Exhibit 10.10
ASSET PURCHASE AGREEMENT
by and among
INTRINSIX CORP.,
PRISM ACOUSTICS, INC.
(d/b/a The VHDL Technology Group)
and
XXXXXXX X. XXXXXXXXXX
dated as of
May 18, 1998
TABLE OF CONTENTS
Page
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Schedules to be provided by the Seller
1.1(a)(ii) - Contract Rights
1.1(a)(iii) - Fixed Assets
1.4 - Assumed Liabilities
1.5 - Allocation of the Base Purchase Price
2.3 - Third Party Consents
2.4 - Encumbrances
2.6 - Inventory
2.7 - Fixed Assets
2.10 - Contracts and Commitments
2.11 - Permits
2.12 - Intellectual Property
2.14 - Regulatory Approvals
Schedules to be provided by the Buyer
4.3 - Third Party Consents
4.5(i) - Capitalization
4.5(ii) - Commitments to Issue Securities
Exhibits
A - Instrument of Assumption of Liabilities
B - Xxxx of Sale
C - Employment Agreement
D - Trademark Assignment
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ASSET PURCHASE AGREEMENT
Agreement made as of the 18th day of May, 1998 by and among Intrinsix
Corp., a Massachusetts corporation (the "Buyer"), Prism Acoustics, Inc. (d/b/a
The VHDL Technology Group), a Delaware corporation (the "Seller") and Xxxxxxx X.
Xxxxxxxxxx, the sole stockholder of the Seller (the "Stockholder"). The Buyer,
Seller and Stockholder are referred to collectively herein as the "Parties."
Preliminary Statement
The Buyer desires to purchase, and the Seller desires to sell,
substantially all of the assets and business of the Seller, for the
consideration set forth below and the assumption of certain of the Seller's
liabilities set forth below, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties hereby agree as follows:
1. Sale and Delivery of the Assets
1.1 Delivery of the Assets.
(a) Subject to and upon the terms and conditions of this
Agreement, at the closing of the transactions contemplated by this Agreement
(the "Closing"), the Seller shall sell, transfer, convey, assign and deliver to
the Buyer, and the Buyer shall purchase from the Seller, the following
properties, assets and other claims, rights and interests:
(i) all OEM and software product inventory of the
Seller, including without limitation all such inventories of the Seller's
software product formerly known as Sledgehammer 6 and all other raw materials,
work in process, finished goods, supplies, packaging materials, spare parts and
similar items (collectively, the "Inventory");
(ii) all rights of the Seller under the contracts,
agreements, licenses and other instruments set forth on Schedule 1.1(a)(ii)
attached hereto (collectively, the "Contract Rights");
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(iii) all of the machinery, equipment, tools, fixtures,
furniture, leasehold improvements and similar items of the Seller set forth on
Schedule 1.1(a)(iii) attached hereto (collectively, the "Fixed Assets");
(iv) all of the Seller's right, title and interest in
and to all intellectual and intangible property rights, including but not
limited to (i) inventions, discoveries, trade secrets, processes, formulas,
know-how, (ii) patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue, re-examination, utility
model, certificate of invention and design patents, patent applications,
registrations and applications for registrations, (iii) trademarks (other than
"Sledgehammer" and "VitalGen" and any derivations thereof, which shall not be
considered Intellectual Property or Assets for purposes of this Agreement),
service marks, trade dress, trade names (and derivations thereof) and
registrations and applications for registration thereof, (iv) copyrights and
registrations and applications for registration thereof, (v) mask works and
registrations and applications for registration thereof, (vi) computer software
(including source and object code) data and documentation, (vii) trade secrets,
procedural, training and product manuals and confidential business information,
whether patentable or non-patentable and whether or not reduced to practice,
know-how, manufacturing and product processes and techniques, research and
development information, copyrightable works, financial, marketing and business
data, pricing and cost information, business, marketing plans and customer,
client and supplier lists and information, (viii) all license, OEM and other
agreements to which the Seller is a party (as licensor or licensee) or by which
the Seller is bound relating to any of the Intellectual Property (as defined
below), (ix) the Seller's Internet domain name "xxxx.xxx", (x) other proprietary
rights relating to any of the foregoing (including, without limitation, remedies
against infringements thereof and rights of protection of interest therein under
the laws of all jurisdictions) and (xi) copies and tangible embodiments thereof,
together with any developments or enhancements thereof (collectively, the
"Intellectual Property");
(v) all outstanding contracts, purchase orders and
purchase and other commitments for (a) the purchase of raw materials, work in
progress, finished goods, commodities, supplies, products or other personal
property of the Seller and (b) the receipt of services from the Seller
(collectively, the "Purchase Orders");
(vi) all claims, causes of action, chooses in action,
rights or recovery, right of set-off and rights of recoupment relating or
applicable to the Assets (as defined below), other than the Assets described in
this Subsection 1.1(a)(vi) (collectively the "Claims");
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(vii) all rights of the Seller under express or implied
warranties applicable to the Assets (as defined below) from suppliers of the
Seller, other than the Assets described in this Subsection 1.1(a)(vii)
(collectively, the "Warranties"); and
(viii) all other assets, properties, claims, rights and
interests of the Seller, relating to any of the Assets (as defined below), which
exist on the Closing Date, of every kind, nature and description, whether
tangible, intangible, real, personal or mixed.
(b) The Inventory, Contract Rights, Fixed Assets, Intellectual
Property, Purchase Orders, Claims, Warranties and other properties, assets and
business of the Seller described in paragraph (a) above shall be referred to
collectively as the "Assets."
1.2 Further Assurances. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration, the Seller
and Stockholder promptly shall execute and deliver such instruments of sale,
transfer, conveyance, assignment and confirmation, and take such other action,
as the Buyer may reasonably request to more effectively transfer, convey and
assign to the Buyer, and to confirm the Buyer's title to, all of the Assets, to
put the Buyer in actual possession and operating control thereof, to assist the
Buyer in exercising all rights with respect thereto and to carry out the purpose
and intent of this Agreement.
1.3 Base Purchase Price.
(a) The purchase price for the Assets shall consist of:
(i) Seventy-Nine Thousand, Three Hundred and Fifty
Dollars ($79,350) in cash, payable by the Buyer at the Closing by cashiers or
certified check or by wire transfer of immediately available funds to an account
designated by the Seller (the "Cash Purchase Price"); and
(ii) Twenty Thousand (20,000) shares of Common Stock, no
par value per share, of the Buyer (the "Shares"), payable by delivery by the
Buyer at the Closing of a certificate or certificates representing the Shares
issued in the name of the Seller.
The Cash Purchase Price and the Shares shall be referred to collectively as (the
"Base Purchase Price").
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1.4 Assumption of Liabilities; Etc.
(a) At the Closing, the Buyer shall execute and deliver an
Instrument of Assumption of Liabilities (the "Instrument of Assumption")
substantially in the form attached hereto as Exhibit A, pursuant to which it
shall assume and agree to perform, pay and discharge the obligations of the
Seller continuing after the Closing set forth on Schedule 1.4 attached hereto
(the "Assumed Liabilities").
(b) The Buyer shall not at the Closing assume or agree to
perform, pay or discharge, and the Seller shall remain unconditionally liable
for, any and all obligations, liabilities and commitments, whether fixed,
contingent or of any other nature or type whatsoever, of the Seller other than
the Assumed Liabilities (the "Retained Liabilities").
