipment and $114 per month for office equipment) and
adjustments to reflect all inventory and/or equipment acquired or sold between
the date of the Asset List through the Closing.
(g) CLOSING DEDUCTION LIST. "Closing Deduction List" shall mean the
revised list setting forth the categories and book values of the Deduction
Items, consistent in all respects in form and substance with the Deduction List,
adjusted to reflect changes in the values of the items set forth on the
Deduction List through the Closing.
(h) CLOSING DATE. "Closing Date" shall mean September 9, 1996.
(i) EMPLOYEES. "Employees" shall mean the current employees of
Seller.
(j) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974.
(k) EVALUATOR. "Evaluator" shall have the meaning set forth in
Section 4(d).
(l) EXCLUDED ASSETS. "Excluded Assets" shall have the meaning set
forth in Section 2.
(m) FINANCIAL STATEMENTS. "Financial Statements" shall mean and
include both the unaudited financial statements reflecting the results of
operations and financial positions of Seller at and for the fiscal year ended
December 31, 1995, and the unaudited financial statements and for the 6-month
period ended June 30, 1996, which financial statements shall include balance
sheets and statements of income and expenses.
(n) HAZARDOUS MATERIAL. "Hazardous Material" shall mean any
flammables, asbestos, explosives, radioactive materials, hazardous wastes, toxic
substances or related materials, including without limitation of any substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "toxic substances" under any applicable federal,
state, or local laws, rules, regulations or orders or which federal, state or
local laws, rules, regulations or orders designate as potentially dangerous to
public health and/or safety when present in the environment.
(o) INTELLECTUAL PROPERTY. "Intellectual Property" shall mean any
and all information, trademarks (including the name "KELTOOL", but excluding the
name "KELTECH"), trade names, service marks, patents, patent rights, licenses
(United States or foreign), copyrights (including any registrations,
applications, licenses or rights relating to any of the foregoing), software,
programs, proprietary rights, proprietary processes, technology, trade secrets,
inventions, know-how, designs, computer programs, franchises, certificates of
public convenience and necessity, and all other intangible assets, properties
and rights.
(p) KELTOOL PROCESS. "Keltool Process" shall mean a tooling process
used to make durable composite metal parts, which process was originally
developed by 3M, and was licensed by 3M to Seller in 1991 pursuant to the
License Agreement.
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(q) LEASE. "Lease" shall have the meaning as set forth in Section
10(f).
(r) LICENSE AGREEMENT. "License Agreement" shall mean, collectively,
that certain License Agreement entered into by and between Seller and 3M dated
January 25, 1991, that certain Addendum of License Agreement dated February 18,
1992, and that certain Second Addendum of License Agreement dated February 18,
1992.
(s) NON-COMPETITION AGREEMENT. "Non-Competition Agreement" shall
have the meaning set forth in Section 10(f).
(t) OTHER AGREEMENTS. "Other Agreements" shall mean the
Non-Competition Agreement, the Warrant Agreement, and the Lease.
(u) PREMISES. "Premises" shall mean Seller's facility located at 000
Xxxxxxxxx Xxxx Xxxx, Xx. Xxxx, XX 00000.
(v) PURCHASED ASSETS. "Purchased Assets" shall have the meaning set
forth in Section 2.
(w) SECOND PAYMENT. "Second Payment" shall mean that portion of the
Purchase Price described in Section 3(a)(ii), to be adjusted pursuant to the
provisions of Section 4.
(x) WARRANT AGREEMENT. "Warrant Agreement" shall have the meaning
set forth in Section 11(b).
2. PURCHASE AND SALE OF ASSETS. On the terms and subject to the
conditions set forth in this Agreement, Seller agrees to sell and deliver to
Buyer, and Buyer agrees to purchase and acquire from Seller, free and clear of
any and all liens, claims and encumbrances of any kind, other than those set
forth on SCHEDULE 7(c) to this Agreement, all of the business, assets,
properties, goodwill and rights of Seller as a going concern of every nature,
kind and description, tangible or intangible, wherever located and whether or
not carried or reflected on the books and records of Seller (the "Purchased
Assets"), including without limitation, as shall exist at the date hereof, the
following business assets: equipment; supplies; software (including the furnace
profiling program on disk (exclusive of the LOTUS software used to run such
program), and excluding any accounting software packages owned and operated by
Keltech, but including floppy disks which contain all databases of such
accounting software packages); fixtures; inventories; personal property and
other goods; accounts receivable; notes; drafts and other documents; leasehold
improvements; customer lists; internet addresses and domain names to the extent
existing; patents; permits; trademarks, trade names and service marks, including
the name "KELTOOL"; inventions, patents, patent applications, contract rights,
including rights to license patents, "know-how" and trade secrets Seller has
under the License Agreement, and Seller's rights
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under Non-Disclosure Agreements, and any and all rights under any and all
insurance policies ever purchased by Sellers, whether in effect at the
Closing or not; goodwill and other general intangibles of whatever kind or
nature, including all Intellectual Property. The Purchased Assets shall not
include, and Seller shall retain for its own use and benefit, the assets of
Seller listed on SCHEDULE 2 attached hereto (the "Excluded Assets"), which
Excluded Assets include only cash, and certain personal, non-business related
assets owned by Seller and the name "KELTECH".
3. PURCHASE PRICE. The Purchased Assets shall be purchased by Buyer from
Seller for a purchase price consisting of:
(a) $1,737,000, payable as follows:
(i) a fixed amount of $875,000 to Seller on the Closing Date by
wire transfer, and
(ii) an amount equal to $862,000, subject to adjustment as set
forth in Section 4 hereof, to Seller on the last to occur of (a) expiration of
30 days after the Closing Date, or (b) resolution of any dispute as to the
amount of any adjustment required pursuant to Section 4 below, by wire transfer;
(b) the assumption of only those current liabilities of Seller set
forth on SCHEDULE 3(b) hereto (the "Assumed Liabilities"); and
(c) Warrants to purchase 50,000 shares of Buyer's Common Stock,
pursuant to the Warrant Agreement (collectively, the "Purchase Price").
The Purchase Price shall be allocated among the Purchased Assets as set
forth in SCHEDULE 3(c) to this Agreement, and such allocation shall be used
for federal and state tax purposes; provided, however, that Buyer may modify
and amend the allocation set forth on SCHEDULE 3(c) prior to the Closing.
With respect to the allocation of the purchase price to the noncompetition
covenant of Xxxxxxxx as set forth in the Non-Competition Agreement, in the
event such allocation causes Xxxxxxxx to incur an amount of combined federal
and state income taxes higher than he would incur if there were no such
allocation of the Purchase Price to the Non-Competition Agreement, Buyer
shall reimburse Xxxxxxxx such premium over Xxxxxxxx'x resulting tax liability
as if there had been no such allocation. In addition, in the event Buyer
allocates a portion of the Purchase Price to any purchased depreciable
equipment which results in the recapture of such depreciation, Seller shall
reimburse Xxxxxxxx such amount as is necessary to make Xxxxxxxx "tax
neutral," i.e., Seller shall reimburse Xxxxxxxx the incremental increase in
combined federal and state tax liabilities due to such recapture (at ordinary
income tax rates) over the combined federal and state income tax liabilities
Xxxxxxxx would incur if an allocation causing such recapture were not made
(at capital gains tax rates).
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4. ADJUSTMENT TO PURCHASE PRICE.
(a) ADJUSTMENT BASED ON ADJUSTED BOOK VALUE OF PURCHASED ASSETS.
