Exhibit No. 10.21
ASSET PURCHASE AGREEMENT
BETWEEN
MECHANICAL TECHNOLOGY, INCORPORATED
(A New York Corporation)
AND
NYFM, INCORPORATED
(A New York Corporation)
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into between
NYFM, Incorporated, a New York corporation ("NYFM") and Mechanical Technology,
Incorporated, a New York corporation ("Seller"). This Agreement is entered
into as of this 31st day of March, 1998. The Xxxx of Sale, the Assignment of
Intellectual Property, the Management Services Agreement, the Proprietary
Information Non-Disclosure Agreement, the FMI Guaranty, and the Amended CCF
Agreement are all dated as of the 31st day of March, 1998 (the "Transactional
Documents"). NYFM and Seller are sometimes referred to herein as the
"Parties."
In consideration of the foregoing and the mutual representations,
warranties, covenants, and agreements contained in this Agreement, NYFM and
Seller hereby agree as follows:
1. Sale of Assets.
1.1 Sale of Assets.
(a) Subject to the terms and conditions of this Agreement,
on the Closing Date, Seller will endeavor to sell, assign, transfer and deliver
to NYFM all of the assets and properties set forth on Schedule 1.1(a) attached
hereto and made a part hereof, as the same shall exist on the Closing Date (and
not disposed of in the ordinary course of business) and all assets and property
thereafter acquired by Seller in respect of or necessary for the conduct of the
Business immediately prior to the Closing Date (collectively, the "Conveyed
Assets"). NYFM agrees that prior to May 31, 1998 it will determine what
portion of the Conveyed Assets will be conveyed back to Seller (collectively,
the "Reconveyed Assets"; the Conveyed Assets minus the Reconveyed Assets are,
the "Assets"). The Assets will be conveyed free and clear of all Liens, except
Permitted Liens. NYFM acknowledges that MTI make no representations or
warranties as to its title to or ability to transfer any software set forth on
Schedule 1.1(a).
(b) Seller further agrees that if any Conveyed Assets are
not delivered to NYFM as of the Closing Date, Seller shall, prior to June 30,
1998, promptly deliver such asset to NYFM, so long as such asset is in the
possession of Seller or Plug Power, L.L.C.
(c) If NYFM resells any of the Assets or transfers any of
such Assets to Xxxxxx-Xxxxxx, Inc. or any affiliates or subsidiaries thereof,
other than in the ordinary course of its business, within three (3) years of the
Closing Date, NYFM shall remit to Seller all sums paid for any such Assets
(less cost directly related to the sale) in excess of Seventy-Five Thousand
Dollars ($75,000), in the aggregate. Seller may request, not more frequently
than annually, an accounting of any such sales or transfers.
(d) Seller shall also convey government property, contract-
required property and third party owned property as set forth on Schedule
1.1(d) to NYFM, to the extent such conveyance does not violate existing agree-
ments of Seller with the government or such third parties. Seller and NYFM
agree to take all reasonable and necessary action to convey any assets not
conveyed as of the Closing Date to NYFM on or before April 30, 1998.
1.2 Purchase of Assets. In exchange for the Assets, NYFM shall do
the following:
(a) Subject to the terms and conditions of this Agreement,
NYFM hereby agrees (i) to execute and deliver to Seller the Transactional
Documents on the Closing Date, (ii) to assume Seller's accrued liability for
vacation pay to the persons listed on Schedule 1.12 in the total amount of
$40,216.74, and (iii) to establish a credit for $34,783.26 for any warranty work
performed by NYFM at the request of MTI pursuant to the terms of the Management
Services Agreement.
(b) NYFM further agrees to pay to Seller in cash, check or
by wire transfer of immediately available funds, Twenty-five thousand dollars
($25,000), as NYFM's first payment on the Leased Premises, pursuant to the
terms of the Management Services Agreement; and
(c) An amount equal to the following: (A) if Combined Gross
Sales exceed $2.5 million NYFM agrees to pay Seller compensation equal to the
following: (1) for the period commencing as of the Closing Date, through the
first anniversary of the Closing Date, NYFM shall pay Seller compensation equal
to (x) Combined Gross Sales, minus (y) $2.5 million, multiplied by (z) 0.13;
(2) for the period commencing as of the first anniversary of the Closing Date,
through the second anniversary of the Closing Date, NYFM shall pay Seller
compensation equal to (x) Combined Gross Sales, minus (y) $2.5 million,
multiplied by (z) 0.053; (4) for the period commencing as of the third
anniversary of the Closing Date, through the fifth anniversary of the Closing
Date, NYFM shall pay Seller compensation equal to (x) Combined Gross Sales,
minus (y) $2.5 million, multiplied by (z) 0.027, plus, (B) if NYFM or its
parent, Xxxxxx-Xxxxxx, Inc., a Massachusetts corporation ("FMI") sell all or a
portion of the assets of TEI or Fast Steering Mirror technologies during the
period commencing as of the Closing Date and ending as of the third anniversary
of the Closing Date, Seller shall receive fifty percent of the total purchase
price in cash, regardless of how the purchase price is actually paid, less
expenses directly related to the sale incurred in preparation of sales
proposals and reasonable attorneys' fees necessary to conclude an agreement of
sale. Such payments shall be due and payable 60 days after the anniversary of
the Closing Date, or the first business day thereafter. FMI, for itself, its
successors and assigns, shall execute a guaranty (the "FMI Guaranty") in the
form attached hereto as Exhibit A, by which FMI agrees to guarantee the prompt
payment when due of all funds payable to Seller pursuant to this Section
1.2(c).
