1
Exhibit 10.14
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into as of
the 13th day of August, 1997, by and between Xionics, Inc., a Delaware
corporation ("Xionics"), Xionics Document Technologies, Inc., a Delaware
corporation ("XDT"), those parties listed in Exhibit A hereto ("Sellers"), and
Seaport Imaging, a California corporation ("Company").
WHEREAS, Sellers are the owners of 1,045,000 shares of common stock
(collectively the "Shares") of Seaport Imaging (the "Company"), which Shares, as
of the Closing Date, shall constitute one hundred percent of the issued and
outstanding capital stock of the Company; and
WHEREAS, Xionics desires to purchase the Shares from the Sellers, and
Sellers desire to sell the Shares to Xionics, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the parties desire to allow Xionics to assume effective operating
control of the Company as of the date of this Agreement; and
WHEREAS, Xionics is a wholly-owned subsidiary of XDT.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, together with the covenants
hereinafter contained, Sellers and Xionics hereby agree as follows:
I - DEFINITIONS
1.1 As used in this Agreement, the following terms shall have the meaning
assigned to them in this Article I:
1.1 "ASSOCIATED PERSON" shall have the meaning specified in Section 5.3(b)
hereof.
1.2 "BALANCE SHEET" shall have the meaning used in generally accepted
accounting principles.
1.3 "BROKER" shall mean The Omni Group, 00000 Xxx Xxxx, Xxxxx Xxxxxx, XX 00000.
1.4 "CLOSING" shall mean the consummation of the transactions contemplated
hereby.
1.5 "CLOSING DATE" shall have that meaning set forth in Section 4.1.
1.5 "FUNDAMENTAL DOCUMENTS" shall mean, collectively: (I) this Agreement; (ii)
the Note defined in Section 1.8 below; and (iii) the Employment Agreements
described in Section 8.1(k)(ii) below.
1.6 "INDEBTEDNESS FOR BORROWED MONEY" as used in this Agreement shall mean, in
relation to any person, any indebtedness of such person (I) in respect of any
money borrowed by such person, (II) under or in respect of any guarantee by such
person of any indebtedness for money borrowed by any other person, or (III)
evidenced by any loan agreement, credit agreement, promissory note, debenture,
bond, guarantee or other similar written obligation of such person to pay money.
1
2
1.7 "MATERIAL ADVERSE EFFECT" shall mean any material adverse effect on the
assets, business, condition (financial or otherwise) or prospects of the
Company, taken as a whole, or any circumstances which would prevent Sellers from
consummating the transactions described in this Agreement.
1.8 "NOTE" shall mean one or more promissory notes for payment of a specified
portion of the Purchase Price (as hereinafter defined), in substance and form
attached hereto as Exhibit C, and guaranteed by XDT.
1.9 "PERSON" or "PERSON" shall mean an individual, corporation, partnership,
joint venture, trust, or unincorporated organization, or a government or any
agency or political subdivision thereof.
1.10 "PRINCIPAL SELLERS" shall mean Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx and Xxxx
Xxxx.
1.11 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and all
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
1.12 "SELLER REPRESENTATIVE" shall mean Xxxxx Xxxxxxx, on behalf of all Sellers.
1.13 "Outside Closing Date" shall have the meaning set forth in Section 8.2 of
this Agreement.
II - AUTHORIZATION OF CAPITAL STOCK
The Sellers represent and warrants to Xionics and XDT as follows:
2.1. CAPITALIZATION OF COMPANY.
(a). The authorized capital stock of the Company will, on and as of the Closing
Date (as defined in Article IV hereof), consist of: 10,000,000 shares of Common
Stock, $0.00 (zero) par value per share. A description of the common stock and
of the voting powers, rights and privileges thereof is as set forth in the
By-laws and Articles of Incorporation, as amended, of the Company and the
California Corporations Code, as applicable.
(b). On and as of the Closing Date (and prior to giving effect to the
transactions contemplated by this Agreement), 1,045,000 shares of Common Stock
will be validly issued and outstanding, and will be fully-paid and
non-assessable. No other shares of Common Stock will be issued or outstanding as
of the Closing Date.
2.2. NO ISSUANCE OF ADDITIONAL STOCK. The Company will not, prior to the Closing
Date, authorize the issuance of, or issue, any shares of Common or any other
Stock.
2.3 As of the Closing Date, Sellers will be the only owners of the outstanding
Shares, and such Shares owned by Sellers will be one hundred percent of the
outstanding stock of the Company.
III - PURCHASE AND SALE OF STOCK AT CLOSING
3.1. Subject to all of the terms and conditions set forth in this Agreement and
in reliance upon the representations, warranties and agreements set forth
herein, Sellers hereby agree to sell, and Xionics hereby agrees to purchase, on
the Closing Date, all of the Shares.
3.2 Subject to those adjustments described in this Agreement, including without
limitation Section 3.4 below, the purchase price for the sale and transfer of
the Shares as described in 3.1 above shall be the
2
3
total amount of U.S. $2,250,000 (hereinafter the "Purchase Price"), which
Purchase Price shall be paid in the manner more particularly described in 3.3
below.
3.3 On the Closing Date, Xionics shall, subject to those adjustments described
in 3.4 below, and subject to all of the terms and conditions set forth in this
Agreement, deliver to the Sellers in amounts equal to their respective ownership
percentage the Purchase Price (after deduction of Broker fees and certain
closing costs borne by the Sellers and paid by Xionics in accordance with the
written instructions of the Seller Representative) by means of cash payments and
Notes as follows:
(a) Cash payment of $1,100,000 on Closing Date (see note * below)
(b) Note for $575,000 due and payable on first anniversary of the Closing Date
(the "First Note") (see note * below)
(c) Note for $575,000 due and payable on second anniversary of the Closing Date
(the "Second Note") (see note * below)
* The cash payment, First Note and Second Note to be delivered to Sellers
shall be reduced by such closing costs of Sellers (e.g. Broker fees, legal and
accounting fees) as Seller Representative may instruct Xionics in writing at
Closing (in which case Xionics shall make such closing cost payments as so
instructed).
3.4 The Purchase Price will be adjusted as follows:
(a) In the event any of the items listed on the Closing Balance Sheet (as
hereinafter defined) are found, at a later date, to be incorrect, overstatements
of any items will be credited to the portion of the Purchase Price to be payable
on the First Note, and understatements of any items will be deducted from the
portion of the Purchase Price to be payable on the First Note. The following
describes a number of specific examples of adjustments to the Purchase Price
which may occur. To the extent there is a contradiction between the foregoing
description of adjustments, and the following description of adjustments, the
following description of adjustment shall control.
(i) TOTAL STOCKHOLDERS EQUITY. The Balance Sheet as of the end of the day on
August 31, 1997 (the "Closing Balance Sheet") will reflect a total of $509,000.
Accordingly, in the event the total stockholders' equity reflected in the
Closing Balance Sheet is less than $509,000.00, the Purchase Price shall be
reduced by the amount by which $509,000.00 exceeds the total stockholders'
equity reflected on the Closing Balance Sheet. One-half of such reduction in
Purchase Price shall be reflected by a reduction in the cash payment due to
Sellers on the Closing Date; the remaining one-half of such adjustment shall be
reflected by a reduction in the principal balance owing under the First Note. In
the event the Closing Balance Sheet reflects total stockholders' equity of more
than $509,000, the Purchase Price will be increased by the amount by which total
stockholders' equity exceeds $509,000. One half of such increase in the Purchase
Price shall be reflected by an increase in the cash payment due to Sellers on
the Closing Date; the remaining one-half of such adjustment shall be reflected
by an increase in the principal balance owing under the First Note.
(ii) MONTHLY EXPENSES. It is agreed that the monthly statement of operating
expenses for the Company for the month immediately prior to the Closing Date
(the "Closing Date Statement") should be $105,000. The Closing Date Statement
shall reflect monthly personnel salary costs of $78,500 or less based upon the
employees noted as "retained" on Exhibit D hereto (plus any other employees
employed by Company)being employed by the Company on the Closing Date. If the
Closing Date Statement indicates monthly expenses in excess of the $105,000
target because the $78,500 salary expense described above is exceeded, and if
after the Closing Date the Company or Xionics reduces personnel in order to
reach the $78,500 salary expense goal, then the expenses (including severance
pay) incurred by
3
4
Company or Xionics, using their reasonable business judgment, in reducing the
salary expense to $78,500 per month will be deducted from the portion of the
Purchase Price paid in the First Note.
(iii) ACCOUNTS RECEIVABLE. In the event the accounts receivable reflected on the
Closing Balance Sheet (net of reserves) are not collected by Xionics within 120
days after the Closing Date, the Purchase Price will be reduced by the amount of
such accounts receivable which remain uncollected as of such date. Xionics shall
only be required to use normal good faith business efforts to collect such
amounts (which normal good faith business efforts may include, if Xionics deems
it appropriate under the circumstances in its reasonable business judgment,
withholding shipments or services to delinquent customers). The uncollected
accounts receivable shall, upon the request of the Seller Representative, be
assigned by Xionics to the Seller Representative (or any Seller designated by
the Seller Representative) for the benefit of the Sellers personally (in which
event such Sellers shall indemnify Xionics against any claims by the remaining
Sellers, if any, in respect of such accounts receivable). The Purchase Price
will be reduced in the foregoing situation by a corresponding reduction in the
principal amount of the First Note. In the event any such accounts receivable
are collected by Xionics after 120 days after the Closing Date, the amount
collected will be added back to the First Note.
