EX-10 4 sitechoptionag1.htm ALCHEMY OPTION AGREEMENT OPTION AND ASSET PURCHASE AGREEMENT
OPTION AND ASSET PURCHASE AGREEMENT
THIS OPTION AND ASSET PURCHASE AGREEMENT(this "Agreement") is entered into and made effective as of September 16, 1997 (the "Effective Date"), by andamong MENTOR CORPORATION, a Minnesota corporation, or its assignee (collectively, "Mentor"), ALCHEMY ENGINEERING, LLC, a California limited liability company d/b/a SiTech, LLC ("SiTech"), and Xxxxxxx X. Xxxxxxx and Del X. Xxxxxxxxx, the individual members of SiTech (such individuals, the "Members"). All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in that certain Exclusive Supply Agreement, of even date herewith, by and between SiTech and Mentor (the "Supply Agreement").
WHEREAS, the Members are presently the sole members of SiTech;
WHERAS, SiTech has been formed to engage in the business of manufacturing silicone dispersions, silicone gel and silicone elastomers (the "Business") in a manufacturing facility located at 0000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000 (the "Texas Facility");
WHERAS, as a condition to execution of the Supply Agreement, SiTech has agreed and the Members have agreed to cause SiTech, among other things, to grant to Mentor an exclusive option to purchase all of the assets of SiTech used in the Business pursuant to the terms and conditions of this Agreement.
1.2 The Assets. The Assets to be sold and purchased hereunder, include, but shall not be limited to:
(i) all cash balances of SiTech;
(ii) all of the accounts receivable of SiTech;
(iii) all inventories of SiTech, including without limitation all raw materials, work in progress, finished goods (including inventories of finished products held for packaging and/or shipping and all types of inventories which are in transit or being held by third parties) and all production, shipping and packaging supplies;
(iv) all prepaid expenses, including deposits and credits of SiTech;
(v) all fixed assets of SiTech, including all machinery, equipment, tools, handling equipment and accessories and supplies;
(vi) all office furniture and furnishings, equipment and supplies of SiTech;
(vii) all of SiTech's right, title and interest as tenant in and to leases and interests in real property (the "Real Property"), together with all of SiTech's right, title and interest in and to all easements, rights and appurtenances thereto;
(viii) all of SiTech's right, title and interest in and to all plants, buildings, structures, erections, improvements and fixtures located on or forming part of the Real Property;
(ix) all of SiTech's right, title and interest in, to and under all domestic and foreign patents, patent applications, patent licenses, assignable software licenses, assignable know-how licenses and technology transfer agreements, trade names, trademarks, brand names, logos, copyrights, unpatented inventions, discoveries, conceptions, reductions to practice, service marks, trademark and service xxxx registrations and applications, including without limitation that certain License and Technology Transfer Agreement (the "License and Technology Transfer Agreement") between SiTech and NuSil Technology ("NuSil");
(x) all of SiTech's right, title and interest in and to trade secrets, know-how (including, without limitation, proprietary know-how and use and application know-how) manufacturing, engineering and other drawings, technology, technical information, engineering data, design and engineering specifications, formulae, processes, blueprints, sketches, schematics, flow sheets, flow diagrams, magnetic media such as audio tapes, computer disks, micromedia such as microfilm and microfiche, promotional literature and similar data, including without limitation the Master Device Files (as defined in the Supply Agreement) (all rights referred to in 1 .2(ix) and 1.2(x) together referred to as the "Intellectual Property");
(xi) all of the Business's existing books, general, financial, tax and personnel records, correspondence and other documents, records and files, and all data systems and customer information to enable Mentor to continue the design, manufacture and sale of the Business's products and services;
(xii) the full benefit of all leases of, and conditional sales contracts and title retention agreements relating to, machinery and equipment of which SiTech is lessee;
(xiii) the full benefit of all contracts or commitments to which SiTech is entitled, including without limiting the generality of the foregoing,
(A) all unfilled orders received by SiTech; and
(B) all forward commitments to SiTech for fixed assets, subleases, services, inventory, supplies or materials entered into in the usual and ordinary course of the Business, whether or not there are any written contracts with respect thereto;
(xiv) the full benefit of all licenses, and all registrations and permits of SiTech pertaining to environment, health and safety matters, and all other assignable registrations and permits;
(xv) the goodwill of SiTech;
(xvi) all computer aided design and other product development equipment of SiTech; and
(xvii) all claims, causes of action, rights of recovery, refunds and rights of set-off of any kind of SiTech, except insofar as necessary to offset a claim against SiTech but for which SiTech does not recover money.
(xviii) all insurance proceeds and the full benefit of all insurance policies of SiTech, including without limitation those described in Section 3.12 hereof.
(i) SiTech's minute book, membership or other ownership ledger and records and tax records not necessary for Mentor to continue the Business; and
(ii) assets related to employee benefit plans which are not assumed by Mentor.
1.5 Exercise of Option. Due Diligence and Closing Date.
(a) The Option may be exercised by Mentor, in its sole discretion, by delivering written notice (the "Option Notice") to SiTech prior to the expiration of the Option Term. Such Option Notice shall specify the tentative time and date of the Closing (which shall be not be less than ninety (90) days and not more than 120 days from the date of delivery of the. Option Notice), and shall specify the due diligence materials and information (the "Due Diligence Information") to be furnished to Mentor to complete its due diligence investigation in connection with its purchase of the Assets from SiTech at the Closing. SiTech shall promptly prepare and provide to Mentor all Due Diligence Information so requested and the. Disclosure Schedule (as defined in Section 3.1 below) to this Agreement (as updated to the Closing) within thirty (30) days after SiTech's receipt of the Option Notice and due diligence request from Mentor. Mentor shall approve or disapprove all of the Due Diligence Information and the updated Disclosure Schedule within sixty (60) days after receipt thereof (the "Due Diligence Period") and, provided Mentor shall have approved the same, the Closing shall occur on the first business date following the expiration of the Due Diligence Period (the "Closing Date").
