EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 15, 2000, by and among
XIT CORPORATION, a New Jersey corporation ("XIT"), MICROTEL INTERNATIONAL, INC.,
a Delaware corporation ("MicroTel") (XIT and MicroTel collectively and
individually referred to as "Seller"), XXXXX XXXXXX ("Xxxxxx"), TAMA-XXX XXXXXX
("Mapalo"), and ETCH-TEK ELECTRONICS CORPORATION, a California corporation owned
by Xxxxxx and Xxxxxx ("EEC") (Xxxxxx, Mapalo and EEC collectively referred to as
"Purchaser"), with reference to the following RECITALS:
A. XIT, a wholly-owned subsidiary of MicroTel, is engaged, in part, in
the business of manufacturing printed circuit boards. Such business operations
have been carried on as a distinct business known as the XCEL Etch-Tek Division
of Seller (the "XET Division Business") for approximately four (4) years and
seven (7) months. All of the XET Division Business operations of Seller desired
to be purchased by Purchaser hereunder are referred to herein as the "XET
Division Business".
B. Subject to the terms and conditions hereinafter set forth, Seller
desires to sell and Purchaser desires to purchase the XET Division Business, its
operations, and all of the Assets of Seller used therein.
C. It is the intent of the parties to enter into this Asset Purchase
Agreement, where, upon the terms and conditions set forth herein, in exchange
for the payment to Seller by Purchaser of the total sum of Three Hundred and Ten
Thousand Dollars and No Cents ($310,000.00) and the assumption of liability by
Purchaser in the amount of Seventy Five Thousand Dollars and No Cents
($75,000.00) consisting of selected existing trade payables of Seller, Purchaser
will obtain all tangible assets of the XET Division Business in their "AS IS"
condition, and all intangible assets of the XET Division Business, all as more
fully described in Section 1 herein. Upon consummation of the Asset Purchase
Agreement, and except as and to the extent otherwise set forth herein, it is the
intent of the Seller and Purchaser that all liabilities and obligations, known
and unknown, contingent or existing, arising prior to the Closing Date that are
attendant to the assets so transferred shall remain the obligation and
responsibility of Seller, and that all liabilities and obligations, known and
unknown, contingent or existing, arising after the Closing Date that are
attendant to the assets so transferred shall become the obligation and
responsibility of Purchaser.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
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1. PURCHASE AND SALE
1.1 AGREEMENT TO SELL. At the Closing hereunder (as defined in Section
2.1 hereof) and except as otherwise specifically provided in this Agreement,
including but not limited to Section 1.3, Seller shall grant, sell, convey,
assign, transfer and deliver to Purchaser, all right, title and interest of
Seller in and to (a) the name "Etch-Tek" and all goodwill associated therewith;
(b) all of the tangible assets and properties of Seller constituting the XET
Division Business or used therein, of every kind and description, real, personal
and mixed, wherever situated, in their AS IS condition, and (c) all intangible
assets and rights of the XET Division Business, wherever situated (which XET
Division Business, name, goodwill, assets, properties and rights are herein
sometimes called the "Assets").
1.2 INCLUDED ASSETS. The Assets shall include without limitation the
following assets, properties and rights of Seller used directly or indirectly in
the conduct of, or generated by or constituting, the XET Division Business,
except as otherwise expressly set forth in Section 1.3 hereof:
(a) all machinery, equipment, tools, vehicles, furniture, furnishings,
leasehold improvements, goods, and other tangible personal property
used in the XET Division Business;
(b) all supplies, raw materials, work-in-process, finished goods and
other inventories;
(c) to the extent permitted by applicable law, all rights under any
written or oral contract, agreement, lease, plan, instrument,
registration, license, certificate of occupancy, operating permit or
other permit or approval of any nature, or other document, commitment,
arrangement, undertaking, practice or authorization;
(d) all rights under any written or oral distribution, dealer, sales
agency or sales representative agreements;
(e) all of Seller's right, title and interest in and to the name
"Etch-Tek";
(f) all rights under any trademark, service xxxx, trade name or
copyright, whether registered or unregistered, and any applications
therefor;
(g) all technologies, methods, formulations, data bases, trade secrets,
know-how, inventions and other intellectual property used in the XET
Division Business or under development;
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(h) all rights in action arising out of occurrences before or after the
Closing, including without limitation all rights under express or
implied warranties relating to the Assets; and
(i) all information, files, records, data, plans, contracts and
recorded knowledge, including customer and supplier lists, related to
the foregoing.