(iv) INVENTORY. In the event any discrepancies in the inventory reflected on
the Closing Balance Sheet are noted in relation to the physical inventory count
conducted at Closing due to nonexistent material, the Purchase Price shall be
reduced by the amount attributable to such discrepancy as determined by Xionics
in its reasonable business judgment. The Purchase Price will be reduced in the
foregoing situation by a corresponding reduction in the cash payment due on the
Closing Date or the principal amount of the First Note, as the case may be based
upon the date the discrepancy is determined. Inventory, as used in the preceding
sentences and as recorded on the Closing Balance Sheet shall only include that
actual physical inventory located on Company's San Jose, CA premises or their
third party manufacturer's premises and in new, resaleable, condition and not
determined on the Closing Date to be obsolete or excess quantity on the Closing
Date. The inventory at the manufacturing facility includes raw materials,
work-in-progress, finished goods and manufacturing re-work. The field inventory
(i.e., that inventory that is not located on Company's San Jose, CA premises or
their third party manufacturer's premises) will be identified as to quantity,
cost and then known location at the Closing Date. This field inventory will not
be counted toward the inventory balance on the Closing Balance Sheet. The cost
of the field inventory on the Closing Date, plus the sum of $10,000, shall
hereinafter be referred to as the "Field Inventory Cost". For a period of six
months after the Closing Date, (i) one hundred percent (100%) of the revenue
received from sales of field inventory (up to the Field Inventory Cost) will be
credited towards a positive Purchase Price adjustment, and (ii) fifty percent
(50%) of the revenue received from sales of field inventory in excess of the
Field Inventory Cost will be credited towards a positive Purchase Price
adjustment. This Purchase Price credit is to be added to the principal balance
owing under the First Note. From and after the six month anniversary of Closing
Date, all revenue generated from sales of field inventory will be retained by
Xionics, and no Purchase Price adjustment will be made on account of such sales.
(v) ACCOUNTS PAYABLE. On the Closing Date, Sellers will present to Xionics a
list of all accounts payable, which list shall be in the same amount as
reflected in the liabilities section of the Closing Balance Sheet. Xionics will
pay such amounts as they come due in the normal course of business. In the event
any other accounts payable are due which required accrual on the Closing Balance
Sheet under generally accepted accounting principles but which are not listed on
such list of accounts, Xionics will pay such amounts and will have the right to
make a corresponding reduction in the amount of the Purchase Price covered by
the First Note.
(vi) VACATION. Sellers will cause the Company to make the appropriate accruals
on the Closing Balance Sheet for actual vacation time earned by employees of the
Company through and including the
4
5
Closing Date, however no such accruals shall exceed ten (10) days of vacation
for any one employee. In recognition of the fact that some employees may be due
more than ten (10) days of vacation time, the Sellers will cause the Company to
pay to applicable employees an equitable amount in lieu of taking vacation time
for the difference between the ten (10) days accrued for on the Company's book
and the actual amount of vacation time otherwise due to such employee. The First
Note shall be increased by (i) the amount paid by Company to such employees for
vacation time as described above and (ii) the amount required to increase the
accruals on the Closing Balance Sheet for vacation time to the above specified
amount.
b) All amounts calculated pursuant to this Section 3.4, including, without
limitation, prepaid expenses (i.e. rent, payroll, etc.), shall be calculated
using generally accepted accounting principles consistently applied.
(c) In the event of a dispute as to the amount of any adjustment to the
Purchase Price, the parties will work in good faith to resolve such dispute. In
the event the parties are unable to mutually agree upon the amount of any
adjustment previously described in this Section 3.4 within ten (10) days after
notification by Xionics to Sellers of the amount of any adjustment, Xionics and
the Seller Representative shall, within ten (10) days of such prior period,
either mutually agree upon the choice of an independent accounting firm or, if
they are unable to mutually agree, each will select an independent accounting
firm, and each such firm will be instructed by Xionics and the Seller
Representative to select, within ten (10) days of their selection, a mutually
agreeable independent accounting firm that is not currently performing work (or
has not performed work with in the prior two years) for any party to this
Agreement (the "Independent Accounting Firm"). Xionics and the Seller
Representative shall, within five (5) days of selection of the Independent
Accounting Firm, submit to the Independent Accounting Firm all applicable
information related to the adjustment at issue, and the Independent Accounting
Firm shall, within ten (10) days of receipt of such information deliver to
Xionics and the Seller Representative its determination of the appropriate
amount of the adjustment to the Purchase Price, which determination shall be
conclusive and binding upon the parties. The costs and fees of the Independent
Accounting Firm shall be paid by the Sellers (or included in the amount deducted
from Purchase Price if not paid within ten (10) days of receipt of Independent
Accounting Firm's invoice) if the Independent Accounting Firm fully agrees with
the position asserted by Xionics, and shall be paid by Xionics if the
Independent Accounting Firm fully agrees with the position asserted by the
Seller Representative, and shall be split evenly between Buyer and Sellers if
the Independent Accountant does not fully agree with either Buyer or the Seller
Representative.
IV - THE CLOSING
4.1. The Closing under this Agreement will take place at the offices of Seaport
Imaging in San Jose, CA, at 10:00 a.m., local time, or such other place and time
as the parties may agree, on or before September 4, 1997 or at such other place
and time and on such other date as may be mutually agreed upon in writing by
Xionics and the Sellers. The date of the Closing is herein called the "Closing
Date". At the Closing, the Sellers will (among other things) deliver to Xionics
stock certificates representing all of the Shares purchased by Xionics
hereunder, appropriately endorsed or accompanied by separate stock powers, and
Xionics will deliver to the Sellers the portion of the Purchase Price and the
Notes due as of the Closing Date as described in Article III of this Agreement.
4.2 Notwithstanding the Closing Date described above, the parties acknowledge
and agree that Xionics will assume effective control of the Company, including,
without limitation, direction of the operations of the Company, effective as of
the date of this Agreement, subject to the conditions set forth in Section
6.1(i).
5
6
V - ADDITIONAL REPRESENTATIONS OF THE SELLERS
5.1 Each Seller severally represents and warrants to Xionics and XDT that the
following representations and warranties are true and complete on and as of this
date and the Closing Date:
(a) Seller is the legal and economic sole owner of the respective number of
Shares set forth in Exhibit A, each of which is fully paid and non-assessable,
duly and validly issued and free of any third party right, security, pledge,
lien and other burden whatsoever.
(b) Seller has the full right, power and authority to enter into this Agreement
and to transfer, convey and sell to Xionics the number of Shares set forth in
Exhibit A of this Agreement.
(c) NO MISLEADING STATEMENTS. Neither this Section 5.1 nor any representations
and/or warranties set forth herein, taken as a whole, contains any untrue
statement of any material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not misleading.
5.2 The Company and Principal Sellers, jointly and severally, hereby represent
and warrant to Xionics and XDT on and as of this date and on the Closing Date (
except for such representations and warranties that by their nature relate
solely to an earlier or later date, as the case may be), that:
(a) CORPORATE STATUS/AUTHORITY
(i) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. The Company has all
requisite corporate power and authority and full legal right to own or to hold
under lease its properties and to carry on the business in which it is presently
engaged.
(ii) There are no other jurisdictions where the character of the property
owned or leased by Company or the nature of its activities requires Company to
be qualified as a foreign corporation.
(iii) The execution and delivery by the Sellers of this Agreement, the
performance by the Sellers or by the Company of all of the agreements and
obligations of Sellers under this Agreement, and the implementation of all of
the other transactions contemplated by this Agreement, have been duly and
properly authorized by all necessary corporate action on the part of the Company
and its shareholders and do not and will not (a) contravene any provision of the
Company's Amended Articles of Incorporation or By-laws, (b) conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any agreement, trust deed, indenture, mortgage or other
instrument to which the Company is a party or by which the Company is bound or
affected, (c) violate any provision of any law or regulation or any order,
ruling or interpretation thereunder or any judgment, decree or order of any
court or governmental or regulatory authority, bureau, agency or official (all
as in effect from time to time and applicable to the Company), (d) require any
waivers, consents or approvals from any of the creditors or trustees for
creditors of the Company, except for such as will have been obtained and will be
in effect as of the Closing Date, or (e) require any consents or approvals from
any shareholders of the Company, except such as will have been obtained and will
be in effect as of the Closing Date.
(iv) The Company has no subsidiaries and neither owns nor has any direct
or indirect interest in or control of any corporation, partnership, joint
venture or entity of any kind whether by ownership of shares of capital or
otherwise.
6
7
(v) The execution and delivery by the Company of this Agreement, the
performance by the Company of all of its agreements and obligations hereunder,
and the implementation of all of the other transactions contemplated by this
Agreement do not and will not prevent the merger by Company into Xionics as of
the Closing Date or any other future date.
(vi) The Company is not in violation of or in default under any provision
of its Articles of Incorporation, as amended, or By-laws.
(b) VALIDITY OF SHARES
(i) The Shares sold and delivered to Xionics by the Sellers pursuant to
this Agreement have been duly and validly issued and are fully paid and
nonassessable. No repayments of capital have been made.
(ii) Upon the purchase by Xionics of the Shares, and the delivery by the
Sellers to Xionics of the stock certificates representing such Shares, all in
accordance with the terms of this Agreement, lawful, valid and marketable title
to each such Share shall be conveyed to and vested in Xionics, free and clear of
all voting agreements, shareholder agreements, restrictions, liens and other
encumbrances, except the agreements, restrictions and other encumbrances imposed
by the Articles of Incorporation and/or this Agreement.
