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ASSET PURCHASE AGREEMENT
by and among
FIBRE OPTICS INTERNATIONAL, INC.,
(a Washington corporation)
XXXXXXX X. XXXXXX,
XXXX X. XXXXXX
and
FIBERSTARS, INC.
(a California corporation)
Dated as of August 31, 1998
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ARTICLE I PURCHASE AND SALE OF ASSETS...................................................................1
1.1 Purchase and Sale of Acquired Assets..........................................................1
1.2 No Buyer Assumption of Liabilities............................................................2
1.3 Purchase Price for Acquired Assets............................................................2
1.4 Closing.......................................................................................2
1.5 Purchase Price Allocation.....................................................................3
1.6 Sales Tax.....................................................................................3
ARTICLE II CERTAIN REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS.............................4
2.1 Organization, Standing and Power..............................................................4
2.2 Authority.....................................................................................4
2.3 Subsidiaries..................................................................................5
2.4 Valid Ownership Effective Transfer of Necessary Rights........................................5
2.5 Financial Statements..........................................................................5
2.6 Absence of Certain Changes or Events..........................................................5
2.7 Absence of Liabilities........................................................................6
2.8 Litigation....................................................................................6
2.9 Restrictions on Business Activities...........................................................6
2.10 Real Property.................................................................................6
2.11 Inventory.....................................................................................7
2.12 Capital Equipment and Hard Assets.............................................................7
2.13 Proprietary Rights............................................................................7
2.14 Taxes.........................................................................................8
2.15 Employee Matters..............................................................................8
2.16 Compliance With Laws..........................................................................8
2.17 Environmental Matters.........................................................................9
2.18 Brokers' and Finders' Fees....................................................................9
2.19 Contracts.....................................................................................9
2.20 Insurance....................................................................................10
2.21 Customers....................................................................................10
2.22 Investment in Buyer Shares...................................................................11
2.23 Representations Complete.....................................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER......................................................12
3.1 Organization, Standing and Power.............................................................12
3.2 Authority....................................................................................12
3.3 Validity of Buyer Shares.....................................................................12
3.4 Litigation...................................................................................12
3.5 Compliance With Laws.........................................................................12
3.6 Public Information...........................................................................13
3.7 Brokers' or Finders' Fees....................................................................13
3.8 Representations Complete.....................................................................13
TABLE OF CONTENTS
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ARTICLE IV COVENANTS OF THE PARTIES.....................................................................14
4.1 Representations and Warranties...............................................................14
4.2 Access to Documents..........................................................................14
4.3 Transition Services Performed by Xxxx X. Xxxxxx..............................................14
4.4 Covenant Not to Compete......................................................................14
4.5 No Publicity; Confidentiality................................................................15
4.6 Employee Matters.............................................................................15
4.7 Trademark Renewal............................................................................15
4.8 Piggyback Registration.......................................................................15
4.9 Post-Closing Buyer Covenants.................................................................16
4.10 Reasonable Best Efforts; Further Assurances..................................................16
ARTICLE V ESCROW; INDEMNIFICATION......................................................................16
5.1 Escrow Fund..................................................................................16
5.2 Indemnification..............................................................................16
5.3 Indemnification Procedure....................................................................17
ARTICLE VI CONDITIONS TO CLOSING........................................................................17
6.1 Buyer's Conditions to Closing................................................................17
6.2 Seller's Conditions to Closing...............................................................19
ARTICLE VII GENERAL PROVISIONS...........................................................................20
7.1 Survival at Closing..........................................................................20
7.2 Specific Performance.........................................................................20
7.3 Notices......................................................................................20
7.4 Interpretation...............................................................................21
7.5 Counterparts.................................................................................22
7.6 Entire Agreement; Nonassignability; Parties in Interest......................................22
7.7 Severability.................................................................................22
7.8 Remedies Cumulative..........................................................................22
7.9 Governing Law................................................................................22
7.10 Rules of Construction........................................................................22
7.11 Amendments and Waivers.......................................................................23
7.12 Expenses.....................................................................................23
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of August 31, 1998, by and among Fibre Optics International, Inc., a
Washington corporation ("Seller"), Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxx
(collectively, the "Shareholders"), and Fiberstars, Inc., a California
corporation ("Buyer") (the Seller, Shareholders and Buyer collectively referred
to as the "Parties").
RECITALS
A. Seller has been engaged in the build-to-order manufacturing, sale
and shipping of fiberoptics, lighting and signage business (the "Seller's
Business").
B. Seller wishes to sell to Buyer and Buyer wishes to purchase from
Seller, on the terms and for the consideration provided below, all the assets
relating to the Seller's Business as provided in this Agreement pursuant to the
closing of the transactions contemplated by this Agreement (the "Closing") on
the Closing Date (as defined in Section 1.4) (such transactions contemplated by
this Agreement being referred to as the "Acquisition").
C. The Shareholders and Boards of Directors of Seller and Buyer believe
it is in the best interests of their respective companies and the shareholders
of their respective companies that Seller sell to Buyer for the consideration
set forth below all the Acquired Assets (as defined hereafter) and, in
furtherance thereof, have approved same.
D. Seller and Buyer desire to make certain representations, warranties
and other agreements in connection with the Acquisition.
E. The Shareholders, as inducement for the Buyer to enter into this
Agreement with Seller, desire to make certain representations, warranties and
other agreements in connection with the Acquisition.
NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the Seller,
Shareholders and Buyer, intending to be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Acquired Assets. Subject to the terms and
conditions contained in this Agreement, Seller agrees to sell, assign, transfer
and deliver to Buyer, and Buyer agrees to purchase and accept from Seller, all
of Seller's right, title and interest in or to the Acquired Assets as set forth
on Schedule 1.1 attached hereto (together, the "Acquired Assets"), free and
clear of all liens, security interests, pledges, charges, claims, options,
rights, defects in title, restrictions or encumbrances of any kind or character
whatsoever ("Encumbrances", each
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an "Encumbrance" ) on the Closing Date; other than those permitted Encumbrances
set forth on Section 2.4 of the Seller Disclosure Schedule (as defined
hereafter).