1.3 EXCLUDED ASSETS. Notwithstanding the foregoing, the Assets shall
not include any of the following (the "Excluded Assets"):
(a) the corporate seal, certificate of incorporation, minute books,
stock books, tax returns, books of account or other records having to
do with the organization of Seller;
(b) the rights which accrue or will accrue to Seller under this
Agreement;
(c) the rights to any of Seller's claims for any federal, state, local,
or foreign tax refunds;
(d) all cash;
(e) all trade receivables;
(f) all prepaid expenses, except all lease rental payments under any
leases, for real or personal property or equipment that Seller has made
for the month of November; and
(g) all affiliate company inter-company receivables.
1.4 AGREEMENT TO PURCHASE. At the Closing hereunder, Purchaser shall
purchase the Assets from Seller in exchange for the purchase price payable under
Section 1.5 and assumption of the liabilities and obligations of Seller as
provided in Section 1.6 of this Agreement.
1.5 PURCHASE PRICE. The purchase price payable by Purchaser for the
Assets (the "Purchase Price"), shall be the sum of Three Hundred and Ten
Thousand Dollars ($310,000), to be paid as follows:
(a) Purchaser shall deliver to Seller at the Closing the sum of Two
Hundred and Sixty Thousand Dollars ($260,000) by delivery of a
certified check, bank cashier's check or by wire transfer (the "Closing
Payment"); and
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(b) Purchaser shall deliver to Seller at Closing the Promissory Note of
Purchaser in the face amount of Fifty Thousand Dollars ($50,000) in the
form attached hereto as Exhibit A (the "Promissory Note").
1.6 ASSUMPTION OF LIABILITIES. At the Closing hereunder Purchaser shall
assume and agree to pay, discharge or perform, as appropriate, the following
liabilities and obligations of Seller:
(a) identified trade payables (as set forth on Exhibit B) in an
aggregate amount not to exceed $75,000 (the "Assumed Trade Payables")
and as reflected on the September 30, 2000 Balance Sheet (as defined in
Section 3.4), and all liabilities and obligations that first arise on
or after the Closing Date in respect of the XET Division Business which
remain unpaid and undischarged on the Closing Date; and
(b) all liabilities and obligations of Seller in respect of all
contracts of Seller which relate to the XET Division Business including
all leases for real property and equipment identified on Exhibit C
attached hereto, including Seller's obligations as guarantor
thereunder, and all obligations to provide normal customer service and
warranty obligations to existing accounts for products shipped prior to
the Closing Date, except that Seller agrees to reimburse Purchaser for
all actual costs incurred by Purchaser in providing normal customer
service and warranty obligations to existing accounts for products
shipped prior to the Closing Date.
In no event, however, shall Purchaser assume or incur any liability or
obligation under this Section 1.6 or otherwise in respect of any of the
following:
(o) any contingent liabilities that are alleged or claimed by any third
party to have arisen from defects in products, or any component
thereof, manufactured by Seller prior to the Closing Date.
(p) any liability whatsoever to Xxxxx Fargo Business Credit, Inc. in
relation to debts of Seller or liens against Seller's Assets;
(q) any federal, state or local income or other tax (i) payable with
respect to the XET Division Business, assets, properties or operations
of Seller or any affiliated entity for any period prior to the Closing
Date, or (ii) incident to or arising as a consequence of the
negotiation or consummation by Seller, of this Agreement and the
transactions contemplated hereby;
(r) any liability or obligation under or in connection with the
Excluded Assets;
(s) any accrued payables (except as provided in Section 1.6(a) above);
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(t) any affiliate company inter-company payables;
(u) any trade payables other than the Assumed Trade Payables;
(v) any accrued expenses;
(w) any accrued employee benefits, including vacation pay;
(x) any liabilities of Seller to any of its affiliated companies;
(y) except for Purchaser's responsibility to pay for its own cost of
legal fees incurred to prepare purchase and sale documents, any
liability or obligation of Seller arising or incurred in connection
with the negotiation, preparation and execution of this Agreement and
the transactions contemplated hereby and fees and expenses of counsel,
accountants and other experts; or
(z) any liability or obligation of Seller to pay a brokerage or
finder's fee or commission.
1.7 ALLOCATION OF PURCHASE PRICE. Purchaser and Seller shall negotiate
in good faith prior to the Closing Date and determine the allocation of the
consideration paid by Purchaser for the Assets. Each party hereto agrees (i)
that any such allocation shall be consistent with the requirements of Section
1060 of the Internal Revenue Code of 1986, as amended and the regulations
thereunder, (ii) to complete jointly and to file separately all necessary forms
with its federal income tax return consistent with such allocation for the tax
year in which the Closing Date occurs and (iii) that such party will not take a
position on any income, transfer or gains tax return, before any governmental or
regulatory authority charged with the collection of any such tax or in any
judicial proceeding, that is in any manner inconsistent with the terms of any
such allocation without the consent of the other parties.