(b) In the event a Closing does not occur, for any reason, within 120 days from the date of Mentor's delivery of an Option Notice to SiTech, this Agreement shall continue in full force and effect until the earlier of: (i) the seven (7) year anniversary of the Effective Date; (ii) a successful Closing pursuant to Mentor's delivery of an Option Notice to SiTech; or (iii) the early termination of this Agreement pursuant to Article VIII below.
(a) Notwithstanding any other provision of this Agreement, during each year SiTech may distribute to each of its members an amount equal to their respective federal and state net income tax liability resulting from their interest in SiTech, calculated to the time immediately prior to Closing, taking into account items of such year's income, loss, deduction and credit, and any other nonseparately computed items of income or loss as described in Section 1366(a) of the Internal Revenue Code (the "Code") (collectively, the "SiTech Items") imputed to such member for that year, pursuant to the terms in Section 1.6(b) below.
(b) The tax liabilities described in Section 1.6(a) above shall be calculated by the following method; Each member shall submit to an independent Certified Public Accountant, mutually agreed upon by SiTech and Mentor (the "CPA"), two sets of federal and state tax returns, with and without the SiTech Items. The CPA may not alter the members tax returns as submitted, but may, in calculating the net tax effect of the SiTech items, make only those changes necessary to correct numerical errors or to comply with federal and state law. The aggregate difference in each members' net tax liability due to the inclusion of the effect of such member's interest in SiTech, as determined by the CPA, shall be distributed to each member by SiTech on either an annual or quarterly basis, to coincide with each member's filing obligations, within 30 days of the CPA completing his or her review of each member's tax returns. The expenses associated with the CPA will be borne by SiTech in the ordinary course of business.
(c) After the Closing Date, and solely with respect to each annual or quarterly tax period for a member (i) that either includes the Closing Date or for which distributions pursuant to Section 1.6(a) could not reasonably have been made prior to the Closing Date due to the time requirements set forth in Section 1.6(b) above and (ii) for which distributions have not been made to such member pursuant to Section 1.6(a), Mentor hereby agrees to distribute to each of the members of SiTech (who are members of SiTech as of the Closing Date) an amount equal to their respective federal and state net income tax liability resulting from their interest in SiTech, with respect and calculated to the time ending immediately prior to Closing, taking into account the SiTech Items imputed to such member for that year, pursuant to the terms of Section 1.6(b) above.
ARTICLE II PURCHASE PRICE AND CLOSING
(a) Upon exercise of the Option by Mentor, the Closing shall occur on the Closing Date at the offices of Mentor, 0000 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxx 00000, or such other date and place as the parties mutually agree.
(b) At the Closing, subject to Article VI below, SiTech shall deliver to Mentor:
(i) a duly executed Xxxx of Sale substantially in the form attached hereto as Exhibit D;
(ii) duly executed assignments of SiTech's right, title and interest in and to, or licenses to practice, the Intellectual Property;
(iii) duly executed assignments of SiTech's right, title and interest in, to and under each contract and license to be assigned pursuant to this Agreement;
(iv) evidence of the release of all liabilities, obligations, liens, claims and encumbrances on or against the Assets;
(v) such other instruments of assignment or conveyance as Mentor may reasonably request as necessary or appropriate to vest in Mentor good and marketable title to the Assets; and
(vi) possession of all tangible assets of the Business.
(c) At the Closing, subject to Article V below, Mentor shall pay the Purchase Price to SiTech by wire transfer of immediately available federal funds to an account designated by SiTech, subject to escrow of the Holdback (as defined in and pursuant to Section 2.4 below) and the Purchase Price adjustment described in Section 2.1 above.
(a) At the Closing, Two Million Dollars ($2,000,000) of the Purchase Price (the "Holdback") shall be deposited in an interest bearing escrow account with a party to be mutually agreeable to Mentor and SiTech as escrow agent (the "Escrow Agent"), to be held and administered in accordance with the terms and conditions set forth in this Section 2.4. Mentor and SiTech shall share equally the expenses associated with such escrow account.
(b) If the Holdback has not been released to Mentor pursuant to Section 2.4(d) hereof and no claims by Mentor to the Escrow Agent have been made for the release of any of the Holdback on the first business day which is one (1) year following the Closing Date, the Escrow Agent shall release and deliver One Million Dollars ($1,000,000) of the Holdback to SiTech, without the necessity for any further instruction from either Mentor or SiTech.
(c) Subject to Section 2.3(d) hereof, the Escrow Agent shall release the Holdback (or such portion of the Holdback that SiTech is entitled to receive after subtracting any of the Holdback released to Mentor in recovery of Damages (as defined in Section 7.1 below) pursuant to Section 2.3(d) hereof or any of the Holdback released pursuant to Section 2.3(b) hereof) on the first business day which is two (2) years following the Closing Date, and on such date the Escrow Agent shall release and deliver all or such portion of the Holdback including interest to which SiTech is entitled to SiTech, without the necessity for any further instruction from either Mentor or SiTech.
(d) Mentor shall be entitled to recover any Damages that may be suffered by Mentor and that are indemnifiable pursuant to Article VII below against the Holdback. The applicable parties hereto shall negotiate in good faith for a reasonable period of time (prior to seeking judicial resolution) regarding the amount of Damages that are indemmfiable. Upon a final settlement between the applicable parties or judgment by a court of competent jurisdiction as to the mutually agreed or judicially determined amount of the Damages that are indemnifiable, that portion of the Holdback equaling the amount of the Damages to which Mentor is entitled to recover shall be released by the Escrow Agent to Mentor to satisfy such Damages.