(iii) As of the Closing Date there will be no outstanding securities
exchangeable for or convertible into or carrying any rights to acquire from the
Company any shares of any class in the capital of the Company, and as of the
Closing Date there will be no outstanding options, warrants or other similar
rights to acquire from the Company any shares of any class in the capital stock
of the Company.
(iv) No shareholder of the Company or any other person has any preemptive
or other similar rights under the Articles of Incorporation, as amended, or
By-laws of the Company or under any applicable law to acquire from the Company
any shares of any class in the capital of the Company.
(v) Neither Sellers nor any other person has any rights of first refusal
to purchase or acquire from the Company any shares of any class in the capital
of the Company or any other securities of the Company, except for those rights
set forth in Exhibit A to this Agreement.
(vi) No shares of any class in the capital of the Company are subject to
any voting agreements, voting trusts, trust deeds, irrevocable proxies,
shareholder agreements or any other similar agreements or instruments.
(vii) Set forth in Exhibit A are (a) the name of each person who owns or
holds of record, on and as of the Closing Date, any Shares, (b) the number of
Shares owned by such person on the Closing Date, and (c) each person who as of
the Closing Date will hold employee stock options entitling such person to
acquire any number of Shares (without giving effect to vesting provisions). As
of the Closing Date there will be no other rights in any other person to acquire
Shares, whether by options, warrants or other rights to acquire any Shares.
(c) MATERIAL AGREEMENTS
(i) The Sellers have provided and will continue, until the Closing Date,
to provide, Xionics with a full opportunity to inspect and evaluate every
currently effective contract in the Company's possession, which shall include
the following contracts to which the Company is a party, whether written or oral
(collectively, the "Contracts"), which will continue after the Closing Date:
7
8
(1) a list of the customers of the Company (which list of Customers shall
be deemed to be Confidential Information of the Company as that term is defined
in that certain Non-Disclosure Agreement between XDT and Company dated June 2,
1997);
(2) all software development agreements, software license agreements
(other than license agreements from shrink-wrapped software purchased from a
retail source) and hardware and software service maintenance agreements;
(3) all loan agreements, mortgages and guaranties;
(4) all pledges, conditional sale or title retention agreements, security
agreements;
(5) all contracts which either involve payments or receipts by the Company
of more than U.S. $5,000.00 in the case of any single contract under which full
performance (including payment) has not been rendered;
(6) all free xxxxx, employment and consulting agreements, executive
compensation plans, bonus plans, deferred compensation agreements, pension
plans, group life, health and accident insurance, severance agreements and
plans, stock option plans, and other employee benefit plans;
(7) all agency, distributor, sales representative, franchise, partner or
similar agreements;
(8) all contracts between the Company and any of the Sellers;
(9) all lease and leasing contracts for property, and all lease and
leasing contracts for any other matter with a value of more than $3,000 per
year;
(10) all lease contracts of real property;
(11) all insurance contracts/policies;
(12) all collective bargaining agreements; and
(13) any other material contracts and any contract under which the
consequences of a default or termination could have a Material Adverse Effect.
(ii) Except as set forth below or in Exhibit E,
(1) each such Contract is a valid and binding obligation of the Company;
(2) the Company has fulfilled all obligations required pursuant to the
Contracts on its part prior to the date hereof, and the Sellers have no reason
to believe that the Company would not be able to fulfill, when due, all of its
obligations under the Contracts which remain to be performed after the date
hereof in the absence of the purchase of the Shares by Xionics;
(3) Neither the Company nor any other party is in breach 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 breach or default;
(4) No breach or default by any other party to any Contract exists;
8
9
(5) No Contract is likely to result in a material financial loss to the
Company;
(6) None of the Contracts, other than those identified as such in Exhibit
E, contain a provision requiring the consent of any other party thereto, or
giving rise to a right to terminate the Contract, in the event of a change of
control of the Company or directly results in any termination or other right on
the part of the other party to the Contract.
(7) true, correct and complete copies of all Contracts of the Company have
previously been or will be prior to the Closing Date delivered to Xionics by the
Sellers; Seller shall have the right, with Xionics approval, to submit a list of
non-customer contracts for matters within the normal course of business (i.e.
copier lease, water cooler lease, etc.) in lieu of copies of the actual
contracts for such matters (provided that Sellers shall provide copies of any
particular contracts at Xionics request).
(8) Notwithstanding V(b)(ii)(6) above, Sellers shall have, as of the
Closing Date, obtained the written approval and have provided Xionics with a
true, correct and complete copy, of the approval of the sale of the Shares of
the Company to Xionics of the following contracts:
- Standard office lease between Company and B&B VI dated March 7,
1991, as amended;
- Marketing and License Agreement between Company and Optimis
Systems, Inc. dated 6/17/97;
- Seaport Imaging Software License Card between Company and Optimis
Systems, Inc.; - Manufacturing License Agreement between Company
and Picture Elements, Inc. dated 1/5/96;
- Eretek manufacturing agreement
(d) PERSONNEL
(i) The Company does not employ any employees, consultants or contractors
except those listed in Exhibit D attached hereto. Except as listed in Exhibit D,
Company is not a party to any written employment contract with respect to any
such employees. All employees listed on Exhibit D as a Retained Employee shall
be employed by the Company as of the Closing Date.
(ii) Other than as noted in Exhibit M hereto, Company has no pension,
profit sharing, welfare, severance, benefit or other plan or agreement
(collectively, "Benefit Plans") subject to or governed by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") covering Company's
employees or any similar laws or regulations. Each of Company's Benefit Plans
has been administered and will through the Closing Date be administered in
compliance with its terms in all material respects and is and will be in
compliance in all material respects with the applicable provisions of ERISA,
including, but not limited to , the funding and prohibited transactions
provisions thereof) and all other applicable laws. Sellers shall provide to
Xionics prior to the Closing a copy of the most recent IRS determination letter,
if any, and the most recent annual report on Form 5500, if any.
(e) PENSION LIABILITIES
Other than may be described in the Simple XXX account Company has with
Xxxxxxx Xxxxxx & Co., Inc. (Account No 7982-6965), there are no pension
liabilities of the Company.
9
10
(f) INTELLECTUAL PROPERTY
(i) Exhibit F attached hereto sets forth a true, correct and complete
list of all patents, trademarks, material trade secrets and copyrights that are
owned by the Company.
(ii) Except as otherwise disclosed in Exhibit H:
(1) Company owns exclusively or has the exclusive right to use, free and
clear of all liens, charges, claims and restrictions, all patents, trade
secrets, trademarks, service marks, trade names, copyrights, licenses and rights
necessary to its business as now conducted ("Intellectual Property Rights"), and
Company is not infringing upon or otherwise acting adversely to the right or
claimed right of any person under or with respect to any of the foregoing. The
Company has the right to use all patents, trademarks, material trade secrets and
copyrights that are owned by third parties and used in the present conduct of
Company's business due to valid license agreements with such third parties.
(2) The Company has not received notice of a pleading or threatening
claim including, without limitation, a letter before action, based on patent,
trademark, trade name, copyright, trade secret or other intellectual property
right; and the Sellers have no reason to believe, and are not aware of any
allegation whatsoever, that the Company, or any product or technology developed
by the Company or any of its employees, consultants, agents or representatives
infringes any intellectual property right of any third party.
(iii) Neither the execution nor delivery of this Agreement, nor the
carrying on of Company's business by the employees of Company will, to the best
of Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under or a violation of any
fiduciary duty or any contract, covenant or instrument under which any of the
Company's employees are now obligated. Company does not believe it is or will be
necessary to utilize any inventions of any of its employees made prior to their
employment by Company.
(g) ADMINISTRATIVE APPROVALS, LICENSES, GOVERNING LAW
(i) The Company has obtained all Federal and state approvals and licenses
which are required for the operation of its business as presently conducted.
(ii) The business of the Company as presently conducted is in compliance
with all applicable Federal and state laws. The Company has complied with all
laws and regulations, all orders, rulings and interpretations thereunder, and
all judgments, decrees and orders of courts and governmental or regulatory
authorities, applicable to the Company, its business or operations, the
violation or contravention of which could reasonably be expected to have a
Material Adverse Effect. The Company has not received any notice from any
governmental authority of any violation or noncompliance with Federal and/or
state laws, and there are no outstanding notices of a violation or noncompliance
which have not been cured.
(iii) No approval, consent, order, notice, authorization or license by any
governmental or regulatory authority, bureau, agency or official is required,
under any provision of any applicable law:
(1) for the execution and delivery by the Sellers of this Agreement, or
for the performance by the Sellers or Company of any of its agreements or
obligations hereunder or in connection herewith, including, without limitation,
the sale of the Shares by Sellers to Xionics as described hereunder; or
10
11
(2) to ensure the continuing legality, validity, binding effect, or
enforceability of this Agreement;
(h) LITIGATION
(i) Except as set forth on Exhibit H, there is no pending or, to Seller's
knowledge, threatened action, suit, proceeding, claim or investigation before
any court, governmental or regulatory authority, agency, commission or official,
board of arbitration or arbitrator by or against the Company, its officers or
directors or in which the Company, its officers or directors is a participant.
(ii) No resolution has been passed by the shareholders of the Company for
the winding up, liquidation or dissolution of the Company. The Company has not
made an assignment for the benefit of creditors or become insolvent. Neither the
Company nor the Sellers have filed a petition in voluntary liquidation or
bankruptcy or filed a petition or answer or consent seeking its reorganization
or the readjustment of any of its indebtedness under applicable insolvency or
bankruptcy laws.
