EXHIBIT 2.11
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of June 1, 1998 between
CREDENCE SYSTEMS CORPORATION, a Delaware corporation ("Purchaser") and YERVANT
XXXXX XXXXXXXX and XXXXXXXX XXXXX, as authorized representatives (the
"Shareholder Representatives") of all of the shareholders of Heuristic Physics
Laboratories, Inc., a California corporation (the "Company").
WHEREAS, the Shareholder Representatives desire to cause the
Company and its wholly-owned subsidiary, Heuristic Physics Laboratories of
Armenia, a company organized under the laws of the Republic of Armenia (the
"Subsidiary" and, collectively with the Company, the "HPL Companies") to sell to
Purchaser, and Purchaser desires to purchase from the HPL Companies, all of the
Assets (as defined in Section 1.1);
WHEREAS, the Shareholder Representatives desire to cause the
transfer from the HPL Companies to Purchaser of, and Purchaser is willing to
accept such transfer from the HPL Companies, the Assumed Liabilities (as defined
in Section 2.1);
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
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SECTION 1. 1 DESCRIPTION OF ASSETS TO BE ACQUIRED. Upon the terms
and subject to the conditions set forth in this Agreement, at the Closing Time
(as defined in Section 7.1), the Shareholder Representatives agree to cause the
HPL Companies to convey, sell, transfer, assign, and deliver to Purchaser (and
any wholly-owned subsidiary of Purchaser designated by Purchaser prior to the
Closing Time to receive title to any of the Assets), and Purchaser (and any
wholly-owned subsidiary of Purchaser designated by Purchaser prior to the
Closing Time to receive title to any of the Assets) shall purchase from the HPL
Companies, all right, title, and interest of the HPL Companies in and to the
assets, properties, and rights of the HPL Companies specifically referred to in
this Section 1. 1 (collectively, the "Assets"). The Shareholder Representatives
represent and warrant to the Purchaser that the Assets are all of the assets of
the HPL Companies used exclusively by the Automatic Test Equipment Division and
the Design For Test Division of the HPL Companies (the business of the HPL
Companies' Automatic Test Equipment Division and the Design For Test Division
being, the "Business"):
(a) All interests in machinery, equipment, instruments, computer
hardware and software, tooling, furniture, fixtures, motor vehicles, supplies,
repair and maintenance parts, demonstration units, and other fixed assets,
together with manufacturer or vendor warranties associated therewith, listed on
Schedule 1.1 (a);
(b) All inventories of raw materials (together with any
manufacturer or vendor warranties associated therewith), work-in-process,
finished goods and supplies, including scrapwork and rework, listed on Schedule
1.1 (b) (collectively, the "Inventory");
(c) All claims and rights under all agreements, contracts,
licenses, leases, franchises, instruments, documents, purchase and sale orders
and other executory commitments, and all permits, consents, and certificates of
any regulatory, administrative or other governmental agency or body, listed on
Schedule 1.1 (c) hereto (collectively, the "Contracts");
(d) All interests in the real property, including leasehold
interests (the "Leasehold Interests") listed on Schedule 1.1(d), and all related
rights, easements and uses which benefit or burden any such property
(collectively, the "Real Property");
(e) All right, title and interest to trademarks, trademark
rights, service marks, service xxxx rights, copyrights, trade names, trade name
rights, fictitious business names, nondisclosure agreements, confidentiality
agreements, assignment of inventions agreements, proprietary in formation and
inventions agreements, works of authorship, inventions, software, source code,
industrial models, industrial designs, utility models and certificates of
invention, designs emblems and logos, trade secrets, know-how, manufacturing
formulae, technical information, patents, patent applications, mask work
registrations, inventions, franchises, franchise rights, customer and supplier
lists together with the goodwill associated therewith and all other proprietary
rights, information and processes, in each case, related exclusively to the
Business, all of which are listed on Schedule 1.1(e) (collectively, the
"Proprietary Rights");
(f) All accounts and notes receivable of the HPL Companies
relating exclusively to the Business, all of which are listed on Schedule 1(f)
(collectively, the "Accounts");
(g) All original books of account, general ledgers, sales
invoices, purchase orders, accounts payable and payroll records, tax returns and
supporting schedules, drawings, files, papers, and all other records relating
exclusively to the Business and duplicates of all of the foregoing relating (but
not exclusively relating) to the Business (the "Records");
(h) All rights under express or implied warranties from suppliers
of the Business only to the extent such warranties relate to the Business;
(i) All of the causes of action, judgments, and claims or demands
of whatever kind or description arising out of the activities of the Business,
but only to the extent such causes of action, judgments, and claims or documents
relate to the Business; and
(j) All goodwill of the Business (the "Goodwill").
SECTION 1.2 NON ASSIGNMENT OF CERTAIN ASSETS. Neither this
Agreement nor any action taken pursuant to its provisions shall constitute an
assignment if such assignment would constitute a breach of the terms of any
agreement or result in the loss or diminution or any rights thereof; provided,
however, that in each such case, the Shareholder Representatives shall use
their best efforts to obtain the consent to an assignment to Purchaser. If such
consent is not obtained by the Closing Time, the Shareholder Representatives
shall cooperate with Purchaser in any arrangement designed for Purchaser to
perform the HPL Companies' obligations with respect to such Asset after the
Closing Time and for Purchaser to receive the benefits under any such Asset
after the Closing Time, which arrangements may include enforcement, for the
account and benefit of Purchaser, of any and all rights of the HPL Companies
against any other person arising out of the breach or cancellation by such other
person or otherwise, all of such actions of the Shareholder Representatives to
be at the direction and expense of the Shareholder Representatives. The
Shareholder Representatives shall reimburse Purchaser for all reasonable
documented costs and expenses, including increased obligations, resulting from
an inability of Purchaser to receive the benefits of any such assignment.
ARTICLE II
LIABILITIES OF SELLER
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SECTION 2.1 ASSUMED LIABILITIES. Purchaser hereby agrees to
assume, satisfy, or perform when due only those liabilities and obligations of
the HPL Companies specifically identified on Schedule 2.1 attached hereto
(collectively, the "Assumed Liabilities").
SECTION 2.2 LIABILITIES NOT ASSUMED. Other than the Assumed
Liabilities, Purchaser shall not assume, nor shall Purchaser or any affiliate,
or any officer, director, employee, stockholder or agent of Purchaser, be deemed
to have assumed or guaranteed, any liabilities, obligations, litigation,
disputes, debts, payables, counterclaims, rights of set-off or return, or
commitments or claims, whether such liabilities are contingent or otherwise, or
direct or indirect, of either of the HPL Companies or any shareholder of the
Company in existence on or prior to or after the Closing Time or based on any
events, facts or circumstances in existence prior to or in connection with the
sale of the Assets or in connection with or arising from any activities of
either of the HPL Companies or any services provided by or goods or assets sold
by or products delivered by or to either of the HPL Companies (collectively, the
"Excluded Liabilities").
ARTICLE III
PURCHASE PRICE
--------------
SECTION 3.1 CONSIDERATION. Upon the terms and subject to the
conditions contained in this Agreement, in consideration for the Assets and in
full payment therefor, Purchaser will pay, or cause to be paid, to the Company
the Purchase Price set forth in Section 3.2.
SECTION 3.2 PAYMENT OF PURCHASE PRICE. The purchase price
("Purchase Price") to be paid or payable by Purchaser to the Company shall
consist of cash in the amount of SEVEN MILLION NINE HUNDRED EIGHTY-TWO THOUSAND
FIVE HUNDRED TWENTY-SIX Dollars ($7,982,526).