(e) Mentor and SiTech hereby agree to execute and deliver any agreement (the "Escrow Agreement") reasonably required by the Escrow Agent which sets forth the rights and obligations of the Escrow Agent with respect to the escrow and re sale of the Holdback.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SITECH AND MEMBERS
Except as set forth on the Disclosure Schedule attached as Exhibit E hereto, which specifically identifies all the relevant sections thereon (the "Disclosure Schedule"), SiTech and, solely with respect to Sections 3.1, 3.2, 3.5(c), (d) and (e), 3.17, 3.20 and 3.21 of this Article III, the Members, jointly and severally, represent and warrant to Mentor, as of the Effective Date and, after the Disclosure Schedule is updated, as of the Closing Date, as follows:
3.1 Existence. Good Standing and Authority. SiTech is a limited liability company duly organized, validly existing and in good standing under the laws of the State of California, and is qualified to conduct business as a foreign limited liability company in all jurisdictions in which such qualification is required. SiTech has all necessary power and authority and has taken all actions necessary to enter into this Agreement, the Supply Agreement, the License and Technology Transfer Agreement, and to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder, and no other actions or proceedings on the part of SiTech are necessary to authorize this Agreement, the Supply Agreement or the License and Technology Transfer Agreement, or to consummate the transactions contemplated hereby and thereby. This Agreement and each of the Supply Agreement and the License and Technology Transfer Agreement has been duly and validly executed and delivered by SiTech, and constitutes a legal, valid and binding obligation of SiTech, enforceable against SiTech in accordance with its terms, except as enforcement may be limited by equitable principles or bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors' rights generally. Neither the execution or delivery of this Agreement, the Supply Agreement or the License and Technology Transfer Agreement, nor the consummation of the transactions contemplated hereby or thereby or performance hereunder or thereunder, will violate the terms of the Articles of Organization or Operating Agreement of SiTech.
SiTech to, do or permit any of the items listed below. Notwithstanding the foregoing sentence, -Mentor may waive any and all objections it may have with respect to such action, and such
waiver and consent shall be deemed for all purposes to have been given with respect to a proposed (and not then current) activity described in this Section 3.5 if, within 15 days of receiving notice of a proposed action, Mentor does not deliver to SiTech in writing an objection to such action and the basis therefor.
(a) permit to occur any Material Adverse Effect (as defined in Section 5.6 below);
(b) increase the compensation paid or payable by SiTech, other than in the ordinary course of business, to any of its officers, directors, employees or agents;
(c) (i) except as set forth in Section 1.6 hereof, pay any compensation to any member of SiTech, (except in his, her or its capacity as a full-time, on-site employee of SiTech; or (ii) pay compensation to any employee of NuSil who remains employed by NuSil in any capacity;
(d) except as set forth in Section 1.6 hereof, declare, set aside or pay dividends or distributions in respect of ownership interests m SiTech including SiTech Membership Interests (except in the event and to the extent SiTech's members' equity (as determined in accordance with GAAP) at such time is equal to or greater than Seven Million Dollars ($7,000,000)), or directly or indirectly redeem, purchase or otherwise acquire any such ownership interests or agree to do any of the foregoing; provided, however, that no such declaration, set aside or payment, or agreement to do same, may occur if SiTech is liable for any bank line of credit or other indebtedness for borrowed money, or trade or other debt, other than accounts payable incurred in the ordinary course of business and not more than thirty (30) days past due.
(e) issue, transfer, sell of pledge any SiTech Membership Interests or other securities, or any commitment, option (other than options to purchase additional SiTech Membership Interests which may be reserved for grant to employees and consultants of SiTech), right or privilege under which SiTech is or may become obligated to issue any SiTech Membership Interests or other securities;
(f) incur any indebtedness, except such as may have been incurred or entered into in the ordinary course of business;
(g) make any loan or agree to make any loan, or become liable or agree to become liable as a guarantor with respect to any loan (other than the initial capitalization requirements of SiTech as set forth in the Disclosure Schedule);
(h) waive or compromise any right or rights of material value or any payment, direct or indirect, of any material debt, liability or other obligation;
(i) change the accounting methods, practices or policies followed by SiTech from those in effect on the Effective Date;
(j) sell, assign or transfer any patents, trademarks, copyrights, trade secrets, know-how or other intangible assets or Intellectual Property of material value;
(k) purchase or otherwise acquire, sell, lease, dispose of, mortgage, pledge or subject to any lien or encumbrance, any of its material property or assets, tangible or intangible, or agree to do any of the foregoing, except in the ordinary course of business and for any single purchase or event (or group or series thereof, to the extent reasonable to be viewed as a single ongoing transaction or occurrence) in an amount not greater than (i) One Hundred Thousand Dollars ($100,000) with respect to inventory or raw materials purchases, or (ii) Fifty Thousand Dollars ($50,000) with respect to fixed assets or other purchases and events; provided, however, that such dollar limits shall not apply with respect to the start-up costs of the Texas Facility and which start-up costs, to the extent conducted reasonably, shall be considered to be in the ordinary course of business for the purposes of this Section 3.5(k);
(1) terminate or lose (i) any material contract, lease, license or other agreement to which it is, as of the Effective Date, or becomes thereafter, during the Option Term, a party; or (ii) any certificate or other authorization it requires for the continued operation of any material portion of the Business;
(m) agree or commit to do any of the things prohibited by this Section 3.5.
(ii) has paid all such federal, state and local taxes due and payable. No tax liabilities, disallowances or assessments relating to the Business, the Assets or the employees or independent contractors of SiTech are outstanding, and to the best knowledge of SiTech there is no basis for any such liabilities, disallowances or assessments.
(i) worker's compensation insurance coverage in the amount required by Texas law;
(ii) general comprehensive liability insurance, with contractual liability and property damage endorsements in the minimum amount of Two Million Five Hundred Thousand Dollars ($2,500,000)each occurrence and in the aggregate, including coverage for business interruption (with coverage limits and terms customary and reasonable for the industry); and
(iii) environmental impairment liability insurance for non-sudden and accidental occurrences, if required by applicable law or regulation.
Copies of the above policies have been made or will be made available to Mentor for inspection. SiTech is not aware of any facts concerning SiTech, the Business or its operations, assets and liabilities, contingent or otherwise, upon which an insurer might be justified in reducing coverage or increasing premiums on existing policies and all such insurance polices can be maintained in full force and effect without substantial increase in premium or reducing the coverage thereof following the Closing Date. All insurance coverage shall consist of 100% replacement coverage, to the extent applicable.