1.5 Allocation of Base Purchase Price and Assumed Liabilities. The
aggregate amount of the Base Purchase Price and the Assumed Liabilities shall be
allocated among the Assets as set forth on Schedule 1.5 attached hereto.
1.6 The Closing.
(a) The Closing shall take place at the offices of Xxxx and
Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 10:00 a.m., Boston time, on
May 18, 1998 or, if all of the conditions to the obligations of the Parties to
consummate the transactions contemplated hereby have not been satisfied or
waived by such date, on such mutually agreeable later date as soon as
practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(the "Closing Date"). Any Party to this Agreement, including such Party's
representatives, may participate in the Closing telephonically. The Closing
shall be deemed to have occurred at 11:59 p.m., Boston time, on the Closing
Date.
(b) At the Closing:
(i) the Seller and Stockholder shall deliver to the
Buyer the various certificates, instruments and documents referred to in Section
6;
(ii) the Buyer shall deliver to the Seller the various
certificates, instruments and documents referred to in Section 7;
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(iii) the Seller and Stockholder shall execute and
deliver to the Buyer a Xxxx of Sale in the form attached hereto as Exhibit B
(the "Xxxx of Sale") and such other instruments of conveyance (e.g., trademark
assignments, patent assignments and copyrights and other intellectual property
license, including without limitation the form of Trademark Assignment attached
hereto as Exhibit D) as the Buyer may reasonably request in order to effect the
sale, transfer, conveyance and assignment to the Buyer of valid ownership of the
Assets;
(iv) the Buyer shall execute and deliver to the Seller
and Stockholder and the Seller and Stockholder shall acknowledge an Instrument
of Assumption in the form attached hereto as Exhibit A;
(v) the Buyer and Stockholder shall execute and deliver
an employment agreement in the form attached hereto as Exhibit C (the
"Employment Agreement");
(vi) the Buyer shall pay to the Seller the Cash Purchase
Price and deliver a certificate or certificates representing the Shares issued
in the name of the Seller as specified in Section 1.3;
(vii) the Seller shall deliver to the Buyer, or
otherwise cause the Buyer to take possession and control of, all of the Assets
of a tangible nature; and
(viii) the Buyer and the Seller shall execute and
deliver to each other Party a cross-receipt evidencing the transactions referred
to above.
2. Representations of the Seller and Stockholder
Except as disclosed in the attached schedules, which refer specifically to the
representations and warranties in this Agreement and which identify by Section
number the Section and Subsection to which such disclosure relates and are
delivered by the Seller and Stockholder to the Buyer prior to or simultaneously
with the execution of this Agreement (the "Seller Disclosure Schedule"), and
whether or not the Seller Disclosure Schedule is referred to in a specific
Section or Subsection herein, Seller and Stockholder, jointly and severally,
represent and warrant to the Buyer as follows:
2.1 Organization. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and has all requisite power
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and authority (corporate and other) to own its properties, to carry on its
business as now being conducted, to execute and deliver this Agreement and all
other agreements and instruments of conveyance and contemplated hereby,
including without limitation the Xxxx of Sale, Instrument of Assumption and
Trademark Assignment, and to consummate the transactions contemplated hereby and
thereby. The Seller is duly qualified to do business and in good standing in all
jurisdictions in which its ownership of property or the character of its
business requires such qualification. Certified copies of the Certificates of
Incorporation and Bylaws of the Seller, as amended to date, have been previously
or will be on the Closing Date delivered to the Buyer, are complete and correct,
and no amendments have been made thereto or have been authorized since the date
thereof. The Seller does not have any subsidiaries and does not own any capital
stock of or other equity interest in any corporation, partnership or other
entity.
2.2 Capitalization of the Seller. The Seller's authorized capital
stock consists of 1,000,000 shares of Common Stock, $.01 par value, of which
55,000 shares are issued and outstanding and held of record and beneficially by
the Stockholder. All of such shares have been duly and validly issued, are fully
paid and nonassessable and held of record by the Stockholder. No subscription,
warrant, option, convertible security or other right (contingent or otherwise)
to purchase or acquire any shares of capital stock of the Seller is authorized
or outstanding and the Seller has no obligation (contingent or otherwise) to
issue any subscription, warrant, option, convertible security or other such
right.
2.3 Authorization. The execution and delivery of this Agreement by
the Seller, and the agreements provided for herein, and the consummation by the
Seller of all transactions contemplated hereby and thereby, have been duly
authorized by all requisite corporate and shareholder action. This Agreement and
all such other agreements and obligations entered into and undertaken in
connection with the transactions contemplated hereby, to which each of the
Seller and the Stockholder is a party constitute the valid and legally binding
obligations of each of the Seller and Stockholder, enforceable against each of
the Seller and Stockholder in accordance with their respective terms. The
execution, delivery and performance by each of the Seller and Stockholder of
this Agreement and the other agreements provided for herein, and the
consummation by the Buyer of the transactions contemplated hereby and thereby,
will not, with or without the giving of notice or the passage of time or both,
(a) violate the provisions of any law, rule or regulation applicable to the
Seller or Stockholder; (b) violate the provisions of the Certificate of
Incorporation or Bylaws of the Seller; (c) violate any judgment, decree, order
or award of any court, governmental body or arbitrator; or (d) conflict with or
result in the breach or termination of any term or provision of, or constitute a
default under, or
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cause any acceleration under, or cause the creation of any lien, charge or
encumbrance upon the properties or assets of the Seller pursuant to, any
indenture, mortgage, deed of trust or other instrument or agreement to which the
Seller or Stockholder is a party or by which the Seller or Stockholder or any of
the Seller's properties is or may be bound. Schedule 2.3 of the Seller
Disclosure Schedule sets forth a true, correct and complete list of all consents
and approvals of third parties that are required in connection with the
consummation by the Seller and Stockholder of the transactions contemplated by
this Agreement and the other agreements provided for herein.
2.4 Ownership of the Assets. Schedule 2.4 of the Seller Disclosure
Schedule sets forth a true, correct and complete list of all claims,
liabilities, liens, security interests, mortgages, restrictions, prior
assignments, pledges, charges, encumbrances and equities of any kind or nature
whatsoever affecting the Assets (collectively, the "Encumbrances"). The Seller
is, and at the Closing will be, the true and lawful owner of the Assets, and
will have the right to sell and transfer to the Buyer good, clear, record and
marketable title to the Assets, free and clear of all Encumbrances of any kind.
The delivery to the Buyer of all instruments of transfer of ownership
contemplated by this Agreement, including without limitation the Xxxx of Sale,
will vest good and marketable title to the Assets in the Buyer, free and clear
of all liens, mortgages, pledges, lines of credit, security interests,
restrictions, prior assignments, encumbrances and claims of any kind or nature
whatsoever.
2.5 Litigation. Each of the Seller and Stockholder is not a party
to, or to each of the Seller's and Stockholder's knowledge threatened with, and
none of the Assets are subject to, any litigation, suit, action, investigation,
proceeding or controversy before any court, administrative agency or other
governmental authority relating to or in any way affecting the Assets. Neither
the Seller nor Stockholder is in violation of or in default with respect to any
judgment, order, writ, injunction, decree or rule of any court, administrative
agency or governmental authority or any regulation of any administrative agency
or governmental authority relating to or affecting the Assets.
