EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and among
XXXXXX AUTOMATION, INC.,
INTELLIGENT AUTOMATION SYSTEMS, INC.,
INTELLIGENT AUTOMATION SYSTEMS, INC. TRUST,
IAS PRODUCTS, INC.,
XXXXXX X. XXXXXX, Ph.D. and
XXXXXXXX XXXX
February 15, 2002
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ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS.................................................... 1
1.1 DEFINITIONS.................................................... 1
ARTICLE 2. PURCHASE AND SALE OF PURCHASED ASSETS.......................... 9
2.1 PURCHASED ASSETS............................................... 9
2.2 EXCLUDED ASSETS................................................ 10
2.3 ASSUMPTION OF LIABILITIES...................................... 11
2.4 RETAINED LIABILITIES........................................... 12
2.5 TAXES; DOCUMENTS OF ASSIGNMENT................................. 13
ARTICLE 3. AGGREGATE CONSIDERATION AND CLOSING............................ 13
3.1 AGGREGATE CONSIDERATION AND PAYMENT............................ 13
3.2 DETERMINATION OF ESTIMATED CLOSING NET BOOK VALUE;
ADJUSTMENT OF THE AGGREGATE CONSIDERATION AT CLOSING.......... 14
3.3 DETERMINATION OF CLOSING NET BOOK VALUE; POST-CLOSING
ADJUSTMENT OF THE AGGREGATE CONSIDERATION..................... 15
3.4 ADJUSTMENT OF HOLDBACK SHARES.................................. 16
3.5 ACCELERATED ISSUANCE OF HOLDBACK SHARES........................ 17
3.6 CLOSING DELIVERIES AND OBLIGATIONS OF THE SELLERS AND
PRINCIPAL STOCKHOLDERS........................................ 17
3.7 CLOSING DELIVERIES OF THE BUYER................................ 19
3.8 OTHER DOCUMENTS; FURTHER ASSURANCES............................ 20
3.9 ALLOCATION OF AGGREGATE CONSIDERATION.......................... 20
3.10 SELLER OPTIONS................................................. 20
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE
PRINCIPAL STOCKHOLDERS........................................ 21
4.1 ORGANIZATION AND QUALIFICATION OF THE SELLERS.................. 21
4.2 AUTHORITY; NO VIOLATION........................................ 21
4.3 CAPITALIZATION................................................. 22
4.4 SUBSIDIARIES; OTHER INVESTMENTS................................ 22
4.5 FINANCIAL STATEMENTS........................................... 22
4.6 ABSENCE OF UNDISCLOSED LIABILITIES............................. 23
4.7 CONDUCT OF BUSINESS; ABSENCE OF CERTAIN CHANGES................ 23
4.8 PAYMENT OF TAXES............................................... 25
4.9 TITLE TO PROPERTIES; ENCUMBRANCES; CONDITION OF PROPERTIES..... 26
4.10 COLLECTIBILITY OF RECEIVABLES.................................. 27
4.11 INVENTORIES.................................................... 28
4.12 INTELLECTUAL PROPERTY ASSETS................................... 28
4.13 CONTRACTS AND COMMITMENTS...................................... 30
4.14 EMPLOYEES...................................................... 33
4.15 LABOR AND EMPLOYEE RELATIONS................................... 33
4.16 EMPLOYEE BENEFITS.............................................. 34
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4.17 ENVIRONMENTAL MATTERS.......................................... 37
4.18 GOVERNMENT AUTHORIZATIONS/COMPLIANCE WITH LAWS................. 39
4.19 WARRANTY OR OTHER CLAIMS....................................... 39
4.20 LITIGATION..................................................... 39
4.21 BORROWINGS AND GUARANTEES...................................... 40
4.22 INSURANCE...................................................... 40
4.23 CORPORATE BOOKS, RECORDS AND ACCOUNTS.......................... 41
4.24 FINDER'S FEE................................................... 41
4.25 TRANSACTIONS WITH INTERESTED PERSONS........................... 41
4.26 ABSENCE OF SENSITIVE PAYMENTS.................................. 42
4.27 INVESTMENT INTENT.............................................. 42
4.28 RESTRICTED SECURITIES.......................................... 42
4.29 PAYABLES....................................................... 43