(a) The Disclosure Schedule contains a true and complete list of each of the following written or oral contracts, agreements or other arrangements to which SiTech is a party as of the Effective Date (to be updated prior to Closing to describe all contracts, agreements or other arrangements to which SiTech has become a party after Effective Date) and which are not already disclosed pursuant to other provisions in the Agreement:
(i) all loan agreements, indentures, debentures, notes or letters of credit relating to the borrowing of money or to mortgaging, pledging or otherwise placing a lien on any material asset of SiTech;
(ii) all leases or agreements under which SiTech is lessee of, or holds or operates, any property, real or personal, owned by any other party, except for any lease under which the aggregate annual rental payments do not exceed $5,000;
(iii) all contracts and agreements that (A) involve the payment or potential payment, pursuant to the terms of any such contract or agreement, by SiTech of more than $25,000 annually, and (B) cannot be terminated within thirty (30) days after giving notice of termination without resulting in any cost or penalty to SiTech;
(iv) a list of the Master Device Files with respect to each product manufactured by SiTech; and
(v) all material permits, licenses and other, certificates or authorizations issued to SiTech by any governmental authority having jurisdiction over the Texas Facility (collectively, the "Permits").
(b) Each contract disclosed in the Disclosure Schedule is in full force and effect and constitutes a legal, valid and binding agreement, enforceable in accordance with its terms, of each party thereto and will continue to be legal, valid, binding and enforceable after the Closing. SiTech has performed all of its required obligations under, and is not, in any material respect, in violation or breach of or default under, any contract except as set forth in the Disclosure Schedule. Except as set forth on the Disclosure Schedule, the Permits are, and as of the Closing will be, in full force and effect and the continuing validity and effectiveness of such Permits will not be affected in any manner by the sale and transfer of the Assets to Mentor as herein contemplated.
(a) For purposes of this Agreement, the term "Environmental Laws" shall mean all federal, state, local and foreign laws, codes, regulations, common law, requirements, directives, orders and administrative or judicial interpretations thereof, all as in effect on the date hereof or on the Closing Date, that may be enforced by any governmental or regulatory authority, relating to pollution, the protection of the environment or the emission, discharge, disposal, release or threatened release of Hazardous Materials in or into the environment, and the term "Hazardous Materials" shall mean pollutants, contaminants or chemical, industrial, hazardous or toxic materials or wastes.
(b) (i) SiTech has not received any notices, directives, violation reports, actions or claims from or by (A) any federal, state or local governmental agency concerning SiTech and any Environmental Law, or (B) any person alleging that, in connection with Hazardous Materials, conditions at any real property owned or leased by SiTech have resulted in or caused or threatened to result in or cause injury or death to any person or damages to any property, including, without limitation, damage to natural resources; and to the best knowledge of SiTech no such notices, directives, violation reports, actions, claims, assessments or allegations exist; (ii) throughout the period of operation of any real property by SiTech, SiTech has operated and continues to operate such real property in compliance with all Environmental Laws and in a manner which should not give rise to any liability under any Environmental Laws and (iii) SiTech is not aware of any facts, events or conditions (including, without limitation, the generation, treatment, transport, storage, emission, disposal, release or other placement, deposit or location of any substance) which materially interfere with or prevent continued compliance by SiTech with, or give rise to any present or potential liability (including with respect to past activities) under any Environmental Laws.
ARTICLE IV COVENANTS OF SITECH AND THE MEMBERS
(a) Notwithstanding anything to the contrary in this Agreement, from the Effective Date until the Closing, SiTech shall not, and specifically with respect to Sections 4.2(a)(xii) and (xiii), the Members shall not permit SiTech to, do or permit any of the items listed below in thisSection 4.2(a). Notwithstanding the foregoing sentence, Mentor may waive any and all objections it may have with respect to such action under this Section 4.2(a), and such waiver and consent shall be deemed for all purposes of such Section to have been given with respect to a proposed (and not then current) action described in this Section if, within 15 days of receiving notice of a proposed action , Mentor does not deliver to SiTech in writing an objection to such action and the basis therefore.
(i) incur any additional indebtedness, or guarantee any indebtedness or obligation of any other party; provided, however, that SiTech may obtain a working capital line of credit of not more than $100,000;
(ii) issue, redeem or purchase any of SiTech's Membership interests or other ownership interests in SiTech or securities convertible into same or grant or issue any options (other than options to purchase additional SiTech Membership Interests which may be reserved for grant to employees and consultants of SiTech), warrants or rights to subscribe for SiTech Membership Interests in SiTech or securities convertible into same or commit to do any of the foregoing;
(iii) enter into any agreement to manufacture or sell any products or materials of any nature to any party other than the products and materials to be purchased by Mentor under the Supply Agreement;
(iv) enter into, amend or terminate any material agreement or arrangement, other than in the ordinary course of business;
(v) increase the compensation payable or to become payable to any of SiTech's officers, employees or agents (except in the ordinary course of business), or adopt or amend any employee benefit plan or arrangement other than to adopt a option or bonus plan under which options to purchase beneficial interests in SiTech may be reserved for grant to employees and consultants of SiTech);
(vi) enter into any employment contract or agreement with any existing or prospective employee (other than to the extent such individual agrees to be bound by confidentiality provisions or by which he or she may receive or purchase beneficial interests in SiTech), including without limitation, the payment of or entering into obligations with respect to any severance benefits ("Severance Benefits");
(vii) pay any obligation or liability, fixed or contingent, other than in the ordinary course of business;
(viii) cancel, without full payment, any note, loan or other obligation owing to SiTech;
(ix) acquire or dispose of any properties or assets used in the Business except in the ordinary course of business;
(x) create or suffer to be imposed any mortgage, security interest, charge, liability, obligation, lien, claim or encumbrance on or against any of SiTech's properties or assets;
(xi) engage in any business, activity or transaction outside the ordinary course of the Business as proposed to be conducted as of the Effective Date;
(xii) make or adopt any change in the Articles of Organization or Operating Agreement of SiTech as in force and effect on the Effective Date (except to the extent of increasing the authorized SiTech Membership Interests for issuance to present NuSil or SiTech employees as of the date hereof, or in connection with issuances of beneficial interests in SiTech to employees); or
(xiii) take any action, or omit to take any action, within its control, that would cause, and shall promptly notify Mentor in writing of any event or occurrence which causes, any of the representations and warranties set forth in Article III hereof, to the extent applicable to SiTech or such Members, to become untrue, incomplete or inaccurate in any material respect prior to or as of the Closing Date.