The Second Payment shall be adjusted based upon the Adjusted Book Value of
the Purchased Assets listed on the Asset List as of the Closing Date, as
follows: (i) if the Adjusted Book Value of the Purchased Assets as of the
Closing Date is less than $243,000, then the Second Payment shall be
decreased by the amount by which the Adjusted Book Value is less than
$243,000, and (ii) if the Adjusted Book Value of the Purchased Assets as of
such date is greater than $243,000, the Second Payment shall be increased by
the amount by which the Adjusted Book Value of the Purchased Assets as of the
Closing Date exceeds $243,000.
(b) PROCEDURES FOR ADJUSTMENTS TO THE SECOND PAYMENT. The Purchase
Price shall be adjusted as follows (the "Adjusted Purchase Price"): Attached
hereto as SCHEDULE 4(b) is the Asset List. Not later than five (5) days
following the Closing Date, Seller shall deliver to Buyer (i) the Closing
Asset List, and (ii) the Closing Deduction List. The parties hereto hereby
covenant and agree that no adjustment shall be made to the Purchase Price in
respect of the Closing Asset List unless (i) the value of the assets as set
forth on the Asset List is greater than the value of the assets set forth on
the Closing Asset List by an amount of $5,000 or more, or (ii) the value of
the assets as set forth on the Asset List is less than the value of the
assets set forth on the Closing Asset List by an amount of $5,000 or more, in
which case the Purchase Price shall be reduced or increased, as the case may
be, on a dollar-for-dollar basis in an amount equal to the entire difference.
Each of the Asset List, the Closing Asset List and the Closing Deduction
List shall be prepared by Seller from Seller's books and records, consistent
with Seller's past accounting practices consistently applied, and, so
prepared, shall be presumptively valid unless Buyer shall give written notice
to Seller of any disagreement or disagreements with the Closing Asset List or
the Closing Deduction List within ten (10) days following its receipt of the
Closing Asset List and Closing Deduction List, specifying in reasonable
detail the nature and extent of such disagreement.
(c) MANNER OF AJUSTMENTS. The Second Payment shall be reduced to
reflect customer deposits made to Seller for orders which have not been
delivered by the Seller prior to the Closing. In addition, it is
acknowledged and agreed that (1) with respect to production and office
equipment, the value of such assets in the Closing Asset List shall be
determined by adding to the value of such assets on the Asset List the cost
of any acquisitions between June 30, 1996 and the Closing Date and
subtracting from the value of the Assets on the Asset List depreciation at a
monthly rate of $1,800 and $114 for production and office equipment,
respectively, and (2) with respect to inventory, the value of such asset on
the Closing Asset List shall be determined by adding acquisitions to
inventory and subtracting cost of sales from the value of the inventory on
the Asset List, and (3) with respect to accounts receivable and prepaid
expenses, the value on the Closing Asset List shall be the value of such
assets on the Closing Date.
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(d) DISAGREEMENT OVER ADJUSTED PURCHASE PRICE. If Seller and Buyer
are unable to resolve any disagreement with respect to the Closing Asset List
which would result in an adjustment to the Purchase Price or with respect to
the Closing Deduction List within five (5) days following receipt by Seller
of the notice referred to in Section 4(b) above, the disagreement shall be
submitted for resolution to Coopers & Xxxxxxx LLP (the "Evaluator");
provided, however, that all undisputed amounts will be paid within two (2)
business days after that portion of the adjustment to the Second Payment is
determined hereunder. The Evaluator shall act as an arbitrator to determine
and resolve such disputes, based solely on presentations by Buyer and Seller
and not by independent review. The Evaluator's resolution shall be made
within fifteen (15) business days of the submission of the dispute, shall be
in accordance with this Agreement, shall be set forth in a written statement
delivered to Seller and Buyer and shall be final, binding and conclusive.
Seller and Buyer shall each pay one half of all fees, costs and expenses of
the Evaluator incurred in connection with the resolution of any dispute.
5. THE CLOSING. The Closing shall take place on the Closing Date and may
be effected by means of facsimile transmissions (with same day delivery of
executed counterparts among all parties) and wire transfer of the Purchase Price
and shall, unless otherwise agreed to by the parties hereto, take place on
September 9, 1996. If all conditions to the Closing have not been satisfied or
waived on or prior to September 9, 1996, the Closing shall take place on that
date which is five business days following the date on which all conditions to
the Closing have been satisfied or waived. In the event the Closing does not
occur on or prior to October 15, 1996 (the "Drop Dead Date"), the parties'
rights and duties with respect to the transaction contemplated in this Agreement
and the other Agreements shall cease.
6. NO ASSUMPTION OF LIABILITIES.
(a) LIABILITIES NOT ASSUMED. Buyer shall not and does not assume
any liabilities, obligations or commitments of Seller of any kind, known or
unknown, contingent or otherwise, of whatsoever kind or nature, other than
those Assumed Liabilities specifically identified on SCHEDULE 3(b) hereto,
which Schedule shall include only (a) the obligation of Seller under the
License Agreement to pay royalties to 3M (as to which Seller is responsible
for all obligations incurred by Seller prior to Closing); (b) the obligation
to pay 3M the balloon payment in the amount of Eleven Thousand Seven Hundred
Seventy-Nine Dollars and Seventy-Nine cents ($11,779.79) on January 25, 1998;
(c) the assumption of up to $1,000 for accrued sick leave and vacation
payable to employees of Seller who Buyer may employ following the Closing;
and (d) any open purchase and/or sales orders of Seller as set forth on
SCHEDULE 3(b). Any obligations or commitments of Seller not identified on
SCHEDULE 3(b) shall remain the sole responsibility of Seller and Seller and
Xxxxxxxx will jointly and severally indemnify and hold Buyer, its officers,
directors and shareholders, and each of them, harmless from and against any
and all such liabilities, expenses or obligations, including, but not limited
to, (i) deferred expenses, trade account liabilities and capitalized lease;
(ii) product liability claims; (iii) liabilities in respect of salaries,
employee benefit plans, including obligations to employees for bonus and/or
severance
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payments upon the sale of the Purchased Assets; (iv) income, sales, transfer
or other taxes, including taxes arising out of the transactions contemplated
by this Agreement; (v) any claims related to environmental matters; or (vi)
legal expenses or other transaction costs associated with the transactions
contemplated by this Agreement. Buyer may offer to hire, on its customary
basis, any or all of the Employees (defined herein), but Buyer shall not
assume or be bound by any of Seller's employment contracts or other
obligations with respect to such Employees. Buyer shall have no obligation
whatsoever to hire or otherwise employ any or all of the Employees.
(b) CLAIMS BROUGHT AGAINST BUYER. From and after the Closing Date,
Buyer shall notify Seller promptly of any claim made upon Buyer with respect to
any liabilities, obligations or commitments of Seller and Buyer shall have no
obligation to make any payment of, settle or offer to settle, or otherwise
satisfy such claim.
7. REPRESENTATIONS AND WARRANTIES OF SELLER AND XXXXXXXX. As a material
inducement to Buyer to enter into this Agreement and the Other Agreements to
which it is a party, and to perform its obligations hereunder and thereunder,
Seller and Xxxxxxxx jointly and severally represent, warrant, and covenant to
Buyer as follows:
(a) ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Minnesota. Copies of the Articles of Incorporation (as
certified by the Secretary of State of the State of Minnesota) and Bylaws of
Seller have been delivered to Buyer and are accurate and complete as of the
date of this Agreement.
(b) AUTHORIZATION OF SELLER AND XXXXXXXX. Seller has all requisite
corporate power and authority to enter into and carry out the terms and
conditions of this Agreement and the Other Agreements to which it is a party
and all the transactions contemplated hereunder and thereunder. All
proceedings have been taken and all authorizations have been secured which
are necessary to authorize the execution, delivery and performance by Seller
of this Agreement and each of the Other Agreements to be executed by Seller.