1.2 No Buyer Assumption of Liabilities. Buyer shall not assume any
liabilities or obligations of any nature (matured or unmatured, fixed or
contingent) of Seller pursuant to this Agreement or the transactions
contemplated hereby other than (i) current liabilities accumulated in the normal
course of business which are itemized on the most recent balance sheet provided
in the Most Recent Balance Sheet (as defined in Section 2.5) to the Buyer as
part of Schedule 2.5 to this Agreement or (ii) future obligations under assumed
contracts expressly assumed by the Buyer as set forth on Schedule 1.2 (the
"Assumed Contracts") attached hereto, except payables to any shareholders, if
applicable.
1.3 Purchase Price for Acquired Assets. The Buyer agrees to pay Eight
Hundred Sixty Five Thousand U.S. Dollars ($865,000) (the "Purchase Price"), to
the Seller, at the Closing on the terms and subject to the conditions set forth
in this Agreement, by delivery of:
(i) a cash payment by wire transfer of immediately
available funds to such account as is specified by Seller, in the amount equal
to Three Hundred Fifteen Thousand and 05/100 U.S. Dollars ($315,000.05);
(ii) 103,108 shares of common stock of Buyer (the
"Shares") issued in the name of Fibre Optics International, Inc. and valued in
the aggregate amount of Four Hundred Sixty-Three Thousand Five Hundred One and
39/100 U.S. Dollars ($463,501.39) based upon the average of the closing price
per share on the ten (10) trading days immediately preceding the Closing (such
price being $4.4953 per share, the "Closing Price");
(iii) a deposit into escrow of 19,242 shares of
common stock of Buyer issued in the name of Fibre Optics International, Inc. and
valued in the aggregate amount of Eighty-Six Thousand Four Hundred Ninety-Eight
and 56/100 U.S. Dollars ($86,498.56) based upon the Closing Price (the "Escrow
Shares") in accordance with Section 5.1 below (all Escrow Shares and Shares
collectively the "Buyer Shares").
1.4 Closing.
(a) Closing. The Closing shall be held at the offices of Xxxx
Xxxx Xxxx & Freidenrich LLP, at 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000 or at such time and place as may be mutually agreed upon by the Parties to
this Agreement, at 10:00 a.m. on August 31, 1998 (the "Closing Date").
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(b) Delivery At Closing. At the Closing:
(i) Seller shall deliver to Buyer an Assignment and
Xxxx of Sale in the form attached hereto as Exhibit A duly transferring the
Acquired Assets to Buyer (the "Xxxx of Sale").
(ii) Buyer shall deliver to Seller the Purchase Price
as set forth in Section 1.3 above.
(iii) Seller and Buyer shall deliver or cause to be
delivered to one another such other certificates, instruments and documents
necessary or appropriate to evidence the due execution, delivery and performance
of this Agreement as set forth in Sections 6.1(f) and 6.2(e) below.
(iv) Seller shall deliver all books and records of
Seller regarding the Acquired Assets, including, without limitation, such
operating manuals and records necessary for Buyer to own and operate the
Acquired Assets in the ordinary course in Seller's possession or control.
(v) Seller, through its officers, agents and
employees, will put Buyer into full possession and enjoyment of all tangible
Acquired Assets, terms FOB Seller, unless Buyer otherwise specifies in writing
that title and risk of loss pass outside of California.
(c) Taking of Necessary Action; Further Action. If, at any
time after the Closing Date, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest Buyer with full right,
title and possession to all Acquired Assets, the officers and directors of
Seller are fully authorized in the name of Seller or otherwise to take, and will
take all such lawful and necessary and/or desirable action (including without
limitation obtaining any required consents or approvals).
1.5 Purchase Price Allocation. The Seller and Buyer agree to allocate
the Purchase Price (and all other capitalizable costs) among the Acquired Assets
for all purposes (including financial accounting and tax purposes) in accordance
with the allocation schedule attached hereto as Exhibit B.
1.6 Sales Tax. The Seller agrees that it promptly shall pay all sales
or similar taxes required to be paid by reason of the sale by the Seller to the
Buyer of the Acquired Assets pursuant to this Agreement, based upon the
allocation provided for in Exhibit B.
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ARTICLE II
CERTAIN REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDERS
In this Agreement, any reference to any event, change, condition or
effect being "material" with respect to any entity or group of entities means
any material event, change, condition or effect related to the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, operations or results of operations of such entity or
group of entities. In this Agreement, any reference to a "Material Adverse
Effect" or "Material Adverse Change" with respect to any entity or group of
entities means any event, change or effect that is materially adverse to the
condition (financial or otherwise), properties, assets, liabilities, business,
operations, results of operations or prospects of such entity and its
subsidiaries, taken as a whole.
In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge. Except as set forth on Schedule 2 (the "Seller
Disclosure Schedule," whereby the exceptions will be arranged in sections
corresponding to the numbered representations and warranties set forth in this
Article II), the Seller and the Shareholders, hereby each jointly and severally
represent and warrant to Buyer the following as of the Closing Date:
2.1 Organization, Standing and Power. Seller is a corporation duly
organized and validly existing under the laws of the State of Washington. Seller
has the corporate power to own its properties and to carry on its business as
now being conducted and is duly qualified to do business in each jurisdiction in
which the failure to be so qualified would have a Material Adverse Effect on
such entity or the Acquired Assets. Seller has delivered a true and correct copy
of its Articles of Incorporation and Bylaws or other charter documents, as
applicable, each as amended to date, to Buyer. Seller is not in violation of any
of the provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents.
2.2 Authority. Seller has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement has been duly executed
and delivered by Seller and constitutes the valid and binding obligations of
Seller enforceable against Seller in accordance with its terms. The execution
and delivery of this Agreement by Seller do not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) any provision of the
organizational documents of Seller, or (ii) any material mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Seller or any of their respective properties or assets. No
consent, approval, order or authorization of, or registration or declaration
with, any court, administrative agency or commission or other governmental
authority or instrumentality ("Governmental
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Entity") is required by or with respect to Seller in connection with the
execution and delivery of this Agreement or the consummation of the Acquisition
except for such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable securities laws.
2.3 Subsidiaries. Seller does not directly or indirectly own any equity
or similar interest or any interest convertible or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity.
2.4 Valid Ownership Effective Transfer of Necessary Rights.
(a) Ownership. Seller owns and has good and marketable title
to all of the Acquired Assets free and clear of all Encumbrances, and has the
rights to sell, assign, transfer, and deliver the Acquired Assets.