SECTION 3.3 ROYALTY PAYMENTS. In addition to the Purchase Price,
for a period of two (2) years following the date of the Closing, Purchaser shall
pay to the Shareholder Representatives in the proportions set forth on Schedule
3.3 hereto royalty payments in the amount equal to ten percent (10%) of
Purchaser's net sales to third parties of products derived from those Assets
attributable to the HPL Companies Design For Test Division (subject to a
reasonable reserve for returns). Purchaser shall maintain books and records
relating to its sales of such products and the Shareholder Representatives shall
be entitled, at their own expense, to audit such books and records at
Purchaser's place of business during normal business hours upon five (5) days
prior written notice.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser hereby represents and warrants to the Shareholder
Representatives that:
SECTION 4.1 ORGANIZATION. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
SECTION 4.2 AUTHORIZATION. Purchaser has full corporate power and
authority to enter into this Agreement, to perform its obligations hereunder,
and to consummate the transactions contemplated hereby. Purchaser has taken all
necessary and appropriate corporate action with respect to the execution and
delivery of this Agreement, and this Agreement constitutes a valid and binding
obligation of Purchaser, enforceable in accordance with its respective terms:
(i) except as limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or other laws affecting creditors' rights and remedies
generally, (ii) except as may be required by the applicable provisions of the
bulk sales laws provisions of applicable state law, and ('iii') except as the
indemnification provisions contained in this Agreement may be limited by
principles of public policy.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
THE SHAREHOLDER REPRESENTATIVES
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Except as set forth in the corresponding sections or subsections
of the disclosure letter delivered to Purchaser by Shareholder Representatives
prior to entering into this Agreement (the "Disclosure Letter"), Shareholder
Representatives hereby represent and warrant to Purchaser:
SECTION 5.1 ORGANIZATION; GOOD STANDING.
The HPL Companies are corporations duly organized, validly
existing and in good standing under the laws of their respective state or
country of organization, and have the corporate power and authority to own,
lease and operate their properties and to carry on their businesses as the same
are now being conducted. The HPL Companies are qualified as foreign corporations
and are in good standing in such other jurisdictions in which the conduct of
their business or their ownership or leasing of property requires such
qualification. Except as set forth on Schedule 5.1, the HPL Companies do not
own, directly or indirectly, any equity or other ownership interest in or
control any corporation, partnership, joint venture or other entity. The Company
owns one hundred percent (100%) of the proprietary interests in the Subsidiary.
All of the proprietary or equity interests in the Subsidiary are fully paid,
nonassessable and not subject to any lien or encumbrance.
SECTION 5.2 AUTHORIZATION.
Shareholder Representatives have full power and authority, on
behalf of all of the shareholders of the Company, to enter into this Agreement
and the Related Agreements to which they are a party, to perform their
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby, including the execution and delivery of this
Agreement, general conveyances, bills of sale, assignments, and other documents
and instruments evidencing the conveyance of the Assets or delivered in
accordance with Section 7.2 hereunder (the "Closing Documents") and the Related
Agreements to which they are a party. The HPL Companies have taken all necessary
and appropriate corporate action with respect to the execution and delivery of
any Closing Documents and any Related Agreements to which they are a party. No
other corporate proceedings on the part of the HPL Companies are necessary to
authorize this Agreement and the Related Agreements or to consummate the
transactions contemplated hereby and thereby (other than, with respect to the
sale of Assets, the approval and adoption of this Agreement by the holders of a
majority of the outstanding shares of the HPL Companies' capital stock in
accordance with California law, Armenian law and the HPL Companies' charter
documents). This Agreement and the Related Agreements to which they are a party
constitute valid and binding obligations of the Shareholder Representatives,
enforceable in accordance with their terms: (i) except as limited by applicable
bankruptcy, insolvency, moratorium, reorganization, or other laws affecting
creditors' rights and remedies generally, and (ii) except as the indemnification
provisions contained in this Agreement may be limited by principles of public
policy.
SECTION 5.3 FINANCIAL STATEMENTS.
(a) Each of the consolidated financial statements (including, in
each case, any related notes thereto) delivered by the HPL Companies to
Purchaser (the "Financial Statements") was prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and each fairly presented the consolidated financial position
of the Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount. The Company's revenue recognition policies with respect
to the Financial Statements have been made in accordance with generally accepted
accounting principles. The Company maintains a standard system of accounting in
accordance with generally accepted accounting principles. All of the Company's
general ledgers, books and records are located at the Company's principal place
of business. The Company's financial reserves are adequate to cover claims
incurred.
(b) The projections which the Company has delivered to Purchaser
have been prepared by the Company in good faith and are based on assumptions
that are reasonable. Such projections do not contain any assumptions that are
false or misleading with respect to any material fact and do not omit to state
any material fact necessary in order to make such projections reasonable.
SECTION 5.4 ABSENCE OF CERTAIN CHANGES AND EVENTS.
1. Since March 31, 1998, there had not occurred any adverse
change in the financial condition, results of operation, assets, liabilities,
business, or prospects of the Business or any occurrence, circumstance, or
combination thereof which reasonably could have been expected to result in any
such adverse change.
2. Since March 31, 1998, there has not been:
a. Any event, including, without limitation, shortage of
materials or supplies, fire, explosion, accident, requisition or taking of
property by any governmental agency, flood, drought, earthquake, or other
natural event, riot, act of God or a public enemy, or damage, destruction, or
other casualty, whether covered by insurance or not, which has had an adverse
effect on the Business or the Assets or any such event which reasonably could be
expected to have such an effect on the Business or the Assets;
b. Any transaction relating to or involving the Business (other
than the transactions contemplated herein) which was entered into or carried out
other than in the ordinary and usual course of business;
c. Any change made by the Company in its method of operating the
Business or its accounting practices relating thereto;
d. Any mortgage, pledge, lien, security interest, hypothecation,
charge, or other encumbrance imposed or agreed to be imposed on or with respect
to the Assets other than liens arising with respect to taxes not yet due and
payable, and such minor liens and encumbrances, if any, which arise in the
ordinary course of business and which do not detract from the value of the
Assets;
e. Any sale, lease, or disposition of, or any agreement to sell,
lease, or dispose of any of the Assets, other than sales, leases, or
dispositions in the usual and ordinary course of business and consistent with
prior practice;
f. Any modification, waiver, change, amendment, release,
rescission, accord and satisfaction, or termination of, or with respect to, any
term, condition, or provision of any contract, agreement, license, or other
instrument to which either Seller is a party and relating to or affecting the
Business or the Assets, other than any satisfaction by performance in accordance
with the terms thereof in the usual and ordinary course of business and
consistent with prior practice;
g. Any labor disputes or disturbances materially affecting in
an adverse manner the Business or financial condition of the HPL Companies,
including, without limitation, the filing of any petition or charge of unfair
labor practices with the National Labor Relations Board;
h. Any notice (written or unwritten)from any engineering or
technical personnel of the Business that such employee has terminated, or
intends to terminate, such employee's employment in the Business;
i. Any waivers of any rights of substantial value by either of
the HPL Companies related to the Business; or
j. Any purchase or lease of, or any agreements to purchase or
lease, capital assets for the Business by either of the HPL Companies in excess
of $10,000 individually, or in excess of $50,000 in the aggregate.
SECTION 5.5 UNDISCLOSED LIABILITIES.
There are no debts, liabilities or obligations, other than the
Excluded Liabilities with respect to which the Assets are subject, liquidated,
unliquidated, accrued, absolute, contingent, or otherwise, that are not
specifically identified in the Financial Statements. Neither of the HPL
Companies has guaranteed the repayment of any obligations of any third party,
including affiliates and affiliated entities or persons.
SECTION 5.6 PROPERTIES.