(b) From the Effective Date until the Closing Date, except as otherwise expressly permitted in this Agreement, SiTech shall:
(i) operate the Texas Facility and manufacture its products in conformance with ISO-9002 and with the GMPs, with all relevant United States federal and state laws and regulations applicable to the products manufactured by SiTech and with such other foreign regulatory authorities as requested by Mentor;
(ii) maintainSiTech's insurance policies at the coverage levels described in Section 3.12 hereof, and not take any action to terminate or modify such insurance policies;
(iii) maintainSiTech's books and records consistent with SiTech's past practices and policies and in accordance with GAAP;
(iv) maintain in good working condition, ordinary wear and tear excepted, and in compliance in all material respects with all applicable laws and regulations, all fixed assets owned, leased or operated, as the case may be, by SiTech;
(v) (A) observe and perform, and remain in compliance with, SiTech's obligations in agreements and contracts the breach or violation of which would have, individually or in the aggregate, a Material Adverse Effect (as defined in Section 5.6 below) and (B) not enter into any agreements or contracts outside the ordinary course of business or which would require payments by SiTech, for any single agreement or contract (or group or series thereof, to the extent reasonable to be viewed as a single ongoing transaction), over any period of twelve (12) months of more than (i) One Hundred Thousand Dollars ($100,000) with respect to inventory or raw materials purchases, or otherwise (ii) Fifty Thousand Dollars ($50,000); provided, however, that such dollar limits shall not apply with respect to the start-up costs of the Texas Facility and which start-up costs, to the extent conducted reasonably, shall be considered to be in the ordinary course of business for the purposes of this Section 4.2(b)(v); and provided, further, that notwithstanding the foregoing Section 4.2(b)(v)(B), Mentor may waive any and all objections it may have with respect to such contract or agreement under Section 4.2(b)(v)(B), and such waiver and consent shall be deemed for all purposes of such Section to have been given with respect to a proposed (and not then current) contract or agreement if, within 15 days of receiving notice of a proposed contract or agreement, Mentor does not deliver to SiTech in writing an objection to such contract or agreement and the basis therefor.
(vi) use its best efforts to maintain all Permits held by SiTech or under which it operates or conducts the Business in full force and effect.
4.3 Necessary Consents. Certificates and Films.
(a) Prior to the Closing, SiTech, and specifically with respect to Sections 4.3(a)(i) and (iv), the Members, shall use their reasonable best efforts to (i) take, or cause to be taken, all appropriation action, and do, or cause to be done, all things necessary, proper or advisable under applicable law or otherwise to consummate and make effective the transactions contemplated as promptly as practicable, including without limitation voting in favor of same, (ii) obtain from any governmental authorities any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained by SiTech or any of SiTech's subsidiaries in connection with the authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated, (iii) use its best efforts to obtain such estoppel certificates from the landlord of the Texas Facility as required by Mentor (the "Estoppel Certificates"), (iv) make all necessary filings, and thereafter make any other required submissions, with respect to this Agreement and the transactions contemplated herein required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx") and the rules and regulations promulgated thereunder, and any related governmental request thereunder, if applicable, and any other applicable law; provided that SiTech and Mentor shall cooperate with each other in connection with the making of all such filings, including providing copies of all necessary documents to the other and its advisors prior to filing, and, if requested, accepting all reasonable additions, deletions or changes suggested in connection therewith.
(b) Without limiting the generality of its undertakings pursuant to Section 4.3(a) above, SiTech shall (i) use its reasonable best efforts to prevent the entry in a judicial or administrative proceeding brought under any antitrust law by any governmental authority with jurisdiction over enforcement of any applicable antitrust laws or any other party of a preliminary injunction or other order that would make consummation of the transactions contemplated hereby in accordance with the terms of this Agreement unlawful or would prevent or delay such consummation; and (ii) take promptly, in the event that such an injunction or order has been issued in such a proceeding, all steps necessary to prosecute an appeal of such injunction or order; provided, however, that SiTech shall not be required to undertake more than one such appeal.
(a) any notice of default received by SiTech subsequent to the date of this Agreement and through the Closing Date under any instrument or agreement to which SiTech is a party or by which SciTech or the Assets are bound, which default could, if not -remedied, have a Material Adverse Effect (as defined in Section 5.6 below) or which would render incorrect any representation or warranty made herein; - -
(b) any suit, action, proceeding or investigation instituted or threatened against or affecting SiTech subsequent to the date of this Agreement and prior to the Closing which, if adversely determined, could have a Material Adverse Effect (as defined in Section 5.6 below) or which would render incorrect any representation or warranty made herein; and
(c) any change in circumstances or action resulting in a breach of any representation and warranty set forth in Section 3 above, including without any limitation any actions in breach of Section 3.5 above.
(a) From time to time during the term hereof, one or more of the parties may acquire form one or more of the other parties hereto certain secret, confidential or proprietary information (whether or not reduced to writing and whether or not patentable or copyrightable) which is or in any manner may be related to the Materials (as defined in the Supply Agreement) or the business of another party hereto (collectively, "Proprietary Information"). Any party receiving Proprietary Information of another party hereunder shall keep strictly secret and confidential and shall not, either during or after the term of this Agreement, without such other party's prior written consent, disclose to any third party or use such Proprietary Information; provided, however, that such party may disclose such Proprietary Information to those of its employees who reasonably need to know such Proprietary Information in order to perform their duties under this Agreement or under the Supply Agreement. Each party shall use his or its best efforts to compel any person or entity to whom or which such party discloses Proprietary Information hereunder to keep such Proprietary Information strictly secret and confidential in accordance with the provisions of this Section 4.7.