1.3 Assumed Liabilities. Subject to the terms and conditions of
this Agreement, NYFM assumes and agrees to pay, discharge, or fulfill any and
all liabilities and obligations of Seller (including but not limited to
contingent liabilities) set forth on Schedule 1.3, attached hereto and made a
part hereof (the "Assumed Liabilities"), and as may be reconciled by the parties
within thirty (30) days of the Closing date.
1.4 [Intentionally left blank]
1.5 Assignment of Contracts.
(a) Seller shall assign to NYFM all of Seller's rights,
title and interest in and to the contracts set forth on Schedule 1.5(a) attached
hereto (the "Assumed Contracts").
(b) Unless otherwise provided in 1.5(d), Seller shall use
its best efforts to invoice customers for all work performed on any of the
Assumed Contracts prior to the Closing Date. If Seller is unable to invoice
customers for any fully-authorized work performed on Assumed Contracts prior to
the Closing Date because it has not attained the necessary milestones, or for
whatever other reason except default, Seller shall, within sixty (60) days of
the Closing Date, invoice NYFM for such amounts. NYFM shall pay Seller with
respect to such invoices within fifteen (15) days of receipt of payment from
the payor with respect to such Assumed Contract. Seller shall have the sole
and absolute right to receive all payments related to such work. Except as set
forth below, NYFM shall have the sole and absolute right to receive all
payments related to work performed on or after the Closing Date with respect to
Assumed Contracts. Any retainage received by NYFM with respect to the Assumed
Contracts shall be divided pro rata based on the respective billing amounts of
the Parties, and NYFM shall remit to Seller its share thereof within fifteen
(15) days of NYFM's receipt thereof. At Seller's reasonable request, NYFM
shall provide Seller a monthly accounting of its Assumed Contract receipts
until all amounts Seller billed to NYFM have been paid in full. Seller shall
not xxxx any amounts for adjustments due to billing errors or an increase in
direct or indirect rates.
(c) NYFM hereby agrees to perform the Assumed Contracts in
accordance with the terms and conditions of the Assumed Contracts and
applicable novations and subcontracts.
(d) 1. Notwithstanding Section 1.5(b) above the parties agree that
NYFM shall assume any cost overrun risk with regard to Assumed Contract
F-41650-95-D-0001 and Seller shall assume any cost overrun risk with regard to
the subcontracting (the "DOE Subcontract") of Seller's prime contract DE-AR21-
95MC32093. Seller shall reimburse NYFM for all invoices submitted to Seller
for NYFM's performance of the DOE Subcontract regardless of Sellers
reimbursement by DOE.
2. The cost to complete several of the NYFM
Electric Boat contracts exceeds the funds currently authorized. It is not
certain that Electric Boat will authorize additional funds to complete the work-
scope of the contracts. The Seller agrees that if the customer(s) does not
authorize sufficient funds to complete the workscopes, that NYFM and the Seller
will share the final amount that the customer pays above the authorized amount
in direct portion to the amount of work each party has invoiced above the
authorized amount.
1.6 [Intentionally left blank]
1.7 Warranty Work Procedure. NYFM will, at Seller's request,
perform all work with respect to any warranty claim on products produced by the
Business with respect to which Seller, or its subsidiary TEI, has warranty
liability. Seller must consent to NYFM's work plan for work and estimate of
costs on warranty claims, prior to the commencement of any such work. Except as
provided in Section 1.2(a) of this Agreement, NYFM will xxxx Seller for the
direct costs of labor, fringe benefits, materials, equipment, travel and other
direct costs related to such warranty work.
1.8 Assignment of Intellectual Property. On the Closing Date,
Seller shall sell, assign and transfer all of Seller's right, title, and
interest in and to the Intellectual Property, as set forth on Schedule 1.8
attached hereto, by execution and delivery to NYFM of the Assignment of Intel-
lectual Property.
1.9 Licensed Technology. Seller shall retain a non-exclusive,
fully paid-up license in all Intellectual Property, including but not limited
to Patent rights, Copyrights and Trade Secrets, transferred to NYFM and
necessary for the conduct of Seller's business (exclusive of the Business),
provided Seller's use of such Intellectual Property does not compete directly
with NYFM's business or commercialization of such technology. Seller hereby
grants to NYFM an irrevocable, paid-up, non-exclusive, non-transferable, royalty
free license to Seller's software for NYFM's use only in connection with NYFM's
business and only to the extent permitted by Section 7 of this Agreement.
Seller hereby also grants to NYFM an irrevocable, paid-up, non-exclusive, non-
transferable, royalty-free copyright license for NYFM's internal use only of
certain Technology Division documents that are non-public, and for NYFM's
external use of such non-public documents to the extent permitted by Sections
1.15 and 7 of this Agreement. Seller hereby also grants to NYFM an
irrevocable, paid-up, non-exclusive, non-transferable, royalty-free license to
U.S. Patent Nos. 4,773,019 and 4,751,381. All rights not expressly granted to
NYFM hereby with respect to the subject matter of this Section, are reserved to
Seller.