2.6 Inventory. Schedule 2.6 of the Seller Disclosure Schedule sets
forth a true, correct and complete list of the Inventory as of the date hereof,
including a description and the book value thereof. Such Inventory consists of
items of a quality and quantity which are usable or saleable without discount in
the ordinary course of the business conducted by the Seller. The value of all
items of obsolete materials and of materials of below standard quality has been
written down to realizable market value, and the values at which such Inventory
is
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carried reflect the normal inventory valuation policy of the Seller of stating
the Inventory at the lower of cost or market value in accordance with generally
accepted accounting principles.
2.7 Fixed Assets. Schedule 2.7 of the Seller Disclosure Schedule
sets forth a true, correct and complete list of all Fixed Assets as of the date
hereof, including a description and the book value thereof. All of the Fixed
Assets are in good operating condition and repair, normal wear and tear
excepted, are currently used by the Seller in the ordinary course of business
and in the production of products of the Seller and normal maintenance has been
consistently performed with respect to such Fixed Assets.
2.8 Change in Assets. Neither the Seller nor the Stockholder has
knowledge of any existing or threatened occurrence, event or development which,
as far as can be reasonably foreseen, could have a material adverse effect on
any of the Assets.
2.9 Tax Matters. The Seller has filed all federal, state and local
tax returns which are required to be filed and has paid all taxes, interest,
penalties, assessments and deficiencies which have become due or which have been
claimed to be due. The Seller is current in the payment of all income,
franchise, real estate, sales, use and withholding taxes and other employee
benefits, taxes or imposts. No deficiencies have been asserted or assessed as a
result of any audit by the Internal Revenue Service or any state or local taxing
authority and no such deficiency or audit has been proposed or threatened.
2.10 Contracts and Commitments.
(a) Schedule 2.10 of the Seller Disclosure Schedule contains a
true, complete and correct list and description of the following contracts and
agreements, whether written or oral, which are included in or relate in any way
to any of the Assets being conveyed to the Buyer pursuant to this Agreement
(such contracts and agreements, together with all contracts, agreements and
commitments concerning confidentiality or non-competition, collectively referred
to herein as the "Contracts"):
(i) all loan agreements, indentures, mortgages and
guaranties to which the Seller is a party or by which the Seller or any of its
property is bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements to which the Seller is a party or by which the
Seller or any of its property is bound;
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(iii) all contracts, agreements, commitments, purchase
orders or other understandings or arrangements to which the Seller is a party or
by which the Seller or any of its property is bound which (A) involve payments
or receipts by the Seller of more than $5,000 in the case of any single
contract, agreement, commitment, understanding or arrangement under which full
performance (including payment) has not been rendered by all parties thereto or
(B) which may materially adversely affect the condition (financial or otherwise)
of any of the Assets;
(iv) all agency, marketing, distributor, reseller, sales
representative, OEM, license and similar agreements to which the Seller is a
party;
(v) all contracts, agreements or other understandings or
arrangements between the Seller any stockholder, officer, director, employee,
consultant or affiliate of the Seller;
(vi) all leases and subleases, whether operating,
capital or otherwise, under which the Seller is lessor or lessee;
(vii) all contracts and other arrangements under which
the consequences of a default or termination could have a material adverse
effect on any of the Assets;
(viii) all contracts, agreements and commitments
concerning confidentiality or non-competition entered into by the Seller not in
the ordinary course of its business;
(ix) all partnership, collaboration and joint venture
agreements to which the Seller is a party or by which the Seller or any of its
properties is bound; and
(x) any other Contract Right, material agreement or
contract entered into by the Seller.
(b) With respect to the Contracts:
(i) each Contract is a valid and binding agreement of
the Seller, enforceable against the Seller in accordance with its terms, and the
Seller does not have
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any knowledge that any Contract is not a valid and binding agreement of the
other parties thereto;
(ii) the Seller has fulfilled all material obligations
required pursuant to the Contracts to have been performed by the Seller on its
part prior to the date hereof and the Seller has no reason to believe that it
will not be able to fulfill, when due, all of its obligations under the
Contracts which remain to be performed by the Seller after the date hereof;
(iii) the Seller is not in breach of or default under
any Contract, and no event has occurred which with the passage of time or giving
of notice or both would constitute such a default, result in a loss of rights or
result in the creation of any lien, charge or encumbrance, thereunder or
pursuant thereto;
(iv) to the knowledge of the Seller, there is no
existing breach or default by any other party to any Contract, and no event has
occurred which with the passage of time or giving of notice or both would
constitute a default by such other party, result in a loss of rights or result
in the creation of any lien, charge or encumbrance thereunder or pursuant
thereto;
(v) the Seller is not restricted by any Contract from
carrying on the portion of its business relating to the Assets anywhere in the
world; and
(vi) the Seller has no written or oral Contracts to sell
products or perform services which are expected to be performed at, or to result
in, a loss.
(c) The continuation, validity and effectiveness of each
Contract will not be affected by the transfer thereof to Buyer under this
Agreement and all such Contracts are assignable to Buyer without the consent of
any other party.
(d) True, correct and complete copies of all Contracts have
previously been delivered by the Seller to the Buyer provided, however, that
with respect to contracts, agreements and commitments concerning
confidentiality, or non-competition, only the agreements set forth in Section
2.10(a)(viii) have previously been delivered to the Buyer.
2.11 Compliance with Agreements and Laws. The Seller has all
requisite licenses, permits and certificates, including environmental, health
and safety permits, from federal, state and local authorities necessary to
conduct the portion of its business relating to the
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Assets and to own and operate the Assets (collectively, the "Permits"). Schedule
2.11 of the Disclosure Schedule sets forth a true, correct and complete list of
all such Permits, copies of which have previously been delivered by the Seller
to the Buyer. Neither the Seller nor the Stockholder is in violation of any law,
regulation or ordinance (including, without limitation, laws, regulations or
ordinances relating to building, zoning, environmental, disposal of hazardous
substances, land use or similar matters) relating to the Assets, the violation
of which could have a material adverse effect on the Assets or Seller's ability
to convey good and marketable title to the Assets to the Buyer hereunder. The
portion of the Seller's business relating to the Assets and the ownership or use
by the Seller of the Assets do not violate, in any material respect, any
federal, state, local or foreign laws, regulations or orders (including, but not
limited to, any of the foregoing relating to employment discrimination,
occupational safety, environmental protection, hazardous waste (as defined in
the Resource Conservation and Recovery Act, as amended, and the regulations
adopted pursuant thereto), conservation, or corrupt practices, the enforcement
of which would have a material and adverse effect on the portion of the Seller's
business relating to the Assets or the Assets. The Seller has not since January
1, 1993 received any notice or communication from any federal, state or local
governmental or regulatory authority or otherwise of any such violation or
noncompliance.
2.12 Intellectual Property.
(a) The Seller is the sole and exclusive owner of, or has the
unrestricted right to use without further payment, all Intellectual Property and
all designs, permits, labels and packages used on or in connection therewith,
used in the operations of its business or necessary for the operation of its
business as presently conducted or proposed to be conducted. Upon execution and
delivery by the Seller to the Buyer of the instruments of conveyance referred to
in Section 6 hereof, each such item of Intellectual Property will be owned or
available for use by the Buyer on identical terms and conditions immediately
following the Closing. The Intellectual Property owned or used by the Seller
and, when transferred to the Buyer pursuant to this Agreement, will be
sufficient to permit the Buyer to conduct the business of the Seller as
currently conducted by the Seller. The Seller has taken all reasonable measures
necessary to protect the proprietary nature of each item of Intellectual
Property, and to maintain in confidence all trade secrets and confidential
information, that it owns or uses. To the knowledge of the Seller, no other
person or entity has any rights to any of the Intellectual Property (except, in
the case of off-the-shelf software programs licensed by the Seller pursuant to
"shrink wrap" licenses, for the licensors of such off-the-shelf software
programs), and, to the
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knowledge of the Seller, no other person or entity is infringing, violating or
misappropriating any of the Intellectual Property.