The HPL Companies have good, valid and marketable title to all
Assets, tangible and intangible, purported to be owned by either of them,
including the Assets reflected on the Financial Statements. All such Assets
purported to be owned by the HPL Companies are free and clear of all mortgages,
liens, charges, security interests or other encumbrances of any nature
whatsoever except as reflected in the Financial Statements and except for liens
for current taxes not delinquent, liens imposed by operation of law and liens
incurred in the ordinary course of business. All Assets, including machinery and
equipment, owned, leased or otherwise used by the HPL Companies are in good
operating condition and repair, reasonable wear and tear excepted, and are
suitable and adequate for use in the ordinary course of business and conform in
all material respects to all applicable laws. All leases relating to the
Business are binding, valid and enforceable in accordance with their terms.
After the Closing Time, Purchaser will be entitled to the continued use and
possession of the property leased by them, for the terms specified in such
leases and for the purposes for which such property is used. There is no pending
or threatened condemnation or similar proceeding affecting any of the real
property used in the Business owned or leased by the HPL Companies.
SECTION 5.7 TAXES.
1. No Tax is required to be withheld pursuant to Section 1445 of
the Code as a result of the transfers contemplated by this Agreement.
2. There are no liens for Taxes upon the Assets except liens for
current Taxes not yet due. The unpaid Taxes of the HPL Companies do not exceed
the reserve for Taxes established on the books and records of the Company. No
governmental entity (a "Taxing Authority") responsible for the imposition of any
Tax (domestic or foreign), has asserted that the HPL Companies owe any Taxes
other than as shown on their tax returns and paid with such returns.
3. None of the assets (including the Assets) of the HPL Companies
(i) is property that is required to be treated as owned by any other person
pursuant to the so-called "safe harbor lease" provisions of former Section
168(f)(8) of the Code, (ii) directly or indirectly secures any debt the interest
on which is tax exempt under Section 103(a) of the Code or (iii) is "tax exempt
use property" within the meaning of Section 168(h) of the Code. The transactions
contemplated herein are not subject to the tax withholding provisions of Code
Section 3406, or of Subchapter A of Chapter 3 of the Code or of any other
provision of law in any jurisdiction. The HPL Companies are not and have never
been members of a group permitted or required to file consolidated Tax returns
and are not party to any agreement relating to the payment or sharing of
liability for Taxes. The Company has not filed a consent under Section 341(f) of
the Code.
4. For purposes of this Agreement, "Tax" (and, with correlative
meaning, "Taxes" and "Taxable") means (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any Taxing Authority responsible
for the imposition of any such tax (domestic or foreign), (ii) any liability for
the payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any Taxable
period and (iii) any liability for the payment of any amounts of the type
described in (i) or (ii) as a result of any express or implied obligation to
indemnify any other person.
SECTION 5.8 COMPLIANCE WITH LAWS.
Each of the HPL Companies has complied and is in compliance with
all applicable foreign, federal, state, and local laws, statutes, licensing
requirements, rules, and regulations, and judicial or administrative decisions
applicable to the Business. Each of the HPL Companies has been granted all
licenses, permits (temporary and otherwise), authorizations, and approvals from
foreign, federal, state, and local government regulatory bodies necessary to
carry on the Business as currently conducted, all of which are currently valid
and in full force and effect. There is no claim, action, litigation, order
investigation, or proceeding pending or threatened, or notice served with
respect to any violation of any law, ordinance, order, writ, decree, rule, or
regulation issued by any federal, state, local, or foreign court or governmental
agency or instrumentality applicable to the Business.
SECTION 5.9 CONSENTS.
The execution and delivery of this Agreement by the HPL Companies
does not, and the performance of this Agreement and the Related Agreements by
the HPL Companies shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, or any other third party, including licensors
and lenders, except for applicable requirements, if any, of the bulk sales laws.
SECTION 5.10 PRODUCT LIABILITY.
There are no defects in the design or technology embodied in any
product of the Business which HPL Companies currently market or have marketed in
the past that impair or are likely to impair the intended use of the product or
injure any consumer of the product or third party, except that warranty claims
may arise in the normal course of business, for products shipped prior to the
Closing Time, in an aggregate amount of no more than the warranty reserves
established on the most recent balance sheet of the Company. HPL Companies have
delivered to Purchaser copies of their warranty policies and all outstanding
warranties or guarantees relating to any of products of the Business other than
warranties or guarantees implied by law. There is no claim asserting (a) any
damage, loss or injury caused by any product of the Business, or (b) any breach
of any express or implied product warranty or any other similar claim with
respect to any product of the Business other than standard warranty obligations
(to replace, repair or refund) made by HPL Companies in the ordinary course of
business.
SECTION 5.11 PROPRIETARY RIGHTS.
1. Schedule 5.11 sets forth all of the Proprietary Rights. Any of
the Proprietary Rights that require the execution and filing with an appropriate
governmental agency have been so indicated on Schedule 5.11.
2. Schedule 5.11 sets forth a true and complete list of all
contracts, licenses and other agreements to which either of the HPL Companies is
a party, which affect any item of the Proprietary Rights, except commercially
available (i.e., off-the-shelf) software. Schedule 5.11 specifically designates
all such contracts, licenses or other agreements (i) pursuant to which either
Seller is a direct or indirect licensor or licensee of Proprietary Rights, (ii)
under which either of the HPL Companies has granted or been granted exclusive
rights, (iii) under which either of the HPL Companies is obligated to pay in
excess of (or under which the consideration is reasonably expected to exceed)
$50,000 in any one year period and (iv) all parties to whom either of the HPL
Companies has delivered their source code, whether pursuant to an escrow
arrangement or otherwise and all parties who have the right to receive such
source code.
3. Except in each case as set forth in Schedule 5.11:
a. The HPL Companies either own or have the exclusive
right to use, sell, license and dispose of, to bring actions for the
infringement of and otherwise exercise all Proprietary Rights,
including Proprietary Rights which comprise trade secret rights, to
the extent permitted by law (hereinafter, "Trade Secrets"), free and
clear of all encumbrances.
b. The HPL Companies have the non-exclusive right to
use, sell, license and dispose of all Proprietary Rights listed on
Schedule 5.11 as exceptions to the previous paragraph.
c. The HPL Companies have taken all appropriate actions
and made all applicable applications and filings pursuant to
applicable laws to perfect or protect their interests in all
Proprietary Rights.
d. The execution, delivery and performance of this
Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby will not (A) breach,
violate or conflict with any instrument or agreement governing any
Proprietary Right, (B) cause the forfeiture or termination or give
rise to a right of forfeiture or termination of any Proprietary Right,
or (C) in any way impair the right of Purchaser to use, sell, license
or dispose of or to bring any action for the infringement of, any
Proprietary Right or any products or technology designed, developed,
manufactured, sold or serviced by the Business (collectively,
"Products").
e. The manufacture, marketing, license, sale or use of any
Products anywhere in the world does not or would not (A) violate any
license or agreement with any third party, (B) infringe on any
non-patent Proprietary Right of any third party or (C) infringe any
third party patent rights. Neither the HPL Companies nor any of their
employees have misappropriated any third party trade secrets. There is
no claim or litigation pending or threatened contesting the validity,
ownership or right to use, sell, license or dispose of any Proprietary
Right, or claiming that the HPL Companies or any of their employees
have misappropriated any third party trade secrets nor is there any
basis for any such claim.
f. No third party is infringing on any Proprietary Right
where such infringement could limit the protection afforded by the
Proprietary Rights to the use, sale, license, sublicense or
disposition of the Products or prevent the future enforcement of such
Proprietary Right.
g. The HPL Companies have taken all steps reasonably
necessary or appropriate (including, entering into appropriate
confidentiality, nondisclosure and noncompetition agreements, the
forms of which have been delivered to Purchaser or their counsel, with
all officers, directors, subcontractors, employees, licensees and
entities that serve the Business) to safeguard and maintain the
secrecy and confidentiality of, and the proprietary rights in, all
Proprietary Rights.
h. All Trade Secrets are presently and as of the Closing
Time will be located at the HPL Companies' addresses as shown in this
Agreement and have not been used, divulged or appropriated for the
benefit of any person other than the HPL Companies or to the detriment
of the HPL Companies.