1.10 Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement
to assign or transfer any Governmental Approval, instrument, contract, lease,
permit or other agreement or arrangement or any claim, right or benefit arising
thereunder or resulting therefrom if an assignment or transfer without the
consent of a third party would constitute a breach or violation thereof or
affect adversely the rights of NYFM or Seller thereunder. Any transfer or
assignment to NYFM or Seller of any interest under any such instrument,
contract, lease, permit or other agreement or arrangement which requires the
consent of a third party shall be made subject to such consent or approval
being obtained. In the event any such consent or approval is not obtained on
or prior to the Closing Date, Seller shall continue to use all efforts to
obtain any such approval or consent after the Closing Date until such time as
such consent or approval has been obtained, and Seller will cooperate with NYFM
in any lawful and economically feasible arrangement to provide that NYFM shall
receive the interest of Seller in the benefits under any such instrument,
contract, lease or permit or other agreement or arrangement.
1.11 Liability for Transfer Taxes and Fees. NYFM shall be responsible
for the timely payment of, and shall indemnify and hold harmless Seller
against, all sales, use, value added, documentary, stamp, gross receipts,
registration, transfer, conveyance, excise, recording, license and other similar
Taxes and fees, including any and all fees related to the transfer of Patents
and other Intellectual Property ("Transfer Taxes") arising out of, in connection
with, or attributable to, the transactions effected pursuant to this Agreement.
NYFM shall prepare and timely file all tax returns required to be filed in
respect of Transfer Taxes, provided that the Seller shall be permitted to
prepare any such tax returns that are the primary responsibility of the Seller
under applicable law.
1.12 Employees. NYFM shall offer to hire those employees set forth
on Schedule 1.12 attached hereto and made a part hereof. All such employees
are currently, and shall be hired by NYFM as, employees at will. NYFM shall
make available to such employees benefits that approximate those provided to
existing employees of NYFM, however, NYFM shall not assume any liability for
continuation of any employee benefit plan instituted or carried out by Seller.
1.13 [Intentionally left blank]
1.14 Employee Severance. If NYFM terminates any employee set forth
on Schedule 1.12 for lack of work during the period commencing as of the Closing
Date and terminating as of the Third anniversary of the Closing Date, NYFM
shall pay such employee a separation payment equal to the payment set forth on
Schedule 1.14 attached hereto and made a part hereof ("Separation Payment").
Seller shall reimburse NYFM for such Separation Payment as follows: (1) if the
termination occurs after the Closing Date, but before the first anniversary of
the Closing Date, Seller shall reimburse NYFM for 2/3 of the Separation
Payment; (2) if the termination occurs as of the first anniversary of the
Closing Date, but before the second anniversary of the Closing Date, Seller
shall reimburse NYFM for 1/2 of the Separation Payment; (3) if the termination
occurs as of the second anniversary of the Closing Date, but before the third
anniversary of the Closing Date, Seller shall reimburse NYFM for 1/4 of the
Separation Payment.
1.15 Confidentiality.
(a) The Parties acknowledge that each of them owns inform-
ation of a confidential and/or proprietary nature ("Information") that may be
located or utilized from time to time at the premises shared by the Parties at
000 Xxxxxx-Xxxxxx Xxxx, Xxxxxx, Xxx Xxxx.
(b) Each of the Parties agrees for itself that it will use
its best efforts to ensure that it, its officers, directors, members, managers
and employees, and any contractors, agents, licensees, and invitees of such
Party do not obtain access to Information of the other Parties through acts or
omissions of such Party and will use its best efforts to protect its own
Information from disclosure to the other Parties or such other persons. In the
event that a Party discovers Information belonging to another Party, or
otherwise receives such Information, other than pursuant to an express written
agreement between such Parties requiring or permitting such disclosure, the
Party discovering or receiving such Information shall (i) use the same
reasonable efforts to protect such Information as are used to protect its own
Information, (ii) promptly give notice of such discovery or disclosure to the
Party whose Information was compromised, as required below, and (iii) except as
provided in paragraph (c) of this Section 1.15, shall not make any
reproductions, disclosures or use of such Information in any manner or for any
use or purpose.
(c) Limitations on reproduction, disclosure or use of
Information shall not apply to, and neither Party shall be liable for, reproduc-
tion, disclosure or use of Information with respect to which any of the follow-
ing conditions exist:
(i) If, prior to the receipt thereof, the Inform-
ation had been developed independently by the Party receiving it, or was
lawfully known to the Party receiving it, or had been lawfully received from
other sources, including another Party, provided such other source did not
receive it due to a breach of this Agreement;
(ii) If, subsequent to the receipt thereof, (i) the
Information is published by the Party furnishing it, or is disclosed by the
Party furnishing it to others, including another Party, without restriction,
(ii) the Information has been lawfully obtained by the Party receiving it from
other sources, including another Party, provided such other source did not
receive it due to a breach of this Agreement, (iii) if such Information other-
wise comes within the public knowledge or becomes generally known to the public,
or (iv) it is established as a matter of law that such Information is developed
by employees or consultants of the receiving Party who have not had access to
Information received hereunder; or
(iii) If any part of the Information has been or hereafter
shall be disclosed in a United States patent issued to the Party owning the
Information hereunder, then, after the issuance of such patent, the limitations
on such Information as disclosed in the patent shall be only that afforded by
the United States patent laws.