(i) TAXES
(i) With the exception of 1996 Federal and state taxes, the Company has
filed all Federal, state and local tax returns and other returns to be filed
according to applicable law when due, and all such returns are complete and
correct in all respects.
(ii) With the exception of 1996 Federal and state taxes (against which
Company has made estimated payments), the Company has paid all taxes and duties
when due, including, without limitation, estimated payments for 1997 Federal and
state taxes.
(iii) The Company has withheld and passed on to the relevant tax
authorities and social security parties all taxes and social security charges
which it is required to deduct from any payments to employees or others.
(iv) All necessary and usual amounts in connection with the preparation,
filing and payment of 1996 Federal and state taxes will have been accrued for on
the Closing Balance Sheet, including without limitation any and all late
fees/penalties, interest and the like. Sellers represent that as of the date of
this Agreement, Company's accountants are in the process of preparing the 1996
Federal and tax filings, and they will continue to process the same in the
normal course of business with the understanding that the same will be filed in
a timely manner to avoid late fees/penalties, interest and the like.
(v) No assessment that has not been settled or otherwise resolved has
been made with respect to taxes not shown on the previously filed tax returns of
the Company. No deficiency in Taxes or other proposed adjustment that has not
been settled or otherwise resolved has been asserted in writing by any taxing
authority against Company. To the knowledge of the Company and the Principal
Sellers, no tax return of the Company is now under examination by any applicable
taxing authority, The Company has not consented to any extension for the period
for assessment or collection with respect to any tax. There are no liens for
taxes (other than current taxes not yet due and payable) on any of the assets of
the Company. No claim has ever been made by a taxing authority in a jurisdiction
where Company does not pay taxes or file tax returns that the Company may be
subject to taxes assessed by that jurisdiction.
(vi) Adequate accruals have been made on the June 30, 1997 Balance Sheet,
and will be made on the Closing Balance Sheet, for all taxes of Company in
respect of all periods through the respective dates thereof. To the extent that
after preparation and filing by or on behalf of Xionics of any
11
12
tax returns for the period ending on the end of the day prior to the date of
this Agreement Xionics has incurred any costs or expenses which were not accrued
for as aforesaid, Xionics shall have the right to reduce the First Note by the
amount of such costs or expenses, all pursuant to the provisions of Section
3.4(c) of this Agreement. To the extent that the tax return for the period
ending on the end of the day prior to the date of this Agreement provides a
refund or requires a payment in excess of the amounts accrued on the Closing
Balance Sheet, an appropriate adjustment shall be made to the First Note.
(vii) For purposes of this Agreement, , "tax" shall mean any federal,
state, local or foreign income, gross receipts, franchise, estimated,
alternative, minimum, add-on minimum, sales, use, transfer, registration, value
added, excise, natural resources, severance, stamp, occupation, premium,
windfall profit, environmental, customs, duties, real property, personal
property, capital stock, intangibles, social security, unemployment, disability,
payroll, license, employee or other tax, levy, of any kind whatsoever, including
any interest, penalties or additional to the tax in respect of the foregoing;
and "tax return" shall mean any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
estimates, elections, schedules, statements or information) filed or required to
be filed in connection with the determination , assessment or collection of any
tax or the administration of any laws, regulations or administrative
requirements relating to any tax.
(j) CUSTOMER DISPUTES
There are no pending disputes between the Company and any of the customers,
and the Sellers are not aware of any significant dissatisfaction on the part of
any of the customers of the Company.
(k) FINANCIAL STATEMENTS/ABSENCE OF UNDISCLOSED LIABILITIES
(i) The Company has made available to Xionics copies of the balance
sheets of the Company as of December 31 for the fiscal years 1994, 1995 and
1996, inclusive, and the related statements of income, changes in stockholders'
equity and cash flows for the fiscal years 1994, 1995 and 1996, inclusive,
prepared by the Company's independent accountants, together with all other
customary and usual financial statements of Company; and each of such statements
(including the related notes, where applicable) has been prepared in accordance
with generally accepted accounting principles consistently applied during the
period involved, except as otherwise set forth in the notes thereto. The
financial statements of the Company are unaudited financial statements. The
books and records of the Company have been and are being maintained in
accordance with generally accepted accounting principles consistently applied
and applicable legal and regulatory requirements.
(ii) The Balance Sheet of the Company as June 30, 1997 (the "June 30, 1997
Balance Sheet") is attached hereto as Exhibit B.
(iii) Except as reflected in the June 30, 1997 Balance Sheet, or incurred
in the ordinary course of business after the date of such Balance Sheet, the
Company has no material liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise), including, without limitation, tax
liabilities, whether already due or due in the future, provided they relate to
the period before the date of Closing, which would be required to be reflected
on or reserved against in the June 30, 1997 Balance Sheet or the Closing Balance
Sheet, as the case may be, in order to cause the June 30, 1997 Balance Sheet or
the Closing Balance Sheet, as the case may be, to fairly represent the financial
condition of the Company as of June 30, 1997 or the Closing Date, as the case
may be, and which were not fully reflected on or reserved against in the June
30, 1997 Balance Sheet or the Closing Balance Sheet, as the case may be.
12
13
(iv) The Company does not have any Indebtedness for Borrowed Money which is
not reflected in the June 30, 1997 Balance Sheet or the Closing Balance Sheet,
as the case may be.
(v) The prepayment reflected on the June 30, 1997 Balance Sheet is for the
prepayment of various expenses in the normal course of business (i.e. rent,
insurance, etc.). The Closing Balance Sheet will reflect similar prepaid
expenses, and in addition will reflect a prepaid royalty relating to the IP-10
family of products in the amount of approximately $20,000. This royalty
prepayment to be reflected on the Closing Balance Sheet, is the only prepayment
of royalties or other like amounts under any agreements between Company and any
of its suppliers.
(l) WARRANTY AND PRODUCT LIABILITY CLAIMS. Each software program, hardware
board, and other product manufactured, sold, leased, licensed or delivered by
the Company is in material conformity with all applicable contractual
commitments and all express and implied warranties applicable thereto.
(m) TITLE TO PROPERTIES.
(i) The Company has good, valid and marketable title in and to all of its
properties and assets reflected on the June 30, 1997 Balance Sheet, except to
the extent the same has been sold or otherwise disposed of in the normal course
of business prior to the date of this Agreement; provided, however, that no
capitalized equipment has been or will be sold or otherwise disposed of, whether
in the normal course of business or otherwise, from and after the period
reflected on the June 30, 1997 Balance Sheet through the Closing Date (except
that company has disposed of 2 laptop computers (1 loss, 1 part of severance
package to ex-employee). All properties and assets of the Company (real or
personal, tangible or intangible) are free and clear of all defects of title and
also free and clear of all mortgages, liens, pledges, charges, security
interests and other encumbrances of any kind whatsoever, except (1) liens for
current taxes not yet due and payable, and (2) such imperfections or minor
defects of title, easements, rights-of-way and other similar restrictions (if
any) as are insubstantial in character, amount or extent, do not materially
detract from the value or interfere with the present or proposed use of the
properties or assets of the Company subject thereto or affected thereby, and do
not otherwise adversely affect or impair the business or operations of the
Company taken as a whole.
(ii) The Company does not own any real property.
(n) INSURANCE. The Company maintains property and liability insurance with
reputable insurance companies insuring all of the Company's material assets
against such risks and in such amounts as are appropriate and reasonable
considering the properties, business and operations of the Company and will
maintain the same through the Closing Date. The Company is in compliance with
the requirements of the insurance policies maintained by the Company as
aforesaid.
(o) INTERIM BUSINESS DEVELOPMENTS
(i) Except as set forth on Exhibit J, since June 30, 1997, the Company has
not entered into any contract or commitment or taken any other action that is
not in the ordinary course of business as conducted in prior periods; and
(ii) Since June 30, 1997, there has been no damage, accident or other
detrimental event materially affecting the business of the Company.
13
14
(p) PRIVATE OFFERING.
(i) Neither the Company, Sellers, nor anyone acting on its behalf has
offered any Shares or any substantially similar securities of the Company for
sale to, or solicited offers to buy any securities of the Company from, or
otherwise approached or negotiated with respect thereto with any prospective
purchasers other than Xionics.
(ii) Based on and assuming the accuracy of Xionics' representation in
6.1(c) below, the offer and sale of Shares to Xionics contemplated by this
Agreement are exempt from the registration and prospectus delivery requirements
of the Securities Act. Based on and assuming the accuracy of Xionics'
representation in 6.1(c) below, the sale by the Sellers of the Shares
contemplated by this Agreement are exempt from registration or qualification
under the registration or qualification requirements of California law.
(q) ACCURACY AS OF CLOSING DATE. All warranties and representations of
Principal Sellers in this Agreement will, on the Closing Date, be true and
complete on and as of the Closing Date.
(p) NO MISLEADING STATEMENTS. Neither this Agreement (including the Exhibits
hereto), any representations and/or warranties set forth herein, nor any of the
other documents delivered at the Closing to Xionics by Sellers pursuant to this
Agreement (including the Exhibits hereto), taken as a whole, contains any untrue
statement of any material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not misleading.
5.3 The Company and Sellers, jointly and severally, hereby represent and
warrant to Xionics and XDT on and as of this date and on the Closing Date,
except for such representations and warranties that relate to an earlier or
later date, as the case may be, that:
(a) BINDING EFFECT OF DOCUMENTS, ETC.
(i) This Agreement has been duly executed and delivered by the Sellers and
is in full force and effect. The agreements and obligations of the Sellers
herein constitute legal, valid and binding obligations of the Sellers
enforceable against the Sellers jointly and severally in accordance with their
respective terms.