2. CLOSING
2.1 TIME AND PLACE OF CLOSING. The closing of the sale and purchase of
the Assets (the "Closing") shall take place at a time mutually agreed to by the
parties hereto on or before November 15, 2000 at such place and in such manner
as may be mutually agreed upon by Purchaser and Seller. The date of the Closing
is referred to herein as the "Closing Date."
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2.2 ITEMS TO BE DELIVERED AT CLOSING. At the Closing:
(a) Purchaser shall deliver to Seller:
(i) the Closing Payment;
(ii) the fully signed Promissory Note;
(iii) the signed Guaranty of Xxxxx Xxxxxx and the signed Guaranty
of Tama-Xxx Xxxxxx, each in the form attached hereto as Exhibit D
and Exhibit E, respectively;
(iv) an executed counterpart of an assignment and assumption
agreement substantially in the form of Exhibit F attached hereto
(the "Xxxx of Sale, Assignment and Assumption Agreement");
(v) an opinion of counsel substantially in the form of Exhibit G
attached hereto;
(vi) a Secretary's Certificate for EEC substantially in the form of
Exhibit H attached hereto evidencing the approval of the
transactions contemplated herein;
(vii) proof that Purchaser has entered a new lease for the Premises
(as defined in Section 6.1 hereof) commencing as of the Closing
Date; and
(viii) such other documents or instruments as Seller may reasonably
require.
(b) Seller shall deliver to Purchaser:
(i) an executed counterpart of the Xxxx of Sale, Assignment and
Assumption Agreement;
(ii) a written release from Xxxxx Fargo Business Credit, Inc.
evidencing as of the Closing the discharge of all debts and liens
by Xxxxx Fargo Business Credit, Inc. against the XET Division
Business Assets;
(iii) consents for the assignment of all agreements requiring
consent relating to all leased real property and equipment utilized
in the XET Division Business;
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(iv) an opinion of counsel substantially in the form of Exhibit I
attached hereto;
(v) a Secretary's Certificate for Seller substantially in the form
of Exhibit J attached hereto evidencing approval of the
transactions contemplated herein; and
(vi) such other documents or instruments as Purchaser may
reasonably require.
2.3 DELIVERY OF POSSESSION. At the Closing, Seller shall make available
to Purchaser all of the contracts, licenses, customer lists and all other
documents, books, records, papers, files and data belonging to Seller that are
part of the Assets; and, simultaneously with such delivery, all such steps shall
be taken as may be required to put Purchaser in actual possession and operating
control of the Assets. Seller shall execute and deliver such further documents
and instruments as Purchaser may reasonably request in order to cause full
possession and control of all of the Assets and of all other things and matters
pertaining to the operation of the XET Division Business to be transferred and
delivered to Purchaser.
2.4 THIRD PARTY CONSENTS.
(a) To the extent that Seller's rights under any agreement, contract,
commitment, lease, or other Asset to be assigned to Purchaser hereunder
may not be assigned without the consent of another person which has not
been obtained, this Agreement shall not constitute an agreement to
assign the same if an attempted assignment would constitute a breach
thereof or be unlawful, and Seller, at its expense, shall use its best
efforts to obtain any such required consents as promptly as possible.
If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Purchaser's rights
under the Asset in question so that Purchaser would not in effect
acquire the benefit of all such rights, Seller, to the maximum extent
permitted by law and the Asset, shall act after the Closing as
Purchaser's agent in order to obtain for it the benefits thereunder and
shall cooperate, to the maximum extent permitted by law and the Asset,
with Purchaser in any other reasonable arrangement designed to provide
such benefits to Purchaser.
(b) With respect to all real and personal property leases identified on
Exhibit C (the "Leases"), Purchaser shall use its best efforts to
negotiate new lease agreements with the respective lessors in order to
terminate the obligations of Seller as lessee and/or guarantor under
the Leases, and for Purchaser to assume sole contractual liability as
lessee from and after November 15, 2000.
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2.5 FURTHER ASSURANCES. Seller from time to time after the Closing, at
Purchaser's request, will execute, acknowledge and deliver to Purchaser such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
assurances as Purchaser may reasonably require in order to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Assets, or to better enable Purchaser to complete, perform or discharge any of
the liabilities or obligations assumed by Purchaser at the Closing pursuant to
Section 1.6 hereof. Each of the parties hereto will cooperate with the other and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
2.6 TERMINATION. If the Closing shall not have taken place on or before
November 30, 2000, or such later date as shall be mutually agreed to in writing
by Purchaser and Seller, all of the rights and obligations of the parties
hereunder this Agreement shall terminate, without liability to any other party.
This provision does not apply if the failure to close results from a breach of
this Agreement by either party, rather than the failure of a condition precedent
to Closing to occur by such date.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser, as of the date
hereof and as of the Closing Date, as follows:
3.1 EXISTENCE. Seller is a corporation duly organized, validly existing
and in good standing under the laws of New Jersey. Seller is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the conduct of the XET Division Business by it requires it to
be so qualified.