The Parties shall execute, deliver and abide by the terms of the
Proprietary Information Non-Disclosure Agreement of even date, executed in
connection with this transaction.
2. Events Occurring on the Closing Date
2.1 Closing. The closing shall take place on March 31, 1998 (the
"Closing Date") at the offices of Xxxxxxxx Xxxxxxxx & Xxxxx, Xxx Xxxxxxxx
Xxxxx, Xxxxxx, Xxx Xxxx 00000, or at such other location as the parties shall
mutually agree.
2.2 Deliveries by Seller. As of the Closing Date, Seller shall
deliver to NYFM the following:
(a) The Xxxx of Sale and the Assignment of Intellectual
Property (the "Conveyance Instruments");
(b) Duly executed copies of every other Transactional
Document to which Seller is a party;
(c) A copy of the resolutions of Seller's directors, certi-
fied by its Secretary or other authorized party, authorizing or ratifying the
execution and delivery of this Agreement, the Conveyance Instruments, and the
other Transactional Documents, and the consummation of the transactions contem-
plated hereby and thereby;
(d) A certificate from the Secretary of State of the State
of New York as to Seller's good standing in such state certified as of a date
within thirty (30) days of the Closing Date;
(e) An opinion from Seller's counsel, in form and substance
satisfactory to NYFM and NYFM's counsel;
(f) All other previously undelivered items required to be
delivered by Seller at or prior to the Closing Date pursuant to the terms of
this Agreement, the Conveyance Instruments or the Transactional Documents.
2.3 Deliveries by NYFM. As of the Closing Date, NYFM shall deliver
or cause to be delivered to Seller the following:
(a) Duly executed copies of the FMI Guaranty;
(b) Duly executed copies of every Transactional Document to
which NYFM is a party;
(c) A copy of the resolutions of NYFM's directors, certified
by its Secretary or other authorized party, authorizing or ratifying the
execution and delivery of this Agreement and the other Transactional Documents,
and the consummation of the transactions contemplated hereby and thereby;
(d) A copy of the resolutions of FMI's directors, certifie
by its Secretary or other authorized party, authorizing or ratifying the execu-
tion and delivery of the FMI Guaranty;
(e) A certificate from the Secretary of State of the State
of New York as to NYFM's good standing in such state certified as of a date
within thirty (30) days of the Closing Date;
(f) A certificate from the Secretary of State of the Common-
wealth of Massachusetts as to FMI's good standing in such state certified as of
a date within thirty (30) days of the Closing Date;
(g) An opinion, from NYFM's counsel, in form and substance
satisfactory to Seller and Seller's counsel;
(h) All other previously undelivered items required to be
delivered by NYFM or FMI at or prior to the Closing Date pursuant to the terms
of this Agreement, the FMI Guaranty or the Transactional Documents.
3. Representations and Warranties.
3.1 Representations and Warranties of Seller. Seller represents and
warrants to NYFM as follows:
(a) Authorization, etc. Seller has the corporate power and
authority to execute and deliver this Agreement and each of the Conveyance
Instruments and Transactional Documents to which it is a party and to fully
perform its obligations and consummate the transactions contemplated thereby.
The execution and delivery by Seller of this Agreement, the Conveyance
Instruments and the Transactional Documents and the consummation of the
transactions contemplated thereby, have been duly authorized by all requisite
corporate action. This Agreement, together with all other obligations of
Seller hereunder, constitutes the valid and legally binding obligation of
Seller, enforceable in accordance with its terms.
(b) Corporate Status. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York with full corporate power and authority to carry on the Business in the
places where such Business is conducted.
(c) No Conflicts. The execution, delivery and performance
by Seller of this Agreement, the Transactional Documents, and the consummation
of the transactions contemplated thereby, do not conflict with, or result in a
violation of, or a default under, (i) any Applicable Law applicable to the
Business or any of the Assets, (ii) the certificate of incorporation and bylaws
of Seller or (iii) except as set forth in Schedule 3.1(c), any Contract or
other contract, agreement or other instrument to which Seller is a party and by
which Seller or any properties or assets of the Business are bound. Except as
specified in Schedule 3.1(c), no Governmental Approval or other Consent is
required to be obtained or made by Seller in connection with the execution and
delivery of this Agreement, the Conveyance Instruments or the Transactional
Documents or the consummation of the transactions contemplated thereby.
(d) Absence of Liens. Seller hereby warrants title to the
Assets to NYFM, free and clear of any Lien, except Permitted Liens. Except as
set forth on Schedule 3.1(d), all Assets transferred to NYFM are free from any
Liens, except Permitted Liens.
(e) Legal Proceedings. Except as set forth on Schedule
3.1(e), to the best of Seller's actual knowledge after due inquiry, there are no
outstanding or threatened claims or suits against Seller or the Assets, that
would cloud Seller's title to the Assets or Intellectual Property or prevent
Seller from transferring the Assets or Intellectual Property to NYFM.