4.30 COPIES OF DOCUMENTS............................................ 43
4.31 SUFFICIENCY.................................................... 43
4.32 DISCLOSURE OF MATERIAL INFORMATION............................. 43
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER........................ 43
5.1 ORGANIZATION OF BUYER.......................................... 43
5.2 AUTHORIZATION OF TRANSACTION................................... 43
5.3 NO CONFLICT OF TRANSACTION WITH OBLIGATIONS AND LAWS........... 43
5.4 REPORTS AND FINANCIAL STATEMENTS............................... 44
5.5 CAPITALIZATION................................................. 44
5.6 LITIGATION..................................................... 45
5.7 DISCLOSURE..................................................... 45
5.8 BROKERS OR FINDERS............................................. 45
ARTICLE 6. COVENANTS OF THE SELLERS AND THE PRINCIPAL STOCKHOLDERS........ 45
6.1 CHANGE OF NAME................................................. 45
6.2 CERTAIN FILINGS................................................ 45
6.3 DISPOSITION OF PURCHASE SHARES................................. 45
6.4 EMPLOYEE BENEFITS.............................................. 46
6.5 TRANSFER OF GOODWILL........................................... 46
6.6 S CORPORATION STATUS........................................... 46
ARTICLE 7. COVENANTS OF BUYER............................................. 46
7.1 REASONABLE BEST EFFORTS........................................ 46
7.2 NOTICES AND CONSENTS........................................... 47
7.3 REGISTRATION OF THE PURCHASE SHARES ON FORM S-3................ 48
7.4 EMPLOYEE BENEFITS.............................................. 50
7.5 XXXXXXX LITIGATION............................................. 50
7.6 CONFIRMATIONS OF EMPLOYMENT.................................... 50
ARTICLE 8. CONDITIONS TO OBLIGATIONS OF BUYER............................. 50
8.1 ENCUMBRANCE TERMINATIONS....................................... 50
8.2 ANCILLARY AGREEMENTS........................................... 50
8.3 GOVERNMENTAL CONSENTS AND APPROVALS............................ 51
8.4 KEY EMPLOYEES.................................................. 51
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8.5 GE CONTRACT..................................................... 51
8.6 ABSENCE OF CERTAIN LITIGATION................................... 51
8.7 NO BANKRUPTCY................................................... 51
8.8 IAS SHAREHOLDER DOCUMENTS....................................... 51
8.9 APPROVAL OF BUYER'S COUNSEL..................................... 52
8.10 DUE DILIGENCE................................................... 52
ARTICLE 9. CONDITIONS TO OBLIGATIONS OF THE SELLERS........................ 52
9.1 ANCILLARY AGREEMENTS............................................ 52
9.2 GOVERNMENTAL CONSENTS AND APPROVALS............................. 52
9.3 ABSENCE OF CERTAIN LITIGATION................................... 52
9.4 NO BANKRUPTCY................................................... 53
ARTICLE 10. INDEMNIFICATION................................................ 53
10.1 INDEMNIFICATION BY THE SELLERS AND THE PRINCIPAL STOCKHOLDERS... 53
10.2 INDEMNIFICATION BY BUYER........................................ 56
10.3 DEFENSE OF THIRD PARTY ACTIONS.................................. 57
10.4 MISCELLANEOUS................................................... 58
10.5 PAYMENT OF INDEMNIFICATION...................................... 58
ARTICLE 11. [INTENTIONALLY OMITTED]........................................ 59
ARTICLE 12. MISCELLANEOUS.................................................. 59
12.1 SURVIVAL OF WARRANTIES.......................................... 59
12.2 FEES AND EXPENSES............................................... 59
12.3 NOTICES......................................................... 59
12.4 PUBLICITY AND DISCLOSURES....................................... 60
12.5 CONFIDENTIALITY................................................. 61
12.6 ENTIRE AGREEMENT................................................ 61