4. Except in each case as set forth in Schedule 5.11:
a. Each of the licenses and agreements listed or required
to be listed in the Schedules to this Section 5.11 is in full force
and effect and is a valid obligation enforceable against each of the
HPL Companies (to the extent it is a party thereto), and against the
other party thereto in accordance with its terms.
b. HPL Companies have performed, or are now performing,
their obligations, and HPL Companies are not in default (or would by
the lapse of time or the giving of notice or both be in default),
under any license or agreement listed or required to be listed in
Schedule 5.11. No other party to such licenses and agreements is in
default (or would by the lapse of time or the giving of notice or
both, be in default) thereunder or has breached any terms or
provisions thereof.
c. No third party has raised against either of the HPL
Companies or any of their current or former service providers any
claim, dispute or controversy with respect to any of the licenses or
agreements which is listed or required to be listed in Schedule 5.11.
Neither of the HPL Companies has received notice or warning of alleged
nonperformance, delay in delivery or other noncompliance by either of
the HPL Companies with respect to their obligations under any such
licenses or agreements.
SECTION 5.12 CONTRACTS AND COMMITMENTS.
1. Schedule 5.12 lists all outstanding Contracts, whether or not
in writing, to which either of the HPL Companies is a party or to which any of
the Assets are subject that may: (i) involve obligations (contingent or
otherwise) or unwritten agreements of, or payments to, either of the HPL
Companies in excess of $50,000; (ii) involve written agreements with suppliers
and customers of either of the HPL Companies; (iii) involve the license of any
Proprietary Rights to or from either Seller; (iv) contain provisions restricting
and/or affecting the development, manufacture, or distribution of HPL Companies'
products or services; (v) relate to any aspect of the Business in which any
person who was or is an officer, director, or employee of either of the HPL
Companies (or any person, firm, partnership, trust, or corporation affiliated
with any such persons or any family members of such persons) has an interest; or
(vi) involve agreements (written or unwritten) on which the Business is
dependent.
2. Each of the HPL Companies has performed all of its obligations
under the terms of each Contract listed in Schedule 5.12 to which it is a party,
and is not in default thereunder. No event has occurred which but for the giving
of notice or lapse of time or both would constitute a default by any party
thereto under any such Contract. Each such Contract is valid and binding on all
parties thereto and in full force and effect. Neither of the HPL Companies has
received a notice of default, cancellation, or termination in connection with
any such Contract.
SECTION 5.13 ASSETS.
The Assets include all intellectual property, inventory and all
other property, in which either of the HPL Companies has any right, title and
interest, necessary to operate the Business in the same manner as the Business
was operated by the HPL Companies prior to the Closing Time. The Assets are
suitable for the purpose or purposes for which they are being used, are in good
operating condition and in reasonable repair, and free from any known defects,
except such minor defects as do not interfere with the continued use thereof.
Each tangible Asset has been serviced and maintained in accordance with
customary industry practices. Subject to normal wear and tear, and to financial
reserves on the Company's most recent balance sheet that are adequate, such
plants, facilities, machinery, and equipment are capable of and are producing
sound and merchantable products.
SECTION 5.14 NO CONFLICT OR DEFAULT.
Neither the execution and delivery of this Agreement or the
Related Agreements, nor compliance with the terms and provisions hereof and
thereof, including the consummation of the transactions contemplated hereby and
thereby, will violate any statute, regulation, or ordinance of any governmental
authority, or conflict with or result in the breach of any term, condition, or
provision of either of the HPL Companies' Articles of Incorporation or Bylaws
(or similar constituent documents), as presently in effect, or of any agreement,
deed, contract, mortgage, indenture, writ, order, decree, legal obligation, or
instrument to which either of the HPL Companies is a party or by which it or
they or any of the Assets are or may be bound, or constitute a default (or an
event which, with the lapse of time or the giving of notice, or both, would
constitute a default) thereunder.
SECTION 5.15 LABOR RELATIONS.
1. With respect to the Business, the Company has not failed to
comply in any respect with Title VII of the Civil Rights Act of 1964, as
amended, the Fair Labor Standards Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, all applicable federal, state, and local laws,
rules, and regulations relating to employment, and all applicable laws, rules
and regulations governing payment of minimum wages and overtime rates, and the
withholding and payment of taxes from compensation of employees.
2. There are no labor controversies pending or threatened
between either Seller and any of its employees or any labor union or other
collective bargaining unit representing any of the employees.
3. Neither of the HPL Companies has ever entered into a
collective bargaining agreement or other labor union contract relating to the
Business and applicable to the employees.
4. There are no written employment or separation agreements, or
oral employment or separation agreements other than those establishing an
"at-will" employment relationship between either of the HPL Companies and any of
the employees.
SECTION 5.16 EMPLOYEE BENEFIT PLANS.
1. Schedule 5.16 lists all employee benefit plans (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) and all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements, and any current or
former employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee of the HPL
Companies, any trade or business (whether or not incorporated) which is a member
or which is under common control with the Company (an "ERISA Affiliate") within
the meaning of Section 414 of the Code or any Subsidiary of the Company
(together, the "Employee Plans"), and a copy of each such Employee Plan has been
provided to Purchaser.
2. a. None of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person; (ii) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any Employee Plan, which could result
in any material liability of the Company or any of its Subsidiaries; (iii) all
Employee Plans are in compliance in all respects with the requirements
prescribed by any and all statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, Internal Revenue Service or Secretary of the Treasury), and
the Company and each of its Subsidiaries have performed all material obligations
required to be performed by them under, are not in any material respect in
default under or violation of, and have no knowledge of any default or violation
by any other party to, any of the Employee Plans; (iv) each Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code does so qualify and a favorable
determination letter with respect to each such Employee Plan and trust has been
received from the Internal Revenue Service (the "IRS"), and nothing has occurred
which may reasonably be expected to cause the loss of such qualification or
exemption; (v) all contributions required to be made to any Employee Plan
pursuant to Section 412 of the Code, the terms of the Employee Plan or any
collective bargaining agreement, have been made on or before their due dates and
a reasonable amount has been accrued for contributions to each Employee Plan for
the current plan years; (vi) with respect to each Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the thirty (30) day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 of ERISA has occurred; and (vii) no Employee Plan is covered by,
and neither the Company nor any Subsidiary has incurred or expects to incur any
liability under, Title IV of ERISA or Section 412 of the Code.
SECTION 5.17 BROKERS' AND FINDERS' FEES/CONTRACTUAL LIMITATIONS.
Neither of the HPL Companies is obligated to pay any fees or
expenses of any broker or finder in connection with the origin, negotiation, or
execution of this Agreement or in connection with any transactions contemplated
hereby. Neither of the HPL Companies, nor any officer, director, employee, agent
or representative of either of the HPL Companies (collectively
"Representatives") are or have been subject to any agreement, letter of intent,
or understanding of any kind which prohibits, limits, or restricts either of the
HPL Companies or the Representatives from negotiating, entering into and
consummating this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby.
SECTION 5.18 INTERESTED PARTY RELATIONSHIPS.
Except as set forth in the footnotes to the Company's most recent
financial statements provided to Purchaser, neither the HPL Companies, nor any
shareholder of the Company, nor any officer and director or family member
thereof, or any corporation, partnership, or other entity which, directly or
indirectly, alone or together with others, controls, is controlled by, or is in
common control with any officer and director or family member thereof has any
material financial interest, direct or indirect, in any material supplier or
customer, any party to any contract which is material to the Business, or any
competitor with the Business.
SECTION 5.19 ENVIRONMENTAL MATTERS.