(b) Neither the business of the Seller, as conducted through
the date of this Agreement, nor the Intellectual Property has infringed or
violated, or constituted a misappropriation of, and does not now infringe or
violate, or constitute a misappropriation of, any intellectual property rights
of any other person or entity. The Seller has not received any complaint, claim
or notice alleging any such infringement, violation or misappropriation.
(c) Schedule 2.12 of the Seller Disclosure Schedule identifies
(i) all patents, copyright registrations, mask works, trademarks, service marks,
trade dress, any renewal rights for any of the foregoing, and any applications
and registrations for any of the foregoing, which are included in the
Intellectual Property and owned by or on behalf of, or used by the Seller, (ii)
all hardware products and tools, software products and tools, and services that
are currently published, offered, or under development by Seller, and (iii) all
licenses, sublicenses and other agreements to which Seller is a party and
pursuant to which Seller or any other person is authorized to use the
Intellectual Property or exercise any other rights with regard thereto. The
Seller has delivered to the Buyer true, correct and complete copies of all such
Intellectual Property listed in clauses (i) through (iii) above (as amended to
date) and has made available to the Buyer true, correct and complete copies of
all other written documentation evidencing ownership of, and any claims or
disputes relating to, each such item. With respect to each such item of
Intellectual Property that the Seller owns:
(i) the Seller possesses all right, title and interest
in and to such item;
(ii) such item is not subject to any outstanding
judgment, order, decree, stipulation or injunction; and
(iii) except in connection with the sale of products in
the ordinary course of business, the Seller has not agreed to indemnify any
person or entity for or against any infringement, misappropriation or other
conflict with respect to such item.
(d) Schedule 2.12 of the Seller Disclosure Schedule identifies
each item of Intellectual Property used at any time during the five-year period
prior to the Closing Date that is owned by a party other than the Seller (other
than off-the-shelf software programs licensed by the Seller pursuant to "shrink
wrap" licenses). The Seller has supplied the Buyer
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with true, correct and complete copies of all licenses, sublicenses or other
agreements (each as amended to date) pursuant to which the Seller uses such
Intellectual Property (other than "shrink wrap" licenses pursuant to which the
Seller licenses off-the-shelf software programs), all of which are listed on
Schedule 2.12 of the Seller Disclosure Schedule. With respect to each such item
of Intellectual Property:
(i) the license, sublicense or other agreement covering
such item is legal, valid, binding, enforceable and in full force and effect;
(ii) such license, sublicense or other agreement is
assignable by the Seller to the Buyer without the consent or approval of any
party and such license, sublicense or other agreement will continue to be legal,
valid, binding, enforceable and in full force and effect without acceleration
immediately following the Closing in accordance with the terms thereof as in
effect prior to the Closing, except as enforceability may be limited by
applicable bankruptcy, insolvency or similar laws which affect creditor's rights
generally;
(iii) with regard to such license, sublicense or other
agreement, the Seller is not, and, to the Seller's knowledge, no other party is,
in breach or default, and no event involving the Seller, and, to the knowledge
of the Seller, no event involving any other party, has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification or acceleration thereunder;
(iv) to the Seller's knowledge, the underlying item of
Intellectual Property is not subject to any outstanding judgment, order, decree,
stipulation or injunction; and
(v) except in connection with the sale of products in
the ordinary course of business, the Seller has not agreed to indemnify any
person or entity for or against any interference, infringement, misappropriation
or other conflict with respect to such item.
(e) The Intellectual Property conveyed hereby includes all
intellectual property owned by the Seller or its affiliates relating to or used
in connection with the Seller's business (other than the trademarks
"Sledgehammer" and "VitalGen" and any derivations thereof).
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(f) Seller has obtained written agreements from all employees
and third parties with whom Seller has shared confidential proprietary
information (i) of Seller or (ii) received from others which Seller is obligated
to treat as confidential, which agreements require such employees and third
parties to keep such information confidential. The Seller has delivered copies
of all such written agreements, as executed, to Buyer.
2.13 Acquired Assets Complete. The Assets are, when utilized by a
labor force substantially similar to that employed by the Seller on the date
hereof, adequate to conduct the business operations currently conducted by the
Seller with the Assets.
2.14 Regulatory Approvals. All consents, approvals, authorizations
and other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Seller or Stockholder and which are necessary for
the execution and delivery by the Seller and Stockholder of this Agreement and
the documents and agreements to be executed and delivered by the Seller and
Stockholder in connection herewith, are set forth on Schedule 2.14 of the Seller
Disclosure Schedule and have been, or will be prior to the Closing Date,
obtained and satisfied.
2.15 Real Property. The Seller does not own any real property.
2.16 Investment. With the exception of the intended distribution of
the Shares by the Seller to the Stockholder immediately following the Closing,
the seller is acquiring the Shares for its own account for investment and not
with a view to, or for sale in connection with, any distribution thereof, nor
with any present intention of distributing or selling the same, and, except as
contemplated by this Agreement, the agreements, documents and transactions
provided for herein, Seller has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof.
2.17 Experience. Seller has carefully reviewed the representations
concerning the Buyer contained in this Agreement and has made detailed inquiry
concerning the Buyer, its business and its personnel; the officers of the Buyer
have made available to Seller any and all written information which it has
requested and have answered to Seller's satisfaction all inquiries made by
Seller; and Seller has sufficient knowledge and experience in investing in
companies similar to the Buyer so as to be able to evaluate the risks and merits
of its investment in the Buyer and is able financially to bear the risks
thereof.
2.18 Authority. Seller has full power and authority to execute,
deliver and perform this Agreement and the Agreements and documents provided for
herein and to
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consummate the transactions contemplated hereby and thereby, and represents that
it has not been organized, reorganized or recapitalized specifically for the
purpose of investing in Buyer.
2.19 Legend. The Seller and Stockholder hereby agree that all
certificates representing the Shares (whether issued by the Buyer to the Seller
or subsequently distributed by the Seller to the Stockholder) shall bear a
legend substantially in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be
offered, sold or otherwise transferred, pledged or hypothecated
unless and until such shares are registered under such Act or an
opinion of counsel satisfactory to the Buyer is obtained to the
effect that such registration is not required."
3. Representations of the Stockholder. The Stockholder represents and
warrants to the Buyer as follows:
3.1 Authority. Stockholder has full power and authority to execute,
deliver and perform this Agreement and the agreements and documents provided for
herein and to consummate the transactions contemplated hereby and thereby,
including without limitation the Employment Agreement, Xxxx of Sale, Instrument
of Assumption and Trademark Assignment in accordance with their respective
terms.