3.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Seller has
the corporate power, authority and legal right to execute, deliver and perform
this Agreement. The execution, delivery and performance of this Agreement by
Seller have been duly authorized by all necessary corporate action. This
Agreement has been, and the other agreements, documents and instruments required
to be delivered by Seller in accordance with the provisions hereof (the "Seller
Documents") will be, duly executed and delivered by Seller, and this Agreement
constitutes, and the Seller Documents when executed and delivered will
constitute, the legal, valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms.
3.3 VALIDITY OF CONTEMPLATED TRANSACTIONS, ETC. The execution, delivery
and performance of this Agreement by Seller does not and will not violate,
conflict with or result in the breach of any term, condition or provision of, or
require the consent of any other person
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under, (a) any existing law, ordinance, or governmental rule or regulation to
which Seller is subject, (b) any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory official, body or
authority which is applicable to Seller, (c) the charter or by-laws of Seller,
or (d) any mortgage, indenture, material agreement, contract, commitment, lease,
plan, or other instrument, document or understanding, oral or written, to which
Seller is a party, by which Seller may have rights or by which any of the Assets
may be bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of Seller thereunder. Except as disclosed by Seller and agreed to by
Purchaser at or before Closing, no authorization, approval or consent of, and no
registration or filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery or performance
of this Agreement by Seller.
3.4 FINANCIAL STATEMENTS.
(a) Seller has delivered to Purchaser true and complete copies of an
unaudited balance sheet (the "Balance Sheet") and an unaudited year-to-date
profit and loss statement, each dated as of September 30, 2000 reflecting
total assets of the XET Division Business. The Balance Sheet has been
prepared using general accepted accounting principles consistently applied.
Such Balance Sheet, including the related notes, fairly represents the
financial position, assets and liabilities (whether accrued, absolute,
contingent or otherwise) of the XET Division Business at the date indicated.
(b) Since the date of the Balance Sheet, the XET Division Business
has not:
(1) mortgaged, pledged or subjected to lien, charge or other
encumbrance, any of the Assets;
(2) sold or transferred any of its Assets, or canceled any
debts or claims, except in the ordinary course of
business;
(3) engaged in any transactions materially affecting its
business or properties not in the ordinary course of
business, suffered any extraordinary losses or waived any
material rights;
(4) suffered any damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting
its properties or business, or
(5) experienced any work stoppage, strike or labor dispute of
such character as to materially and adversely affect its
business or properties;
3.5 MATERIAL CONTRACTS.
(a) Except as listed in Exhibit K hereto, the XET Division is not a
party to any written:
(1) contract with any labor union;
(2) contract(s) for the purchase of materials, supplies,
services, machinery or equipment involving individually
payment of more than $10,000, or more than $25,000 in the
aggregate;
(3) contract(s) continuing over a period of more than two (2)
years;
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(4) contract(s) not terminable on more than thirty (30) days
notice;
(5) lease for real property;
(6) contract(s) with any subcontractor, or
(7) contract(s) not made in the ordinary course of business.
(8) distributor, sales agency or advertising contract for the
sale of its products, except as listed on Schedule 3.5 (a)
attached hereto.
(b) The XET Division Business has performed all obligations required to
be performed by it to date, and is not in default under any contract, agreement,
lease, commitment, indenture, mortgage or deed of trust to which it is a party.
3.6 MISCELLANEOUS.
(a) There are no actions, suits, claims, proceedings, investigations or
litigation pending, or to the knowledge of Seller threatened, against the XET
Division Business. The XET Division Business is not in default of any court
order or injunction by which it is bound.
(b) The XET Division Business has good and sufficient title to all of
the Assets shown as owned by it on the Balance Sheet, free and clear of all
mortgages, liens, charges, encumbrances or pledges whatsoever, except as stated
in the Balance Sheet.
(c) No representation or warranty contained herein, and no statement
made by Seller in any document furnished by Seller to Purchaser under this
Agreement contains, to the best of Seller's knowledge, any untrue statement of a
material fact or omits any material fact necessary to make such representation
or warranty not misleading to Purchaser.
3.7 The Assets owned by Seller and being sold to Purchaser hereunder
are free and clear of all liens and encumbrances. This provision does not apply
to leased properties or equipment.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller, as of the date hereof and
as of the Closing Date, as follows:
4.1 CORPORATE EXISTENCE. EEC is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. EEC is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the conduct of its business
requires it to be so qualified.