(b) Effective Transfer of Necessary Rights. Upon the Closing,
by means of this Agreement, together with the documents, instruments and
agreements contemplated hereby, Seller will transfer good and marketable title
to all Acquired Assets (including the Intellectual Property, as defined
hereafter) to Buyer, free and clear of all Encumbrances. The Acquired Assets
transferred to Buyer pursuant to this Agreement, and the documents, instruments
and agreements contemplated hereby will include all necessary assets and
intellectual property rights related to the Seller's Business, free and clear of
all Encumbrances.
2.5 Financial Statements. Seller has delivered to Buyer the following
financial statements for the Seller (collectively the "Financial Statements")
which are attached hereto as Schedule 2.5:
(a) unaudited consolidated balance sheets and statements of
income as of and for the fiscal years ended June 30, 1996, June 30, 1997 and
June 30, 1998 (the "Most Recent Fiscal Year End"); and
(b) unaudited consolidated balance sheet for the purpose of a
Closing balance sheet dated as of August 31, 1998 (the "Most Recent Balance
Sheet").
2.6 Absence of Certain Changes or Events. Since the Most Recent Fiscal
Year End, Seller has conducted the Seller's Business in the ordinary and usual
course and, without limiting the generality of the foregoing, has not:
(i) suffered any Material Adverse Change;
(ii) sold, leased, transferred or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
ordinary course of business;
(iii) suffered any damage, destruction or loss,
whether or not covered by insurance, in an amount exceeding Five Thousand U.S.
Dollars ($5,000);
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(iv) granted or agreed to make any increase in
compensation payable to Seller's employees other than those occurring in the
ordinary course of business consistent with Seller's past practices with respect
to the Seller's Business;
(v) permitted or allowed the Acquired Assets to be
subjected to any Encumbrance of any kind;
(vi) made any capital investment in, any loan to, or
any acquisition of the securities or assets of any individual, partnership,
corporation, association, trust, joint venture, unincorporated organization, or
Governmental Entity in an amount exceeding Five Thousand U.S. Dollars ($5,000);
(vii) issued any note, bond or other debt security or
created incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation either involving more than Five Thousand U.S.
Dollars ($5,000) in the aggregate;
(viii) made any changes in the accounting method or
practices it follows, whether for general financial, or tax purposes, or any
change in depreciation or amortization policy or rates adopted therein;
(ix) made any cash withdrawals or disbursements from
the Seller's accounts outside of its ordinary course of business; or
(x) agreed to take any action described in this
Section 2.6 outside of its ordinary course of business or which would constitute
a breach of any of the representations contained in this Agreement.
2.7 Absence of Liabilities. Seller has no obligations or liabilities of
any nature (matured or unmatured, fixed or contingent) other than as disclosed
on the Most Recent Balance Sheet or as Assumed Contracts, and Buyer shall not
assume any liabilities or obligations of Seller as a result of its purchase of
the Acquired Assets.
2.8 Litigation. There is no private or governmental action, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the knowledge of Seller, threatened
against Seller (with respect to the Seller's Business), or that could prevent,
enjoin, or materially alter or delay any of the transactions contemplated by
this Agreement.
2.9 Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon Seller which has or could
reasonably be expected to have the effect of prohibiting or impairing Buyer's
future operation of the Seller's Business.
2.10 Real Property. Schedule 1.1 contains descriptions of all real
property owned by Seller or used or held for use in connection with the Seller's
Business and leases or licenses or other rights to possession of any real
property so used or held (collectively the "Real Property"). Seller has
delivered to Buyer correct and complete copies of any leases or subleases
related to
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such Real Property. With respect to the Real Property, Seller has good and
marketable title to their interest in such Real Property, free and clear of all
Encumbrances, except for liens to be released prior to or at Closing, if
applicable, or those Encumbrances of record that are usual or customary. With
respect to each lease (i) the leases are in full force and effect, and are
valid, binding and enforceable in accordance with their respective terms, (ii)
all accrued and currently payable rents and other payments required by such
leases have been paid, (iii) Seller is not in default in any respect under any
such leases and no notice of default or termination has been given or received,
and (iv) Seller has not violated any term or condition under any such lease. No
third-party consent or approval is required for the assignment of any such lease
to Buyer, or for the consummation of the transactions contemplated herein. To
the extent that any third-party consent or approval is required, such consent or
approval shall be provided by Seller to Buyer prior to the Closing Date. Seller
shall obtain appropriate estoppel letters with respect to any other persons or
entities with an interest in the Leased Property, in a form reasonably
satisfactory to Buyer.
2.11 Inventory. The inventory included in the Acquired Assets
(including raw materials, work in progress and finished goods) is as set forth
on Schedule 1.1 and constitutes substantially all of the inventory relating to
the Seller's Business. Such inventory is identified as to those items which are
consistent with the current version of the Seller's Business product(s) and
those items which are either inconsistent with such current version or otherwise
obsolete or damaged. Seller has also identified on Schedule 1.1 all inventory
that is on loan or consignment to customers, sales offices or design centers of
the Seller's Business and the location of such inventory.
2.12 Capital Equipment and Hard Assets. All tangible assets listed on
Schedule 1.1 are in substantially good condition and repair and are adequate for
the uses to which they are being put or would be put in the ordinary course of
business consistent with industry standards.
2.13 Proprietary Rights.
(a) Seller neither owns nor is licensed under any patents or
patent applications. Seller owns all rights, titles and interest in and to or
has obtained licenses, whenever necessary and appropriate, to use all
technology, software, software tools, know-how, processes, trade secrets, trade
names, copyrights and other proprietary rights included in the Acquired Assets.
Schedule 2.13 contains an accurate and complete description of (i) all
trademarks and tradenames in or related to the Acquired Assets, and a list of
all licenses and other agreements relating thereto, and (ii) a list of all
licenses and other know-how, or processes that Seller is licensed or otherwise
authorized by such third parties to use, market, distribute or incorporate into
the Acquired Assets (such software, technology, know-how and processes are
collectively referred to as the "Third Party Technology"). No claims have been
asserted against Seller (and Seller is not aware of any claims which are likely
to be asserted against it or which have been asserted against others) by any
person challenging or questioning the validity or effectiveness of any license
or agreement relating thereto. To the best knowledge of Seller, none of the
Acquired Assets nor the use of any trademarks, tradenames, copyrights, software,
technology, know-how or processes contained in the Acquired Assets infringes on
the rights of,
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constitutes misappropriation of, or in any way involves unfair competition with
respect to, any proprietary information or intangible property right of any
third person or entity, including without limitation any patent, trade secret,
copyright, trademark or tradename.