3.2 Conflicting Agreements. Stockholder is not, as a result of the
nature of the business conducted or proposed to be conducted by the Buyer or for
any other reason, in violation of (i) any fiduciary or confidential
relationship, (ii) any term of any contract or covenant relating to employment,
patents, proprietary information disclosure, non-competition or
non-solicitation, or (iii) any other contract or agreement, or any judgment,
decree or order of any court or administrative agency relating to or affecting
the right of Stockholder to be employed by the Buyer on the Closing Date after
giving effect to the transactions contemplated hereby. No such relationship,
term, judgment, decree, or order will conflict with Stockholder's obligations to
use his best efforts to promote the interests of the Buyer on the Closing Date
after giving effect to the transactions contemplated hereby, nor will the
execution and delivery of this Agreement, nor the carrying on of the Buyer's
business as an officer or employee of the Buyer, conflict with any such
relationship, term, judgment, decree or order.
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3.3 Investment. Stockholder (who is receiving the Shares in a
distribution from the Seller immediately following the Closing) is acquiring or
receiving the Shares for its own account for investment and not with a view to,
or for sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling the same, and, except as contemplated by
this Agreement, the agreements, documents and transactions provided for herein,
Stockholder has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition thereof.
3.4 Experience. Stockholder has carefully reviewed the
representations concerning the Buyer contained in this Agreement and has made
detailed inquiry concerning the Buyer, its business and its personnel; the
officers of the Buyer have made available to Stockholder any and all written
information which it has requested and have answered to Stockholder's
satisfaction all inquiries made by Stockholder; and Stockholder has sufficient
knowledge and experience in investing in companies similar to the Buyer so as to
be able to evaluate the risks and merits of its investment in the Buyer and is
able financially to bear the risks thereof.
3.5 Ownership of Assets. Stockholder does not own, and has no right,
title or interest in or to any of the Assets.
4. Representations of the Buyer
The Buyer represents and warrants to the Seller as follows:
4.1 Organization and Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, and has requisite power and authority (corporate
and other) to own its properties and to carry on its business as now being
conducted. The Buyer has full power to execute and deliver this Agreement, the
agreements and documents provided for herein and to consummate the transactions
contemplated hereby and thereby. Certified copies of the Certificate of
Incorporation and the Bylaws of the Buyer, as amended to date, have been
previously or will be on the Closing Date delivered to the Seller, are complete
and correct, and no amendments have been made thereto or have been authorized
since the date thereof.
4.2 Issuance of Shares. The issuance, sale and delivery of the
Shares in accordance with this Agreement have been, or will be on or prior to
the Closing, duly authorized by all necessary corporate action on the part of
the Buyer, and all such shares have been duly
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reserved for issuance. The Shares when so issued, sold and delivered against
payment therefor in accordance with the provisions of this Agreement will be
duly and validly issued, fully paid and non-assessable.
4.3 Authorization. The execution and delivery of this Agreement and
the agreements provided for herein by the Buyer, and the consummation by the
Buyer of all transactions contemplated hereby and thereby, have been duly
authorized by all requisite corporate action. This Agreement and the agreements
provided for herein constitute the valid and legally binding obligations of the
Buyer, enforceable against the Buyer in accordance with their respective terms.
The execution, delivery and performance of this Agreement and the agreements
provided for herein, and the consummation by the Buyer of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) violate the provisions of any law, rule or
regulation applicable to the Buyer; (b) violate the provisions of the Buyer's
Certificate of Incorporation or Bylaws; (c) violate any judgment, decree, order
or award of any court, governmental body or arbitrator; or (d) conflict with or
result in the breach or termination of any term or provision of, or constitute a
default under, or cause any acceleration under, or cause the creation of any
lien, charge or encumbrance upon the properties or assets of the Buyer pursuant
to, any indenture, mortgage, deed of trust or other agreement or instrument to
which it or its properties is a party or by which the Buyer is or may be bound.
Schedule 4.3 attached hereto sets forth a true, correct and complete list of all
consents and approvals of third parties that are required in connection with the
consummation by the Buyer of the transactions contemplated by this Agreement and
the other agreements provided for herein.
4.4 Regulatory Approvals. All consents, approvals, authorizations
and other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Buyer and which are necessary for the consummation
of the transactions contemplated by this Agreement have been, or will be prior
to the Closing Date, obtained and satisfied.
4.5 Capitalization of the Buyer. The Buyer's authorized capital
stock consists of 2,000,000 shares of Common Stock, no par value per share, of
which 1,162,743 shares are issued and outstanding and held of record and
beneficially by the stockholders listed on Schedule 4.5(i) attached hereto.
There are an aggregate of 400,000 shares of Common Stock reserved for issuance
pursuant to the Buyer's Incentive Stock Option Plan (the "Plan") and as of the
date hereof there are options outstanding under the Plan to purchase an
aggregate of 149,580 shares of Common Stock. Except as otherwise disclosed in
this Section 4.5, in the Employment
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Agreement or on Schedule 4.5(ii) attached hereto, no subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Buyer is authorized or
outstanding and the Buyer has no obligation (contingent or otherwise) to issue
any subscription, warrant, option, convertible security or other such right.
5. Best Efforts to Obtain Satisfaction of Conditions
The Seller, Stockholder and the Buyer covenant and agree to use
their best efforts to obtain the satisfaction of the conditions specified in
this Agreement.
6. Conditions to Obligations of the Buyer
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
6.1 Continued Truth of Representations and Warranties of the Seller
and Stockholder; Compliance with Covenants and Obligations. The representations
and warranties of the Seller and Stockholder contained in Sections 2 and 3
hereof shall be true on and as of the Closing Date as though such
representations and warranties were made on and as of such date, except for any
changes permitted by the terms hereof or consented to in writing by the Buyer.
Each of the Seller and Stockholder shall have performed and complied with all
terms, conditions, covenants, obligations, agreements and restrictions required
by this Agreement to be performed or complied with by it prior to or at the
Closing Date.
6.2 Corporate Proceedings. All corporate and other proceedings
required to be taken on the part of the Seller to authorize or carry out this
Agreement and the transactions contemplated hereby and to convey, assign,
transfer and deliver the Assets shall have been taken.
6.3 Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Seller or Stockholder of the transactions contemplated
by this Agreement and the conveyance, assignment, transfer and delivery of the
Assets to the Buyer shall have consented to, authorized, permitted or approved
such transactions.
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6.4 Consents of Lenders, Lessors and Other Third Parties. Each of
the Seller and Stockholder shall have received all requisite releases, consents
and approvals of all lenders, lessors and other third parties whose consent or
approval is required in order for it or him to consummate the transactions
contemplated by this Agreement and the agreements provided for herein,
including, without limitation, those set forth on Schedule 2.3 attached hereto.
6.5 Adverse Proceedings. No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or the agreements
provided for herein or which might affect the right of the Buyer to own or use
the Assets after the Closing.
6.6 Board of Directors and Shareholder Approval. The Board of
Directors of the Seller and the Stockholder (in his capacity as the sole
stockholder of the Seller) shall have duly authorized the transactions
contemplated by this Agreement.
6.7 The Assets. At the Closing the Buyer shall receive good, clear,
record and marketable title to the Assets, free and clear of all liens,
liabilities, security interests and encumbrances of any nature whatsoever.
6.8 Tax Lien Waivers. On or prior to the Closing Date, the Seller
shall have obtained and delivered to the Buyer tax lien waivers from all
jurisdictions in which Assets are located, and which impose tax liens on the
Assets and provide such tax lien waivers.
6.9 Termination of Security Interests, Etc. On or prior to the
Closing Date, the Seller shall have secured the termination of all security
interests, lines of credit, financing statements, liens and other encumbrances
on any of the Assets, and shall have delivered to the Buyer copies of all Form
UCC-3s or other documentation evidencing such termination.