4.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. EEC has
the corporate power, authority and legal right to execute, deliver and perform
this Agreement. The execution, delivery and performance of this Agreement by EEC
have been duly authorized by all necessary corporate action. This Agreement has
been, and the other agreements, documents and instruments required to be
delivered by Purchaser in accordance with the
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provisions hereof (the "Purchaser Documents") will be, duly executed and
delivered by Purchaser, and this Agreement constitutes, and the Purchaser
Documents when executed and delivered will constitute, the legal, valid and
binding obligations of Purchaser as applicable, enforceable against Purchaser in
accordance with their respective terms.
4.3 FULL KNOWLEDGE AND INFORMATION; RELIANCE. Xxxxxx has been the
executive in charge of the XET Division Business for more than four (4) years
and Mapalo has been Sales Manager and Sales and Operations Director of the
XET Division Business for a combined period of more than four and one-half (4
1/2) years, and, as such, it is recognized that they are knowledgeable with
regard to the activities, operations, environmental matters, customers, sales
and order entry, employees and overall business functions of the XET Division
Business. Xxxxxx and Xxxxxx each represent that, as of the Closing Date, they
are unaware of any misstatement or misrepresentation in the matters set forth
in Section 3 of this Agreement and know of no fact or circumstances that may
qualify or render the statements and representations set forth in Section 3
of this Agreement, in any respect, incorrect, false or misleading. It is
understood that both Purchaser and Seller have, in part, relied upon the
knowledge of Xxxxxx and Mapalo with respect to the matters covered by this
Agreement. Notwithstanding the foregoing, Purchaser relies on the statements
and representations made by Seller to the extent that such statements and
representations contain facts that are not within the personal knowledge of
Xxxxxx and Xxxxxx or that have not been provided by Xxxxxx or Mapalo to
Seller.
5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made by the parties in this
Agreement or in any certificate, schedule, statement, document or instrument
furnished hereunder or in connection with negotiation, execution and performance
of this Agreement shall survive the Closing for a period of two (2) years.
Notwithstanding any investigation or audit conducted before or after the Closing
Date or the decision of any party to complete the Closing, each party shall be
entitled to rely upon the representations and warranties set forth herein and
therein.
6. ENVIRONMENTAL MATTERS.
6.1 Seller has caused a Phase 1 and Phase 2 environmental assessment to
be performed in September 2000, ( the "Environmental Assessment") with respect
to certain leased premises comprising part of the Assets of the XET Division
Business being transferred to Purchaser hereunder, located at 0000 Xxxxx Xxxxxx,
Xxxxxx Xxxxx, Xxxxxxxxxx, and leased to Seller (as Lessee) by RKR Associates (as
Lessor) pursuant to a Standard Industrial/Commercial Single-Tenant Lease-Net,
dated April 5, 1996 (the "Premises"). The Environmental Assessment has been
performed under the direct supervision of Xxxxxx, and Purchaser acknowledges
that a copy of a report containing results of the Environmental Assessment ( the
"Environmental Assessment Report") has been provided to it and to the Lessor and
that Purchaser has full knowledge and familiarity with all aspects thereof.
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6.2 (a) Seller assumes responsibility for the Environmental Costs that
are required to be incurred to the extent that they are identified in the
Environmental Assessment Report.
(b) In the event that it is determined within three (3) years
following the Closing Date that the Premises are contaminated by a hazardous
substance, and that such contamination is not identified in the Environmental
Assessment Report, Seller shall be responsible, and shall reimburse Purchaser,
for a portion of the clean-up/remediation costs (the "Remediation Costs")
actually incurred, net of any environmental insurance proceeds, to be calculated
in accordance with the following:
(i) Seller shall only be responsible for a share of
the Remediation Costs proportional to the period of its use of the
Premises. For these purposes, it is agreed by Purchaser and Seller that
the Premises were first occupied, by a prior party, in 1982; that
Seller occupied and used the Premises for a total period of 4 years and
7 months, being the period from April 5, 1996 to November 15, 2000; and
that the period of time during which the Premises are used and occupied
by Purchaser, commencing on the Closing Date, shall be included in the
total time period for use of the Premises.
(ii) Based upon the agreed upon terms contained in
paragraph (i) above, the calculation of Seller's maximum potential
liability under this Section 6.2 (b) shall be as follows:
Seller's Use Period [i.e. 4
years and 7 months]
----------------------------- Remediation Seller's Maximum
Total Period of Use and x Costs = Proportional Share
Occupancy of the Premises as
of the Date of the Claim
PROVIDED, HOWEVER, that Seller's responsibility under this Section 6.2 (b) shall
be limited to claims made by Purchaser within three (3) years following the
Closing Date. In no event shall Seller be responsible for any Remediation Costs
unless it receives written notice of Purchaser's claim within three (3) years
after the Closing Date.