(b) Except as set forth in Schedule 2.13, Seller has not
granted any third party any right to manufacture, reproduce, distribute, market
or exploit any of the Acquired Assets or any adaptations, translations, or
derivative works based on the Acquired Assets or any portion thereof.
(c) All designs, drawings, specifications, source code, object
code, documentation, flow charts and diagrams incorporating, embodying or
reflecting any of the Acquired Assets at any stage of their development were
written, developed and created solely and exclusively by employees of Seller
without the assistance of any third party or entity or were created by third
parties who assigned ownership of their rights to Seller in valid and
enforceable consultant confidentiality and invention assignment agreements.
Seller has kept secret and has not disclosed the source code for the software
included within the Acquired Assets to any person or entity other than certain
employees of Seller who are subject to the terms of a binding confidentiality
agreement with respect thereto. Seller has taken all appropriate measures to
protect the confidential and proprietary nature of such software.
2.14 Taxes. Seller has timely filed within the time period for filing
or any extension granted with respect thereto all federal, state, local and
other returns and reports relating to any and all taxes or any other
governmental charges, obligations or fees for taxes and any related interest or
penalties ("Tax" or "Taxes") required to be filed by it with respect to the
Seller's Business and the Acquired Assets and such returns and reports are true
and correct. The Company has withheld and paid all Taxes required to be withheld
and paid, with respect to (i) such returns and reports, (ii) all employees,
independent contractor, shareholder, or other third party related to the
Seller's Business, and (iii) all sales, use and similar Taxes. No income, sales,
use or similar Tax return or report of the Company has been examined or audited
by the Internal Revenue Service or any state taxing authority. There are no
pending or, to the best of the Company's knowledge, threatened audits,
examinations, assessments, asserted deficiencies or claims for additional Taxes.
2.15 Employee Matters. Seller has no employee or consultant benefit
plans or agreements, and to the extent it has had any of the foregoing in the
past, Seller has no liabilities or obligations relating in any way whatsoever to
the same.
2.16 Compliance With Laws. Seller has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state, local or foreign statute, law or regulation (including, without
limitation, laws and regulations relating to labor matters) with respect to the
conduct of its business, or the ownership or operation of its business, except
for such violations or failures to comply as could not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect on Seller.
Seller has obtained each federal, state, county, local or foreign governmental
consent, license, permit, grant, or other authorization of a Governmental Entity
(i) pursuant to which Seller currently operates or holds
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any interest in any of its properties or (ii) that is required for the operation
of Seller's business or the holding of any such interest (collectively referred
to as "Seller Authorizations"), and all of such Seller Authorizations are in
full force and effect, except where the failure to obtain or have any such
Seller Authorizations could not reasonably be expected to have a Material
Adverse Effect on Seller or the Acquired Assets.
2.17 Environmental Matters.
(a) To the best of Shareholders' knowledge, Seller has
complied in all material respects with all federal, state and local
environmental laws, rules and regulations as in effect on the date hereof
applicable to the Seller's Business and its operations. To the best of Seller's
and Shareholders' knowledge, no hazardous or toxic waste, substance, material or
pollutant (as those or similar terms are defined under the Comprehensive
Environmental Response, Compensation and Liability act of 1980, as amended, 42
U.S.C. ss.ss.9601 et seq., Toxic Substances Control Act, 15 U.S.C. ss.ss.2601 et
seq., or any other applicable federal, state and local environmental law,
statute, ordinance, order, judgment, rule or regulation relating to the
environment or the protection of human health ("Environmental Laws")), have been
released, emitted or discharged or are currently located in, on, under, or about
the real property on which the Acquired Assets are situated or contained in the
tangible personal property included in the Acquired Assets. To the best of
Shareholders' knowledge, the Acquired Assets and Seller's use thereof are not in
violation of any Environmental Laws or any occupational, safety and health or
other applicable law now in effect. Seller shall be, as of the Closing Date and
thereafter, solely responsible for all environmental liabilities, of whatever
kind and nature, arising out of or attributable to the operation or ownership of
the Acquired Assets prior to the Closing Date.
(b) No Notice of Lack of Compliance with Environmental Laws.
Neither Seller nor the Shareholders have been notified by any governmental
authority of any violation by Seller or the Shareholders of any Environmental
Laws.
2.18 Brokers' and Finders' Fees. Seller has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
2.19 Contracts.
(a) Schedule 2.19 lists all contracts (collectively the
"Contracts", each a "Contract" ) currently in force with any third party,
including but not limited to, (i) agreements, contracts or commitments that call
for fixed and/or contingent payments or expenditures by or to the Seller of more
than Five Thousand Dollars ($5,000); or (ii) agreements, contracts or
commitments with officers, employees, agents, consultants, advisors, salesmen,
sales representatives, distributors or dealers that are not cancelable by it on
notice of not longer than thirty (30) days and without liability, penalty or
premium; or (iii) agreement to loan or advance any sums to any person, any line
of credit, standby financing, revolving credit or other similar financing
arrangement of any sort.
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(b) Seller is not restricted by agreement from carrying on its
business anywhere in the world.
(c) Except as set forth on Schedule 2.19, Seller is not under
any liability or obligation, and no such outstanding claim has been made, with
respect to the return of inventory or merchandise in the possession of
wholesalers, distributors, retailers, or other customers, except such
liabilities, obligations and claims as, in the aggregate, do not exceed Five
Thousand Dollars ($5,000).
(d) Seller has not guaranteed any obligations of other persons
or made any agreements to acquire or guarantee any obligations of other persons.
(e) All material contracts, agreements and instruments to
which Seller is a party are valid, binding, in full force and effect, and
enforceable by Seller in accordance with their respective terms. No such
material contract, agreement or instrument contains any material liquidated
damages, penalty or similar provision. To the best of Seller's knowledge, no
party to any such material contract, agreement or instrument intends to cancel,
withdraw, modify or amend such contract, agreement or arrangement. No Contract
requires any third party's consent, approval or waivers in connection with the
execution and delivery of this Agreement or the consummation of the Acquisition.