(b) The obligations of the parties under Section 4.7(a) above shall not apply to:
(i) Proprietary Information that is generally known to the public at the time of disclosure or subsequently becomes generally known to the public through no breach of Section 4.7(a) above by any party to this Agreement;
(ii) Proprietary Information that was in the receiving party's possession prior to disclosure hereunder;
(iii) Proprietary Information that was obtained by the receiving party in good faith from a third party lawfully possessing and having a right to disclose the same;
(iv) Proprietary Information that the receiving party is required by law or court order to disclose, provided that any party receiving any subpoena or governmental, judicial or administrative request for any Proprietary Information of Mentor shall notify Mentor of the request immediately, and shall not disclose such Proprietary Information absent Mentor's consent or a court order requiring such disclosure; or
(v) Proprietary Information that the receiving party has affirmatively demonstrated to the disclosing party's reasonable satisfaction prior to disclosure or use was independently developed by the receiving party without the aid, application, reference or use in any way to Proprietary Information received from the disclosing party.
(c) Within thirty (30) days following the termination or expiration of this Agreement or the request of a disclosing party hereto, the parties shall each return all Proprietary Information belonging to the other parties and all copies thereof, and any other records containing such Proprietary Information, to the other parties, except that SiTech may retain copies of such Proprietary Information to the extent necessary to meet any continuing obligations it may have to Mentor under this Agreement.
(d) The parties hereto acknowledge that any breach or violation of provisions of Section 4.7(a) above will result in irreparable and continuing damage to the other parties for which there may be no adequate remedy at law, and the parties agree that in the event of any such breach or violation by any of them, the injured party shall be entitled to seek both damages and injunctive relief.
(e) The obligations of the parties under this Section 4.7 shall survive the Closing or termination of this Agreement and shall continue in full force and effect in perpetuity.
(f) SiTech shall require, prior to any person becoming a member of SiTech, that such person agree in writing to become subject to all the obligations of this Section 4.7 as if he, she or it were a party hereto.
4.8 [Intentionally Omitted]
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF MENTOR
The obligation of Mentor to consummate the transactions contemplated by this Agreement is subject to the satisfaction, at or before the Closing, of all the following conditions, unless waived in writing by Mentor:
(b) [Intentionally Omitted].
(d) Certificates of Good Standing. Certificates of Good Standing (including tax) with respect to SiTech, issued by the Secretaries of State of the States of California and Texas, dated within ten (10) days of the Closing Date.
(f) Opinion of Counsel. The opinion of counsel for SiTech provided in Section 5.4above.
(g) Certificates. Certificate from SiTech, dated the Closing Date, containing the information required pursuant to Sections 5.3 and 5.6 above.
(h) Estoppel Certificates. The Estoppel Certificates, if obtainable through SiTech's best efforts.
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF SITECH
The obligation of SiTech to consummate the transactions contemplated by this Agreement is subject to the satisfaction, at or before the Closing, of all the following conditions, unless waived in writing by SiTech:
(d) Opinion of Counsel. The BP&H Opinion.
ARTICLE VII OBLIGATIONS OF THE PARTIES AFTER CLOSING
7.1 Indemnification by SiTech and the Members. SiTech and, solely with respect to and to the extent of the obligations of the Members as expressly set forth in the Agreement, the Member, jointly and severally, shall indemnify and hold harmless Mentor and its officers, directors, employees, attorneys, representatives, successors and assigns in respect of any and all claims, actions, suits or other proceedings and any and all losses, costs, expenses, liabilities, fines, penalties, interest and damages, whether to not arising out of any claim, action suit or other proceeding, and including reasonable attorneys' and accountants' fees and expenses and all other reasonable costs and expenses of investigation, defense or settlement of claims and amounts paid in settlement, (collectively, "Damages"), incurred by, imposed on or borne by Mentor arising out of, resulting from or in any manner relating to:
(a) the breach of any of the representations or warranties made by SiTech and the Members in this Agreement;
(b) the breach or the failure of performance by SiTech or the Members of any of the covenants that they are to perform hereunder;
(c) the payment of any taxes (including interest and penalties) of any kind or nature imposed, whether before or after the Closing, by any government or subdivision thereof upon the business, assets or employees of SiTech or otherwise resulting from or relating to the respective businesses or operations of SiTech prior to the Closing or any of its properties or assets as they existed as of or any time prior to the Closing;
(d) the existence prior to the Closing of Hazardous Materials upon, about or beneath any real property owned, leased or operated by SiTech on -or before the Closing or migrating or threatening to migrate from such real property, or the existence of a violation of Environmental Law pertaining to such real property, regardless of whether the existence of such Hazardous Materials or the violation of Environmental Law arose prior to the present ownership or operation of such real property by SiTech or was disclosed to Mentor by SiTech or the Members;
(e) all debts, obligations and liabilities of SiTech arising out of, resulting from or in any manner relating to the Severance Benefits, if any;
(f) the death of or injury to any person or damage to property that occurred prior to the Closing and arose out of or in connection with the business or operations of SiTech (whether asserted, discovered or established before or after the Closing), and whether or not it is the subject matter of a claim or action disclosed in the Disclosure Schedule to this Agreement;
(g) all employment-related claims and causes of action, including, without limitation, those referenced in the Disclosure Schedule, and all other claims and causes of action that have arisen or arise out of or in connection with the operations of the businesses of SiTech conducted prior to the Closing (whether asserted, discovered or established before or after the Closing); and
(h) the failure of the transactions contemplated in this Agreement to Close as a result of SiTech's failure to fulfill its material obligations under this Agreement that would materially affect the value of SiTech to Mentor.