(iii) Purchaser will obtain environmental liability
insurance (the "Environmental Insurance"), and shall file a claim(s)
under Environmental Insurance before seeking reimbursement from Seller
hereunder. Seller shall only be liable to
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Purchaser to the extent that its proportional share of liability as
calculated under this Section 6.2 (b) exceeds all amounts paid by the
insurer.
6.3 (a) Neither Seller nor Purchaser are aware of any pending or
threatened proceedings, including lawsuits, arbitrations and administrative
hearings, instituted by a private party or by a governmental entity concerning
any hazardous substance alleged to be or to have been present, contained, used,
manufactured, handled, created, stored, treated, discharged, released or buried
on the Premises.
(b) Neither Seller nor Purchaser have been contacted, nor do they
have reason to believe that any contact will be made, by any representative of a
federal, state or local governmental agency concerning any matter having to do
with a hazardous substance on the Premises or the transportation of a hazardous
substance to or from the Premises.
(c) At no time during the period that Seller has occupied the
Premises, and to the best of' Seller's knowledge, at no earlier time, were any
agreements, stipulations, or settlements of any kind entered into between any
owner or occupier of the Premises and any private or public entity relating to
any hazardous substance on the Premises or to any transportation to or from the
Premises of any hazardous substance.
(d) Seller agrees to indemnify, defend and hold Purchaser harmless
against all claims, damages and liabilities that arise from occurrences that
took place prior to the Closing Date and Purchaser agrees to indemnify, defend
and hold Seller harmless from and against all claims, damages and liabilities
that arise from occurrences that take place after the Closing Date of whatever
nature, foreseen or unforeseen, that may result in liability under any Hazardous
Substance Laws.
(e) Notwithstanding any other provision of this Agreement, the
parties shall have no obligation whatsoever to each other under this Section 6
for any matter with regard to which a written disclosure was made prior to the
Closing Date.
(f) For purposes of this Section 6, the term "hazardous substance"
shall mean:
(i) any substance, product waste, or other material of any
nature that is or becomes listed or regulated under one or more of
the following, referred to herein as "Hazardous Substance Laws":
(1) The Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq.
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(2) The Hazardous Materials Transportation Act, 49 U.S.C
Section 1801 et seq.
(3) The Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et seq.
(4) The Clean Water Act, 33 U.S.C. Section 1251 et seq.
(5) The Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq.
(6) The California Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous Substance
Account Act, Health & Safety Code Section 25300 et seq.
(7) The California Xxxxxx-Cologne Water Quality Control Act,
Water Code Section 13000 et seq.
(8) The California Hazardous Waste Control Act, Health & Safety
Code Section 25100 et seq.
(9) The California Safe Drinking Water and Toxic Enforcement
Act, Health & Safety Code Section 25249.5 et seq.
(10) The California Hazardous Waste Management Act, Health &
Safety Code Section 25170.1 et seq.
(11) Any other federal or state law or local ordinance
concerning hazardous or toxic substances, wastes or materials.
(ii) Crude oil products, including petroleum.
(iii) Asbestos
(iv) Polychlorinated biphenyl
(v) Fossil fuel combustion wastes.
(vi) Solid wastes resulting from the extraction and processing of
ore.
(vii) Cement kiln dust wastes.
6.4 "Environmental Costs" means any costs arising out of compliance
requirements of any law, regulation, order, decree, opinion, requirement or
agency policy relating to air, water, noise, odor, hazardous substances,
hazardous wastes or the protection of the environment or human health and
safety.
7. INDEMNIFICATION
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7.1 INDEMNIFICATION OBLIGATION OF SELLER. For two (2) years after the
Closing Date, Seller will reimburse, indemnify and hold harmless Purchaser and
its respective successors and assigns against and in respect of any and all
actions, suits, claims, proceedings, investigations, demands, damages, losses,
deficiencies, liabilities, costs and expenses incurred or suffered by Purchaser
that result from, relate to or arise out of:
(a) any material breach of the representations, warranties or covenants
of Seller contained in Section 3 of this Agreement or in a certificate,
agreement or other instrument delivered by Seller pursuant to this
Agreement, and
(b) any liabilities or obligations of Seller other than those
specifically assumed by Purchaser pursuant to this Agreement.
7.2 INDEMNIFICATION OBLIGATION OF EEC AND XXXXXX. EEC, Xxxxxx and
Xxxxxx will, for two (2) years after the Closing Date, jointly and severally
reimburse, indemnify and hold harmless Seller and its successors or assigns
against and in respect of any and all actions, suits, claims, proceedings,
investigations, demands, damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered by Seller that result from, relate to or arise out
of:
(a) any material breach of the representations, warranties or covenants
of Purchaser contained in this Agreement or in a certificate, agreement
or other instrument delivered by Purchaser pursuant to this Agreement;
and
(b) any liabilities or obligations of Seller which have been assumed by
Purchaser pursuant to this Agreement.