12.7 SEVERABILITY.................................................... 61
12.8 ASSIGNABILITY................................................... 62
12.9 AMENDMENT....................................................... 62
12.10 GOVERNING LAW; VENUE............................................ 62
12.11 REMEDIES........................................................ 63
12.12 DEFINITION OF SELLERS' KNOWLEDGE................................ 63
12.13 COUNTERPARTS.................................................... 63
12.14 EFFECT OF TABLE OF CONTENTS AND HEADINGS........................ 63
12.15 INTERPRETATION.................................................. 63
12.16 ARBITRATION..................................................... 63
LIST OF SCHEDULES AND EXHIBITS........................................... 65
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") dated as of February 15,
2002, is entered into by and among Xxxxxx Automation, Inc., a Delaware
corporation (the "BUYER"), Intelligent Automation Systems, Inc., a Massachusetts
corporation ("IAS"), Intelligent Automation Systems, Inc. Trust, a Massachusetts
business trust ("IAS TRUST"), IAS Products, Inc., a Massachusetts corporation
("IAS PRODUCTS" and collectively with IAS and IAS Trust, the "SELLERS", and each
individually, a "SELLER"), Xxxxxx X. Xxxxxx, Ph.D. ("XXXXXX") and Xxxxxxxx Xxxx
("XXXX", and collectively with Xxxxxx, the "PRINCIPAL STOCKHOLDERS").
This Agreement, including the exhibits and schedules hereto, sets forth the
terms and conditions upon which the Buyer or one or more Subsidiaries of the
Buyer will acquire substantially all of the assets of the Sellers in exchange
for aggregate consideration of (i) $8,000,000 cash (subject to adjustment as
provided in Sections 3.2 and 3.3 hereof); (ii) $9,862,500 payable in shares of
Buyer Common Stock; and (iii) the assumption of certain identified liabilities
of the Sellers.
In consideration of the mutual representations, warranties and covenants
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1. DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement and, unless otherwise
set forth therein, for the purposes of all schedules and exhibits to this
Agreement, all capitalized words or expressions used in this Agreement
(including the schedules and exhibits annexed thereto) shall have the meanings
specified in this Article I (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"ACQUIRED CONTRACTS" is defined in Section 2.1(b) hereof.
"AFFILIATE" means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the other Person in question.
"AGGREGATE CONSIDERATION" means the Cash Consideration and the Purchase
Shares.
"AGREEMENT" is defined in the preamble hereof.
"ANCILLARY AGREEMENTS" means all of the documents, instruments and
agreements entered into or executed in conjunction with the execution, delivery
and performance of this Agreement, including, but not limited to, those
documents and agreements referenced in Sections 3.6 and 3.7 hereof.
"ASSUMED LIABILITIES" is defined in Section 2.3 hereof.
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"BASE BALANCE SHEET" means the unaudited combined balance sheet of the
Sellers as of the Base Balance Sheet Date.
"BASE BALANCE SHEET DATE" means September 30, 2001.
"BASE NET BOOK VALUE" is defined in Section 3.2(a) hereof.
"BUYER" is defined in the preamble hereof.
"BUYER COMMON STOCK" means shares of Buyer's common stock, par value $.01
per share. Each share of Buyer Common Stock is accompanied by one Buyer Purchase
Right.
"BUYER FINANCIAL STATEMENTS" is defined in Section 5.4 hereto.
"BUYER PURCHASE RIGHT" means an associated preferred stock purchase right
pursuant to the Rights Agreement, as amended, between the Buyer and the Rights
Agent named therein.
"BUYER REPORTS" is defined in Section 5.4 hereof.
"BUYER'S INDEMNIFIED PERSONS" means the Buyer, its Subsidiaries,
Affiliates, their respective present and former directors, officers, employees,
stockholders, representatives and agents.
"CASH CONSIDERATION" is defined in Section 3.1(a) hereof.