Damages recoverable hereunder shall exclude any payment amount which Mentor shall have received under any insurance policy with respect thereto. Notwithstanding anything to the contrary in this Agreement, any liability of the Members under this Section 7.1 is expressly limited to the extent of their ownership interests in SiTech and any funds received in violation of this Agreement.
(a) the breach of any of the representations or warranties made by Mentor in this Agreement; or
(b) the breach or the failure of performance by Mentor of any of the covenants that it is to perform hereunder.
Damages recoverable hereunder shall exclude any payment amount which SiTech-or the Members shall have received under any insurance policy with respect thereto:
(a) by mutual written consent of Mentor and SiTech;
(b) by Mentor or SiTech if the Closing shall not have occurred on or before the seven (7) year anniversary of this Agreement; provided (i) that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure~ to fulfill any of its obligations under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date; (ii) that if a request for additional information is received from a governmental authority pursuant to the HSR Act, such Closing shall be extended to the 90th day following the acknowledgement by such governmental authority that the parties have complied with such request, provided that in the event any of the parties litigates the order or injunction of a governmental authority challenging the transactions contemplated hereby on antitrust grounds through an appeal, such Closing will be extended through the completion of such appeal and (iii) that in the event SiTech shall have failed to meet one of the Milestones set forth on Exhibit B for twelve (12) months or more, this Agreement shall be automatically renewed for an additional twelve (12) month period unless Mentor gives written notice of its intention to terminate the Agreement; and
(c) by Mentor at any time upon thirty (30) days' prior written notice to SiTech.
9.5 Entire. Agreement: Waivers. This Agreement (and the Exhibits and Schedules hereto), the Supply Agreement and the License and Technology Transfer Agreement (and the Exhibits and Schedules thereto) constitute the entire agreement among the parties pertaining to the subject matter hereof. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by all parties hereto. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.
9.8 Consent to Transfer Membership Interests; Obligations of Transferees and Assigns. During the term of this Agreement, SiTech will not sell or transfer any of its assets other than in the ordinary course of business, and the Members will not voluntarily assign or transfer any interest in their SiTech Membership Interests without (i) first obtaining the prior written consent of Mentor (which consent shall not be unreasonably withheld) and (ii) complying with California law. Additionally, any transferee or assignee to whom SiTech Membership Interests are transferred or assigned by any Member during the Option Term, whether voluntarily or by operation of law, shall be subject to all of the obligations of a Member under this Agreement to the same extent as if such transferee or assignee shall have agreed in writing to be subject to such obligations in connection with such transfer or assignment, and SiTech and the Members will cause such transfer or assignee, as a condition to the effectiveness of such transfer or assignment, to become a party to this Agreement and subject to all of the obligations of a Member hereunder.
To Mentor: Chief Legal Counsel Mentor Corporation 0000 Xxxxxxxxx Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx 00000 Facsimile No. (000) 000-0000 Attn: Xxxxxxx X. Xxxxxxxxxx, Esq.
with a copy to: Xxxxxxx, Phieger & Xxxxxxxx LLP 000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx Xxx Xxxxxxx, XX 00000-0000 Facsimile No.: (000) 000-0000 Attn: V. Xxxxxx Xxxxxx, Esq.
To SiTech: Alchemy Engineering, LLC d/b/a SiTech, LLC c/o Mr. Xxxxxxx Xxxxxxx X.X. Xxx 0000 Xxxxxxxxxxx, Xxxxxxxxxx 00000
To the Members: Mr. Xxxxxxx Xxxxxxx Mr. Del Xxxxxxxxx X.X. Xxx 0000 Xxxxxxxxxxx, Xxxxxxxxxx 00000
All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section 9.10, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section 9.10, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section 9.10, be deemed given five (5) days after deposit in the United States mail (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section 9.10). Any party from time to time may change his or its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other parties hereto.
9.11 Governin2 Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts executed and performed in such State, without giving effect to conflicts of laws principles.
9.12 Consent to Jurisdiction and Forum Selection. The parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated exclusively in the state and federal courts located in the County of Los Angeles, State of California. Such choice of venue is intended by the parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between the parties with respect to or arising out of this Agreement in any jurisdiction other than that specified in this Section 9.12. Each party hereby waives any right it may have to assert the doctrine of forum non convenes or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this Section 9.12, and stipulates that the state and federal courts located in the County of Los Angeles, State of California shall have in personal jurisdiction and venue over each of them for the purposes of litigating any dispute, controversy or proceeding arising out of or related to this Agreement. Each party hereby authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by this Section 9.12 by registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices as set forth in this Agreement.. Any final judgment rendered against a party in any action or proceeding shall be conclusive as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law.
IN WITNESS WHEREOF, the parties hereto have executed this Option and Asset Purchase Agreement as of the date first above written.
MENTOR CORPORATION
By: /S/XXXX X. XXXXXXX Name: Xxxx X. Xxxxxxx Its: Vice President of Finance
"Mentor"
ALCHEMY ENGINEERING, LLC d/b/aSITECH, LLC
By: /S/XXXXXXX X. XXXXXXX Name: Xxxxxxx X. Xxxxxxx Its: President
"SiTech"
/S/XXXXXXX X. XXXXXXX
/S/X.X. XXXXXXXXX
"Members"
EXHIBIT A ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assignment Agreement") is entered into in connection with that certain Option and Asset Purchase Agreement, dated as of September __, 1997 (the "Agreement"), by and among MENTOR CORPORATION, a Minnesota corporation, or its assignee (collectively. "Mentor"), ALCHEMY ENGINEERING, LLC, a California limited liability company d/b/a SiTech, LLC ("SiTech"), and Xxxxxxx X. Xxxxxxx and Del X. Xxxxxxxxx, the individual members of SiTech (such individuals, the "Members"), pursuant to which Mentor has been granted, and has exercised, an option to buy substantially all of the assets of SiTech and assume certain liabilities of SiTech. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them directly or by reference in the Agreement.
1. Liabilities. Subject to the terms and conditions of the Agreement:
6. Governing Law. This Assignment Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts executed and performed in such State, without giving effect to conflicts of laws principles.