7.3 METHOD OF ASSERTING CLAIMS, ETC. (a) In the event that any claim or
demand for which a party or parties (the "Indemnifying Party") would be liable
to another party or party (the "Indemnified Party") is asserted against or
sought to be collected from the Indemnified Party by a third party, the
Indemnified Party shall promptly notify the Indemnifying Party of such claim or
demand, specifying the nature of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall not
be conclusive of the final amount of such claim and demand) (the "Claim
Notice"). The Indemnifying Party shall have thirty days from the personal
delivery or mailing of the Claim Notice (the "Notice Period") to notify the
Indemnified Party, (i) whether or not they dispute their liability to the
Indemnified Party hereunder with respect to such claim or demand and (ii)
notwithstanding any such dispute, whether or not they desire, at their sole cost
and expense, to defend the Indemnified Party against such claim or demand.
In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that they desire to defend the Indemnified Party
against such claim or demand then, except as hereinafter provided, the
Indemnifying Party shall have the right to defend the
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Indemnified Party by appropriate proceedings, which proceedings shall be
promptly settled or prosecuted by them to a final conclusion. If any Indemnified
Party desires to participate in, but not control, any such defense or
settlement, it may do so at its sole cost and expense.
If the Indemnifying Party elects not to defend the Indemnified Party
against such claim or demand, whether by not giving the Indemnified Party timely
notice as provided above or otherwise, then the amount of any such claim or
demand, or if the same be contested by the Indemnifying Party, then that portion
thereof as to which such defense is unsuccessful, shall be conclusively deemed
to be a liability of the Indemnifying Party hereunder.
If, in the reasonable opinion of the Indemnified Party, any such claim
or demand or the litigation or resolution of any such claim or demand involves
an issue or matter which could have a materially adverse effect on the business,
operations, assets, properties or prospects of the Indemnified Party, then the
Indemnified Party shall have the right to participate in, but not control, the
defense or settlement of any such claim or demand and its reasonable costs and
expenses shall be included as part of the indemnification obligation of the
Indemnifying Party hereunder.
(b) In the event an Indemnified Party should have a claim against the
Indemnifying Party hereunder that does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall promptly send a Claim Notice with respect to such claim
to the Indemnifying Party.
7.4 PAYMENT. Upon the determination of liability under Section 7.3, the
appropriate party shall pay to the other, as the case may be, within ten days
after such determination, the amount of any claim for indemnification made
hereunder. In the event that the Indemnified Party is not paid in full for any
such claim pursuant to the foregoing provisions promptly as required,
notwithstanding any other rights it may have against the Indemnifying Party, the
Indemnified Party shall have the right to set off against any amounts owed by it
under this Agreement to the Indemnifying Party.
7.5 ATTORNEYS' FEES AND COSTS. In any action, at law or in equity,
to enforce or interpret the indemnification provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
costs in addition to any other relief to which the prevailing party may be
entitled.
8. CONDITIONS PRECEDENT TO THE CLOSING
8.1 CONDITIONS OF OBLIGATIONS OF SELLER. The obligation of Seller to
effect the Asset Purchase is subject to the satisfaction on or before the
Closing Date of the following conditions:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date.
(b) PERFORMANCE BY PURCHASER. Purchaser shall have performed and
satisfied all agreements and conditions which it is respectively
required by this Agreement to perform or satisfy prior to or on the
Closing Date and shall have delivered all documents required to be
delivered hereunder.
(c) LITIGATION AFFECTING CLOSING. No court order shall have been issued
or entered which would be violated by the completion of the transaction
contemplated herein. No person who or which is not a party to this
Agreement shall have commenced or threatened to commence any litigation
seeking to restrain or prohibit, or to obtain substantial damages in
connection with this Agreement or the transactions contemplated by this
Agreement.
(d) LEASE AGREEMENT. Purchaser shall have signed a lease agreement for
the Premises (as defined in Section 6.1 above) the term for which
commences as of the Closing Date;
(e) FORM AND CONTENT OF DOCUMENTS. The form and content of all
documents, certificates and other instruments to be delivered by
Purchaser shall be reasonably satisfactory to Seller.
(f) CONSENTS AND APPROVALS. Any required consent, approval,
authorization or order required in connection with the sale of the
Assets shall have been obtained or made and shall be in effect on the
Closing Date.
(g) CLOSING DOCUMENTS. Purchaser shall have executed and delivered the
closing documents set forth in Section 2.2 hereof.
(h) PURCHASE PRICE. Purchaser shall have delivered the Purchase Price
as provided in Section 1.5 hereof.
8.2 CONDITIONS OF OBLIGATIONS OF PURCHASER. The obligation of Purchaser
to effect the Asset Purchase is subject to the satisfaction on or before the
Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller set forth in this Agreement shall be true and correct in all
material respects as of the
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date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date.