Xxxxxxxx has the legal capacity to enter into this Agreement and each Other
Agreement to which Xxxxxxxx is a party in any capacity. This Agreement has
been duly and validly executed and delivered by Seller and by Xxxxxxxx and
constitutes, and the Other Agreements to which Seller or Xxxxxxxx is a party,
when executed and delivered by them will constitute, the valid and binding
obligations of Seller and Xxxxxxxx, as the case may be, enforceable in
accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally.
(c) TITLE TO THE PURCHASED ASSETS. Seller has, and will transfer to
Buyer at the Closing, good and marketable title to all of the Purchased Assets,
free and clear of all mortgages, pledges, liens (including, without limitation,
tax liens), charges, security interests, claims, conditions, restrictions,
encumbrances and obligations, of any type, kind or nature whatsoever
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other than those specifically described on SCHEDULE 7(c) hereto. Seller and
Xxxxxxxx are not parties to, nor are any of the Purchased Assets bound by or
subject to, any leases or other agreements or instruments except as may be
referred to herein or set forth on SCHEDULE 7(c) to this Agreement.
(d) FINANCIAL STATEMENTS. Seller has delivered to Buyer the
Financial Statements. The Financial Statements are true, complete and
accurate in all material respects, present fairly the financial condition of
Seller for the periods therein specified, and were prepared in accordance
with GAAP consistently applied throughout the periods involved, subject to
year-end adjustments which will not be materially adverse, and except that
the unaudited financial statements may not contain all footnotes required by
GAAP. Except as set forth in the June 30, 1996 balance sheet of Seller
included in the Financial Statements or on SCHEDULE 7(d), there are no
liabilities, debts, claims or obligations, whether accrued, absolute,
contingent or otherwise, whether due or to become due, which could materially
and adversely affect the Purchased Assets or the rights of Seller therein and
thereto.
(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the June
30, 1996 balance sheet, there has not been any change in, or event affecting,
the business condition, properties, assets, liabilities, operations or prospects
of Seller's business other than changes in the ordinary course of its business,
none of which has (either when taken by itself or when taken in conjunction with
any other or all such other changes) been materially adverse to Seller's
business. Except as set forth in SCHEDULE 7(e), since the date of the June 30,
1996 balance sheet, Seller's business has not suffered any adverse change in,
and no events have occurred which, individually or in the aggregate, have had,
or may have, any material adverse effect on, the financial condition, results of
operations, business or prospects of Seller's business other than as reflected
in the June 30, 1996 balance sheet and statements of income and expenses.
(f) EFFECT OF AGREEMENT. The execution and delivery by each of
Seller and Xxxxxxxx of this Agreement and the agreements referred to herein, the
sale by Seller of the Purchased Assets to Buyer, the performance by each of
Seller and Xxxxxxxx of their respective obligations pursuant to the terms of
this Agreement and the Other Agreements, and the consummation of the
transactions contemplated hereby and under such Other Agreements, do not and
will not, with or without the giving of notice or lapse of time, or both:
(i) violate any judgment, order, writ or decree of any court of
administrative body applicable to Seller;
(ii) accelerate or constitute an event entitling the holder of
any indebtedness of Seller or Xxxxxxxx to accelerate the maturity of such
indebtedness or to increase the rate of interest presently in effect with
respect to such indebtedness; or
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(iii) result in the breach of (with the exception of the License
Agreement), constitute a default under, constitute an event which with notice
or lapse of time, or both, would become a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the Purchased Assets or other properties of Seller or Xxxxxxxx under any
agreement, commitment, contract (written or oral) or other instrument to
which Seller or Xxxxxxxx is a party, or by which the Purchased Assets or
other properties of Seller or Xxxxxxxx are bound or affected.
(g) LITIGATION. Except as set forth on SCHEDULE 7(g) to this
Agreement, there is no claim, legal action, suit, arbitration, investigation
or hearing of which Seller or Xxxxxxxx has received notice, notice of claim
or other legal, administrative or governmental proceedings pending or, to
Seller's or Xxxxxxxx'x best knowledge, threatened against Seller or Xxxxxxxx
(or in which Seller is a plaintiff or otherwise a party thereto) relating to
the Purchased Assets or the Keltool Process.
(h) ACCOUNTS RECEIVABLE. The accounts receivable reflected in the
1995 Financial Statements and subsequently arising arose from valid sales and
transactions in the ordinary course of business and represent valid
obligations due Seller, and have been collected or are collectible in the
ordinary course of business consistent with past practice. Within one year
from the Closing, at Buyer's request and upon 30 days written demand, Seller
agrees to purchase from Buyer all materially delinquent accounts receivable,
defined as those accounts for which credit was extended by Seller prior to
the Closing and are more than 180 days past due (applying any payment made by
a debtor to such debtor's invoices on a first-in first out basis), and for
which Buyer has made reasonable collection attempts from the debtor.
(i) EMPLOYEES. SCHEDULE 7(i) contains a true and complete list of
all current employees (the "Employees") of Seller and all written or oral
employment contracts and collective bargaining agreements and all other
agreements or arrangements providing for employee compensation, to which
Seller is a party or by which Seller is bound. Seller is not delinquent in
payments to any of its directors or employees or former directors or
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them or amounts required to be
reimbursed to such directors or employees. There are no labor disputes,
troubles or controversies of any type or character between Seller and any of
its Employees or former employees.
(j) EMPLOYEE BENEFIT PLANS, ETC. Except as set forth on SCHEDULE
7(j), with respect to Employees or former employees of Seller, Seller does
not maintain or contribute to any (i) nonqualified deferred compensation,
bonus or retirement plans or arrangements, (ii) qualified defined
contribution or defined benefit plans or arrangements which are employee
pension benefit plans (as defined in Section 3(2) of ERISA, or (iii) employee
welfare benefit plans, (as defined in Section 3(1) ERISA), or material fringe
benefit plans or programs (the "Plans"). Seller does not and has not within
the last five years contributed to any defined benefit plan (as defined in
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Section 3(35) of ERISA) or multiemployer pension plan (as defined in Section
3(37) of ERISA). Seller does not maintain or contribute to any employee
welfare benefit plan which provides health, accident or life insurance
benefits to former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Internal Revenue Code of 1986, as
amended.
(k) CUSTOMERS AND SUPPLIERS. SCHEDULE 7(k) contains a correct and
complete list of each of the 20 largest customers of Seller's business who have
purchased from the Seller goods and/or services during the twelve months prior
to the date hereof and indicates the dollar value of goods and/or services
purchased by, and the pricing to, each such customer. SCHEDULE 7(k) also
contains a list of each of the 10 top suppliers of the Seller who have supplied
goods and/or services to Seller's business and indicates the dollar value and
pricing of the goods and/or services supplied by each such supplier during such
calendar year. Except as set forth on SCHEDULE 7(k), to Seller's and Xxxxxxxx'x
best knowledge, no such customer or supplier, or any other person or entity
having material business dealings with the Seller, will or may cease to continue
such relationship with the Buyer, or will or may substantially reduce the extent
of such relationship, at any time from or after the Closing Date. To the best
knowledge of the Seller and Xxxxxxxx, (a) there is no other existing or
contemplated material modification or change in the business relationship of the
Seller with, nor (b) any existing condition or state of facts or circumstances,
which has materially affected adversely, or will materially adversely affect,
the relationship of Seller's business after it is acquired by Buyer with, the
Seller's customers or suppliers or which has prevented or will prevent such
business from being carried on by the Purchaser after the Closing in essentially
the same manner as it is currently carried on.