(ii) The representations and warranties made by the Sellers in paragraph
(i) of this Section 5.3(a) are subject to the following qualifications:
(1) the enforceability of any rights and remedies provided in this
Agreement against any particular party hereto is subject to any applicable
bankruptcy, reorganization, moratorium or other similar laws affecting generally
the enforcement of rights against any party; and
(2) the availability of equitable remedies for the enforcement of any
provision of this Agreement may be subject to the discretion of the court before
which any proceeding for the enforcement of any such provision may be brought.
(b) TRANSACTIONS WITH ASSOCIATED PERSONS, ETC.
(i) Except as otherwise described in Exhibit G, (1) none of the Sellers or
the Company is a party to or bound by or otherwise committed in respect of any
agreement, instrument or contract (whether written or oral) to which any
Associated Person (as hereinafter defined) is or is to become a
14
15
party or under which any Associated Person has or is to acquire any rights,
interests or benefits, (2) the Company is not a party to or a participant in or
otherwise committed in respect of any transaction or arrangement in which any
Associated Person has or is to acquire any rights, interests or benefits, (3)
the Company is not committed to make nor has any investments of any kind in any
Associated Person, (4) no Associated Person has or is committed to make any
investments of any kind in the Company , (5) there is no Indebtedness for
Borrowed Money of the Company to any Associated Person, and (6) there is no
Indebtedness for Borrowed Money of any Associated Person to the Company.
(ii) As used herein, the term "ASSOCIATED PERSON" shall mean:
(1) any person who owns or holds, of record and/or beneficially, any
shares of any class in the capital of the Company;
(2) any person who is a director or an officer of the Company;
(3) any person who is an ancestor, a lineal descendant, a brother or
sister, a spouse, a father-in-law, or a mother-in-law of a person
who is an Associated Person; and
(4) any person which (directly or indirectly) controls or is
controlled by or is under common control with any Associated
Person.
As used herein, the term "ASSOCIATED PERSON" shall not include Xionics or
XDT.
(iii) Sellers warrant and represent that the Note to Xxxxx Xxxxxxx
from the Company reflected on Exhibit G will be paid in full by the Company
prior to the Closing Date.
(c) NO MISLEADING STATEMENTS. Neither this Section 5.3 nor any representations
and/or warranties set forth herein, taken as a whole, contains any untrue
statement of any material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not misleading.
(d) BROKER. No broker or finder other than Broker has acted for Sellers in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder other than Broker is entitled to any brokerage or finder's fee
or other commission. Sellers will jointly and severally indemnify and hold
Xionics harmless from any such payment alleged to be due by or through the
Sellers to any broker or finder other than Broker as a result of the action of
Sellers or its officers and agents. Sellers agree that the amounts due and
payable by the Company to Broker will be paid by the Sellers out of the Purchase
Price proceeds.
(e) ACCURACY AS OF CLOSING DATE. All warranties and representations of Sellers
in this Agreement will, on the Closing Date, be true and complete on and as of
the Closing Date.
VI - REPRESENTATIONS OF XIONICS
6.1 Xionics and XDT jointly and severally represent and warrant to the Sellers
that:
(a) DUE ORGANIZATION, ETC. Xionics and XDT are corporations duly organized,
legally existing and in good standing under the laws of the State of Delaware.
Xionics and XDT have all requisite power and authority to enter into this
Agreement, and to perform, observe and comply with all of their agreements and
obligations hereunder.
(b) BINDING EFFECT OF DOCUMENTS. This Agreement has been duly authorized,
executed and delivered by Xionics and XDT, and constitutes the valid and legally
binding agreement of Xionics and XDT, enforceable in accordance with its terms,
except as such validity, binding effect or enforceability may be affected by (i)
applicable bankruptcy, reorganization, moratorium or other similar laws
affecting generally the enforcement of rights, or (ii) the availability of
equitable remedies.
15
16
(c) INVESTMENT REPRESENTATIONS. Xionics acknowledges that the Shares to be
delivered hereunder have not been registered. The Shares to be delivered
hereunder are being acquired for Xionics' own account, for investment only,
without a view to distribution, as that phrase has meaning under the Securities
Act, of all or any part of the Shares. Xionics and XDT understand that the
effect of such representation and warranty is that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from such registration is available at the time of any proposed
sale or other transfer thereof. Xionics and XDT agree to indemnify and hold
harmless Sellers against all liabilities, costs and expenses including
reasonable attorney's fees, incurred by Sellers as a result of any sale,
transfer or other disposition by Xionics (or its successor) of all or any part
of the Shares in violation of the Securities Act.
(d) NO CONFLICT. The execution, delivery and performance of this Agreement by
Xionics and XDT do not and will not (i) violate or conflict with any material
law, rule, regulation, order, judgment, injunction, decree determination or
award applicable to Xionics or XDT, (ii) violate or conflict with the
certificate of incorporation or by-laws of Xionics or XDT, or (iii) require any
material pre-Closing consent, notice, authorization or approval under, result in
any material breach of or constitute a material default (or event which with
notice or lapse of time or both would become a material default) under, or
result in the creation of any material lien or other encumbrance on any of the
properties or assets of Xionics or XDT pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument to which Xionics, XDT or any of their affiliates is a party or by
which any of them, any of its or their respective properties is bound, or
affected, which might have a material adverse effect on the consummation of the
transactions contemplated by this Agreement,
(e) ABSENCE OF LITIGATION. There is no private or governmental suit, claim,
action at law or in equity, proceeding, investigation or audit pending or to
Xionics' and XDT's knowledge threatened, before any arbitrator, court or
governmental or regulator authority, against Xionics or XDT that challenges or
reasonably could be expected to prevent the consummation of the transactions
contemplated hereby nor to Xionics' nor XDT's knowledge is there any basis for
any of the foregoing.
(f) CONSENTS AND APPROVALS. The execution, delivery and performance of this
Agreement by Xionics and XDT do not require any consent, approval, authorization
or other action by, or filing with or notification to, any domestic or foreign
governmental or regulatory authority or any other person, except where the
failure to obtain such consents, approvals, authorizations or actions, or to
make such filings or notifications, would not (i) prevent Xionics or XDT from
performing any of its obligations under this Agreement, or (ii) otherwise
prevent the consummation of the transactions contemplated herein by Xionics or
XDT.
(g) ABSENCE OF UNTRUE OR MISLEADING STATEMENTS. No representation and/or
warranty of Xionics or XDT as set forth herein or in any document to be
delivered at the Closing contains any untrue statement of any material fact or
omits to state any material fact necessary in order to make the statements
contained herein not misleading.
(h) BROKERS OR FINDERS. Xionics, XDT and their officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders fees or agents commissions or other like payment in connection with this
Agreement and Xionics and XDT will indemnify and hold Sellers harmless from any
such payment alleged to be due by or through Xionics or XDT as a result of the
action of Xionics, XDT or their officers and agents.
(i) INTERIM ACTION BY XIONICS. Xionics agrees that it will not, from the time
it assumes effective operating control of the Company as of the date of this
Agreement, until the Closing has occurred, direct
16
17
or require the Company or any of its employees, directors or officers to take
any action out of the ordinary course of business, and Company shall be entitled
(without Xionics' consent) to continue to operate in a manner consistent with
its prior ordinary course of business and to take such other actions as
described in Section 7.1 below as may be reasonably necessary to comply with its
obligations under this Agreement.
(j) ACCURACY AS OF THE CLOSING DATE. All representations an warranties of
Xionics and XDT will, on the Closing Date, be true and complete on and as of the
Closing Date.
VII - ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 In connection with Sellers' obligations described elsewhere in this
Agreement, the parties agree that Company shall, and Sellers shall cause Company
to take any or all of the actions noted below as the Company and Sellers deem
appropriate in order to comply with their respective obligations under this
Agreement, notwithstanding the provisions to the contrary described in Section
5.2(o) of this Agreement; provided, however, that no other actions out of the
ordinary course of business (including without limitation termination of
contracts between Company and any third party) may be taken by Company or
Sellers without the prior consent of Xionics in each instance; and further
provided that neither Company nor Sellers is affirmatively obligated to take any
of the actions noted below.
(a) terminate employees of the Company, other than those employees noted as
"retained" on Exhibit D hereto (which termination shall include payment of all
amounts due in connection with such termination of personnel, including, without
limitation, all amounts due pursuant to the laws of California through the
Closing Date for salaries, wages, bonuses, overtime, vacations, sick and
personal days, pension contributions, severance benefits and all other
applicable amounts due to such terminated personnel as a result of their
employment by the Company or related thereto;
(b) repurchase issued and outstanding stock of the Company (which repurchase
shall be at a price no lower than the current fair market value of the Shares);
For purposes of this Section 7.1(b), fair market value shall mean a price no
lower than the per share price reflected by the terms of this Agreement, as
reduced by the estimated sale transaction costs (including Broker fees,
attorneys costs and accounting costs) to be borne by the Sellers entering into
this Agreement.