(b) PERFORMANCE BY SELLER. Seller shall have performed and satisfied
with all agreements and conditions which it is required by this
Agreement to perform or satisfy prior to or on the Closing Date, and
shall have delivered all documents required to be delivered hereunder.
(c) LITIGATION AFFECTING CLOSING. No court order shall have been issued
or entered which would be violated by the completion of the transaction
contemplated herein. No person who or which is not a party to this
Agreement shall have commenced or threatened to commence any litigation
seeking to restrain or prohibit, or to obtain substantial damages in
connection with this Agreement or the transactions contemplated by this
Agreement.
(d) FORM AND CONTENT DOCUMENTS. The form and content of all documents,
certificates and other instruments to be delivered by Seller shall be
reasonably satisfactory to Purchaser.
(e) CONSENTS AND APPROVALS. Any required consent, approval,
authorization or order required in connection with the sale of the
Assets shall have been obtained or made and shall be in effect on the
Closing Date.
(f) CLOSING DOCUMENTS. Seller shall have executed and delivered the
closing documents set forth in Section 2.2 hereof.
9. POST CLOSING MATTERS
9.1 HIRING OF SELLER'S EMPLOYEES. As of the Closing, Purchaser may, but
is not required to, offer employment to any or all persons presently engaged in
the XET Division Business, who are identified on Exhibit L attached hereto and
made a part hereof (the "Employees"), and the Employees shall not thereafter be
considered Employees of Seller for any purposes. Seller will terminate all
Employees, and shall be responsible for all accrued vacation pay and other
benefits in accordance with its normal plans and policies.
9.2 NON-SOLICITATION. Seller agrees that, for the a period of one (1)
year following the Closing Date (the "Noncompete Period"), neither Seller nor
its affiliates will (directly or indirectly) call on or solicit, or divert or
take away from EEC or any affiliate of EEC, or divulge to any competitor or
potential competitor of EEC or any affiliate or other entity who or which at the
Closing Date was, or at any time preceding the Closing Date had been, a customer
of the XET Division Business. Nothing contained in this Section shall be deemed
to limit or impair, or be limited or impaired by, the provisions otherwise
appearing herein.
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9.3 PAYMENTS RECEIVED. Seller and Purchaser each agree that after the
Closing they will hold and will promptly transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to the other party, including without limitation any insurance proceeds,
and will account to the other for all such receipts.
10. MISCELLANEOUS
10.1 USE OF NAME. From and after the Closing Date, Seller will sign
such consents and take such other action as EEC shall reasonably request in
order to permit EEC to use the name "Etch-Tek". From and after the Closing Date,
neither Seller nor its affiliates shall use the name "Etch-Tek" or any names
similar thereto or variants thereof.
10.2 AMENDMENT. This Agreement may be amended by the parties hereto by
an instrument in writing signed on behalf of each of the parties hereto.
10.3 EXTENSION; WAIVER. At any time prior to the Closing, the parties
hereto may extend the time for the performance of any of the obligations or
other acts of the other parties hereto, waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party.
10.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement.
10.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein) constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. This Agreement is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
10.6 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed and construed in accordance with the laws of the State of California
without regard to principles of conflicts of law. Each party hereby irrevocably
submits to the jurisdiction of any California state court or any federal court
in the State of California in respect of any suit, action or proceeding arising
out of or relating to this Agreement, and irrevocably accept for
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themselves and in respect of their property, generally and unconditionally, the
jurisdiction of the aforesaid courts.
10.7 NOTICES. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by registered or
certified mail, postage prepaid, as follows:
If to Seller, to:
XIT Corporation and MicroTel International, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxxxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxxx
With a required copy to:
Xxxxxxxxx, Xxxxxx & Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxxxx
If to Purchaser to;
Etch-Tek Electronics Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
ATTN: Xxxxx Xxxxxx
and
Xxxxx Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
and
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Tama-Xxx Xxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered.
10.8 BULK SALES. With respect to the transaction contemplated by this
Agreement, Purchaser and Seller waive compliance with notice requirements of the
bulk sales law as specified in California Commercial Code Section 6105
("Notice") and any other similar laws in any applicable jurisdiction. Seller
agrees to indemnify and hold Purchaser harmless, against any liabilities,
damages, costs and expenses resulting from, or arising out of, the lack of such
Notice.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date set forth above.
XIT CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Title: President
-----------------------------------
MICROTEL INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Title: Chairman, President & CEO
-----------------------------------
ETCH-TEK ELECTRONICS
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Title: President
-----------------------------------
XXXXX XXXXXX
/s/ Xxxxx Xxxxxx
-----------------------------------------
TAMA-XXX XXXXXX
/s/ Tama-Xxx Xxxxxx
-----------------------------------------
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