(l) ENVIRONMENTAL COMPLIANCE MATTERS. Neither Seller nor Xxxxxxxx
has received any notice of any claim, proceeding or investigation under
federal, state or local law relating to air, soil, subsurface and water
pollution, soil monitoring and the storage, treatment, disposal, removal,
remediation, release, discharge or emission or any Hazardous Material with
respect to the Premises or the processes used in Seller's business. To the
best knowledge of Seller and Xxxxxxxx, neither Seller nor any predecessor
entity operating or controlling Seller's business, has ever owned, leased or
operated or otherwise controlled any real property at which a claim or
proceeding is presently pending or threatened, nor is there any condition on
any such property which would give rise to any such claim or proceeding under
federal, state or local law relating to air, soil, subsurface, water
pollution, soil monitoring and the storage, treatment, disposal, removal,
remediation, release, discharge or emission of any Hazardous Material. To
the best of Seller's knowledge, Seller has operated Seller's business in
compliance with all federal, state and local laws relating to air, soil,
subsurface and water pollution, soil monitoring and the storage, treatment,
disposal, removal, remediation, release, discharge or emission or any
Hazardous Material, and to the best knowledge of Seller and Xxxxxxxx, there
has been no release of Hazardous Material from the operation of Seller's
business at the Premises or anywhere Seller has operated Seller's business.
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(m) CONTRACTS. The contracts listed in SCHEDULE 7(m) constitute all
contracts, purchase orders, agreements, licenses, and other commitments and
arrangements in effect as of the Closing Date that either (1) involve
expenditure by Seller of more than $500 or (2) require performance by any
party to the contract thereto more than six (6) months after the Closing
Date. All such contracts are valid, binding, and enforceable in accordance
with their terms and are in full force and effect. There are no existing
defaults by Seller under any such contracts and no act, event, or omission
has occurred that, whether with or without notice, lapse of time, or both,
would constitute a default thereunder.
(n) THIRD-PARTY INTERESTS IN PURCHASED ASSETS. Seller has not
granted, transferred, or assigned any right or interest in the Purchased Assets
to any person or entity, except pursuant to the contracts identified in SCHEDULE
7(n). There are no contracts, agreements, licenses, and other commitments and
arrangements in effect with respect to the marketing, distribution, licensing,
or promotion of the Keltool Process or the Purchased Assets, including the
Intellectual Property, by any independent salesperson, distributor, sublicensor,
or other remarketer or sales organization, except pursuant to the contracts
identified in SCHEDULE 7(n).
(o) CONDITION OF SELLER'S PURCHASED ASSETS. The Purchased Assets
constitute all of the assets used in and required for the conduct of the
business of Seller, except for the Excluded Assets listed on SCHEDULE 2 attached
hereto. All machinery and equipment included in the Purchased Assets is being
delivered "as is", except as to the eight working furnaces of Seller, which are,
and as of the Closing Date shall be, in good operating condition and repair
(with the exception of normal wear and tear) free from defects. All inventory
included in the Purchased Assets is merchantable and useable in the ordinary
course of the operation of Seller's business.
(p) COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. Seller's operation
of Seller's business has been and is being conducted in accordance with all
applicable laws, ordinances, rules and regulations, judgments and decrees of all
federal, state, county, municipal and local authorities applicable to Seller's
business. No investigations by any governmental authorities asserting or
alleging any violation of or noncompliance with any such laws, ordinances, rules
and regulations, judgments and decrees are pending or, to the best knowledge of
Seller and Xxxxxxxx, threatened. To the best knowledge of Seller and Xxxxxxxx,
SCHEDULE 7(p) sets forth a true and complete list of all federal, state, local
or other governmental licenses, permits, orders and approvals of any federal,
state or local regulatory body (collectively, the "Permits") necessary to the
conduct of Seller's business. Seller has obtained all of such Permits, each of
which is in full force and effect. As of the date hereof, and during the 36
month period ending on the date hereof, no violation of any Permit shall have
occurred and no proceeding shall be pending or threatened to revoke or limit any
such Permit. The Seller is not in breach of or in default under any
indebtedness or any mortgage, contract, lease or other agreement or commitment
relating to any of the Purchased Assets or to Seller's business.
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(q) CONSENTS OR WAIVERS. Seller has delivered to Buyer any and all
consents or waivers of other parties required in order to permit the
continuation of the contracts included as part of the Purchased Assets upon
the same terms and conditions as are contained in such contracts upon
consummation of the transactions contemplated by this Agreement, including,
but not limited to, consents by 3M to assignments of the License Agreement.
A list of such consents and waivers is set forth on SCHEDULE 7(o) to this
Agreement.
(r) INSURANCE POLICIES. Seller has kept all property, liability,
accident, fire, and any other insurance policies on the Premises, or with
respect to Seller's business operations in effect through the Closing Date.
(s) INTELLECTUAL PROPERTY.
(i) TITLE TO INTELLECTUAL PROPERTY. To Seller's and/or
Xxxxxxxx'x present knowledge, Seller owns, possesses, or has the right to use,
free and clear of all liens, claims and restrictions of any kind or nature, or
where necessary, has made timely and proper application for, any and all
Intellectual Property, and all governmental approvals, authorizations, consents,
licenses and permits necessary for the conduct of the business of Seller as
presently conducted where failure to file or apply, as applicable, would be
materially adverse to the operation of the business of the Seller as a whole.
Immediately following the Closing, with the exception of the 3M Patents, to
Seller's and/or Xxxxxxxx'x present knowledge, Buyer shall own, possess, and have
the right to use, free and clear of all liens, claims and restrictions of any
kind or nature (other than the obligation of Buyer to pay royalties under the
License Agreement), or where necessary, make application for, any and all
Intellectual Property necessary or required for Buyer to operate the Purchased
Assets and use and exploit the Intellectual Property necessary or required for
Buyer to operate the Purchased Assets and use and exploit the Intellectual
Property and Keltool Process included therein where failure to file or apply, as
applicable, would be materially adverse to the operation of the business of the
Seller as a whole. With respect to the 3M Patents and modifying the foregoing,
immediately following the Closing, Buyer shall, to the present knowledge of
Seller and Xxxxxxxx, own, possess, and have the right to use, free and clear of
all liens, claims and restrictions of any kind or nature (other than the
obligations of Buyer to pay royaltides un the License Agreement) and subject to
3M's rights pursuant to the License Agreement, have the right to bring actions
for infringement of, or where necessary, make application for, such 3M Patents.
With respect to each service xxxx, trademark or trade name used by Seller,
Seller owns the goodwill identified by each such xxxx or name and has the
exclusive right to use all such marks and names in commerce. SCHEDULE 7(s)(i)
sets forth all registered trademarks and service marks, all reserved trade
names, all registered copyrights, and all filed patent applications and issued
patents used in the Keltool process or otherwise necessary for the conduct of
Seller's business as now conducted. Notwithstanding the foregoing, Seller and
Xxxxxxxx are not making any representations that Seller's technology is
patentable.
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(ii) 3M PATENTS. Pursuant to the License Agreement, Seller has
validly obtained an exclusive license from 3M to make, use and sell the mold
inserts and EDM electrodes on which 3M holds the patents referred to in the
License Agreement (the "3M Patents") in the United States, and has validly
obtained a nonexclusive license from 3M to make, use and sell the intricately
shaped parts. Seller and Xxxxxxxx know of no other agreements under which
any third party may claim superior, joint, or common ownership, including any
right to license, to Seller with respect to the 3M Patents.
(iii) OTHER PATENTS. At the Closing, Seller will separately
assign to Buyer any and all patents issued to or held by or for the benefit of
Seller or rights under any patent application and will file the appropriate
documentation with the United States Patent and Trademark Office to effectuate
such assignments.