(c) make the appropriate applications and filings with the state which are
required by the provisions of this Agreement (including payment of all filing
fees and the like);
(d) conduct appropriate stockholder and/or Board of Directors meetings in order
to obtain the necessary approvals contemplated by the provisions of this
Agreement;
(e) obtain approvals of those parties identified in Section 5.2(c)(ii)(8);
VIII - CONDITIONS OF CLOSING
8.1 The obligations of Xionics to purchase and pay for the Shares being
purchased by Xionics at the Closing in accordance with the terms hereof shall be
subject to the satisfaction in each such instance, prior thereto or concurrently
therewith, unless otherwise indicated, of each of the following conditions
precedent:
(a) DUE DILIGENCE INVESTIGATION. Completion by Xionics of a due diligence
investigation satisfactory to it of Seaport's assets, liabilities and business;
17
18
(b) CERTIFIED COPIES OF CHARTER DOCUMENTS. Xionics shall have received from the
Company a copy, certified by an authorized officer of the Company to be true and
complete on and as of the Closing Date, of each of (1) the Articles of
Incorporation and all amendments thereto in effect on the Closing Date, and (2)
the By-laws of the Company, in effect on the Closing Date, and (3) any documents
described in Section 5.2(a)(iii)(d) and (e). Each of such documents shall be
reasonably satisfactory in form and substance to Xionics. Xionics acknowledges
having received a copy of Company's representation of the current form of each
such documents through and including August 31, 1990 (with respect to the
By-laws) and March 13, 1991 (with respect to the Articles of Incorporation) and
agrees that the form and substance of the same are satisfactory to Xionics.
(c) PROOF OF CORPORATE ACTION. Xionics shall have received copies, certified by
an authorized officer of the Company to be true and complete on and as of the
Closing Date, of the records of all corporate action taken by the Company`s
Board of Directors to authorize this Agreement.
(d) REPRESENTATIONS AND WARRANTIES. Receipt by Xionics of a Certificate signed
by each of the Sellers that each of the representations and warranties made by
the Sellers to Xionics in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same full force and effect as if
such representations and warranties had been made to Xionics by the Sellers on
and as of the Closing Date. The Sellers shall have performed and complied, or
shall have caused the Company to have performed and complied, in all material
respects with all agreements and conditions contained in this Agreement which
are required to be performed or complied with by the Company and Sellers on or
prior to the Closing Date. No event shall have occurred on or prior to the
Closing Date and be continuing on such date, and no condition shall exist on any
such date, which constitutes a breach or default on the part of the Company
and/or Sellers of any representation, warranty or other material term hereunder.
(e) PROCEEDINGS. All corporate and other proceedings to be taken by Sellers and
the Company in connection with the arrangements and transactions contemplated
hereunder shall be reasonably satisfactory in form and substance to Xionics, and
Xionics shall have received all such originals or certified or other copies of
all such documents, including records of corporate or other proceedings, as
Xionics shall have reasonably requested.
(f) DELIVERY OF STOCK CERTIFICATES. Sellers shall have delivered on the Closing
Date to Xionics duly issued stock certificates representing all of the Shares
being purchased by Xionics hereunder on the Closing Date, appropriately endorsed
or accompanied by separate stock powers.
(g) QUALIFICATIONS. All authorizations, approvals or permits (if any) of any
governmental or regulatory authority or agency of the United States, the State
of Delaware, the State of California, or any other State of the United States
which are required in connection with the sale of the Shares pursuant to this
Agreement shall have been duly obtained by Sellers and shall be effective on and
as of the Closing Date.
(h) MEMBERSHIP ON BOARD OF DIRECTORS. All current members of the Board of
Directors of the Company shall have resigned as of the Closing Date.
(i) OPINIONS. Receipt by Xionics of an opinion of Sellers counsel in the form
set forth in Exhibit L to this Agreement. and receipt by Xionics of an opinion
of Company's independent accounting firm customary in connection with the
certification of the completeness and accuracy of Company's December 31, 1996
financial statements;
(j) CONTINUATION OF BUSINESS. Subject to Section 7.1 above, Seaport will have
continued its operations in the ordinary course of business until the Closing;
18
19
(k) CERTIFICATES. Receipt by Xionics of both corporate and tax Certificates of
Good Standing from the State of California.
(l) OTHER AGREEMENTS.
(i) There shall have been executed and delivered by the Retained
employees of the Company such agreements, including, without limitation,
employment agreements, non-compete agreements and confidentiality agreements, as
Xionics shall require, and all of such agreements shall be in form and substance
satisfactory to Xionics.
(ii) Xxxxx Xxxxxxx and Xxxxxxx Xxxx shall have, as of the Closing Date,
signed employment agreements with Xionics in form mutually agreeable to the
parties thereto.
(iii) Xxxxx Xxxxxxx shall have assigned the patent and patent application
described in Exhibit F hereto to XDT as of the Closing Date. Xionics will
prepare the required paperwork in connection with such assignment and will pay
the costs of preparing and filing the same.
(l) CONSENTS OF THIRD PARTIES. Xionics shall have received a copy of all
consents required to be obtained as described in Section 5.2(c)(ii)(8) of this
Agreement.
8.2 Unless the Closing shall have occurred on or before September 8, 1997 (the
"outside closing date"), this Agreement shall be terminated and the
unconsummated portions of the transactions herein contemplated shall be
abandoned as of such date, and Xionics shall immediate relinquish control of the
Company to Sellers; provided, however, that the aforesaid outside closing date
may be extended by mutual written agreement of the parties. Xionics shall have
the right to terminate this Agreement prior to the Closing Date in the event its
due diligence investigation identifies any matters unsatisfactory to Xionics in
its sole discretion and the parties are unable to reach a mutually agreeable
resolution of such matter.
IX - CONDITIONS OF SELLERS' OBLIGATION TO SELL SHARES
9.1 The obligations of the Sellers to sell the Shares to Xionics on the Closing
Date in accordance with the terms hereof shall be subject to the satisfaction,
prior thereto or concurrently therewith, of each of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. Receipt by Sellers of a Certificate
signed by an officer of Xionics and XDT that each of the representations and
warranties made by Xionics and XDT to Sellers in this Agreement are true and
correct in all material respects on and as of the Closing Date with the same
full force and effect as if such representations and warranties had been made to
Sellers by Xionics and XDT on and as of the Closing Date. Each of the
representations and warranties made by Xionics and XDT to the Sellers in Article
VI hereof shall be true and correct when made by Xionics and XDT and shall be
true and correct on the Closing Date.
(b) PAYMENT OF PURCHASE PRICE. Xionics shall have delivered to the
Company, in full and complete payment for the Shares to be purchased by Xionics
from the Company hereunder, the portion of the Purchase Price payable by Xionics
as of the Closing Date as described in Article III and shall deliver the Notes
described in Article III, all as described in Article III of this Agreement.
(c) NO PROHIBITION BY LAW. There is no provision of any applicable law or
regulation and no judgment, injunction, order or decree that prohibits the
consummation of this Closing.
19
20
(d) CORPORATE ACTION. Sellers shall have received copies, certified by an
authorized officer of the Xionics and XDT to be true and complete on and as of
the Closing Date, of the records of all corporate action taken by Xionics' Board
of Directors to authorize this Agreement.
9.2 Both Sellers (collectively) and Xionics shall have the right to terminate
this Agreement at any time prior to the Closing Date in the event that any
matter arises that the terminating party in good faith and in its reasonable
business judgment determines would have a Material Adverse Effect on the
operation of the Company's business and the parties are unable to reach a
mutually agreeable resolution of such matter.
X - SURVIVAL OF REPRESENTATIONS; DEFAULT; INDEMNIFICATION
10.1 intentionally left blank
10.2 DEFAULT. In the event of any breach or default by Sellers of any of the
provisions of this Agreement prior to the Closing Date, after giving notice to
Sellers of such breach or default, and if Sellers are not able to remedy the
breach or default to the satisfaction of Xionics within 3 days of such notice
(or such longer period of time as is mutually agreed upon between the parties in
the event the matter giving rise to such breach or default is not capable of
being cured within 3 days, provided that Sellers are diligently pursuing the
cure of such breach), Xionics shall have the right, but not the obligation, to
remedy the situation or condition giving rise to such breach or default, in
which case the Purchase Price shall be reduced by the amount incurred by Xionics
in curing such default (but only to the extent that Sellers are not already
providing indemnification for that breach pursuant to Section 10.3 below).
10.3 INDEMNIFICATION BY SELLERS.
(a) The Sellers agree to indemnify Xionics as follows:
(i) The Principal Sellers shall jointly and severally indemnify and hold
Xionics and XDT harmless from and against, and to pay to Xionics and XDT, on
demand by Xionics or XDT from time to time, the full amount of any loss, claim,
damage, liability, cost or expense (including reasonable attorneys' fees)
resulting to Xionics, XDT and/or Company during the Indemnification Period from
(1) any false, incorrect or misleading representation or warranty of the Sellers
or the Company contained in Article II or Section 5.2 of this Agreement, or in
any agreement, instrument or document delivered by the Sellers or the Company to
Xionics or XDT pursuant to any of the provisions of this Agreement; (2) any
claim or litigation brought by parties other than XDT or Xionics (whether
brought prior to or after the Closing Date) which is demonstratably related to
(i) the operation of the business of the Company prior to the Closing Date, or
(ii) any event, act or omission of the Company occurring prior to the Closing
Date (including without limitation those actions taken pursuant to Section 7.1
of this Agreement); (3) product liability claims brought against the Company for
goods sold prior to the Closing Date, or (4) the breach of any covenant or
obligation of the Company or the Principal Sellers under this Agreement or (5)
which arise in connection with the matter described in Exhibit H (other than
economic damages - i.e. lost sales and the like).