The Company and the Subsidiary (i) has obtained all applicable
permits, licenses and other authorizations which are required under foreign,
federal, state or local laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous or toxic materials
or wastes into ambient air, surface water, ground water, or land or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants or hazardous or
toxic materials or wastes by the Company and the Subsidiary (or their respective
agents); (ii) are in compliance with all terms and conditions of such required
permits, licenses and authorization, and also are in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such laws or contained in any
regulation, code, plan, order, decree, judgement, notice or demand letter
issued, entered, promulgated or approved thereunder; (iii) are not aware of nor
have received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance or which would give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action, suit or proceeding,
based on or resulting from the Company's or the Subsidiary (or any of their
respective agents') manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission, discharge, or
release into the environment, of any pollutant, contaminant, or hazardous or
toxic material waste; (iv) have taken all actions necessary under applicable
requirements of Federal, state or local environmental laws, rules or regulations
to register any products or materials required to be registered by the Company
or the Subsidiary (or any of their respective agents) thereunder; and (v) are
not aware of any contaminated soil or groundwater at any of the properties or
portions thereof owned or operated, leased or previously owned or leased by the
Company or the Subsidiary. The Company does not require any permits relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by the Company or the Subsidiary (or their respective agents). The Company has
disclosed to Purchaser in the Disclosure Letter all documents relating to tests
previously conducted or to be conducted in the future for potential
contamination at any of the Company's or such Subsidiary's facilities, whether
owned or leased, including soil and water tests.
SECTION 5.20 CERTAIN PAYMENTS.
In connection with the Business, the HPL Companies have not and
no person directly or indirectly on behalf of the HPL Companies has made or
received any payment that was not legal to make or receive.
SECTION 5.21 BOOKS AND RECORDS.
The books and records of the HPL Companies to which Purchaser has
been given access are the true books and records of the HPL Companies and truly
and fairly reflect the underlying facts and transactions in all respects.
SECTION 5.22 COMPLETE DISCLOSURE.
No representations or warranties made by the Shareholder
Representatives in this Agreement, nor any financial statements prepared and
furnished or to be prepared and furnished by the HPL Companies or their
representatives to Purchaser pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained herein or therein not misleading.
SECTION 5.23 BACKLOG.
Schedule 5.23 sets forth the backlog of orders that the HPL
Companies are to ship and contract work to be performed as of March 31, 1998.
The HPL Companies either possess sufficient inventory of parts, materials and
personnel to produce the same within their scheduled delivery dates or such
parts or materials have lead times such that the HPL Companies can acquire such
parts and materials in time to produce and ship such backlog in accordance with
its schedule shipping date.
SECTION 5.24 CUSTOMERS AND SUPPLIERS.
None of the HPL Companies' ten largest customers and ten largest
suppliers during the twelve months ended March 31, 1998 (determined on the basis
of both revenues and bookings during such period) has terminated, or intends to
materially reduce or terminate, the amount of its business with the HPL
Companies, and no such termination or alteration will occur as a result of the
consummation of this Agreement.
SECTION 5.25 BEST EFFORTS.
Each of the Shareholder Representatives shall use their best
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to Closing under this Agreement. Each of
the Shareholder Representatives shall promptly apply for or otherwise seek, and
use their best efforts to obtain, all consents and approvals required for the
consummation of the transactions set forth hereby.
SECTION 5.26 EMPLOYMENT AGREEMENTS.
Prior to the Closing Time, each of the Shareholder
Representatives shall use their best efforts to assist Purchaser in persuading
employees of the Business to be willing to accept employment with Purchaser.
SECTION 5.27 INVENTORY.
Schedule 5.27 sets forth a list of all of the inventories of the
Business as of the date hereof (the "Inventories"). The Inventories are valued
at cost (determined on a first-in first-out basis) or market, whichever is
lower, with adequate allowances for excess and obsolete materials and materials
below standard quality in accordance with GAAP consistently applied. The quality
and quantity of the Inventories are such that the Inventories are readily usable
and saleable in the normal course of business of the Business, except such
amounts as are reserved in accordance with GAAP consistently applied. All items
included in such Inventories are owned by the HPL Companies. All Inventories
materially in excess of reasonable estimated requirements for the Business based
on current operations for the three (3) months from the date hereof are set
forth in Schedule 5.27. Except as disclosed in Schedule 5.27, the HPL Companies
hold no Inventories manufactured to customer specifications effectively
rendering the Inventories saleable only to that customer.
SECTION 5.28 PAYABLES; RECEIVABLES.
All the accounts receivable and notes receivable owing to the
Business as of the date hereof are set forth in Schedule 5.28 and constitute
valid and enforceable claims arising from bona fide transactions in the ordinary
course of business, and there are no contingent or asserted claims, refusals to
pay, rights of return, or other rights of set-off against any thereof. As of the
date hereof, except as set forth in Schedule 5.28, there is (i) no account
debtor or note debtor delinquent in its payment by more than 30 days, (ii) no
account debtor or note debtor that has refused (or threatened to refuse) to pay
its obligations for any reason, (iii) no account debtor or note debtor that is
insolvent or bankrupt, and (iv) no account receivable or note receivable which
is pledged to any third party by either of the HPL Companies. Neither of the HPL
Companies holds deposits from customers or has received prepaid service contract
revenue or other prepaid revenue.
SECTION 5.29 SERVICE PROVIDER AGREEMENTS.
No service provider of the HPL Companies is in violation of any
term of any employment agreement (whether written or verbal), patent or
trademark disclosure agreement or any other contract or agreement relating to
the relationship of any such service provider with the HPL Companies or any
other party (including prior employers) or any term of any judgment, decree, or
order, because of the nature of the business now conducted or now proposed to be
conducted by the HPL Companies. Each current and former service provider of the
HPL Companies has executed a proprietary information and inventions agreement
(or similar agreement) with the HPL Companies in the form then being used by the
HPL Companies, all of which forms have been previously delivered to Purchaser by
the HPL Companies. Each employee or consultant-inventor has executed a written
agreement validly assigning his or her rights to the HPL Companies on all
inventions, pending patent applications, all patents issued, and all other
intellectual property rights developed by such service provider while working
for or on behalf of the HPL Companies. To the extent the HPL Companies have ever
utilized consultants or independent contractors, each consultant or independent
contractor has executed a written agreement, validly assigning to the HPL
Companies his or her rights in and to all copyrights and works of authorship
relating to products, services or technology designed, developed, manufactured,
licensed, sold, marketed or serviced by the HPL Companies and its business. The
HPL Companies are not aware that any of its service providers is in violation
thereof and will use all efforts to prevent any such violation. The HPL
Companies are not aware that any of its service providers are obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the HPL Companies or that would conflict
with the HPL Companies business as conducted or as proposed to be conducted or
that would prevent any such service provider from assigning inventions to the
HPL Companies. The HPL Companies do not believe that it is or will be necessary
for the HPL Companies to utilize any inventions of any of its service providers
(or people it currently intends to hire) made prior to their employment by or
relationship with the HPL Companies.
ARTICLE VI
COVENANTS
---------
SECTION 6.1 CONSENTS. The Shareholder Representatives shall use
their best efforts to obtain, or to cause the HPL Companies to obtain, all
consents of and authorizations by third parties and to make all filings with and
give all notices to third parties that may be necessary or required in order to
consummate the sale of the Assets, and shall take such additional actions as
Purchaser may reasonably request so that the transactions contemplated by this
Agreement may be expeditiously consummated.
SECTION 6.2 EMPLOYMENT OFFERS. Purchaser shall offer to employ
all employees of the HPL Companies employed exclusively in the Business, all of
such employees (and only such employees) being listed on Schedule 6.2; provided,
however, that Purchaser shall not agree to maintain such employment for any
particular period of time and, if such offers are accepted, such employees will
be employed on an "at will" basis. Purchaser shall not solicit any employees of
the HPL Companies other than those set forth on Schedule 6.2.