(iv) NO TRANSFERS. Except as set forth on SCHEDULE 7(s)(iv)
hereto, Seller has not sold, transferred, assigned, licensed or subjected to any
Lien, any Intellectual Property, trade secret, know-how, invention, design,
process, computer program or technical data, or any interest therein, necessary
or useful for the development, manufacture, use, operation, marketing or sale of
the Keltool Process or any Asset used in the Keltool Process.
(v) NO OTHER RIGHTS IN INTELLECTUAL PROPERTY. Except as set
forth on SCHEDULE 7(s)(v) hereto, no director, officer, employee, agent,
shareholder or former shareholder of Seller owns or has any right in or to the
Intellectual Property of Seller, or any patents, trademarks, service marks,
trade names, copyrights, licenses or rights with respect to the foregoing, or
any inventions, developments or discoveries used in or necessary for the conduct
of Seller's business as now conducted.
(vi) NO INFRINGEMENT. Except as set forth on SCHEDULE 7(s)(vi)
hereto, neither Seller nor Xxxxxxxx has received any communication alleging or
stating that Seller or any employee has violated or infringed, or by conducting
business as proposed, would violate or infringe, any patent, trademark, service
xxxx, trade name, copyright, trade secret, proprietary right, process or other
Intellectual Property of any other person. Neither Seller nor Xxxxxxxx has
received any notice that any product designed and/or manufactured and/or
marketed or sold or proposed to be manufactured and/or marketed or sold by
Seller violates any license or infringes any patent, service xxxx, trademark,
trade name, know-how, proprietary process, formula, assumed name or copyright of
another and there is no pending or threatened claim or litigation against Seller
contesting the validity or right to use of any of the foregoing, nor has Seller
received any notice that any of said copyrights, trademarks, trade names,
franchises, certificates of public convenience and necessity, patent, patent
rights, licenses, permits, software, programs, proprietary rights or
Intellectual Property or the operation or proposed operation of the business of
Seller conflicts with the asserted rights of others, nor is there any reason to
believe that such conflict will, or may, exist.
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(vii) NO ROYALTIES. Except under the License Agreement, no
royalties, honorariums or fees are payable by Seller to other Persons by
reason of the ownership or use of said copyrights, trademarks, trade names,
franchises, certificates of public convenience and necessity, patents, patent
rights, licenses, software, programs, proprietary rights, proprietary
processes or Intellectual Property.
(viii) PERSONNEL AND THIRD PARTY AGREEMENTS. All personnel,
including Employees and former employees, agents, consultants, and contractors,
who have contributed to or participated in the conception and development of the
Keltool Process or who have conceived, developed, invented, discovered, derived,
programmed or designed Intellectual Property on behalf of Seller either (1) have
been party to a "work-for-hire" arrangement or agreement with Seller, in
accordance with applicable federal and state law, that has accorded Seller full,
effective, exclusive, and original ownership of all tangible and intangible
property thereby arising, or (2) have executed appropriate instruments of
assignment in favor of Seller as assignee that have conveyed to Seller full,
effective, and exclusive ownership of all tangible and intangible property
thereby arising. All personnel, including Employees and former employees,
agents, consultants, and contractors, who have contributed to or participated in
the conception and development of the Keltool Process or Intellectual Property
on behalf of Seller, and all third parties who have knowledge of the trade
secrets, know-how, and technology with respect to the Keltool Process have
executed Non-Disclosure Agreements with Seller with respect to their knowledge,
with the exception of Xxxxxxx Xxxxxx. Other than those agreements set forth on
SCHEDULE 7(s)(viii), Seller has not entered into any agreements with respect to
protecting the secrecy, confidentiality and value of its Intellectual Property.
Insofar as Seller and Xxxxxxxx know, there has been no material violation of any
such agreements by any person or entity.
(t) DISCLOSURE. No representation or warranty made by Seller or
Xxxxxxxx in this Agreement or in any writing furnished or to be furnished
pursuant to or in connection with this Agreement knowingly contains or will
contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to make the statements herein or therein
contained not misleading. Seller and Xxxxxxxx have disclosed to Buyer all
material information known to them related to the business of Seller, the
Premises, its condition, operations and prospects.
8. REPRESENTATIONS AND WARRANTIES OF BUYER.
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, with adequate corporate power and authority to
own its properties and carry on its business as presently conducted. Buyer
has the corporate power to enter into, execute and deliver this Agreement and
the Other Agreements and to consummate the transactions contemplated hereby
and thereby.
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(b) EXECUTION, DELIVERY AND PERFORMANCE. The execution, delivery
and performance of this Agreement and the Other Agreements and the
consummation of the transactions contemplated hereby and thereby have been or
will prior to the Closing be duly authorized by the Board of Directors of
Buyer, and Buyer has taken all other actions required by law, its Certificate
of Incorporation and its Bylaws in order to consummate the transactions
contemplated by this Agreement and the Other Agreements. This Agreement and
the Other Agreements referred to herein constitute the valid and binding
obligations of Buyer and are enforceable in accordance with their respective
terms, except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally.
(c) NO VIOLATION. The execution and delivery of this Agreement by
Buyer and the consummation of the transactions contemplated herein do not and
will not violate or result in a default under the charter or bylaws of Buyer
or any judgment, order, decree, law, rule or regulation applicable to Buyer,
except for violations or defaults which would not prevent the consummation of
the transactions contemplated by this Agreement.
(d) DISCLOSURE. No representation or warranty made by Buyer in this
Agreement or in any writing furnished or to be furnished in connection with this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact required to make the statements
herein or therein contained not misleading.
9. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
(a)INVESTIGATIONS. Between the date of this Agreement and the
Closing Date, Seller shall give to Buyer and its representatives full access
to all of Seller's premises, books, records, employees, bankers, independent
public accounts and other agents possessing any information relating in any
manner to Seller's business or the Purchased Assets, and to furnish Buyer
with such financial and operating data and other information with respect to
the business and properties of Seller's business as Buyer shall from time to
time request; PROVIDED, HOWEVER, that any such investigation shall not affect
any of the representations and warranties hereunder; and PROVIDED, FURTHER,
that any such investigation shall be conducted in such manner as not to
interfere unreasonably with the operation of Seller's business. If this
Agreement is terminated without the transactions contemplated hereby having
been effected, Buyer and Seller shall each return to the other all documents,
working papers and other materials obtained from the other party pursuant to
this Agreement, and the confidentiality provisions of Section 13(c) of this
Agreement shall continue to apply.
(b) CONDUCT. Except as permitted or required hereby or as Buyer may
otherwise consent in writing, Seller shall conduct its business only in the
ordinary and normal course of business in a manner consistent with past practice
and shall not enter into any transaction or take any action which would result
in any of the representations and warranties of
15
Seller or Xxxxxxxx contained in this Agreement or in the Other Agreements not
being true and correct at and as of both the time immediately after such
transaction has been entered into or such event has occurred and on the
Closing Date, and shall use its best efforts to maintain good employee
relations. It is understood that Xxxxx Xxxxxxx shall continue to be employed
by Keltech Engineering after the Closing, but that she shall be available to
perform services for Buyer after the Closing, as needed, on a part-time basis
equal to one-half of her working hours, and at Buyer's expense.
10. CONDITIONS TO OBLIGATIONS OF BUYER. Unless waived, in whole or in
part, in writing by Buyer, the obligations of Buyer to effect the
transactions contemplated hereby and in the other agreements referred to
herein shall be subject to the satisfaction at or prior to the Closing Date
of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF SELLER AND XXXXXXXX TO BE TRUE.
The representations and warranties of Seller and Xxxxxxxx contained in this
Agreement shall be true and correct in all material respects on the Closing Date
with the same force and effect as though made on and as of the Closing Date.
Seller and Xxxxxxxx shall have performed all obligations and complied with all
covenants required by this Agreement and the Other Agreements to be performed or
complied with by it or him on or prior to the Closing Date.