"CHANGE IN CONTROL" shall mean:
(i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, other
than Xxxxxx X. Xxxxxxxx or any of his affiliates (as defined in the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent or more of the
then outstanding shares of stock of the Buyer entitled to vote in the
election of directors (the "Outstanding Buyer Common Stock"), whether
in one transaction or in multiple transactions which in the aggregate
equal or exceed thirty percent of the Outstanding Buyer Common Stock;
provided, however, that (a) any acquisition by the Buyer or its
subsidiaries, or any employee benefit plan (or related trust) of the
Buyer or its subsidiaries of thirty percent or more of Outstanding
Buyer Common Stock shall not constitute a Change of Control; (b) any
acquisition by any individual, entity or group of beneficial ownership
of thirty percent or more but less than forty percent of the
Outstanding Buyer Common Stock may be deemed unanimously by the Board
of Directors of the Buyer as it is constituted as of the date of this
Agreement (the "Incumbent Board"), excluding any members of the
Incumbent Board affiliated with the acquiror, to not constitute a
Change of Control, in the Incumbent Board's sole and absolute
discretion (provided that such determination applies equally to all of
the Company's executives); and (c) any acquisition by a corporation
with respect to which, following such acquisition, more than fifty
percent of the then outstanding shares of common stock of such
corporation, is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners of
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the Outstanding Buyer Common Stock immediately prior to such
acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Buyer Common
Stock, shall not constitute a Change of Control; or
(ii) individuals who, as of the date of this Agreement,
constitute the members of the Incumbent Board cease for any reason to
constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date of this Agreement
whose election, or nomination for election by the Buyer's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office is
in connection with either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than the Board; or
(iii) approval by the stockholders of the Buyer of (a) a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Buyer Common Stock immediately
prior to such reorganization, merger or consolidation will not,
following such reorganization, merger or consolidation, beneficially
own, directly or indirectly, more than 50% of the then outstanding
shares of common stock of the corporation resulting from such a
reorganization, merger or consolidation, other than a merger or
consolidation effected to implement a recapitalization of the Buyer (or
similar transaction) in which no "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) acquires 30% or more of
Outstanding Buyer Common Stock; or (b) the sale or other disposition of
all or substantially all of the assets of the Buyer, excluding a sale
or other disposition of assets to a subsidiary of the Buyer and
excluding a sale or license of a portion of the business of the Buyer
which is deemed by the Incumbent Board, acting in its sole and absolute
discretion, to not constitute a Change of Control, provided, however,
(iv) if an event that would constitute a Change of Control
results from or arises out of a purchase or other acquisition of the
Buyer, directly or indirectly, by a corporation or other entity in
which a Principal Stockholder has a greater than ten percent direct or
indirect equity interest, such event shall not constitute a Change of
Control with respect to such Principal Stockholder.
"CHIN" is defined in the Preamble hereof.
"CHIN AGREEMENT" is defined in Section 3.6(a)(vii).
"CLOSING" means the closing of the transactions contemplated herein, which
shall be held at the offices of Brown, Rudnick, Freed & Gesmer, Xxx Xxxxxxxxx
Xxxxxx, Xxxxxx, XX 00000 at
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10:00 a.m., on the date hereof or at such other place, date or time as may
be fixed by mutual agreement of the parties (the "CLOSING DATE").
"CLOSING BALANCE SHEET" is defined in Section 3.3(a) hereof.
"CLOSING DATE" is defined in the definition of "Closing."
"CLOSING NET BOOK VALUE" is defined in Section 3.3(a) hereof.
"CLOSING PRICE" means the average closing price of a share of Buyer Common
Stock for the ten (10) consecutive Trading Days ending on the Trading Day that
is three Trading Days immediately prior to the Closing Date, as reported on the
Nasdaq National Market.
"CLOSING STATEMENT" is defined in Section 3.3(a) hereof.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor law.
"CONFIDENTIAL INFORMATION" is defined in Section 12.5 hereof.
"CONSTITUENT DOCUMENTS" means the certificate of incorporation, articles of
organization, agreement of association, bylaws, declaration of trust, trust
agreement and/or equivalent documents pursuant to which a corporation is
organized and operates under its governing law.
"CONTRACT" means any agreement, contract, obligation, promise, commitment
or undertaking (whether written or oral), other than those that have been
terminated.