SECTION 6.3 COBRA. The Shareholder Representatives shall ensure
that the HPL Companies comply with the health care continuation coverage
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") applicable to employees of the HPL Companies who are terminated by the
HPL Companies on or before the Closing Time.
SECTION 6.4 MAIL AND RECEIVABLES PAYMENTS. From and after the
Closing Time, the Shareholder Representatives shall endorse, or shall ensure
that the HPL Companies endorse, any check or any other evidence of indebtedness
or payment received by the HPL Companies on account of any Accounts after the
Closing Time to the order of Purchaser or take other appropriate actions and
shall promptly forward such payment to Purchaser no later than five (5) business
days after actual receipt by the HPL Companies. Purchaser and the Shareholder
Representatives shall each provide to the other all the cooperation which the
other may reasonably request in connection with the collection of the Accounts.
SECTION 6.5 NOTIFICATION OF CERTAIN MATTERS. Each party shall
give prompt notice to the other of (i) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure of Purchaser or the Shareholder Representatives,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by them hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.5 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 6.6 FURTHER ACTION. Upon the terms and subject to the
conditions hereto, each of the Purchaser and each of the Shareholder
Representatives hereto shall use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to otherwise satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement. The Shareholders
Representatives shall ensure that the Company changes its corporate name within
30 days of the Closing Time to a name which does not uses any of the words, or
any combination thereof, "Heuristic", "Physics" and "Laboratories" and to ensure
that Purchaser have all rights to the name "Heuristic Physics Laboratories,
Inc."
SECTION 6.7 COVENANTS AGAINST DISCLOSURE. The Shareholder
Representatives and Purchaser agree to maintain the confidentiality of the terms
and conditions of this Agreement; provided, however, that the Shareholder
Representatives may provide copies of this Agreement and related documents to
the Company or to any party who acquires, or proposes to acquire, all or
substantially all of the capital stock or remaining assets of the HPL Companies;
provided, further, however, any party hereto may disclose information to the
extent required by securities laws or as compelled by court order. Neither of
the Shareholder Representatives nor Purchaser shall disseminate (except to each
other) any press release or announcement concerning the transactions
contemplated by this Agreement without the prior written consent of the other
parties; provided, however, that any of the parties hereto may disseminate
information to employees and legal and accounting representatives.
SECTION 6.8. NO SHOP. The Shareholder Representatives shall not,
nor shall they permit any of their legal or financial advisors or any officers
or directors of the Company to, solicit, negotiate or discuss the disposition of
any of the Assets to any person other than Purchaser.
ARTICLE VII
CLOSING
-------
SECTION 7.1 CLOSING TIME. The transactions contemplated by this
Agreement shall be completed on June 4, 1998 (the time of the Closing on such
date being, the "Closing Time"), unless otherwise agreed to in writing by
Purchaser and the Shareholder Representatives. The Closing shall take place at
the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Two Embarcadero Place, 0000 Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, or at such other place as may be agreed to in
writing by Purchaser and the Shareholder Representatives. The "Closing," shall
mean the deliveries to be made by the Shareholder Representatives and the
Purchaser at the Closing Time in accordance with this Agreement.
SECTION 7.2 DELIVERIES BY THE SHAREHOLDER REPRESENTATIVES. At the
Closing, the Shareholder Representatives shall deliver to Purchaser all duly and
properly executed, the following:
(a) (1) A good and sufficient xxxx of sale in the form attached
as Exhibit 7.2(a) (the "Xxxx of Sale") for the Assets to be transferred from the
Company to Purchaser and (ii) if Purchaser designates any of its wholly-owned
subsidiaries to receive the Assets currently held by Subsidiary a good and
sufficient Xxxx of Sale for the Assets to be transferred from the Subsidiary to
such designated subsidiary of Purchaser, in each case selling, delivering,
transferring, and assigning to Purchaser (and any designated subsidiary) title
to all of the HPL Companies' right, title, and interest to the Assets, free and
clear of all mortgages, pledges, liens, encumbrances, security interests,
equities, charges, and restrictions of any nature whatsoever.
(b) An opinion of General Counsel Associates LLP, counsel to the
HPL Companies, dated the date of the Closing, in the form attached hereto as
Exhibit 7.2(b).
(c) An opinion of Armenian legal counsel to the Subsidiary, dated
the date of the Closing, in the form attached hereto as Exhibit 7.2(c).
(d) An affidavit of the Shareholder Representatives, in the form
attached hereto as Exhibit 7.2(d), stating, under penalty of perjury, the
Shareholder Representatives' United States taxpayer identification numbers and
that the Shareholder Representatives are not foreign persons, pursuant to
Section 1445(b)(2) of the Code.
(e) Valid assignments of rights for all Contracts and other
third party or governmental consents necessary in order for Purchaser to operate
the Business.
(f) Valid patent, patent application, trademark, trademark
application, trade secret, domain name and other intellectual property
assignments in the forms attached as Exhibit 7.2(f).
(g) Valid proprietary information and invention agreements
executed by the employees of the Business listed in Schedule 6.2.
(h) Evidence, satisfactory to Purchaser, of the HPL Companies'
title to all of the Assets and right to fully convey all Assets free and clear
of any lien, encumbrances or restrictions on transfer.
(i) Evidence satisfactory to Purchaser of the Shareholder
Representatives' authority to act on behalf of all the Company's shareholders
including with respect to receipt of the Purchase Price and the royalty payments
referred to in Section 3.4.
(j) A certificate executed by the Shareholder Representatives,
dated the date of the Closing, to the effect that all of the conditions to
Closing set forth in this Section 7.2 have been satisfied.
(k) An accepted offer of employment with Purchaser from all the
employees of the Business listed on Schedule 6.2.
(l) All licenses from all appropriate governmental agencies or
third parties to operate the Business in the same manner as the HPL Companies
operated the Business prior to the Closing Time, including a file format license
in the form attached hereto as Exhibit 7.2(l).
(m) all books and records (or copies thereof) related to the
Business.
SECTION 7.3 DELIVERIES BY PURCHASER. At the Closing, Purchaser
shall deliver, or cause to be delivered, to the Company, the Purchase Price and
a Waiver and Release in the form attached hereto as Exhibit 7.3.
SECTION 7.4 FURTHER ASSURANCES. At or after the Closing Time,
each of the Shareholder Representatives and Purchaser shall prepare, execute,
and deliver, at its expense, such further instruments of conveyance, sale,
assignment, or transfer, and shall take or cause to be taken such other or
further action, as any party shall reasonably request of any other party at any
time or from time to time in order to perfect, confirm, or evidence in
Purchaser's title to all or any part of the Assets or to consummate, in any
other manner, the terms and provisions of this Agreement.
ARTICLE VIII
SETTLEMENT AND GENERAL RELEASE
------------------------------
SECTION 8.1 SETTLEMENT AND GENERAL RELEASE. For the consideration
set forth in Article III herein, each of the Shareholder Representatives waives
and releases Purchaser and each of its successors, officers, directors,
affiliates, agents, employees and/or assigns, and covenants not to xxx or
otherwise institute or cause to be instituted or in any way participate in
(except at the request of Purchaser or as required by legal process) legal or
administrative proceedings against Purchaser and each of its successors,
officers, directors, affiliates, agents, employees and/or agents with respect to
any matter of any kind arising out of, relating to or connected with any
Excluded Liabilities.
This waiver and release extends to all claims of every nature and
kind, known or unknown, suspected or unsuspected, past, present or future,
arising from Excluded Liabilities. The Shareholder Representatives acknowledge
that any and all rights granted to them under Section 1542 of the California
Civil Code or any analogous state law or federal law or regulation are hereby
expressly waived. Said Section 1542 of the Civil Code of the State of California
reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED ITS SETTLEMENT WITH THE DEBTOR."