(ii) The Sellers shall severally indemnify and hold Xionics and XDT
harmless from and against, and pay to Xionics or XDT, on demand by Xionics or
XDT from time to time, the full amount of any loss, claim, damage, liability,
cost or expense (including reasonable attorneys' fees) resulting to Xionics, XDT
and/or Company from claims asserted during the Indemnification Period relating
to any false, incorrect or misleading representation or warranty of that Seller
contained in Section 5.1 of this Agreement, or in any agreement, instrument or
document delivered by the Sellers to Xionics or XDT pursuant to any of the
provisions of this Agreement.
20
21
(iii) The Sellers shall jointly and severally indemnify and hold Xionics
and XDT harmless from and against, and pay to Xionics or XDT, on demand by
Xionics or XDT from time to time, the full amount of any loss, claim, damage,
liability, cost or expense (including reasonable attorneys' fees) resulting to
Xionics, XDT and/or Company from claims asserted during the Indemnification
Period relating to any false, incorrect or misleading representation or warranty
of that Seller contained in Section 5.3 of this Agreement.
(iv) The aggregate liability of any individual Seller under Sections 10.2,
Section 10.3 and 10.6 shall not exceed the total proportionate share of the
Purchase Price actually received by that individual Seller (if the Purchase
Price has been fully paid at the time of the indemnification) or to be received
by that individual Seller (if the Purchase Price has not been fully paid at the
time of the indemnification), after any applicable Purchase Price adjustments
allocated to that Seller pursuant to Article III of this Agreement have been
made, if any, on the date indemnification is due; provided, however, that Seller
Xxxxx Xxxxxxx'x maximum liability shall be as previously set forth in this
Section 10.3(a)(iv), plus an additional $93,014.00.
(b) (i) Any claim for payment under these provisions (other than otherwise
addressed in Section 10.6) by Xionics or XDT shall be delivered (along with a
brief description of the facts upon which such claim is based and the amount of
such claim) in writing to the Seller against whom the claim is made (or if the
claim is made against all Principal Sellers or all Sellers, then notice need
only be delivered to the Seller Representative). If the Seller to whom the
notice was delivered shall, in good faith, notify Xionics or XDT in writing
(within fifteen (15) days following receipt of the notice delivered by Xionics
or XDT) of the Seller's agreement with or objection to the claim of
indemnification, and if following any such objection and discussing the matter
in good faith the parties are unable to agree on the validity of the claim for
indemnification, the dispute shall be submitted for binding arbitration in San
Jose, CA pursuant to the procedures and rules of the American Arbitration
Association,. Such arbitration shall be conducted by one (1) arbitrator mutually
acceptable to Xionics and those Sellers against whom the claim for
indemnification has been brought. If the parties are unable to agree upon an
arbitrator within ten (10) days, an arbitrator shall be appointed pursuant to
the procedures of the American Arbitration Association. The parties hereto shall
submit all pertinent documents to the arbitrator at the time the arbitrator is
appointed. The arbitrator shall make its decision within ten (10) days of its
appointment. The costs and expenses (including reasonable counsel fees) of any
such arbitrator shall be borne by the parties against whom the award is
rendered, or as may otherwise be determined by the arbitrator. To the extent
that Xionics or XDT shall have prevailed in such arbitration, or in the event
that the applicable Seller(s) did not deliver written notice of objection to the
indemnity claim within the fifteen (15) day period specified in the second
sentence of this Section 10.6(b)(i), Xionics shall have the right to reduce the
Purchase Price by means of a reduction to the amount owing to the applicable
Seller(s) under the First Note or the Second Note by the amount determined by
the arbitrator to be owing to Xionics or XDT as a result of such indemnity
claim, plus the costs of the arbitrator if Seller(s) do not pay the same within
thirty (30) days of their receipt of an invoice for the same.
10.4 INDEMNIFICATION BY XIONICS AND XDT. Xionics and XDT shall jointly and
severally indemnify, and hold Sellers harmless from and against any loss, claim,
damage, liability, cost or expense (including reasonable attorneys' fees)
resulting to Sellers from any claim asserted during the Indemnification Period
relating to (i) any false, incorrect or misleading representation or warranty of
Xionics or XDT contained in this Agreement, or in any agreement, instrument or
document delivered by Xionics or XDT to Sellers pursuant to any provision of
this Agreement, or (ii) any breach by Xionics or XDT of the terms of this
Agreement.
21
22
10.5 ATTORNEYS FEES. If any legal action or other proceeding is brought for the
enforcement of this Agreement or because of an alleged dispute, breach, default
or misrepresentation in connection with any of the provisions of this Agreement,
or to interpret this Agreement or any of the provisions hereof, the successful
or prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding, whether or not the action or
proceeding goes to final judgment, in addition to any other relief which it or
they may be entitled to. In the event Sellers, (or any individual Seller, as the
case may be) fail to pay to Xionics any such amounts owing, Xionics shall have
the right to reduce the Purchase Price payable to Sellers (or any individual
Seller, as the case may be), by means of a reduction in the First Note or the
Second Note, by the amount due to be paid to Xionics by Sellers.
10.6 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or legal proceeding (whether against the
Company, Xionics, XDT, or against any other Person) with respect to which the
Sellers may become obligated to hold harmless, indemnify, compensate or
reimburse Xionics or XDT pursuant to Section 10.3, the procedure set forth below
shall be followed.
(a) NOTICE. Xionics or XDT shall give immediate written notice of any claim or
the commencement of any claim or legal proceeding against Xionics, XDT or the
Company for which indemnity may be sought under Section 10.3 together with a
description of the claim or such legal proceeding and the specific basis upon
which such indemnity may be sought consistent with the provisions of this
Agreement. The Indemnification Period shall be tolled solely with respect to a
particular claim for the period beginning on the date the Indemnifying Party
receives written notice of that claim until the final resolution of such claim
so long as such claim is made within the Indemnification Period.
(b) DEFENSE OF CLAIM. (i) The Seller Representative may elect (by written
notice to Xionics within ten (10) days after receipt of written notice under
Section 10.6(a)) to assume the defense of or otherwise control the handling of
any such claim or legal proceeding for which indemnity is sought, subject to the
limitations provided herein. Any such election by the Seller Representative
shall be deemed binding upon all Sellers, each of whom shall share in the cost
of defending the claim, which defense shall be provided pursuant to the terms of
Section 10.3(a) above.
If the Seller Representative elects to assume the defense of any such claim or
legal proceeding:
(A) the Seller Representative shall proceed to defend such claim or legal
proceeding in a diligent manner with counsel reasonably satisfactory to
Xionics;
(B) Xionics shall cooperate fully in all aspects of any defense and shall
make available to the Seller Representative any documents and materials in
the possession of Xionics and reasonable access to employees that may be
necessary to the defense of such claim or legal proceeding;
(C) The Seller Representative shall keep Xionics informed of all material
developments and events relating to such claim or legal proceeding;
(D) Xionics shall have the right to participate in the defense of such
claim or legal proceeding at Xionics' expense; and
(E) at their expense, the Seller Representative, together with the
remaining Sellers, shall have the right to settle, adjust or compromise
such claim or legal proceeding with the consent of Xionics; provided,
however, that Xionics shall not unreasonably withhold such consent.
22
23
(ii) If the Seller Representative does not elect to assume the defense of
any such claim or legal proceeding, Xionics may proceed with the defense of such
claim or legal proceeding on its own. If Xionics so proceeds with the defense of
any such claim or legal proceeding on its own:
(A) all third party expenses relating to the defense of such claim or
legal proceeding (whether or not incurred by Xionics) shall be borne and
paid exclusively by the Sellers; provided, however, that the Sellers shall
not be liable for the costs of more than one counsel on behalf of Xionics
collectively; in the event Sellers fail to pay such expenses within fifteen
(15) days of receipt of an invoice therefore, Xionics shall have the right
to deduct the costs incurred by Xionics from the unpaid portion of the
Purchase Price covered by the First Note or the Second Note, as the case
may be.
(B) the Sellers shall make available to Xionics any documents and
materials in the possession or control of the Sellers that may be necessary
to the defense of such claim or legal proceeding except for documents or
materials which are sealed by a court order or are subject to a
nondisclosure agreement prohibiting disclosure by the applicable Seller;
(C) Xionics shall keep the Seller Representative informed of all material
developments and events relating to such claim or legal proceeding; and
(D) Xionics shall have the right to settle, adjust or compromise such
claim or legal proceeding only with the consent of the Seller
Representative, which such consent shall not be unreasonably withheld.
(E) The provisions of Section 10.3(b) shall not apply to this Section
10.6(b)(ii).
(c) EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN XIONICS OR XDT. No person
other than Xionics, XDT or any affiliate thereof or successor thereto or
assignee thereof shall be permitted to assert any indemnification claim or
exercise any other remedy under Section 10.3(a) of this Agreement unless
Xionics (or XDT or any affiliate thereof or any successor thereto or assign
thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.
10.7 INDEMNIFICATION PERIOD/ SURVIVAL OF REPRESENTATIONS. The representations
and warranties of the Sellers contained in this Agreement, or any agreement,
instrument or document delivered pursuant to any of the provisions of this
Agreement, shall survive the execution and delivery of this Agreement, any
examination or investigation conducted by or on behalf of Xionics, and the
Closing hereunder for a period of two (2) years with respect to all matters not
relating to calculation, payment or filing of taxes, and for a period of three
(3) years with respect to all matters relating to calculation, payment of filing
of taxes. The Indemnification Period shall terminate (i) two (2) years after the
Closing Date for all matters except matters related to the calculation, payment
of filing of taxes, and (ii) three (3) years after the Closing Date for matters
relating to the calculation, payment of filing of taxes; accordingly, all
claims, demands or requests by Xionics for indemnification by Sellers as
described in this Section X must be submitted to Sellers within seven (7) days
after the expiration of the Indemnification Period.