(f) Taxes. Seller has duly and timely filed all tax returns
with respect to taxes required to be filed on or before the Closing Date.
Except for taxes set forth on Schedule 3.1(f), which are being contested in
good faith and by appropriate proceedings, all taxes have been duly and timely
paid. All taxes required to be withheld by or on behalf of Seller in connection
with amounts paid or owing to any employee, independent contractor, creditor or
other party with respect to the Business have been withheld, and such withheld
taxes have been duly and timely paid to the proper Governmental Authorities or
set aside in accounts for such purpose. Seller shall be responsible for
payment of all such contested taxes in the event such contest is determined
adverse to Seller.
(g) Intellectual Property. To the best of its knowledge,
Seller is not aware of any third party trade secret, patent, trademark or copy-
right that would be subject to a claim of infringement by such third party
should NYFM practice the Intellectual Property or Trade Secrets to be trans-
ferred. Seller has no outstanding claims against any third party for infringe-
ment of any of the Intellectual Property, and to the best of its actual knowl-
edge, Seller is not aware of any Intellectual Property that is currently being
infringed by any third party.
(h) Due Diligence Materials. Except as set forth on
Schedule 3.1(h), each of the documents, contracts, financial statements, corres-
pondence, purchase orders, patent applications, records of title, bills of
sale, employee records or business forecasts, identified as material by mutual
agreement of the Parties and as set forth on Schedule 3.1(h), are materially
complete and accurate and no other documents exist that are material to the
Business or material to an analysis of whether to purchase the Business.
(i) Environmental. There are no known outstanding or
pending environmental claims regarding the Assets or the premises to be leased
by NYFM from Seller and there have been no reportable releases to the ground or
air at the premises to be leased by NYFM, except as set forth in the Phase I
Environmental Reports for the Xxxxxx and Malta sites, previously delivered to
NYFM. Seller shall indemnify and hold harmless NYFM, its agents, officers,
directors, employees, consultants and contractors, and each of their respective
heirs, successors and assigns, from all claims, injunctions, damages, response
costs, reasonable attorneys' fees, fines, fees, taxes and penalties, including,
without limitation, past, present and future claims under the common law or any
local, state or federal ordinances, statutes or regulations administered or
enforced by any government or governmental agency, arising out of, or relating
to, acts or omissions of Seller with respect to any environmental condition
arising out of Seller's use of such Latham and Malta sites.
(j) Further Environmental Assurances. None of the Assets or
premises are subject to any RCRA, Federal or State Superfund or any third party
environmental claims or suits, and except as disclosed on Schedule 3.1(j),
Seller and employees of the Business as of the Closing Date are not involved in
any claims or suits regarding any environmental matter related to Seller or the
Business.
(k) Employees. Seller is in compliance with regard to any
affirmative action plan and is not in violation of any EEOC, wage, OSHA or
other employment plan or regulation that would give rise to claims by the
current employees of the Business, which claims would have a material adverse
effect on the ability of NYFM to hire such current employees without
restriction or conduct the Business without undue burden or costs.
(l) Leased Space. Except as set forth on Schedule 3.1(l),
to the best of Seller's knowledge, there are no building or electrical or other
code violations or primary lease conditions or breaches regarding the premises
to be leased by NYFM which would cause any unanticipated expense or an inabil-
ity of NYFM to lease the premises for their intended purpose. In the event of a
breach of this provision, upon notice thereof by NYFM to Seller, Seller
promptly shall undertake the repair or correction of any such violation, lease
condition or breach at Seller's own expense.
(m) To the best of its knowledge, Seller has not withheld
any material facts from NYFM which would cause NYFM, as a reasonably prudent
business entity, not to proceed with the Transactional Documents.
(n) Employees. Seller is an employer at will and has no
employment contracts with any employee of the Business. Seller is a non-union
shop and has no union contracts or agreement. Except as set forth on Schedule
3.1(n) attached hereto, there have been no material changes in the compensation
of the employees of the Business since February 28, 1998.
(o) Seller represents that it has product liability and
completed operations insurance coverage in the amount of $1,000,000 per occur-
rence and $2,000,000 in the aggregate and that it will maintain such coverage
for two years from the Closing.
(p) Intellectual Property. In addition to Schedule 1.8 and
Section 1.9, Seller has transferred to NYFM all the Intellectual Property Seller
owns necessary for NYFM to conduct the Assumed Contracts, and Seller shall not
assert any Patents it owns against NYFM with respect to NYFM's conduct of the
Business.
3.2 Representations and Warranties of Purchaser. NYFM represents
and warrants to Seller as follows:
(a) Authorization, etc. NYFM has the corporate power and
authority to execute and deliver this Agreement and each of the Transactional
Documents to which it is a party and to fully perform its obligations and
consummate the transactions contemplated thereby. The execution and delivery
by NYFM of this Agreement and the Transactional Documents and the consummation
of the transactions contemplated thereby, have been duly authorized by all
requisite corporate action. This Agreement, together with all other obligations
of NYFM hereunder, constitute the valid and legally binding obligation of NYFM,
enforceable in accordance with its terms.