MENTOR CORPORATION By: /S/XXXX X. XXXXXXX Name: Xxxx X. Xxxxxxx Its: Vice President of Finance
"Mentor"
ALCHEMY ENGINEERING, LLC d/b/aSITECH, LLC
By: /S/XXXXXXX X. XXXXXXX Name: Xxxxxxx X. Xxxxxxx Its: President
"SiTech"
EXHIBIT B MILESTONES AND PURCHASE PRICE ADJUSTMENT
[*] redacted
EXHIBIT C ALLOCATION OF PURCHASE PRICE
EXHIBIT D XXXX OF SALE
THIS XXXX OF SALE (this "Xxxx of Sale") is entered into in connection with that certain Option and Asset Purchase Agreement, dated as of September __, 1997 (the "Agreement"), by and among MENTOR CORPORATION, a Minnesota corporation, or its assignee (collectively, "Mentor"), ALCHEMY ENGINEERING, LLC, a California limited liability company d/b/a SiTech, LLC ("SiTech"), and Xxxxxxx X. Xxxxxxx and Del X. Xxxxxxxxx, the individual members of SiTech (such individuals, the "Members"), pursuant to which Mentor has been granted, and has exercised, an option to buy substantially all of the assets of SiTech. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them directly or by reference in the Agreement.
2. The Assets. The Assets sold and purchased hereunder, include, but shall not be limited to:
(i) all cash balances of SiTech; (ii) all of the accounts receivable of SiTech;
(iii) all inventories of SiTech, including without limitation all raw materials, work in progress, finished goods (including inventories of finished products held for packaging and/or shipping and all types of inventories which are in transit or being held by third parties) and all production, shipping and packaging supplies;
(iv) all prepaid expenses, including deposits and credits of SiTech;
(v)all fixed assets of SiTech, including all machinery, equipment, tools, handling equipment and accessories and supplies;
(vi) all office furniture and furnishings, equipment and
supplies of SiTech;
(vii) all of SiTech 's right, title and interest as tenant in and to leases and interests in real property (the "Real Property"), together with all of SiTech's right, title and interest in and to all easements, rights and appurtenances thereto;
(viii) all of SiTech's right, title and interest in and to all plants, buildings, structures, erections, improvements and fixtures located on or forming part of the Real Property;
(ix) all of SiTech's right, title and interest in, to and under all domestic and foreign patents, patent applications, patent licenses, assignable soft*are licenses, assignable know-how licenses and technology transfer agreements, trade names, trademarks, brand names, logos, copyrights, unpatented inventions, discoveries, conceptions, reductions to practice, service marks, trademark and service xxxx registrations and applications, including without limitation that certain License and Technology Transfer Agreement (the "License and Technology Transfer Agreement") between SiTech and NuSil Technology ("NuSil");
(x) all of SiTech's right, title and interest in and to trade secrets, know-how (including, without limitation, proprietary know-how and use and application know-how) manufacturing, engineering and other drawings, technology, technical information, engineering data, design and engineering specifications, formulae, processes, blueprints, sketches, schematics, flow sheets, flow diagrams, magnetic media such as audio tapes, computer disks, micromedia such as microfilm and microfiche, promotional literature and similar data (all rights referred to in 2(ix) and 2(x) together referred to as the "Intellectual Property");
(xi) all of the Business's existing books, general, financial, tax and personnel records, correspondence and other documents, records and files, and all data systems and customer information to enable Mentor to continue the design, manufacture and sale of the Business's products and services;
(xii) the full benefit of all leases of, and conditional sales contracts and title retention agreements relating to, machinery and equipment of which SiTech is lessee;
(xiii) the full benefit of all contracts or commitments to which SiTech is entitled, including without limiting the generality of the foregoing,
(A) all unfilled orders received by SiTech; and
(B) all forward commitments to SiTech for fixed assets, subleases, services, inventory, supplies or materials entered into in the usual and ordinary course of the Business, whether or not there are any written contracts with respect thereto;
(xiv) the full benefit of all licenses, and all registrations and permits of SiTech pertaining to environmental, health and safety matters, and all other assignable registrations and permits;
(xv) the goodwill of SiTech;
(xvi) all computer aided design and other product development equipment of SiTech; and
(xvii) all claims, causes of action, rights of recovery, refunds and rights of set-off of any kind of SiTech, except insofar as necessary to offset a claim against SiTech but for which SiTech does not recover money. - - -
(xviii) all insurance proceeds and the full benefit of all insurance policies of SiTech, including without limitation those described in Section 3.12 hereof.
(i) SiTech's minute book, membership or other ownership
ledger and records and tax records not necessary for Mentor to continue the Business; and
(ii) assets related to employee benefit plans which are not assumed by Mentor.
MENTOR CORPORATION By: /S/XXXX X. XXXXXXX Name: Xxxx X. Xxxxxxx Its: Vice President of Finance
"Mentor"
ALCHEMY ENGINEERING, LLC d/b/aSITECH, LLC By: /S/XXXXXXX X. XXXXXXX Name: Xxxxxxx X. Xxxxxxx Its: President
"SiTech"
EXHIBIT E DISCLOSURE SCHEDULE
3.2 Capitalization. The members of SiTech and their respective interests are as set forth below:
Xxxxxxx X. Xxxxxxx 66.6 % Del X. Xxxxxxxxx 33.4 %
Capitalization of SiTech has not yet been completed. SiTech has reserved the right to issue additional membership interests and this schedule will be amended to reflect the issuance of such interests, the issuance of any non-membership interests, and any loans or other commitments of funding which shall be deemed necessary for SiTech to carry out its business purposes.
3.6 Properties. 3.8 Indebtedness.
3.11 Employees and Service Providers.
SiTech has entered into a License and Technology Transfer Agreement with NuSil Technology dated January 7, 1997 in which SiTech has acquired a license to certain technology as described therein to enable SiTech to produce certain silicone materials specifically set forth on Exhibit A to said Agreement in return for good and valuable consideration as described therein.