To the extent that any third-party consent or approval is required, such consent
or approval shall be provided by Seller to Buyer prior to the Closing Date.
(f) Seller is not in default under or in breach or violation
of, nor, to Seller's knowledge, is there any valid basis for any claim of
default by Seller under, or breach or violation by Seller of, any contract,
commitment or restriction to which Seller is a party or to which it or any of
its properties is bound, where such defaults, breaches, or violations would, in
the aggregate, have a Material Adverse Effect on the operations, assets,
financial condition or prospects of Seller. To the best of Seller's knowledge,
no other party is in default under or in breach or violation of, nor is there
any valid basis for any claim of default by any other party under or any breach
or violation by any other party of, any material contract, commitment, or
restriction to which Seller is bound or by which any of its properties is bound,
where such defaults, breaches, or violations would, in the aggregate, have a
Material Adverse Effect on the operations, assets, financial condition or
prospects of Seller.
2.20 Insurance. Seller maintains insurance policies providing general
coverage for full replacement value against risks commonly insured against. All
of such policies are in full force and effect and Seller is not in breach or
default of any provision thereof and no event has occurred which, with notice or
the lapse of time, would constitute such a breach or default, or permit
termination, modification or acceleration, under such policies. Seller has not
received notice from any issuer of any such policies of its intention to cancel,
terminate or refuse to renew any policy issued by it.
2.21 Customers . Seller has provided Buyer with a list of substantially
all customers of the Seller's Business for the last three (3) years, together
with a schedule of such customers' orders and specifying which orders (whether
for revenue or not) have not yet been filled, and of
10
those orders which have been filled, those as to which revenue has been
recognized, the amount (if any) of cash collected and the amount of revenue
deferred. Additionally, Seller has provided Buyer, for each listed customer
order, a brief description of the status of that installation and any further
commitments, contingencies, milestones or customer expectations with regard to
that order.
2.22 Investment in Buyer Shares.
(a) Seller (i) understands that the Buyer Shares have not been
and will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under any state securities laws, and are being acquired in
reliance upon federal and state exemptions from registration requirements
thereof, (ii) is acquiring the Buyer Shares solely for its own account for
investment purposes, and not with a view to the distribution thereof, (iii) is a
sophisticated investor with knowledge and experience in business and financial
matters as to be capable of evaluating the merits and risks of an investment in
Buyer, (iv) acknowledges that it has received all information it desires
concerning Buyer, its common stock and any other matter it deems relevant or
material to evaluating the merits and risks inherent in holding the Buyer
Shares, (v) is able to bear the economic risk of investment and lack of
liquidity inherent in holding the Buyer Shares.
(b) Seller understands that the Buyer Shares may not be sold,
transferred or otherwise disposed of without registration under the Securities
Act or reliance upon an exemption therefrom, and that in the absence of an
effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Buyer Shares must be
held until a transfer or disposition of the Buyer Shares is otherwise permitted
pursuant to the Securities Act or applicable state securities laws. To the
extent applicable, each certificate or other document evidencing any of the
Buyer Shares shall be endorsed with the following restrictive legend:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
ABSENT AN EFFECTIVE REGISTRATION THEREOF, OR EXEMPTION
THEREUNDER, UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT."
2.23 Representations Complete. None of the representations or
warranties made by Seller herein or in any Schedule hereto, or certificate
furnished by Seller pursuant to this Agreement, when all such documents are read
together in their entirety, contains any untrue statement of a material fact, or
omits any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization, Standing and Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Buyer has the corporate power to own its properties and to carry on
its business as now being conducted and as proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a Material
Adverse Effect on Buyer. Buyer is not in violation of any of the provisions of
its Articles of Incorporation or Bylaws or equivalent organizational documents.
3.2 Authority. Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes the valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms. The execution and
delivery of this Agreement by Buyer does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) any provision of the Articles of
Incorporation or Bylaws of Buyer or any of its subsidiaries, as amended, or (ii)
any material mortgages indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or any of its
respective properties or assets. No consent, approval, order or authorization
of, or registration or declaration with, any Governmental Entity is required by
or with respect to Buyer in connection with the execution and delivery of this
Agreement or the consummation of the Acquisition except for such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws.
3.3 Validity of Buyer Shares. The Buyer Shares, when issued and
delivered to Seller in accordance with this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable.
3.4 Litigation. There is no private or governmental action, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the knowledge of Buyer, threatened against
Buyer, or that could prevent, enjoin, or materially alter or delay any of the
transactions contemplated by this Agreement.
3.5 Compliance With Laws. Buyer has complied with, is not in violation
of, and has not received any notices of violation with respect to, any federal,
state, local or foreign statute, law or regulation (including, without
limitation, laws and regulations relating to labor matters) with respect to the
conduct of its business, or the ownership or operation of its business, except
for such violations or failures to comply as could not, individually or in the
aggregate, be
12
reasonably expected to have a Material Adverse Effect on Buyer. Buyer has
obtained each federal, state, county, local or foreign governmental consent,
license, permit, grant, or other authorization of a Governmental Entity (i)
pursuant to which Buyer currently operates or holds any interest in any of its
properties or (ii) that is required for the operation of Seller's business or
the holding of any such interest, and all of such authorizations are in full
force and effect, except where the failure to obtain or have any such
authorizations could not reasonably be expected to have a Material Adverse
Effect on Buyer.
3.6 Public Information.
(a) The Buyer shall make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times from and after 90 days following the effective date
of the first registration of the Company under the Securities Act of an offering
of its securities to the general public.
(b) The Buyer shall file with the Securities Exchange
Commission (the "Commission") in a timely manner all reports and other documents
the Commission may prescribe under Section 13(a) or 15(d) of the Exchange Act at
any time after the Buyer has become subject to such reporting requirements of
the Exchange Act.