(b) Corporate Status. NYFM is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
with full corporate power and authority to carry on its business in the places
where it is to be conducted.
(c) No Conflicts. The execution, delivery and performance
by NYFM of this Agreement and the Transactional Documents, and the consummation
of the transactions contemplated thereby, do not conflict with or result in a
violation of or a default under (i) any Applicable Law applicable to NYFM or
any of its assets, (ii) the certificate of incorporation and bylaws of NYFM or
(iii) except as set forth in Schedule 3.2(c), any contract, agreement or other
instrument to which NYFM is a party and by which NYFM or any properties or
assets are bound. Except as specified in Schedule 3.2(c) or Schedule 3.1(c),
no Governmental Approval or other Consent is required to be obtained or made by
NYFM in connection with the execution and delivery of this Agreement, or the
Transactional Documents or the consummation of the transactions contemplated
thereby.
(d) Litigation. To the best of NYFM's knowledge, after due inquiry,
there is no action, claim, demand, suit, proceeding, arbitration, grievance,
citation, summons, subpoena, inquiry or investigation of any nature, civil,
criminal, regulatory or otherwise, in law or in equity pending or threatened
against NYFM, their assets or businesses or the transactions contemplated by
this Agreement.
4. Indemnification.
4.1 By Seller. Seller agrees to indemnify against all losses,
actions, suits, claims or proceedings (including attorneys' fees) that may be
incurred by NYFM arising out of any breach by Seller of any of Seller's
representations warranties, covenants or agreements made in this Agreement, the
Schedules attached hereto or any document or instrument delivered in connec-
tion with the transactions contemplated hereby.
4.2 Seller shall also be liable for and indemnify, defend, and hold
harmless NYFM for all costs, including reasonable expenses and attorneys' fees,
of any claims, suits or actions that arise:
(a) out of any contract work, warranty work or products for
any and all Seller contract work, operations or products sold or delivered to
third parties prior to the Closing Date; and
(b) for any and all contract work, warranty work or products
whether or not completed or sold or delivered but only to the extent such claim,
suit or action arises out of Seller's negligent design, fabrication, manu-
facture, sales, installation, repair, replacement parts or warranty work
performed by Seller prior to, or after, the Closing Date.
4.3 By NYFM. NYFM agrees to indemnify against all losses, actions,
suits, claims or proceedings (including attorneys fees) that may be incurred by
Seller arising out of any breach by NYFM of any of NYFM's representations
warranties, covenants or agreements made in this Agreement, the Schedules
attached hereto or any document or instrument delivered in connection with the
transactions contemplated hereby.
4.4 NYFM shall be liable for and indemnify, defend and hold harmless
Seller for all costs, including reasonable expenses and attorneys' fees, that
arise:
(a) out of all Assumed Contract work performed by NYFM after the
Closing Date (except as otherwise provided in Section 4.4(c) hereof), provided,
however, that NYFM shall not be liable for any such Assumed Contract work if
the act or omission or cause of the claim arises out of work previously
performed by Seller;
(b) out of warranty work performed by NYFM at the request of Seller
or upon the contractual obligation of NYFM, provided, however, that NYFM shall
not be liable for any failures of warranty work performed or re-performed that
arise out of the original design of Seller, the design or supply of spare parts
by Seller, or the instruction or operations manuals or procedures supplied by
Seller, unless such manuals or procedures are not followed by NYFM or unless
NYFM performs redesign and such redesign is the cause of any failure; and
(c) out of work done by Seller for Electric Boat Corporation after
the Closing Date if Seller transfers revenues from such work to NYFM pursuant
to the Management Services Agreement.
4.5 Notice and Defense of Claims. A Party claiming indemnification
under this Section 4 (the "Asserting Party") must promptly notify in writing
the Party from which indemnification is sought (the "Defending Party") of the
nature and basis of such claim for indemnification. If such claim relates to a
claim, litigation or other action by a third party against the Asserting Party,
or any fixed or contingent liability to a third party (a "Third Party Claim"),
the Defending Party may elect to assume the defense of the Third Party Claim at
its own expense with counsel selected by the Defending Party. The Defending
Party may not assume the defense if the named parties to the Third Party Claim
(including any impleaded parties) include both the Defending Party and the
Asserting Party and the Asserting Party determines that representation of both
Parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, in which case the Asserting Party shall have
the obligation to employ its own counsel, at its own cost. If such a
determination is made by counsel to the Asserting Party in an opinion letter
addressed and reasonably satisfactory to the Defending Party, the Defending
Party shall retain liability for the cost of the Asserting Party's independent
counsel. If the Defending Party assumes the defense of the Third Party Claim,
the Defending Party shall be liable for any fees and expenses of counsel for
the Defending Party incurred thereafter in connection with the Third Party
Claim (except in the case of actual or potential differing interests, as
provided in the preceding sentence). The Defending Party shall have the right
to assume the defense of and settle the Third Party Claim (at the Defending
Party's expense), unless the Asserting Party shall notify the Defending Party
in writing within five (5) days after receipt of such notice of intention to
settle, of the Asserting Party's election to assume (at its expense) the
defense of the Third Party Claim and promptly thereafter takes appropriate
action to implement such defense. The Asserting Party and the Defending Party
shall use all reasonable efforts to cooperate fully with respect to the defense
of any claim, action or proceeding covered by this Section 4.