This Section 8.1 shall constitute a complete defense to any claim
released herein. Notwithstanding any other provision of this Agreement, this
Section 8.1 shall survive indefinitely.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
-----------------------------------
SECTION 9.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. Each and
every obligation of Purchaser to be performed at the Closing shall be subject to
the satisfaction as of or before the Closing Time of the following conditions
(unless waived in writing by Purchaser):
(a) Representations and Warranties. The representations and
warranties of the Shareholder Representatives set forth in this Agreement shall
have been true and correct when made and shall be true and correct at and as of
the Closing Time as if such representations and warranties were made as of such
date and time.
(b) Performance of Agreement. All covenants, conditions, and
other obligations under this Agreement and the Related Agreements which are to
be performed or complied with by the Shareholder Representatives, including
necessary approvals of the HPL Companies' Boards of Directors and shareholders,
shall have been fully performed and complied with at or prior to the Closing
Time, including the delivery of the instruments and documents in accordance with
Section 7.2 hereof.
(c) No Material Adverse Change. There shall have been no
material adverse change in the financial condition, business, properties or
prospects of the Business since March 31, 1998.
(d) Absence of Governmental or Other Objection. There shall be no
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Closing Time.
(e) Evidence of Title. Purchase shall have received evidence
satisfactory to it, at or prior to the Closing Time, of the HPL Companies' title
to all of the Assets and right to fully convey all Assets free and clear of any
lien, encumbrances or restrictions on transfer.
(f) Certificate of Shareholder Representatives. Shareholder
Representatives shall have delivered to Purchaser a certificate executed by
them, dated the date of the Closing, to the effect that all of the conditions to
Closing set forth in this Section 9.1 have been satisfied.
(g) Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered or to be
delivered to Purchaser under this Agreement shall be satisfactory to Purchaser
in all respects.
(h) Key Employees. All employees of the Business listed on
Schedule 6.2 shall have accepted offers of employment with Purchaser.
(i) Licenses. Purchaser shall have received all licenses from all
appropriate governmental agencies or third parties to operate the Business in
the same manner as the HPL Companies operated the Business prior to the Closing
Time.
SECTION 9.2 CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDER
REPRESENTATIVES. Each and every obligation of the Shareholder Representatives to
be performed at the Closing Time shall be subject to the satisfaction as of or
before such time of the following conditions (unless waived in writing by the
Shareholder Representatives):
(a) Representations and Warranties. Purchaser's representations
and warranties set forth in this Agreement shall have been true and correct when
made and shall be true and correct at and as of the Closing Time as if such
representations and warranties were made as of such time and date.
(b) Absence of Governmental or Other Objection. There shall be no
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Closing Time.
ARTICLE X
INDEMNIFICATION
---------------
SECTION 10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS.
(a) Notwithstanding any investigation conducted at any time with
regard thereto by or on behalf of any party to this Agreement, all
representations, warranties, covenants, and agreements of each party in this
Agreement shall survive for eighteen (18) months following the Closing. No
investigation made by or on behalf of Purchaser with respect to the HPL
Companies or the Shareholder Representatives shall be deemed to affect
Purchaser's reliance on the representations, warranties, covenants and
agreements made by the Shareholder Representatives contained in this Agreement
and shall not be a waiver of Purchaser' rights to indemnity as provided herein
for the breach or inaccuracy of or failure to perform or comply with any of the
Shareholder Representative's representations, warranties, covenants or
agreements under this Agreement.
(b) Nothing in this Agreement shall be construed as limiting in
any way the remedies that may be available to a party in the event of fraud
relating to the representations, warranties, agreements or covenants made by any
party in this Agreement.
SECTION 10.2 INDEMNIFICATION BY SHAREHOLDER REPRESENTATIVES.
The Shareholder Representatives hereby agree to indemnify, defend
and hold harmless Purchaser and its affiliates against any and all losses,
liabilities, damages, demands, claims, suits, actions, judgments, and causes of
action, assessments, costs, and expenses, including interest, penalties,
attorneys' fees, any and all expenses incurred in investigating, preparing, and
defending against any litigation, commenced or threatened, and any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation (collectively, "Damages"), asserted against, resulting from, imposed
upon, or incurred or suffered by Purchaser and any of its affiliates, directly
or indirectly, as a result of or arising from or in connection with any
inaccuracy in or breach or nonfulfillment of any of the representations,
warranties, covenants, or agreements made by the Shareholder Representatives in
this Agreement or any facts or circumstances constituting such an inaccuracy,
breach, or nonfulfillment (all of which shall also be referred to as
"Identifiable Claims"); provided, however, that, except with respect to Damages
arising out of (i) any violation of any applicable bulk sales laws, (ii) the
Excluded Liabilities, (iii) Taxes accruing prior to, or in connection with, the
Closing, (iv) any breach of Section 5.11 (Proprietary Rights), and (v) any
breach of the last sentence of Section 5.1 including any claim by any
shareholder of the Company (other than the Shareholder Representatives) that
such person has not received their share of the Purchase Price or their share of
the royalty payments provided for in Section 3.3. Shareholder Representatives
shall be so liable only to the extent of aggregate Damages in excess of
$250,000. The maximum monetary liability of the Shareholder Representatives
under this Section 10.2 shall be (i) with respect to any notice or notices of
Identifiable Claims delivered by Purchaser to Shareholder Representatives during
the thirty day period following the Closing Time, the Purchase Price, and (ii)
with respect to any notice of notices of Identifiable Claims delivered by
Purchaser to Shareholder Representatives from the period commencing on the 31st
day after Closing Time until the 540th day after the Closing Time, $2,000,000.
SECTION 10.3 PROCEDURE FOR NOTIFICATION WITH RESPECT TO
THIRD-PARTY CLAIMS.
(a) If Purchaser determines to seek indemnification under this
Article IX with respect to the existence of any claim giving rise to Damages
resulting from the assertion of liability by third parties, Purchaser shall give
notice to the Shareholder Representatives within 20 days of Purchaser becoming
aware of any such Identifiable Claim or of facts upon which any such
Identifiable Claim will be based. The notice shall set forth such material
information with respect thereto as is then reasonably available to Purchaser.
In case any such liability is asserted against Purchaser, and Purchaser notifies
the Shareholder Representatives thereof, the Shareholders Representatives will
be entitled, if they so elect by written notice delivered to Purchaser within 20
days after receiving Purchaser's notice, to assume the defense thereof with
counsel satisfactory to Purchaser. Notwithstanding the foregoing, (i) Purchaser
shall also have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of Purchaser unless
Purchaser shall reasonably determine that there is a conflict of interest
between Purchaser and the Shareholder Representatives with respect to such
Identifiable Claim, in which case the fees and expenses of such counsel will be
borne by the Shareholder Representatives, and (ii) the rights of Purchaser to be
indemnified hereunder in respect of Identifiable Claims resulting from the
assertion of liability by third parties shall not be adversely affected by their
failure to give notice pursuant to the foregoing unless, and, if so, only to the
extent that, the Shareholder Representatives are materially prejudiced thereby.
With respect to any assertion of liability by a third party that results in an
Identifiable Claim, the parties hereto shall make available to each other all
relevant information in their possession material to any such assertion.
(b) In the event that the Shareholder Representatives, within 20
days after receipt of the aforesaid notice of an Identifiable Claim, fail to
assume the defense of Purchaser against such Identifiable Claim, Purchaser shall
have the right to undertake the defense, compromise, or settlement of such
action on behalf of and for the account, expense, and risk of the Shareholder
Representatives.