(b) NO PROCEEDINGS. No action, suit or proceeding before any court
or any governmental body or authority pertaining to the transactions
contemplated by this Agreement or the Other Agreements or to their consummation
shall have been instituted or threatened on or prior to the Closing Date.
(c) NO ADVERSE CHANGE. Since the date of this Agreement there shall
not have been any material adverse change in the properties, prospects, results
of operation or condition of the Seller's business.
(d) CONSENTS. Seller shall have obtained and delivered to Buyer all
written consents of the other party to all contracts which by their terms or
otherwise require the consent of such party to the transfer thereof by Buyer,
including consents from 3M to the assignment to Buyer of the License Agreement.
(e) DUE DILIGENCE. Buyer shall have completed and approved to its
sole satisfaction customary business and legal due diligence with respect to
Seller and Seller's business.
(f) CLOSING TRANSACTIONS. At the Closing, the following documents
must be executed and delivered by Seller and/or Xxxxxxxx to Buyer:
16
(i) Xxxxxxxx shall have executed and delivered to Buyer the
Non-Competition Agreement in the form attached hereto as EXHIBIT 1 (the
"Non-Competition Agreement"); and
(ii) Xxxxxxxx and Seller shall have executed and delivered to
Buyer a sublease for the Premises in the form attached hereto as EXHIBIT 2 (the
"Lease").
(iii) Seller shall have received and delivered to Buyer an
assignment from Xxxxxxx Xxxxxx to Seller of any rights Xxxxxxx Xxxxxx may
currently have or acquire to any of the Intellectual Property or the Keltool
Process, in the form attached hereto as EXHIBIT 4 (the "Intellectual Property
Assignment").
(g) 3D BOARD APPROVAL. The Board of Directors of Buyer shall have
approved this Agreement and the Other Agreements and the consummation of the
transactions contemplated hereby and thereby prior to October 15, 1996.
11. CONDITIONS TO OBLIGATIONS OF SELLER. Unless waived, in whole or in
part, in writing by Seller, the obligations of Seller to effect the consummation
of the transactions contemplated by this Agreement shall be subject to the
fulfillment prior to or at the Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF BUYER TO BE TRUE. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on the Closing Date with the same
effect as though made at such time. Buyer shall have performed all obligations
and complied with all covenants required by this Agreement and the other
agreements referred to herein to be performed or complied with by it prior to
the Closing Date.
(b) CLOSING TRANSACTIONS. At the Closing, Buyer shall have executed
and delivered to Seller a certified bank check in the amount of $875,000, and
Buyer and Xxxxxxxx shall have entered into a warrant agreement in the form
attached hereto as Exhibit 3 (the "Warrant Agreement").
12. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of Seller's and
Xxxxxxxx'x representations and warranties herein shall survive the consummation
of the transactions hereunder and any and all inspections, examinations or
audits on behalf of Buyer, and shall be binding upon the parties to this
Agreement, their successors and assigns for a period of eighteen months; except,
however, that the representations and warranties contained in Paragraph 7(l)
("Environmental Compliance Matters") shall survive the consummation of the
transactions
17
hereunder and any and all inspections, examinations or audits on behalf of
Buyer, and shall be binding upon the parties to this Agreement, their
successors and assigns, until the expiration of each respective statute of
limitations applicable to a breach of each such representation and warranty,
and the representations and warranties contained in Paragraph 7(g)
("Litigation") and Paragraph 7(s) ("Intellectual Property") shall survive the
consummation of the transactions hereunder and any and all inspections,
examinations or audits on behalf of Buyer, and shall be binding upon the
parties to this Agreement, their successors and assigns, for a period of
three years.
(b) INDEMNIFICATION BY SELLER. Seller and Xxxxxxxx hereby covenant
and agree with Buyer, regardless of any investigation made at any time by or
on behalf of Buyer or any information Buyer may have and regardless of the
Closing of the purchase of the Purchased Assets hereunder, each of Seller and
Xxxxxxxx shall jointly and severally indemnify Buyer and its directors,
officers, shareholders and affiliates, and each of their successors and
assigns (individually, a "Buyer Indemnified Party") and hold them harmless
from, against and in respect of any and all actual costs, losses, claims,
liabilities, fines, or penalties (including interest which may be imposed in
connection therewith and court costs and reasonable fees and disbursements of
counsel):
(i) all liabilities of or claims against the Buyer Indemnified
Parties of any nature, whether accrued, absolute, contingent or otherwise,
arising out of the business of Seller or the Premises (whether known or
unknown to Seller, the Buyer Indemnified Parties or any of them), to the
extent arising out of the operation of the business of Seller or the Premises
or incurred by Seller on or prior to the Closing Date;
(ii) any breach of, or any inaccuracy in any of the
representations, warranties, covenants or agreements made by Seller in this
Agreement, any other agreement referred to herein, any Exhibit or Schedule to
this Agreement or any certificate, instrument or writing delivered in
connection therewith;
(iii) any attempt (whether or not successful) by any person
to cause or require a Buyer Indemnified Party to pay or discharge any debt,
obligation, liability or commitment of any of Seller or Xxxxxxxx;
(iv) any damages or out of pocket expenses incurred by Buyer from
an action by a third party successfully asserting (or alleging, but only where
Xxxxxxxx has actual knowledge of any specific actual or threatened claim), that
the Intellectual Property, including without limitation, the Keltool Process
infringes a patent, copyright, trademark, service xxxx or any trade secret or
other intangible property right of a third party where such damage is due to the
breach of the representations made in Section 7(s) by the Seller or Xxxxxxxx; or
18
(v) any action, suit, proceeding, compromise, settlement,
assessment or judgment arising out of or incidental to any of the matters
indemnified against in this Paragraph; provided, HOWEVER, that neither Seller
nor Xxxxxxxx shall be obligated to indemnify a Buyer Indemnified Party and
hold it harmless under this Section 12(b) with respect to any settlement of a
claim to which Seller has not consented, which consent shall not unreasonably
be withheld.
Notwithstanding anything contained in Section 12(b) above to the contrary, a
Buyer Indemnified Party shall not be entitled to assert any claim for
indemnification contained in Section 12(b) unless and until such time as the
claims of all Buyer Indemnified Parties, in the aggregate, pursuant to
Section 12(b) exceed $25,000 (exclusive of all tax savings and insurance
proceeds received) and at which time all claims of any one or more Buyer
Indemnified Party for indemnification pursuant to Section 12(b) above may be
asserted in full. The remedies of Buyer set forth in this Section 12 are the
exclusive remedies of Buyer and the Buyer Indemnified Parties under this
Agreement, at law or in equity in the event of any breach of, or any
inaccuracy in any of the representations, warranties, covenants or agreements
made by Seller in this Agreement, any Exhibit or Schedule to this Agreement
or any certificate, instrument or writing delivered in connection therewith;
except, however, that in the event of an intentional breach, fraud, or
reckless misrepresentation, Buyer's remedies against Seller shall not be
limited by this provision and Buyer shall have all remedies against Seller
available under applicable law. It is expressly understood that any
adjustment to the Second Payment pursuant to the provisions of Section 4(b)
shall not constitute a claim of a Buyer Indemnified Party for purposes of
this provision.