"COPYRIGHTS" means all copyrights in both published works and unpublished
works, including training manuals, marketing and promotional materials, internal
reports, business plans mask works, software, programs and related
documentation, and videos and any other expressions, whether registered or
unregistered, and all registrations or applications in connection therewith
owned, used or licensed by the Sellers as licensee or licensor and that are used
in or material to the conduct of its business as it is currently conducted or as
proposed to be conducted.
"COURT ORDER" means any court order, judgment, administrative or judicial
order, writ, decree, stipulation, arbitration award or injunction.
"DEDUCTIBLE" is defined in Section 10.1(b) hereof.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA and any other plan, policy, program, practice, agreement,
understanding or arrangement (whether written or oral) providing compensation or
other benefits (other than ordinary cash compensation) to any current or former
director, officer, employee or consultant (or to any dependent or beneficiary
thereof), of the Sellers or any of their Subsidiaries, which are now, or were
within the past three years, maintained by the Sellers or any of their
Subsidiaries, or under which the Sellers or any of their Subsidiaries has or
could have any obligation or liability, whether actual or contingent, including,
without limitation, all incentive, bonus,
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deferred compensation, profit sharing, vacation, holiday, cafeteria,
medical, disability, stock purchase, stock option, stock appreciation, phantom
stock, restricted stock or other stock-based compensation plans, policies,
programs, practices or arrangements.
"ENCUMBRANCE" means any mortgage, deed of trust, charge, lease, community
property interest, equitable interest, lien, option, hypothecation, pledge,
security interest, title defect, right of first refusal, restriction of any kind
(including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership), any filing of any financing
statement as debtor under the Uniform Commercial Code or comparable law of any
jurisdiction and any agreement to give or make any of the foregoing; and the
verb "Encumber" shall be construed accordingly.
"ENVIRONMENTAL LAWS" means Laws, Court Orders and Government Authorizations
concerning the environment, or activities that might threaten or result in
damage to the environment or human health, or any Laws, Court Orders and
Government Authorizations that are concerned, in whole or in part, with: (i) the
environment and with protecting or improving the quality of the environment and
human and employee health and safety issues; or (ii) the management of pollution
or Hazardous Materials, including, but not limited to, the: (a) Comprehensive
Environmental Response, Compensation and Liability Act; (b) Resource
Conservation and Recovery Act; (c) Clean Air Act; (d) Clean Water Act; (e) Toxic
Substances Control Act; (f) Emergency Planning and Community Right-to-Know Act
of 1986; (g) Hazardous Materials Transportation Act; (h) Federal Water Pollution
Control Act; and (i) the Federal Insecticide, Fungicide and Rodenticide Act, as
such laws have been amended or supplemented, and the regulations promulgated
pursuant thereto, and any and all analogous state or local statutes, and the
regulations promulgated pursuant thereto, or any successor laws and any similar
laws, rules, or regulations.
"ENVIRONMENTAL SITE" means any properties or facilities currently or
formerly owned or leased by any Seller, or, to the knowledge of any Seller, any
current or former Affiliates or predecessors-in-interest of any Seller.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor law.
"ERISA AFFILIATE" is defined in Section 4.16(d) hereof.
"ESTIMATED ADJUSTMENT AMOUNT" is defined in Section 3.2(b).
"ESTIMATED CLOSING BALANCE SHEET" is defined in Section 3.2(a).
"ESTIMATED CLOSING STATEMENT" is defined in Section 3.2(a).
"ESTIMATED CLOSING NET BOOK VALUE" is defined in Section 3.2(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE RATIO" means the result obtained by dividing (i) the sum of (a)
the Cash Consideration, subject to adjustment as provided in Section
3.2(b)hereof, plus the amount of all
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cash and cash equivalents reflected on the Estimated Closing Balance Sheet,
divided by the Closing Price and (b) the number of Purchase Shares by (ii)
30,706,162.
"EXCLUDED ASSETS" is defined in Section 2.2 hereof.