4.6 Remedies. Except as otherwise provided herein, none of the
remedies provided in this Agreement for either party, including specific per-
formance, are the exclusive remedy of either party for a breach of this Agree-
ment. Except as otherwise provided herein, the parties shall have the right to
seek any other remedy in law or equity in lieu of or in addition to any remedies
provided in this Agreement, including an action for damages for breach of
contract.
5. Brokers.
5.1 For Seller. Seller represents and warrants that except as set
forth on Schedule 5.1 hereof, it has not engaged any broker or finder or
incurred any liability for brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement. Seller agrees
to indemnify and hold harmless NYFM against any claims or liabilities asserted
against it by any person acting or claiming to act as a broker or finder on
behalf of Seller.
5.2 For NYFM. NYFM represents and warrants that it has not engaged
any broker or finder or incurred any liability for brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement. NYFM agrees to indemnify and hold harmless Seller against any
claims or liabilities asserted against it by any person acting or claiming to
act as a broker or finder on behalf of NYFM.
5.3 Public Announcements. Any and all press releases and other
public announcements or communications concerning this Agreement and the trans-
actions hereunder to be made by either Party may be made only with the prior
written approval of the other Party or as otherwise required by law.
6. Definition of Certain Terms.
The terms defined in this Section 6, whenever used in this Agreement
(including in the Schedules), shall have the respective meanings indicated
below for all purposes of this Agreement. All references herein to a Section
are to a Section or Schedule of or to this Agreement, unless otherwise
indicated.
"Agreement" means this Asset Purchase Agreement, including the Schedules
hereto.
"Applicable Law" means all applicable provisions of all (i) constitu-
tions, treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (ii) Governmental
Approvals, and (iii) orders, decisions, injunctions, judgments, awards and
decrees of, or agreements with, any Governmental Authority.
"Assets" is defined in Section 1.1.
"Assumed Contracts" is defined in Section 1.5(a).
"Assumed Liabilities" is defined in Section 1.3.
"Business" shall mean the Technology Division of Mechanical Technology
Incorporated.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York are authorized or required to close.
"Closing Date" is defined in Section 2.1.
"Combined Gross Sales" means Gross Sales of NYFM, plus Gross Sales of
FMI derived from Intellectual Property transferred to NYFM, but shall not
include any sales revenue from the sale by NYFM of all or a portion of the
assets of TEI or Fast Steering Mirror technologies.
"Confidential Information" means any information concerning the business
and affairs of the Business that is not already generally available to the
public.
"Consent" means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including, but not limited to, any Governmental Authority.
"Conveyance Instruments" is defined in Section 2.2(a).
"Copyrights." The term Copyrights shall mean all copyrights, including,
without imitation, all copyrights registered with the U.S. Copyright Office,
(the "Works") and any derivative works of the Works and any "Moral Rights"
Seller may have in the Works to the extent consistent with Sections 1.9 and 7
of this Agreement, excluding those copyrights underlying for which NYFM is only
granted a license.
"$ or dollars" means lawful money of the United States.
"Excluded Liabilities" is defined in Section 1.4.
"Gross Sales" means sales revenue minus any applicable taxes, freight,
insurance, rebates or other costs incurred or paid by NYFM which is added to
the sales price but not reimbursed by the purchaser of the goods or services or
assets.
"Governmental Approval" means any Consent of, with, from, or to, any
Governmental Authority.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any
State of the United States or any political subdivision thereof, and any
tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory
organization.
"Intellectual Property" means collectively and singularly Patent
rights, Copyrights, Trademark rights, Trade Secrets and know how used solely
in connection with the Business except to the extent the transfer of any such
Intellectual Property would be inconsistent with Sections 1.9 and 7 of this
Agreement.
"Knowledge" means actual knowledge after due inquiry and investigation.
"Lien" means any encumbrance, lien, insurance claim, suit, and secured
or unsecured financing.
"Patent" The term Patent shall mean certain patent applications (the
"Patent Applications"), together with all U.S. and foreign Letters Patent,
foreign or domestic patent applications set out on Schedule 1.8 attached hereto
and made a part hereof; patentable rights, whether or not such rights are
registered, or applications for registration have been filed, with any foreign
or domestic governmental agency; all proprietary drawings, plans, designs,
quality control, machine and mechanical specifications, engineering data,
production data, production techniques, installation data, application data,
flow charts, logic diagrams relating to the Patent Applications, and any other
foreign or domestic patentable rights that may be obtained in respect thereof;
any foreign or domestic re-issues, reexaminations certificates, extensions,
substitutions, confirmations, divisions, and continuations or continuations-in-
part of any of the foregoing, whether or not such rights or inventions become
patented, to the extent consistent with Sections 1.9 and 7 of this Agreement.
"Permitted Liens" means 1) Liens for taxes not yet due and payable or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on Seller's books in
accordance with GAAP; and 2) those Liens set forth on Schedule 6, attached
hereto and made a part hereof.
"Person" means any natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Authority or other
entity.
"Subcontracts" is defined in Section 1.5.