(c) INDEMNIFICATION BY BUYER. Buyer hereby covenants and agrees
with Seller that, regardless of any investigation made at any time by or on
behalf of Seller or any information Seller may have and regardless of the
consummation of the transactions hereunder, Buyer shall indemnify Seller and
Xxxxxxxx and Seller's directors, officers, shareholders and affiliates
(individually, a "Seller Indemnified Party"), and hold them harmless from,
against and in respect of any and all costs, losses, claims, liabilities,
fines, penalties, damages and expenses (including interest which may be
imposed in connection therewith and court costs and reasonable fees and
disbursements of counsel) incurred by any of them in connection with:
(i) all liabilities of or claims against Seller Indemnified
Parties of any nature, whether accrued, absolute, contingent or otherwise
attributable to any event occurring after the Closing Date (whether known or
unknown to Seller, or Buyer), relating to the operation by Buyer of the
Purchased Assets from and after the Closing Date, except if (x) such
liability results from or arises in connection with the breach of any of the
representations, warranties, covenants or agreements made by Seller and/or
Xxxxxxxx in this Agreement, any other agreement referred to herein, any
Schedule or Exhibit hereto or any certificate or instrument delivered in
connection herewith or therewith, or (y) such liability is included under
Section 12(b) above;
19
(ii) any breach of, or any inaccuracy in any of the
representations, warranties, covenants or agreements made by Buyer in this
Agreement, any other agreement referred to herein, any Exhibit or Schedule
hereto or any certificate or instrument delivered in connection herewith or
therewith;
(iii) any attempt (whether or not successful) by any person to
cause or require a Seller Indemnified Party to pay or discharge any debt,
obligations, liability or commitment included in the Assumed Liabilities; or
(iv) any action, suit, proceeding, compromise, settlement,
assessment or judgment arising out of or incidental to any of the matters
indemnified against in this Paragraph; provided, HOWEVER, that Buyer shall not
be obligated to indemnify a Seller Indemnified Party under this Paragraph with
respect to any settlement of a claim to which Buyer has not consented, which
consent shall not unreasonably be withheld.
(d) RIGHT TO DEFEND, ETC. If the facts giving rise to any claim
for indemnification hereunder shall involve any actual claim or demand by any
third person against a Buyer Indemnified Party or a Seller Indemnified Party
(who are referred to hereinafter as an "Indemnified Party"), the indemnifying
party shall be entitled to notice of and entitled (without prejudice to the
right of any Indemnified Party to participate at its own expense with counsel
of its own choosing) to defend or prosecute such claim at its own expense and
through counsel of its own choosing if it gives written notice of its
intention to do so no later than the time by which the interests of the
Indemnified Party would be materially prejudiced as a result of its failure
to have received such notice; provided, however, that if the defendants in
any action shall include both the indemnifying party and the Indemnified
Party and the Indemnified Party shall have reasonably concluded that counsel
selected by the indemnifying party has a conflict of interest because of the
availability of different or additional defenses to the Indemnified Party,
the Indemnified Party shall have the right to select separate counsel to
participate in the defense of such action on its behalf, at the expense of
the indemnifying party. The Indemnified Party shall cooperate fully in the
defense of such claim and shall make available to the indemnifying party
pertinent information under its control relating thereto, but shall be
entitled to be reimbursed, as provided in this Section 12, for all costs and
expenses incurred by it in connection therewith.
13. POST-CLOSING COVENANTS.
(a) CONSULTING SERVICES. Xxxxxxxx hereby covenants and agrees to
perform on a part-time basis for a maximum total of 80 hours, and without
additional compensation (other than reimbursement for reasonable expenses
incurred on behalf of Buyer and at Buyer's direction), such consulting services
as may be requested by Buyer with respect to the transfer of Seller's business,
the Purchased Assets, the Intellectual Property and the Keltool Process, for a
period of 30 days after the Closing Date, which period shall terminate earlier
after 80 hours of consulting services have been provided. After 30 days,
Xxxxxxxx shall continue to perform a reasonable
20
amount of consulting to Buyer with respect to Seller's business, the
Purchased Assets, the Intellectual Property and the Keltool Process, by
telephone, at reasonable hours and as needed for the operation of the
Purchased Assets, for an additional 180 day period. Buyer expressly
acknowledges that Xxxxxxxx will be performing services for Keltech and with
respect to other business endeavors.
(b) FURTHER ASSURANCES; RECORDS; AUDIT. Each of the parties shall
cooperate and take such actions, and execute all such further instruments and
documents, at or subsequent to the Closing, as either may reasonably request
in order to convey title to the Purchased Assets to Buyer, effect the
assumption by Buyer of the Assumed Liabilities and to otherwise effectuate
the terms and purposes of this Agreement. Each party shall provide the other
party or parties with access to all relevant documents and other information
pertaining to the Purchased Assets and Seller's business which are needed by
such other party or parties for the purposes of preparing tax returns or
responding to an audit by any governmental agency, to permit Buyer's auditors
(at the expense of Buyer) to prepare audited financial statements of Seller
and the Seller's business for the three year period ended June 30, 1996, or
for any other reasonable purpose. Such access will be during normal business
hours and not subject to time limitations.
(c) CONFIDENTIALITY OBLIGATIONS. Seller and Xxxxxxxx hereby
covenant and agree that any and all information which has been disclosed to
Seller, its employees, consultants, agents and, if applicable, stockholders
during the discussions and negotiations leading to the execution of this
Agreement, and all information to be disclosed to Seller, its employees,
consultants and agents and, if applicable, stockholders, during the period
commencing on the date of execution of this Agreement through the Closing or
termination of this Agreement, shall constitute confidential information and
trade secrets of Buyer, and as such are secret, confidential and unique and
constitute the exclusive trade secrets and property of such party. Such
information has been made known and available to Seller and its respective
employees, consultants and agents strictly in connection with the negotiation
and execution of this Agreement and the consummation of the transactions
provided for herein. Seller and Xxxxxxxx hereby acknowledge and agree that
any use or disclosure of any such confidential information or trade secrets,
other than pursuant to this Agreement, would be wrongful and would cause
irreparable injury to Buyer. Accordingly, Seller and Xxxxxxxx hereby
expressly agree, for Seller and on behalf of Seller's stockholders and
directors, if any, and its principal officers, managers, employees, agents,
consultants and representatives, that they will not at any time prior to the
Closing or at any time thereafter, use or disclose, other than in accordance
with the terms and provisions of this Agreement, any of such confidential
information or trade secrets including without limitation, all confidential
information included in the Intellectual Property of Seller. Seller and
Xxxxxxxx acknowledge that, in the event of a violation of the terms and
provisions of this SECTION 13(c), the remedies at law would not be adequate;
and accordingly, in such event Buyer may proceed to protect and enforce its
rights under this SECTION 13(c) by a suit in equity for specific performance
hereof, or for an injunction against the violation hereof.
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(d) APPLICATIONS AND ASSIGNMENTS. At the request of Buyer,
Xxxxxxxx shall assist Buyer and shall cause employees of Seller to assist and
cooperate with Buyer in applying for and obtaining both domestic and foreign
patents, or copyrights, as the case may be, on all Intellectual Property
devised, discovered, developed, invented or authored by Xxxxxxxx or any other
employee of Seller prior to the Closing (or in which Xxxxxxxx or such
employees of Seller may otherwise obtain, or have otherwise obtained, any
rights, while in the employ of the Seller) which relates to or was developed
in connection with the Keltool Process or the business of Seller, that the
Buyer deems to be patentable or copyrightable, and Xxxxxxxx shall execute and
shall cause all employees of Seller to execute at any time or times any and
all documents and perform all acts reasonably requested by Buyer which Buyer
deems to be necessary or desirable in order to obtain such patents or
copyrights or otherwise to vest in Buyer full and exclusive title and
interest in and to all such Intellectual Property, to protect the same
against infringement by others and otherwise to aid the Buyer in connection
with any continuations, renewals or reissues of any patents or copyrights, or
in the conduct of any proceedings or litigation in regard thereto. Buyer
shall pay Xxxxxxxx and the employees of Seller for their services in
connection with the applications made pursuant to this Paragraph on an hourly
basis, which hourly rate shall be agreed upon by the parties at that time and
shall in all events be reasonable under the circumstances. All filing fees
and documentation expenses incurred in procuring any patent or copyright
shall be born by the Buyer.