(c) The Buyer shall furnish to a holder and/or a prospective
purchaser of such Shares or Escrow Shares (a "Holder"), forthwith upon request
(i) a written statement by the Buyer as to its compliance with the reporting
requirements of Rule 144 under the Securities Act (at any time from and after 90
days following the effective date of the first registration statement of the
Company for an offering of its securities to the general public) and of the
reporting requirements of the Exchange Act (at any time after it has become
subject to such reporting requirements), (ii) a copy of the most recent annual
or quarterly report of the Company, (iii) any other reports and documents
necessary to satisfy the information-furnishing condition to offers and sales
under Rule 144A under the Securities Act, and (iv) such other reports and
documents as a Holder of any Shares or Escrow Shares reasonably requests to
avail itself of any rule or regulation of the Commission allowing such Holder to
sell any such securities without registration.
3.7 Brokers' or Finders' Fees. Buyer is not a party to, or in any way
obligated under, and has no knowledge of, any contract or outstanding claim for
the payment of any broker's or finder's fee in connection with the origin,
negotiation, execution or performance of this Agreement, the nonpayment of which
could result in the placement of a lien or other encumbrance on the Acquired
Assets, or a claim against Buyer or its affiliates.
3.8 Representations Complete. None of the representations or warranties
made by Buyer herein or in any Schedule hereto, or certificate furnished by
Buyer pursuant to this Agreement, when all such documents are read together in
their entirety, contains any untrue statement of a material fact, or omits any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
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ARTICLE IV
COVENANTS OF THE PARTIES
4.1 Representations and Warranties. On or after the Closing, Buyer,
Seller or each of the Shareholders shall give detailed written notice to the
other parties promptly upon learning of any fact which would render untrue any
of the Party's representations or warranties contained in this Agreement or the
information contained in any Schedule to this Agreement.
4.2 Access to Documents. If, after the Closing Date, (i) in order to
properly prepare its tax returns or other documents or reports required to be
filed with governmental authorities or its financial statements; (ii) in
connection with any threatened or pending litigation or claim which involves or
may involve Buyer; or (iii) for any other reasonable purpose, it is necessary
that Buyer be furnished with additional information or documents relating to the
Acquired Assets and such information or documents are in the possession of
Seller or Shareholders, and can reasonably be furnished to Buyer, Seller or
Shareholders shall, upon written request therefor, promptly furnish such
information or documents to Buyer. Buyer shall reimburse the Seller or
Shareholders providing such information or documents for the cost of copying or
shipping any requested documents.
4.3 Transition Services Performed by Xxxx X. Xxxxxx. The Buyer hereby
agrees to pay Xxxx X. Xxxxxx an hourly rate of $50 per hour for work performed
by Xxxx X. Xxxxxx on behalf of the Seller which is (i) reasonable and
appropriate for the transition and continuation of the Seller's Business and
(ii) authorized by the Chief Financial Officer of the Buyer or such officer that
Buyer may designate from time to time prior to the work being performed. Xxxx X.
Xxxxxx shall be responsible for providing a good-faith report of such work
performed and hours worked to such officer of the Buyer.
4.4 Covenant Not to Compete. As of the Closing Date, Xxxx X. Xxxxxx, by
executing this Agreement, hereby agrees to enter into a five (5) year
non-compete agreement covering the geographic territory in which the Seller
currently does business, which agreement shall preclude solicitation or hiring
of former employees of Seller hired by Buyer without Buyer's prior written
consent, and further agrees that for a period of five (5) years from the
Effective Date he will not, directly or indirectly, individually or as an owner,
partner, shareholder, joint venturer, employee, consultant, principal, agent,
trustee or licensor, or in any other similar capacity whatsoever of or for any
person, firm, partnership, company or corporation (other than Buyer), (a) own,
manage, consult with, operate, sell, control or participate in the ownership,
management, operation, sales or control of (i) any business that competes with
the business of Buyer (whether through stand-alone products or broader products
that include equivalent functionality), and/or (ii) any business engaged in the
design, research, development, marketing, sales, manufacturing or licensing of
products that are substantially similar to or competitive with any products of
Buyer (whether through stand-alone products or broader products that include
equivalent functionality); (b) accept to provide consulting services on behalf
of a customer of Buyer with the intent or purpose of depriving Buyer of business
performed by Buyer by transferring such work to a department, division or
affiliate of the customer or to a third party; or (c) request or advise any of
the
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customers, suppliers or other business contacts of Buyer to withdraw, curtail,
cancel or not increase their business with Buyer.
4.5 No Publicity; Confidentiality. Without the consent of the other
party, which consent may be granted by Xxxxx Xxxxxxx on behalf of Buyer, and
Xxxx Xxxxxx on behalf of Seller, none of the Parties shall reveal the existence
of or contents of this Agreement or make any internal or public announcements
except to their respective professional advisors or as otherwise required by
applicable law. The Parties acknowledge and agree that all confidential material
or information delivered as part of any due diligence performed by the Parties
shall be kept completely confidential by the Parties and the Parties' respective
agents, representatives, or employees to any third party in any manner
whatsoever, in whole or in part, without the prior written consent of the other
party or by order of a court of competent jurisdiction. Each of the Parties
agree to undertake reasonable precautions to safeguard and protect the
confidentiality of all such confidential information, to accept responsibility
for any breach of this Agreement by itself, or representatives or members of its
organization, and at its sole expense to take all reasonable measures (including
but not limited to court proceedings) to restrain its representatives or members
of its organization from prohibited or unauthorized disclosure or uses of
confidential information.
4.6 Employee Matters. At the Closing Date, Buyer agrees to enter into
an employment agreement with Xxxx Xxxxxx in substantially the form attached
hereto as Exhibit C (the "Employment Agreement").
4.7 Trademark Renewal. Within 30 days of the Closing Date, the Seller
on behalf of the Seller or Buyer (as mutually determined by the Parties) shall
have filed or shall have cause to be filed an application for registration for
the trademark as originally issued under Registration Number 1536793 for the
design xxxx "Fibre Optics International, Inc." with the United States Patent and
Trademark Office (the "Trademark Renewal"); provided that all reasonable costs
(including attorney's fees) associated to such Trademark Renewal shall be borne
by the Seller and the Shareholders.
4.8 Piggyback Registration.
(a) Notice of Registration. If, at any time after the one-year
anniversary and before the two-year anniversary of the Closing Date, Buyer shall
determine to register any of its equity securities, either for its own account
or for the account of a security holder or holders, other than a registration
relating solely to employee benefit plans or a registration relating solely to a
Rule 145 transaction, Buyer will:
(i) promptly give written notice to Seller or the
Shareholders, if applicable, for so long as it continues to hold the
registration rights contained herein (each for the purposes of this Section 4.7,
a "Holder"), and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Buyer
15
Shares specified in a written request or requests, made within thirty (30) days
after receipt of such written notice from Buyer, by any Holder.