6.10 Closing Deliveries. The Buyer shall have received at or prior
to the Closing each of the following documents:
(a) each of the Seller and Stockholder shall have delivered to
the Buyer a certificate to the effect that each of the conditions specified in
Sections 6.1, 6.3, 6.4, 6.5, 6.7 and 6.8 of this Section 6 (as are applicable to
it) is satisfied;
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(b) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing of the Seller in Delaware;
(c) a certificate of the Secretary of the Seller attesting to
the incumbency of the Seller's officers, the authenticity of the resolutions
authorizing the transactions contemplated by the Agreement and the agreements
provided for herein, and the authenticity and continuing validity of the charter
documents delivered pursuant to Section 2.1; and
(d) such other documents, instruments or certificates as the
Buyer may reasonably request.
6.11 Assignment of Trademarks. The Buyer shall have received from
Seller and Stockholder a Trademark Assignment dated as of the Closing Date in
the form attached hereto as Exhibit D, duly executed and delivered by the Seller
and Stockholder.
6.12 Xxxx of Sale. Each of the Seller and Stockholder shall have
executed and delivered the Xxxx of Sale.
6.13 Instrument of Assumption of Liabilities. Each of the Seller and
Stockholder shall have executed and delivered the Instrument of Assumption.
6.14 Employment Agreement. The Stockholder shall have executed the
Employment Agreement.
6.15 Lease Agreement. The Buyer and Liberty Property Limited
Partnership ("Liberty") shall have executed and delivered a lease relating to
rental space located at 000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxx.
6.16 Lease Release. The Seller shall have obtained from Liberty an
agreement to terminate the Agreement of Lease dated May 31, 1996 between the
Seller and Liberty, as amended (the "Seller Lease"), and release the Seller from
its obligations thereunder.
7. Conditions to Obligations of the Seller
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The obligations of the Seller and Stockholder under this Agreement are subject
to the fulfillment, at the Closing Date, of the following conditions precedent,
each of which may be waived in writing at the discretion of the Seller and
Stockholder:
7.1 Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations. The representations and warranties of
the Buyer in this Agreement shall be true on and as of the Closing Date as
though such representations and warranties were made on and as of such date,
except for any changes consented to in writing by the Seller and Stockholder.
The Buyer shall have performed and complied with all terms, conditions,
obligations, agreements and restrictions required by this Agreement and the
agreements provided for herein to be performed or complied with by it prior to
or at the Closing Date.
7.2 Corporate Proceedings. All corporate and other proceedings
required to be taken on the part of the Buyer to authorize or carry out this
Agreement and the transactions contemplated hereby shall have been taken.
7.3 Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Buyer of the transactions contemplated by this Agreement
and the agreements provided for herein shall have consented to, authorized,
permitted or approved such transactions.
7.4 Consents of Lenders, Lessors and Other Third Parties. The Buyer
shall have received all requisite consents and approvals of all lenders, lessors
and other third parties whose consent or approval is required in order for the
Buyer to consummate the transactions contemplated by this Agreement and the
agreements provided for herein, including, without limitation, those set forth
on Schedule 4.3 attached hereto.
7.5 Adverse Proceedings. No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement and the agreements
provided for herein or which might affect the right of the Seller to transfer
the Assets.
7.6 Closing Deliveries. The Seller shall have received at or prior
to the Closing each of the following documents:
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(a) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified in Sections 7.1, 7.3, 7.4
and 7.5 of this Section 7 is satisfied;
(b) a certificate of the Secretary of State of the
Commonwealth of Massachusetts as to the legal existence and good standing of the
Buyer in Massachusetts;
(c) a certificate of the Clerk of the Buyer attesting to the
incumbency of the Buyer's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Section 4.1; and
(d) such other documents, instruments or certificates as the
Seller may reasonably request.
7.7 Xxxx of Sale. The Buyer shall have executed and delivered the
Xxxx of Sale.
7.8 Instrument of Assumption of Liabilities. The Buyer shall have
executed and delivered the Instrument of Assumption.
7.9 Employment Agreement. The Buyer shall have executed the
Employment Agreement.
7.10 Lease Agreement. The Buyer and Liberty shall have executed and
delivered a lease relating to rental space located at 000 Xxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxx.
7.11 Lease Release. The Seller shall have obtained from Liberty an
agreement to terminate the Seller Lease, and release Seller from its obligations
thereunder.
8. Indemnification
8.1 By the Buyer. The Buyer hereby agrees to indemnify and hold
harmless the Seller and Stockholder from any and all claims, damages, losses,
liabilities, costs and expenses (including, without limitation, settlement costs
and any legal, accounting or other expenses for investigating or defending any
actions or threatened actions) reasonably incurred by the Seller and Stockholder
(the aggregate sum of all such claims, damages, losses, liabilities,
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costs and expenses reasonably incurred by Seller and Stockholder together, are
referred to herein as the "Buyer Indemnifiable Amounts") in connection with each
and all of the following:
(a) Any breach by the Buyer of any representation or warranty
in this Agreement;
(b) Any breach of any covenant, agreement or obligation of the
Buyer contained in this Agreement;
(c) Any misrepresentation contained in this Agreement
furnished by the Buyer; and
(d) Any Assumed Liabilities.
8.2 By the Seller and Stockholder. The Seller and Stockholder,
jointly and severally, agree to indemnify and hold harmless the Buyer from any
and all claims, damages, losses, liabilities, costs and expenses (including,
without limitation, settlement costs and any legal, accounting or other expenses
for investigating or defending any actions or threatened actions) reasonably
incurred by the Buyer (the "Seller Indemnifiable Amounts"), in connection with
each and all of the following:
(a) Any breach by the Seller or Stockholder of any
representation or warranty in this Agreement;
(b) Any breach of any covenant, agreement or obligation of the
Seller or Stockholder contained in this Agreement (including without limitation,
the failure by the Seller to obtain and deliver any tax lien waivers required by
Section 6.8 hereof);
(c) Any misrepresentation contained in this Agreement
furnished by the Seller or Stockholder;
(d) Any claims against, or liabilities or obligations of the
Seller or against the Assets not specifically assumed by the Buyer pursuant this
Agreement;
(e) Any violation by the Seller or Stockholder of, or any
failure by the Seller or Stockholder to comply with, any law, ruling, order,
decree, regulation or zoning, environmental or permit requirement applicable to
the Assets, whether or not any such violation
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or failure to comply has been disclosed to the Buyer, including any costs
incurred by the Buyer (i) in order to bring the Assets into compliance with
environmental laws as a consequence of noncompliance with such laws on the
Closing Date or (ii) in connection with the transfer of the Assets;
(f) Any warranty claim or product liability claim relating to
Assets owned or used by the Seller prior to the Closing Date;
(g) Any tax liabilities or obligations of the Seller or
Stockholder;
(h) All liabilities or obligations of the Seller to pay
severance benefits to any employee of the Seller whose employment is terminated
(or treated as terminated) in connection with the consummation of the
transactions contemplated by this Agreement and to whom the Buyer (or its
designee) has offered employment, and all liabilities resulting from the
termination of employment of employees of the Seller prior to the Closing that
arose under any federal or state law or under any employee benefit plan
established or maintained by the Seller;
(i) The failure of the Buyer to obtain the protections
afforded by compliance with the notification and other requirements of the bulk
sales laws in force in the jurisdictions in which such laws may be applicable to
either the Seller or the transactions contemplated by this Agreement; and
(j) Any trademark infringement or other claims relating to,
arising from or made in connection with the ownership or use by Seller or
Stockholder of the names "Sledgehammer" and "VitalGen" or any derivations
thereof, including without limitation any names or word incorporating the names
"Sledgehammer" or "VitalGen".