23
24
10.8 The Sellers shall not be required to make any indemnification payment
pursuant to Section 10.2 or 10.3, or on account of any other provision of this
Agreement, for any inaccuracy in or breach of any of the representations and
warranties set forth in Articles II or V hereof, or in any certificate delivered
by Xionics in connection with this Agreement, until such time as the total
amount of all indemnified damages that have been suffered or incurred by Xionics
and XDT, collectively, or to which Xionics and XDT, collectively, have otherwise
become subject, exceeds Fifty Thousand Dollars ($50,000) in the aggregate.
XI - NON-COMPETITION
11.1 COVENANT NOT TO SOLICIT. In consideration of the Purchase Price, the
Sellers noted on Exhibit A as being subject to the provisions of this Section
11.1 hereby agree that until the later of (i) the third (3rd) anniversary of the
Closing Date hereof or (ii) one year after such Seller's association with the
Company, Xionics and/or XDT (whether by employment, consulting or otherwise)
such Sellers will not, without the Xionics' written approval, directly or
indirectly:
(a) recruit, solicit or knowingly induce, or attempt to induce, any employee or
consultant of the Company or Xionics to terminate his or her employment or
consulting relationship with the Company or Xionics (except as otherwise
provided in Section 7.1(a) of this Agreement); or
(b) solicit, divert or take away, or attempt to do so, the business or
patronage of any of the clients, customers, or accounts, or prospective clients,
customers or accounts, of the Company, Xionics, XDT or any affiliate of any of
them.
In the event this Agreement is terminated, the aforesaid provisions of this
Section 11.1 shall be of no force and effect.
11.2 CESSATION OF USE OF NAME. As of the Closing Date, Sellers shall refrain
from using the business name Seaport Imaging after Closing except as otherwise
directed by Xionics in connection with any Seller's employment by Xionics.
11.3 NONCOMPETITION AGREEMENTS. The Company will, on the Closing Date, cause
each Seller noted on Exhibit A as being subject to this Section 11.3 to execute
and deliver to Company a noncompetition and confidentiality agreement in
substantially the form set forth on Exhibit K.
11.4 CONFIDENTIALITY AGREEMENTS. The Company will, on the Closing Date, cause
each of the employees, consultants and agents of the Company with access to
confidential information or documents of the Company to execute and deliver to
Xionics a confidentiality agreement in form and substance substantially similar
to that which Xionics or XDT requires to be executed by all of its employees,
consultants and agents with similar duties and responsibilities.
XII - MISCELLANEOUS
12.1. NOTICES.
(a) All notices and other communications pursuant to this Agreement shall be in
writing, either delivered in hand or sent by overnight delivery, first-class
mail, postage prepaid, or sent by telex, telecopier, facsimile machine or
telegraph, addressed as follows:
(i) if to the Sellers, at the address of the Sellers set forth on Exhibit
I hereof, or at such other address as shall have been furnished to Xionics in
writing by the Sellers, with a copy to Xxxxx X. Xxxxx, Esq., Xxxx Xxxx Xxxx &
Freidenrich, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, XX 00000; or
24
25
(ii) if to Xionics or XDT, at 00 Xxxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000, or
at such other address as shall have been furnished to the Sellers by Xionics in
writing, and marked Attn: General Manager - Imaging, with a copy to Attn:
General Counsel.
(b) Any notice or other communication pursuant to this Agreement shall be
deemed to have been duly given or made and to have become effective (I) when
delivered in hand to the party to which it was directed, (ii) if sent by telex,
telecopier, facsimile machine or telegraph and properly addressed in accordance
with the foregoing provisions of this 12.1, when transmitted, or (iii) if sent
by first-class mail, postage prepaid, and properly addressed in accordance with
the foregoing provisions of this 12.1, (A) when received by the addressee, or
(B) on the third business day following the day of dispatch thereof, whichever
of (A) or (B) shall be the earlier.
12.2. GOVERNING LAW. This Agreement is intended to take effect as a sealed
instrument and shall be construed in accordance with and governed by the
internal laws of the Commonwealth of Massachusetts, without regard to the
principles of conflicts of law.
12.3. AMENDMENTS AND WAIVERS. Except as otherwise expressly required by any
other provisions of this Agreement, none of the terms or provisions contained in
this Agreement, and none of the agreements, obligations or covenants of the
Sellers or Xionics contained in this Agreement, may be amended, modified,
supplemented, waived or terminated unless all parties hereto shall execute an
instrument in writing agreeing or consenting to such amendment, modification,
supplement, waiver or termination
12.4. INTEGRATION. Annexed to this Agreement are Exhibits A through M. Such
Exhibits are an integral part of this Agreement and are hereby incorporated by
reference.
12.5. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of Xionics
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. In the event there
are amounts due to Xionics at the time the Second Note would otherwise be due
and payable due to the fact that the Second Note has been reduced as described
in this Agreement to the extent that there are additional amounts to be reduced
and no remaining balance against which to apply such amounts, then, subject to
any other limitations described herein (i.e. limitations under the
indemnification provisions of this agreement), Xionics shall have the right to
bring an action for recovery of the amounts due to Xionics against the Sellers
who would are responsible for the matter giving rise to the right of reduction
against the amounts due under the Second Note. If any dispute under this
Agreement is ongoing and the Second Note becomes due, Xionics shall have the
right to withhold from payment under such Note an amount which Xionics in its
reasonable business judgment using good faith believes may be the amount by
which the Second Note will be reduced, and such amount withheld will be paid to
a mutually acceptable escrow agent to be held in an interest bearing escrow
account until the matter in dispute is resolved, at which time such amount, plus
any earned interest, will either be returned to Xionics or paid to the Sellers,
based upon the resolution of the dispute.
12.6. ENTIRE AGREEMENT. This Agreement, including the Exhibits hereto,
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes any prior understandings or agreements
concerning the subject matter hereof.
12.7. SEVERABILITY. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
25
26
12.8. BINDING EFFECT. All of the covenants and agreements of the Sellers
contained in, and all of the rights granted by the Sellers pursuant to, this
Agreement, shall inure to the benefit of Xionics and XDT. None of such
covenants, agreements or rights shall be assignable or transferable by Sellers
to any person.
12.9. COUNTERPARTS. This Agreement may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart signed by each of the parties hereto.
12.10 EXPENSES. Each party will pay its own expenses and costs incidental to the
completion of the acquisition contemplated by this Agreement, including legal
and accounting fees, whether or not the acquisition is completed. In the event
this Agreement is terminated or expires because the Closing Date has not
occurred, Xionics shall immediately relinquish control of the Company to
Sellers, and Xionics shall have no liability of any kind or nature in connection
with its interim control of the Company, and Sellers and/or Company shall be
fully liable in all respects for all matters arising in connection therewith.
12.11 NON-DISCLOSURE; PUBLICITY. Each party agrees that it will not without the
prior written consent of the other party disclose publicly or to any third party
the terms and conditions of the Letter of Intent dated July 24, 1997 between
Company and XDT, this Agreement or the subsequent negotiations between the
parties, except to the extent required by law. After the Closing Date, Xionics
shall have the right to disclose any information it deems appropriate in
connection with its announcement of this Agreement. At any time prior to or
after the Closing Date, Xionics shall have the right to announce all information
required to be announced by it in connection with its compliance with all
Federal laws applicable.
12.12 HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.13 FURTHER ASSURANCES. At any time and from time to time, including after
Closing, each party hereto, without further consideration, shall cooperate, take
such further action and execute and deliver such further instruments and
documents as may be reasonably requested by any other party in order to carry
out the provisions and purposes of this Agreement and to transfer the Shares.
12.14 SURVIVAL. The provisions of Sections I, 5.3(d), 6.1(h), 8.2, X, 12.10,
12.11 shall survive the termination of this Agreement. The provisions of
Sections I, II, III, V, VI, X, XI, and XII shall survive the Closing Date (and
if any referenced section specifies a limited survival period, such limited
survival period for such referenced section shall apply).
12.15 SIMULTANEOUS DELIVERY. All document and instruments to be delivered on the
Closing Date shall be regarded as having been delivered simultaneously, and no
document or instrument shall be regarded as having been delivered until all
Closing documents and instruments have been delivered.
IN WITNESS WHEREOF, XIONICS and SELLERS have executed this Agreement as of
the day and year first above written.
XIONICS, INC. XIONICS DOCUMENT TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------ --------------------------------
Xxxxx Xxxxxx
Name: Xxxx Xxxxxxxxx President
Title: Vice President
26
27
SEAPORT IMAGING
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: President
SELLERS
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx Xxxxxxx
------------------------------- ---------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxx Xxxxxxx
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxxx
------------------------------- ---------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxxxx Xxxxxxx
By: /s/ Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
-------------------------------
27
28
EXHIBITS REFERENCES
Exhibit Description
------- -----------
Exhibit A List of Shareholders/# of shares owned/rights to acquire stock
Exhibit B June 30, 1997 Balance Sheet
Exhibit C Note and Guaranty
Exhibit D Employees/Retained Employees
Exhibit E Retained Contracts/consent requirements
Exhibit F Intellectual property
Exhibit G Transactions with Associated Persons
Exhibit H Litigation/Liabilities
Exhibit I Address of Sellers and Wire Transfer Instructions
Exhibit J Contracts and/or commitments entered into since June 30, 1997
Exhibit K Form of noncompetition and confidentiality agreement
Exhibit L Form of Legal Opinion
Exhibit M Plans or Agreements subject to ERISA
28