(b) Right to Terminate Registration. The registration rights
granted under this Section 4.7 are solely piggyback in nature, and the Buyer
shall have the right to terminate or withdraw any registration initiated by it
under this Section 4.7 prior to the effectiveness of such registration, whether
or not any Holder has elected to include securities in such registration.
4.9 Post-Closing Buyer Covenants. In accordance with Buyer's Stock
Option Plan, a copy of which has been provided to Seller, and Buyer's policy for
granting options, Buyer hereby agrees to (i) grant an option to purchase 7,500
shares of common stock of the Buyer to Xxxxx Xxxxxxx and (ii) grant options to
Xxxxxxx X. Xxxxxx under the Employment Agreement at the next meeting of the
Board Compensation Committee of the Buyer to be held as soon as reasonably
practicable after the Closing Date.
4.10 Reasonable Best Efforts; Further Assurances. Each of the Parties
to this Agreement shall use its or their reasonable best efforts to effectuate
the transactions contemplated hereby and to fulfill and cause to be fulfilled
the conditions to closing under this Agreement. Each party hereto, at the
reasonable request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
ARTICLE V
ESCROW; INDEMNIFICATION
5.1 Escrow Fund. As soon as practicable after the Closing, the Escrow
Shares shall be deposited in an escrow with the Bank of San Francisco (or other
institution selected by Buyer with the reasonable consent of Seller) as escrow
agent (the "Escrow Agent"), such deposit to constitute the "Escrow Fund" and to
be governed by the terms set forth herein and in the escrow agreement attached
hereto as Exhibit D (the "Escrow Agreement"). The Escrow Fund shall be available
to compensate Buyer pursuant to the indemnification obligations of Seller set
forth in this Agreement, with respect to Damages (as defined below) arising by
reason of Seller's failures under Section 5.2 hereafter. The Escrow Fund shall
act as partial security for Seller's indemnification obligations set forth in
this Agreement, but shall not serve as Buyer's exclusive remedy with respect
thereto. The Escrow Fund shall be released upon the later of (i) February 28,
1999 and (ii) completion of delivery of all Acquired Assets by Seller to Buyer
(the "Escrow Period"), as provided in and subject to the terms of the Escrow
Agreement.
5.2 Indemnification.
(a) Indemnification by Seller and Shareholders. Subject to the
limitations set forth in this Article V, Seller and Shareholders, jointly and
severally, will defend, indemnify, and
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hold harmless Buyer and its respective officers, directors, agents and
employees, and each person, if any, who controls or may control Buyer within the
meaning of the Securities Act (individually, an "Indemnified Person" and
collectively, "Indemnified Persons"), and shall reimburse Indemnified Persons,
for, from and against any and all losses (which shall include any diminution in
value), costs, damages, liabilities and expenses arising from claims, demands,
actions and causes of action, including, without limitation, reasonable legal
fees, (collectively, "Damages") arising out of (i) any misrepresentation or
breach of or default in connection with any of the representations, warranties,
covenants and agreements given or made by Seller or Shareholders in this
Agreement, or any exhibit or other schedule to this Agreement, or (ii)
transactions, events, acts or omissions of or by Seller or Shareholders relating
to the Seller's Business on or before the Closing.
(b) Indemnification by Buyer. Subject to the limitations set
forth in this Article V, Buyer shall defend, indemnify and hold harmless Seller
and the Shareholders, and shall reimburse Seller and the Shareholders, for, from
and against all Damages arising out of any misrepresentation or breach of or
default in connection with any of the representations, warranties, covenants or
agreements given or made by Buyer in this Agreement or any exhibit or other
schedule to this Agreement.
(c) Limitations. In no event shall the liability under
Sections 5.2(a) or (b) exceed the amount of the Purchase Price (such that the
Buyer Shares shall remain valued at the Closing Price); provided, however, to
the extent Buyer Shares are valued less than the Closing Price at the time in
which indemnification is sought, Buyer's remedy as to the amount of the Purchase
Price shall be limited to that amount which takes into account such value of the
Buyer Shares.
(d) Threshold. Buyer will not be entitled to make a claim
against Seller or the Shareholders under Section 5.2(a) and the Seller or
Shareholders will not be entitled to make a claim against the Buyer under
Section 5.2(b) unless and until the aggregate amount of indemnifiable losses
incurred exceeds Ten Thousand U.S. Dollars ($10,000). At such time, such
aggregate threshold amount shall be fully and completely subject to all prior
claims and, for purposes of Buyer's claims, payable from the Escrow Fund subject
to the terms and conditions of the Escrow Agreement.
(e) Indemnification Procedure Proceeding Against the Escrow
Fund. All claims for indemnification asserted against the Escrow Fund shall be
asserted and resolved as set forth in the Escrow Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Buyer's Conditions to Closing. The obligations of Buyer hereunder
are subject to fulfillment or satisfaction, on and as of the Closing, of each
the following conditions (any one or more of which may be waived by the Buyer):
17
(a) Representations and Warranties. Each of the
representations and warranties Seller and Shareholders have set forth in Article
II above shall be true and correct in all material respects at and as of the
Closing Date.
(b) Performance. All of the terms, covenants and conditions of
this Agreement to be complied with and performed by the Seller and Shareholders
at or prior to the Closing shall have been duly complied with and performed in
all material respects.
(c) No Injunction. There shall be no effective injunction,
writ, preliminary restraining order or any order of any nature issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated hereby.
(d) No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action, investigation, inquiry or
other proceeding against any party hereto by or before any governmental entity
requesting or looking toward an order, judgment or decree that (i) restrains or
prohibits the consummation of the transactions contemplated hereby, or (ii)
would have a material adverse effect on Buyer's ability to exercise control over
or manage the Acquired Assets or the Seller's Business after the Closing.
(e) Consents. All material written consents, approvals,
assignments, waivers or authorizations, including Seller Authorizations and
other consents scheduled hereto, that are required to be obtained as a result of
the transactions contemplated by this Agreement or for the continuation in full
force and effect of any of the Contracts shall have been obtained.