8.3 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder the Party seeking indemnification (the "Indemnified
Party"), shall promptly notify the Party from whom indemnification is sought
(the "Indemnifying Party") of the claim and, when known, the facts constituting
the basis for such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third-party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
unless suit shall have been instituted against it and the
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Indemnifying Party shall not have taken control of such suit after notification
thereof as provided in Section 8.4 of this Agreement.
8.4 Defense by Indemnifying Party. In connection with any claim
giving rise to indemnity hereunder resulting from or arising out of any claim or
legal proceeding by a person who is not a Party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
it acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom within 30 days after the date such claim is made, (a) the
Indemnified Party may defend against such claim or litigation, in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the Indemnifying Party, on such
terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying
Party shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such third party claim or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by a preponderance of the
evidence that the Indemnified Party did not defend or settle such third party
claim in a reasonably prudent manner.
8.5 Payment of Indemnification Obligation. All indemnification by a
Party hereunder shall be effected by payment of cash or delivery of a cashier's
or certified check in the amount of the indemnification liability.
8.6 Survival of Representations; Claims for Indemnification. All
representations and warranties made by the Parties herein or in any instrument
or document furnished in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of the Parties hereto. All such
representations and warranties shall expire on the second anniversary of the
Closing Date, except (i) for claims, if any, asserted in writing prior to such
second anniversary, which shall survive until finally resolved and satisfied in
full, (ii) for the representations and warranties of the Seller set forth in
Section 2.4 (Ownership of Assets), which shall continue indefinitely, (iii) for
the representations and warranties of the Seller set forth in Section 2.9 (Tax
Matters), which shall continue until 90 days following the expiration of the
applicable statue of limitations date and (iv) that obligations of the Seller
and
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Stockholder, and Buyer for Seller Indemnifiable Amounts and Buyer Indemnifiable
Amounts, respectively, arising out of or in connection with fraud or knowing
misrepresentations or omissions of the Seller or Stockholder, or the Buyer,
respectively, will have no time limit (other than limits imposed by applicable
statutes of limitations, if any). All claims and actions for indemnity pursuant
to this Section 8 for breach of any representation or warranty shall be asserted
or maintained in writing by a party hereto on or prior to the expiration of the
applicable period.
8.7 Limitation of Liability. Notwithstanding the foregoing
provisions of this Section 8, the obligations of the Indemnifying Parties
pursuant to this Section 8 shall be subject to the following limitations:
(a) Buyer shall be entitled to indemnification hereunder only
to the extent that the aggregate Seller Indemnifiable Amounts exceed $5,000 (the
"Seller Basket Amount") (at which point the Buyer shall be entitled to
indemnification for the full amount of the Seller Indemnifiable Amounts,
including the first $5,000 of such Seller Indemnifiable Amounts). Any
qualification in the representations and warranties of the Seller and
Stockholder as to "material", "materially" and "materiality" shall be
disregarded in determining Seller Indemnifiable Amounts after the Seller Basket
Amount has been exceeded.
(b) Buyer shall not be entitled to indemnification hereunder
to the extent that the aggregate Seller Indemnifiable Amounts exceed $136,350
(the "Seller Cap Amount"), provided, however, that the Seller Cap Amount shall
not apply to, and there shall be no limit on, Seller Indemnifiable Amounts
arising from or in connection with the commission by Seller or Stockholder of
fraud in connection with this Agreement or a knowing misrepresentation or
omission relating to any representation, warranty, covenant or agreement made by
the Seller or Stockholder in this Agreement.
(c) Seller and Stockholder shall be entitled to
indemnification hereunder only to the extent that the aggregate Buyer
Indemnifiable Amounts exceed $5,000 (the "Buyer Basket Amount") (at which point
the Seller and Stockholder shall be entitled to indemnification for the full
amount of the Buyer Indemnifiable Amounts, including the first $5,000 of such
Buyer Indemnifiable Amounts). Any qualification in the representations and
warranties of the Buyer as to "material", "materially" and "materiality" shall
be disregarded in determining Buyer Indemnifiable Amounts after the Buyer Basket
Amount has been exceeded.
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(d) Seller and Stockholder shall not be entitled to
indemnification hereunder to the extent that the aggregate Buyer Indemnifiable
Amounts exceed $136,350, (the "Buyer Cap Amount"), provided, however, that the
Buyer Cap Amount shall not apply to, and there shall be no limit on, Buyer
Indemnifiable Amounts arising from or in connection with the commission by Buyer
of fraud in connection with this Agreement or a knowing misrepresentation or
omission relating to any representation, warranty, covenant or agreement made by
the Buyer in this Agreement.
9. Post-Closing Agreements
Each of the Seller and Stockholder agrees that from and after the Closing Date:
9.1 Proprietary Information.
(a) The Seller and Stockholder shall, and Seller shall use its
best efforts to have all of its officers, directors and personnel, hold in
confidence, all knowledge and information of a secret or confidential nature
with respect to the Assets and business of the Buyer and shall not disclose,
publish or make use of the same without the consent of the Buyer, except to the
extent that such information shall have become public knowledge other than by
breach of this Agreement by the Seller or Stockholder or breach of the
Employment Agreement by Stockholder.
(b) Each of the Seller and Stockholder agrees that the remedy
at law for any breach of this Section 9.1 would be inadequate and that the Buyer
shall be entitled to injunctive relief in addition to any other remedy it may
have upon breach of any provision of this Section 9.1.
9.2 No Solicitation or Hiring of Former Employees. Except as
provided by law, for a period of two years after the Closing Date, neither the
Seller nor the Stockholder shall solicit any person who was an employee of the
Seller on the Closing Date to terminate his employment with the Buyer or to
become an employee of the Seller, Stockholder or entity affiliated with the
Stockholder (other than the Buyer), or hire any person who was such an employee
on the date hereof or on the Closing Date.
9.3 Non-Competition Agreement.
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(a) For a period of two years after the Closing Date, neither
the Seller, Stockholder nor any affiliate thereof (other than the Buyer) shall
(i) manufacture, market or sell any product which has the same or substantially
the same form, function and primary application as any existing or proposed
product manufactured by the Seller on or prior to the Closing Date or (ii)
engage in any business competitive with the business of the Seller as conducted
on the date hereof or on the Closing Date, in the United States or any other
country in which the Seller conducted its business during the two years prior to
the Closing Date; provided, however, that nothing contained in this Section
9.3(a) shall be construed as prohibiting Stockholder from performing the duties
and fulfilling the obligations set forth in the Employment Agreement.
(b) The Parties hereto agree that the duration and geographic
scope of the non-competition provision set forth in this Section 9.3 are
reasonable. In the event that any court determines that the duration or the
geographic scope, or both, are unreasonable and that such provision is to that
extent unenforceable, the Parties hereto agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable. The Parties intend that this
non-competition provision shall be deemed to be a series of separate covenants,
one for each and every county of each and every state of the United States of
America and each and every political subdivision of each and every country
outside the United States of America where this provision is intended to be
effective. Each of the Seller and Stockholder agrees that damages are an
inadequate remedy for any breach of this provision, and that the Buyer shall,
whether or not it is pursuing any potential remedies at law, be entitled to
equitable relief in the form of preliminary and permanent injunctions without
bond or other security upon any actual or threatened breach of this
non-competition provision.