(c) Notwithstanding anything in this Agreement to the contrary,
if there is a reasonable probability that an Identifiable Claim may materially
adversely affect Purchaser, Purchaser shall have the right to participate in
such defense, compromise, or settlement and Shareholder Representatives shall
not, without Purchaser' written consent (which consent shall not be unreasonably
withheld), settle or compromise any Identifiable Claim or consent to entry of
any judgment in respect thereof unless such settlement, compromise, or consent
includes as an unconditional term thereof the giving by the claimant or the
plaintiff to Purchaser a release from all liability in respect of such
Identifiable Claim.
SECTION 10.4 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO
NON-THIRD PARTY CLAIMS.
In the event that Purchaser asserts the existence of a claim
giving rise to Damages (but excluding claims resulting from the assertion of
liability by third parties), it shall give written notice to the Shareholder
Representatives. Such written notice shall state that it is being given pursuant
to this Section 10.4, specify the nature and amount of the claim asserted and
indicate the date on which such assertion shall be deemed accepted and the
amount of the claim deemed a valid claim (such date to be established in
accordance with the next sentence). If the Shareholder Representatives, within
20 days after the mailing of notice by Purchaser, shall not give written notice
to Purchaser announcing their intent to contest such assertion of Purchaser,
such assertion shall be deemed accepted and the amount of claim shall be deemed
a valid claim. In the event, however, that the Shareholder Representatives
contest the assertion of a claim by giving such written notice to Purchaser
within said period, then the parties shall act in good faith to reach agreement
regarding such claim. In the event that litigation shall arise with respect to
any such claim, the prevailing party shall be entitled to reimbursement of costs
and expenses incurred in connection with such litigation including attorney
fees, if the parties hereto, acting in good faith, cannot reach agreement with
respect to such claim within ten days after such notice.
SECTION 10.5 INDEMNIFICATION BY PURCHASER.
Purchaser hereby agrees to indemnify, defend and hold harmless
the Shareholder Representatives and their respective affiliates against any and
all Damages asserted against, resulting from, imposed upon, or incurred or
suffered by Shareholders Representatives, directly or indirectly, as a result of
or arising from or in connection with (i) any of the Assumed Liabilities or (ii)
the Purchaser's conduct of the Business after the Closing Time; provided,
however, that no payment shall be payable by Purchaser under this Section 10.5
at any time when Shareholder Representatives shall be in breach of any of their
representations, warranties, covenants and agreements in this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
SECTION 11.1 NOTICE. All notices and other communications
required or permitted under this Agreement shall be delivered to the parties at
the address set forth below, or at such other address that they designate by
notice to all other parties in accordance with this Section 11.1. All notices
and communications shall be deemed to have been received: (i) in the case of
personal delivery, on the date of such delivery; (ii) in the case of telex or
facsimile transmission, on the date on which the sender receives confirmation by
telex or facsimile transmission that such notice was received by the addressee,
provided that a copy of such transmission is additionally sent by mail as set
forth in (iv) below; (iii) in the case of overnight air courier, on the second
business day following the day sent, with receipt confirmed by the courier; and
(iv) in the case of mailing by first class certified or registered mail, postage
prepaid, return receipt requested, on the fifth business day following such
mailing:
If to the Purchaser: Credence Systems Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention- Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Xxxxxxx, Phleger & Xxxxxxxx LLP Two Embarcadero Place
0000 Xxxx Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq. & Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Shareholder
Representatives: Xxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx
0000 X. Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SECTION 11.2 ENTIRE AGREEMENT. This Agreement, the exhibits and
schedules hereto, and the documents referred to herein embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to said subject matter.
SECTION 11.3 REMEDIES OF PURCHASER. The Shareholder
Representatives agree that the Assets are unique and not otherwise readily
available to Purchaser. Accordingly, the Shareholder Representatives acknowledge
that, in addition to all other remedies to which Purchaser are entitled,
Purchaser shall have the right to enforce the terms of this Agreement by a
decree of specific performance, provided Purchaser is not in material default
hereunder.
SECTION 11.4 BINDING EFFECT, ASSIGNMENT. This Agreement and the
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon the Shareholder Representatives, their successors and
permitted assigns, and Purchaser and its successors and permitted assigns.
Neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be transferred or assigned (by operation of law or otherwise) by
either of the parties hereto without the prior written consent of the other
party.
SECTION 11.5 EXPENSES OF TRANSACTION, TAXES. Each party shall
bear its own costs and expenses in connection with this Agreement. The
Shareholder Representatives shall pay or cause the HPL Companies to pay all
applicable Taxes, including, without limitation, sales, use, excise, transfer,
documentary and any other similar Taxes, arising out of the purchase and sale of
the Assets.
SECTION 11.6 WAIVER, CONSENT. This Agreement may not be amended
except by a writing executed by the parties hereto, and no waiver of any of the
provisions or conditions of this Agreement or any of the rights of a party
hereto shall be effective or binding unless such waiver shall be in writing and
signed by the party claimed to have given or consented thereto. Except to the
extent that a party hereto may have otherwise agreed in writing, no waiver by
that party of any condition of this Agreement or breach by the other party of
any of its obligations or representations hereunder or thereunder shall be
deemed to be a waiver of any other condition or subsequent or prior breach of
the same or any other obligation or representation by the other party, nor shall
any forbearance by the first party to seek a remedy for any noncompliance or
breach by the other party be deemed to be a waiver by the first party of its
rights and remedies with respect to such noncompliance or breach.
SECTION 11.7 THIRD-PARTY BENEFICIARIES. Except as otherwise
expressly provided for in this Agreement, nothing herein, expressed or implied,
is intended or shall be construed to confer upon or give to any person, firm,
corporation, or legal entity, other than the parties hereto, any rights,
remedies, or other benefits under or by reason of this Agreement.
SECTION 11.8 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
SECTION 11.9 GOVERNING LAW. This Agreement shall in all respects
be construed in accordance with and governed by the laws of the State of
California as applied to agreements among California residents entered into and
to be performed entirely within the State of California.
SECTION 11.10 ATTORNEYS' FEES. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement or to protect
the rights obtained hereunder the prevailing party shall be entitled to its
reasonable attorneys' fees, costs, and disbursements in addition to any other
relief to which it may be entitled.
SECTION 11.11 COOPERATION AND RECORDS RETENTION. The Shareholder
Representatives and Purchaser shall (i) each provide the other with such
assistance as may reasonably be requested by them in connection with the
preparation of any tax return, statement, report form or other document
(hereinafter collectively a "Tax Return"), or in connection with any audit or
other examination by any taxing authority or any judicial or administrative
proceedings relating to liability for Taxes, (ii) each retain and provide the
other, with any records or other information which may be relevant to any such
Tax Return, audit or examination, proceeding or determination, and (ii) each
provide the other with any final determination of any such audit or examination,
proceeding or determination that affects any amount required to be shown on any
Tax Return of the other for any period. Without limiting the generality of the
foregoing, the Shareholder Representatives and Purchaser shall retain, until the
applicable statute of limitations (including any extensions) have expired,
copies of all Tax Returns, supporting work schedules and other records or
information which may be relevant to such Tax Returns for all tax periods or
portions thereof ending before or including the Closing Time and shall not
destroy or otherwise dispose of any such records without first providing the
other party with a reasonable opportunity to review and copy the same. Purchaser
shall keep the original copies of the records at its facilities in California
and elsewhere, if applicable, and, at the Shareholder Representatives' expense,
shall provide copies of the Records to the Shareholder Representatives upon
request.
SECTION 11.12 COUNTERPARTS. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
CREDENCE SYSTEMS CORPORATION
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President, Chief Executive Officer
SHAREHOLDER REPRESENTATIVES:
/s/ YERVANT XXXXX XXXXXXXX
-----------------------------------------
Yervant Xxxxx Xxxxxxxx
/s/ XXXXXXXX XXXXXX
-----------------------------------------
Xxxxxxxx Xxxxxx
The Company shall furnish supplementally a copy of any omitted schedule to the
Commission upon request.