(e) REFERRAL. Xxxxxxxx and Seller shall refer all purchase order
inquiries concerning the Purchased Assets and the purchased business to Buyer
for a period of 12 months following the Closing.
14. TAXES.
(a) PAYMENT OF TAXES, FILING OF RETURNS. Seller shall remain
liable for the filing of all tax returns and reports and for the payment of
all federal, state and local taxes of Seller relating to the operation of the
Premises or to the Purchased Assets for any period ending on or prior to the
Closing Date and Seller shall remain so liable for the payment of all of his
taxes attributable to or relating to the consummation of the transactions
contemplated herein, and shall indemnify and hold Buyer harmless from and
against all liability in connection therewith.
(b) SALES TAXES. It is understood that the consideration payable by
Buyer as specified herein does not include any applicable sales, use or other
taxes imposed upon the transfer of Purchased Assets under this Agreement and
that Seller shall bear the responsibility for any state sales, use or other
similar taxes, if any, arising out of the consummation of the transactions
herein provided for and shall be liable for the filing of all necessary tax
returns and reports with respect to such taxes.
15. NONCOMPETITION. Seller hereby agrees that Seller shall not for a
period of five years from and after the Closing Date, directly or indirectly,
and whether as a principal or
22
agent or otherwise, or alone or in association with any individual or any
other entity, carry on, be engaged or take part in, consult or advise, or
own, share in the earnings of, or invest in the stock, bonds or other
securities of (except to the extent such investment does not exceed two
percent (2%) of the total outstanding stock, bonds or other securities), any
other entity which is engaged in a business which is in any other manner
competitive with the business of Buyer, as conducted during the one year
period prior to the date hereof (a "Competing Activity"); provided however,
that Seller may engage in the business of Keltech Engineering as currently
conducted (the "Keltech Business"). It is agreed that the Keltech Business
as currently conducted does not involve the manufacture of, sale of, or
provision of services to enable or facilitate the manufacture or creation of,
any hard tools or molds for hard tools. Seller covenants and agrees to
change the name of its corporation with the Secretary of State of the State
of Minnesota, which new name shall not include the word "Keltool."
16. MISCELLANEOUS.
(a) FURTHER ASSURANCES. Each of Seller, Xxxxxxxx and Buyer agree to
execute such further documents or instruments and to take such other actions as
are necessary to otherwise carry out the transactions contemplated by this
Agreement and the Other Agreements.
(b) NOTICES. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given if sent by telex or by registered or certified mail, return
receipt requested, postage and fees prepaid, or otherwise actually delivered
to the address of the party to whom the notice is addressed as set forth at
the end of this Agreement. Any of the parties to this Agreement may from
time to time change its address for receiving notice by giving written notice
thereof in the manner set forth above. For any notices or other
communications given or made pursuant to this Agreement to Seller, in
addition to such notice or communication being sent to the address set forth
below, a copy should be sent to:
Winthrop & Weinstine
0000 Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
(c) AMENDMENT; WAIVER. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors, heirs and personal representatives. No provision of this Agreement
may be waived unless in writing signed by all of the parties to this Agreement,
and waiver of any one provision of this Agreement shall not be deemed to be a
waiver of any other provision.
23
(d) GOVERNING LAW. This Agreement shall be governed by and construed
both as to validity and performance and enforced in accordance with the laws of
the State of California, without giving effect to the choice of law principles
thereof. Jurisdiction and venue over any legal action brought hereunder shall
reside exclusively in the County of Los Angeles, State of California. Each of
the parties hereto hereby waive their right to a jury trial with respect to any
such legal actions.
(e) ATTORNEYS' FEES. If any action, suit or other proceeding is
instituted to remedy, prevent or obtain relief from a default in the performance
by any party of its obligations under this Agreement, the prevailing party shall
recover all of such party's costs and reasonable attorneys' fees incurred in
each and every such action, suit or other proceeding, including any and all
appeals or petitions therefrom.
(f) NO FINDERS. The parties each agree to indemnify and hold
harmless the other against any expense incurred by reason of any consulting,
brokerage commission or finder's fee alleged to be payable to any person in
connection with the transactions contemplated hereby because of any act,
omission or statement of indemnifying party or any dealings by the indemnifying
party with any consultant, broker or finder.
(g) EXPENSES. Each of the parties shall pay its own expenses
incurred in connection with the preparation of this agreement and the
consummation of the transactions contemplated hereby.
(h) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
(i) SPECIFIC PERFORMANCE. Seller acknowledges that the Purchased
Assets are unique and that Buyer will have no adequate remedy at law if Seller
shall fail to perform any of its obligations hereunder. In such event, Buyer
shall have the right, in addition to any other rights it may have, to specific
performance of this Agreement.
(j) RIGHTS CUMULATIVE. No right granted to the parties under this
Agreement on default or breach is intended to be in full or complete
satisfaction of any damages arising out of such default or breach, and each
and every right under this Agreement, or under any other document or
instrument delivered hereunder, or allowed by law or equity, shall be
cumulative and may be exercised from time to time.
(k) INTERPRETATION. This Agreement and all of the provisions of this
Agreement shall be deemed drafted by all of the parties hereto. This Agreement
shall not be interpreted
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strictly for or against any party, but solely in accordance with the fair
meaning of the provisions hereof to effectuate the purpose and intent of this
Agreement.
(l) HEADINGS. The section and subsection headings contained in this
Agreement are included for convenience only and form no part of the agreement
between the parties.
(m) ENTIRE AGREEMENT. This Agreement constitutes and embodies the
entire understanding and agreement of the parties hereto relating to the subject
matter hereof and there are no other agreements or understandings, written or
oral, in effect between the parties relating to such subject matter except as
expressly referred to herein.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first
set forth above.
3D SYSTEMS, INC. KELTOOL, INC.
x/x X. Xxxxxx Xxxxxx x/x Xxxxx Xxxxxxxx
00000 Avenue Hall 000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000 Xx. Xxxx, XX 00000
By: By:
------------------------- -----------------------
Its: Its:
------------------------- -----------------------
------------------------------
XXXXX XXXXXXXX
c/o Keltool, Inc.
000 Xxxxxxxxx Xxxx Xxxx
Xx. Xxxx, XX 00000
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EXHIBITS
EXHIBIT 1 The Non-Competition Agreement
EXHIBIT 2 The Lease
EXHIBIT 3 The Warrant Agreement
EXHIBIT 4 The Intellectual Property Assignment
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SCHEDULES
Schedule 2 - Excluded Assets
Schedule 3(b) - Assumed Liaiblities
Schedule 3(c) - Allocation of Purchase Price
Schedule 4(b) - Asset List
Schedule 7(c) - Title Exceptions
Schedule 7(d) - Undisclosed Liabilities
Schedule 7(e) - Material Adverse Changes
Schedule 7(f)(iii) - Effect of Agreement
Schedule 7(g) - Litigation
Schedule 7(i) - List of Employees
Schedule 7(j) - Employee benefits
Schedule 7(k) - Customers and Supplies
Schedule 7(m) - Contracts
Schedule 7(n) - Third Party Interests
Schedule 7(p) - Compliance with Law
Schedule 7(q) - Consents or Waivers
Schedule 7(s)(i) - Title to Intellectual Property
Schedule 7(s)(iv) - No Transfers
Schedule 7(s)(v) - No Other Rights in Intellectual Property
Schedule 7(s)(vi) - Infringements
28
Schedule 7(s)(viii) - Personnel and Third Party Agreement
29