(f) Delivery of Deliverables. Seller and Shareholders shall
deliver or cause to be delivered each of the following deliverables, duly
executed and/or reasonably satisfactory in form and substance to Buyer, to Buyer
at the Closing:
(i) the Acquired Assets by making the Acquired Assets
available to Buyer;
(ii) a certificate signed by the President of the
Seller to the effect that each of the conditions specified above in Section
6.1(a)-(d) is satisfied in all material respects;
(iii) all required third party and Governmental
Entity consents in accordance with Section 6.1(e);
(iv) the executed opinion of Bulivant Xxxxxx Xxxxxx,
P.C., as Seller's Counsel, dated as of the Closing Date and substantially in the
form attached as Exhibit E hereto;
(v) executed copies of the Xxxx of Sale, the
Employment Agreement, a Certification of Non Foreign Status completed by the
Seller, and the Escrow Agreement;
(vi) a certificate, signed by the Secretary of
Seller, certifying as to the truth and accuracy of and attaching copies of all
board of directors resolutions adopted in connection with the Acquisition; and
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(vii) completed Schedules to this Agreement, as
applicable to the Seller and/or Shareholders.
(g) Other Matters. All actions required to be taken by Sellers
and Shareholders in connection with consummation of the transactions
contemplated hereby and all certificates, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Buyers.
6.2 Seller's Conditions to Closing. The obligations of Seller hereunder
are subject to fulfillment or satisfaction, on and as of the Closing, of each of
the following conditions (any one or more of which may be waived by Seller, but
only in a writing signed by Seller):
(a) Representations and Warranties. Each of the
representations and warranties Buyer has set forth in Article III above shall be
true and correct in all material respects at and as of the Closing Date.
(b) Performance. All of the terms, covenants and conditions of
this Agreement to be complied with and performed by the Buyer at or prior to the
Closing shall have been duly complied with and performed in all material
respects.
(c) No Injunction. There shall be no effective injunction,
writ, preliminary restraining order or any order of any nature issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated hereby.
(d) No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action, investigation, inquiry or
other proceeding against any party hereto by or before any governmental entity
requesting or looking toward an order, judgment or decree that restrains or
prohibits the consummation of the transactions contemplated hereby.
(e) Delivery of Deliverables. Buyer shall deliver each of the
following Deliverables, duly executed and/or reasonably satisfactory in form and
substance to Buyer, to Buyer at the Closing:
(i) the Purchase Price in the form and manner
required under Section 1.3 above;
(ii) the executed opinion of Xxxx Xxxx Xxxx &
Freidenrich LLP, counsel to Buyer, in substantially the form attached hereto as
Exhibit F;
(iii) executed copies of the Escrow Agreement, the
Employment Agreement, and the resale certificate, in substantially the form
attached hereto as Exhibit G (the "Resale Certificate");
(iv) a certificate signed by an authorized officer of
the Buyer to the effect that each of the conditions specified above in Section
6.2(a)-(b) is satisfied in all material respects;
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(v) a certificate, signed by the Secretary of Buyer,
certifying as to the truth and accuracy of and attaching copies of all board of
directors resolutions adopted in connection with the Acquisition; and
(vi) completed Schedules to this Agreement, as
applicable to the Buyer.
(f) Other Matters. All actions required to be taken by Buyer
in connection with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to Seller.
ARTICLE VII
GENERAL PROVISIONS
7.1 Survival at Closing. The representations, warranties and agreements
set forth in this Agreement shall survive the Closing, except the
representations, warranties and/or agreements set forth in Article II, Article
III and Article IV shall survive until the latest of (i) the second anniversary
of the Closing; (ii) with respect to Section 2.13 (Taxes) the expiration of all
applicable statutes of limitations; and (iii) final resolution of any pending
claim under Article VI (but only as to such pending claim or claims).
7.2 Specific Performance. The Parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Moreover, each party's obligation under this Agreement is unique. If any party
should default in its obligations under this Agreement, the Parties each
acknowledge that it would be extremely impracticable to measure the resulting
damages. It is accordingly agreed that the Parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the U.S. or any
state having jurisdiction, this being in addition to any other remedy to which
they are entitled in law or in equity.
7.3 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the Parties
at the following address (or at such other address for a party as shall be
specified by like notice):
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(a) if to Seller or any of the Shareholders to:
Fibre Optics International, Inc.
000 X. Xxxxxxxxxx Xxxxxx
Xxxx. X-0
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, President
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Bulivant Xxxxxx Xxxxxx, P.C.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Buyer, to:
Fiberstars, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Chief Executive
Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
7.4 Interpretation. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning, or interpretation of this Agreement.
21
7.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other Parties, it being understood that all
Parties need not sign the same counterpart.
7.6 Entire Agreement; Nonassignability; Parties in Interest. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits and the
Schedules, (a) constitute the entire agreement among the Parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the Parties with respect to the subject matter
hereof, (b) are not intended to confer upon any other person any, rights or
remedies hereunder; and (c) shall not be assigned by operation of law or
otherwise except as otherwise specifically provided.
7.7 Severability. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the Parties hereto. The Parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
7.8 Remedies Cumulative. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
7.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without giving effect to
conflicts of law. Each of the Parties hereto irrevocably consents to the
exclusive jurisdiction of any court located within the State of California, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of California for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
7.10 Rules of Construction. The Parties agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
22
7.11 Amendments and Waivers. No amendment of any provisions of this
Agreement shall be valid unless it is in writing and signed by Buyer and Seller.
No waiver by Buyer or Seller of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any such prior or subsequent occurrence.
7.12 Expenses. Whether or not the Acquisition is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of its
advisers, accountants and legal counsel) shall be paid by the party incurring
such expense.
(The remainder of this page is intentionally left blank.)
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized,
all as of the date first written above.
FIBRE OPTICS INTERNATIONAL, INC.,
a Washington corporation
By: /s/ XXXXXXX X. XXXXXX
---------------------------------------------
Xxxxxxx X. Xxxxxx
President
FIBERSTARS, INC.,
a California corporation
By: /s/ XXXXX X. XXXXXXX
---------------------------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
SHAREHOLDERS:
---------------------------------------------
/s/ XXXXXXX X. XXXXXX
XXXXXXX X. XXXXXX
---------------------------------------------
/s/ XXXX X. XXXXXX
XXXX X. XXXXXX
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