9.4 Sharing of Data.
(a) The Seller and Stockholder shall have the right for a
period of three years following the Closing Date to have reasonable access to
such books, records and accounts, including financial and tax information,
correspondence, production records, employment records and other similar
information as are transferred to the Buyer pursuant to the terms of this
Agreement for the limited purposes of concluding its involvement in the business
of the Seller prior to the Closing Date and for complying with its obligations
under applicable securities, tax, environmental, employment or other laws and
regulations. The Buyer shall have the right for a period of three years
following the Closing Date to have reasonable access to those books, records and
accounts, including financial and tax information, correspondence, production
records, employment records and other records which are retained by the Seller
or
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Stockholder pursuant to the terms of this Agreement to the extent that any of
the foregoing relates to the business of the Seller or Assets transferred to the
Buyer hereunder or is otherwise needed by the Buyer in order to comply with its
obligations under applicable securities, tax, environmental, employment or other
laws and regulations.
(b) The Seller, Stockholder and the Buyer agree that from and
after the Closing Date they shall cooperate fully with each other to facilitate
the transfer of the Assets from the Seller to the Buyer and the operation
thereof by the Buyer.
9.5 Use of Name. Each of the Seller and Stockholder agrees not to
use the names, "VHDL," "VHDL Technology Group", "Prism Acoustics" or "Prism
Acoustics, Inc." or any derivations thereof after the Closing Date in connection
with any business related to, competitive with, or an outgrowth of, the business
conducted by the Seller on the date hereof.
9.6 Cooperation in Litigation. Each Party hereto will fully
cooperate with the other in the defense or prosecution of any litigation or
proceeding already instituted or which may be instituted hereafter against or by
such Party relating to or arising out of the conduct of the portion of the
Seller's business relating to the Assets prior to or after the Closing Date
(other than litigation arising out the transactions contemplated by this
Agreement). The Party requesting such cooperation shall pay the out-of-pocket
expenses (including legal fees and disbursements) of the party providing such
cooperation and of its officers, directors, employees and agents reasonably
incurred in connection with providing such cooperation, but shall not be
responsible to reimburse the Party providing such cooperation for such Party's
time spent in such cooperation or the salaries or costs of fringe benefits or
similar expenses paid by the Party providing such cooperation to its officers,
directors, employees and agents while assisting in the defense or prosecution of
any such litigation or proceeding.
9.7 Product Claims and Returns. Seller shall be responsible for
customer claims relating to services rendered by Seller prior to the Closing
Date, and customer claims relating to, or returns of, the Seller's software
product formerly known as Sledgehammer 6 and all other products of Seller which
(a) were sold and shipped by the Seller prior to the Closing Date or (b) were in
the finished goods inventory of the Seller as of the Closing Date. If a customer
makes a claim or seeks a return and, in the reasonable judgment of the Buyer,
the claim or return is proper, Buyer shall replace or repair, as the case may
be, the services rendered or product purchased at the Buyer's then generally
prevailing prices and labor rates.
10. Brokers
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10.1 For the Seller and Stockholder. Each of the Seller and
Stockholder represents and warrants that it has not engaged any broker or finder
or incurred any liability for brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement. The Seller and
Stockholder, jointly and severally, agree to indemnify and hold harmless the
Buyer against any claims or liabilities asserted against it by any person acting
or claiming to act as a broker or finder on behalf of the Seller or Stockholder.
10.2 For the Buyer. The Buyer represents and warrants that it has
not engaged any broker or finder or incurred any liability for brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement. The Buyer agrees to indemnify and hold harmless the Seller and
Stockholder against any claims or liabilities asserted against it by any person
acting or claiming to act as a broker or finder on behalf of the Buyer.
11. Knowledge of the Seller.
For purposes of this Agreement, the term "knowledge" (including
without limitation any derivations thereof such as "know" or "knowing") as it
relates to the Seller shall be deemed to mean the knowledge of the Stockholder.
12. Notices
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by federal express,
registered or certified mail, postage prepaid, addressed as follows or to such
other address of which the parties may have given notice:
To the Seller: Prism Acoustics, Inc.
(d/b/a The VHDL Technology Group)
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, President
With a copy to: Mesirov Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
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To the Stockholder: Xxxxxxx X. Xxxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
With a copy to: Mesirov Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
To the Buyer: Intrinsix Corp.
00 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, President
With copies to: Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally; or (b) three
business days after being sent, if sent by registered or certified mail.
13. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and assigns, except that no Party
hereto may assign or delegate its respective obligations hereunder without the
prior written consent of the other Parties; provided, however, that the Buyer
may assign this Agreement, and its rights and obligations hereunder, to a
subsidiary or affiliate. Any assignment in contravention of this provision shall
be void. No assignment shall release the Buyer from any obligation or liability
under this Agreement.
14. Entire Agreement; Amendments; Attachments
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the Parties pursuant hereto
represent the entire understanding and
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agreement between the Parties hereto with respect to the subject matter hereof
and supersede all prior oral and written and all contemporaneous oral
negotiations, commitments and understandings between such Parties. The Exhibits
and Schedules attached hereto or to be attached hereafter are hereby
incorporated as integral parts of this Agreement. The Buyer and the Seller, by
the consent of their respective Boards of Directors, or officers authorized by
such Boards, and the Stockholder may amend or modify this Agreement, in such
manner as may be agreed upon, by a written instrument executed by the Buyer, the
Seller and Stockholder.
15. Expenses
The Buyer shall pay the reasonable legal and closing costs of the
Seller in connection with the negotiation of this Agreement and the agreements
and transactions contemplated hereby, up to an aggregate maximum of $11,500.
16. Legal Fees
In the event that legal proceedings are commenced by the Buyer
against the Seller or Stockholder, or by the Seller or Stockholder against the
Buyer, in connection with this Agreement or the transactions contemplated
hereby, the Party or Parties which do not prevail in such proceedings shall pay
the reasonable attorneys' fees and other costs and expenses, including
investigation costs, incurred by the prevailing Party in such proceedings.
17. Transfer and Sales Tax
Notwithstanding any provisions of law imposing the burden of such
taxes on the Seller or the Buyer, as the case may be, the Seller and Buyer each
shall be responsible for and shall pay 50% of (a) all sales, use and transfer
taxes, and (b) all governmental charges, if any, upon the sale or transfer of
any of the Assets hereunder. If the Seller shall fail to pay such amounts on a
timely basis, the Buyer may pay such amounts to the appropriate governmental
authority or authorities, and the Seller and Stockholder shall promptly
reimburse the Buyer for any amounts so paid by the Buyer. If the Buyer shall
fail to pay such amounts on a timely basis, the Seller or Stockholder may pay
such amounts to the appropriate governmental authority or authorities, and the
Buyer shall promptly reimburse the Seller or Stockholder, as the case may be,
for any amounts so paid by the Seller or Stockholder.
18. Governing Law
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This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
19. Section Headings
The section headings are for the convenience of the Parties and in
no way alter, modify, amend, limit, or restrict the contractual obligations of
the Parties.
20. Severability
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
21. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties
hereto as of and on the date first above written.
BUYER:
INTRINSIX CORP.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx
Title: President
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SELLER:
PRISM ACOUSTICS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxxx
Title: President
STOCKHOLDER:
/s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxxxxx
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