"Trademark" means the foreign or domestically registered trademarks and
common law trademarks described on Schedule 1.8, to the extent consistent with
Sections 1.9 and 7 of this Agreement.
"Trade Secrets" means methods, processes, know how and all other
proprietary data and information relating to the Intellectual Property,
including customer lists and business methods.
7. Covenant Not to Compete. For a period of five (5) years from and after
the Closing Date, NYFM and FMI shall not (1) manufacture for use or sale of any
aircraft engine balancing systems; (2) manufacture for use or sale any non-
contact displacement sensors using fiber optic, capacitance, or laser
technology; (3) manufacture for use or sale any PBS or equivalent engine
balancing systems or component products; (4) contact any current Advanced
Products Division vendors, unless as of the Closing Date, the Technology
Division, NYFM or FMI had a relationship with such vendors; (5) sell, license
or convey to a third party any of the technology underlying the items 7(1)
through 7(3) above, unless such conveyance is approved by MTI and related to
the purchase of a piece of machinery from MTI by FMI or NYFM for any such third
party. This covenant not to compete does not prohibit NYFM or FMI from making,
using or selling the Fast Steering Mirror Technology or from using structured
light technology for surface profiling in such applications as topographical
mapping and EndSpector or from continuing any work in fiberoptic capacitance or
laser systems that FMI has completed, proposed (as evidenced by written records
or has underway as of the Closing Date. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section 7 is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with
one that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
8. Miscellaneous.
8.1 Expenses. Except as otherwise expressly provided herein, NYFM,
FMI and Seller shall each pay their own expenses in connection with this Agree-
ment and the transactions contemplated hereby.
8.2 Severability. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.
8.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, (c) sent by next-day or overnight mail or
delivery, or (d) sent by facsimile transmission, with receipt thereof confirmed
by telephone:
(i) if to NYFM:
Xxxxxx X. Xxxxxxxx
Senior Vice President
Xxxxxx-Xxxxxx, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
General Counsel
Xxxxxx-Xxxxxx, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
(ii) if to Seller:
President
Mechanical Technology Incorporated
000 Xxxxxx-Xxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxxxxx X. Xxxx, Esq.
Xxxxxxxx Xxxxxxxx & Xxxxx
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
Such notices or other communications shall be deemed received (a) on the
date delivered, if delivered personally, (b) three business days after being
deposited with the U.S. Postal Service, if sent by registered or certified
mail, (c) on the next business day, if sent by Federal Express or similar
overnight courier, or (d) on the date sent, if receipt is confirmed by
telephone in accordance with this provision.
8.4 Entire Agreement. This Agreement, including the Schedules and
the Transactional Documents (when executed and delivered), constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
8.5 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
8.6 Governing Law, etc. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of New York without giving effect to the conflict of laws
rules thereof. NYFM and Seller hereby irrevocably submit to the jurisdiction
of the courts of the State of New York and the Federal courts of the United
States of America located in the State of New York in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any of such
document may not be enforced in or by said courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a New York or Federal court. NYFM,
Seller hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of any such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 8.3 or in such other manner as may
be permitted by law, shall be valid and sufficient service thereof.
8.7 Binding Effect. This Agreement shall be binding upon an inure
to the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
8.8 No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties and their
respective successors and permitted assigns.
8.9 Amendment; Waivers, etc. No amendment, modification or dis-
charge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom enforce-
ment of the amendment, modification, discharge or waiver is sought. Any such
waiver shall constitute a waiver only with respect to the specific matter des-
cribed in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to exer-
cise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights or remedies that any
party may otherwise have at law or in equity.
8.10 Further Assurances. Seller and NYFM agree to execute such
documents and other papers and perform such further acts as may be reasonably
required or desirable to carry out the provisions hereof and the transaction
contemplated hereby.
8.11 Continued Cooperation. Seller NYFM agree that following the
Closing Date, each of them shall cooperate in furnishing such information,
documentation, and assistance as the other Party may reasonably request to
carry out the provisions hereof, the transactions contemplated hereby and by
the Transactional Documents, and to permit the continued operation of the
businesses contemplated by the Transactional Documents to be operated at the
building shared by the Parties.
8.12 Survival. None of the representations and warranties or
covenants of the Parties contained in this Agreement shall survive beyond the
Closing Date, except that the and the covenants contained in Sections 1.1, 1.2,
1.3, 1.5(b), 1.7, 1.9, 1.10 through 1.15, 3.1(f), 3.1(i) 3.1(l), 3.1.0, 4.1
through 4.4, 4.5, 5.1 through 5.3, 7, 8.3, 8.6 through 8.11 shall survive until
the expiration of the applicable statute of limitations period for any claims
made in respect of the matters referred to in such Sections.
IN WITNESS WHEREOF, the parties have executed the foregoing documents as
of the date and year first above written.
MECHANICAL TECHNOLOGY INCORPORATED
(a New York corporation)
/s/ Xxxxx Xxxxxx
___________________________________
By: Xxxxx Xxxxxx
Its: Vice-President
NYFM, INCORPORATED
(a New York corporation)
/s/ Xxxxxxx X. Xxxxxx
___________________________________
By: Xxxxxxx X. Xxxxxx, Sc. D.
Its: President