"GAAP" means generally accepted accounting principles in the United States
of America, applied on a basis consistent with past practices.
"XXXXXX" is defined in the Preamble hereof.
"XXXXXX AGREEMENT" is defined in Section 3.6(a)(vii).
"GOVERNMENTAL AUTHORITY" means any court, tribunal, authority, agency,
commission, bureau, department, official or other instrumentality of the United
States, any foreign country or any domestic, foreign, state, local, county, city
or other political subdivision thereof.
"GOVERNMENT AUTHORIZATIONS" means any license, permit, order, franchise
agreement, concession, grant, authorization, consent or approval from a
Government Authority.
"HAZARDOUS MATERIALS" means any substance, material or waste which is
regulated by an Environmental Law, including, without limitation, any material
or substance which is defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste," "subject waste," "contaminant," "toxic waste" or "toxic substance" under
any provision of Environmental Law, including, but not limited to, petroleum
products, asbestos and polychlorinated biphenyls.
"HOLDBACK SHARES" is defined in Section 3.1(b)(iii) hereof.
"IAS SHAREHOLDERS" means the shareholders of each Seller on the Closing
Date.
"IAS TRUST" is defined in the Preamble hereof.
"INDEMNIFIED PERSON" means any Person entitled to indemnification under
Article X hereof.
"INDEMNIFYING PERSON" any Person obligated to indemnify another Person
under Article X hereof.
"INDEPENDENT CPA" means Deloitte & Touche LLP.
"INTELLECTUAL PROPERTY ASSETS" means all worldwide intellectual property
rights including without limitation: MARKS, PATENTS, COPYRIGHTS and TRADE
SECRETS.
"INVENTORIES" is defined in Section 4.11 hereof.
"KEY EMPLOYEES" is defined in Section 8.3 hereof.
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"kSARIA PROCEEDING" means the Proceeding referred to as INTELLIGENT
AUTOMATION SYSTEMS, INC. V. XXXXXXX XXXXXXXXXXX AND KSARIA CORPORATION in Item 1
of Schedule 4.20.
"LAWS" means statutes, laws, ordinances rules and regulations issued by any
Government Authority.
"LIABILITIES" means all the actual or contingent liabilities of the Sellers
existing at the time of the Closing or any such liabilities incurred as a direct
result of the Closing.
"LOSSES" means, with respect to any Person, all losses, claims, damages or
liabilities actually incurred by such Person, including, without limitation,
fines, penalties, payments, obligations and all liabilities and all expenses
related thereto actually incurred by such Person, including, any reasonable
legal fees and costs incurred by any Person in defense of or in connection with
any alleged or asserted liability, payment or obligation, whether or not any
liability or payment, obligation or judgment is ultimately imposed against such
Person and whether or not such Person is made or becomes party to any such
action. Losses shall be reduced by any related recoveries which such Person or
any of its Affiliates receives under insurance policies or other related
payments received from third parties and any net Tax benefit actually received
by such Person or any of its Affiliates.
"MARKS" means all trademarks, service marks, trade names, common law
trademarks, business names, Internet domain names and addresses, trade dress,
slogans, and all registrations or applications therefor, and the goodwill
associated therewith owned, used or licensed by any Seller as licensee or
licensor and that are used in or material to the conduct of its business as it
is currently conducted or as proposed to be conducted.
"MATERIAL ADVERSE EFFECT" means a material adverse change in the business,
operations, properties, assets, liabilities, results of operations or condition
(financial or otherwise) or prospects of the referenced party other than such a
change with respect to any of the Excluded Assets or Retained Liabilities;
provided, however, "Material Adverse Effect" shall not include any material
adverse change or effect occurring (i) to the extent that such change or effect
is a result of the execution and public announcement of this Agreement or the
consummation of the transactions contemplated hereby, or (ii) as a result of
general economic, regulatory or political conditions.
"MATERIAL CONTRACTS" is defined in Section 4.13(b) hereof.
"MATERIAL PERSONAL PROPERTY" is defined in Section 4.9(b) hereof.
"MATERIAL REAL PROPERTY" is defined in Section 4.9(a) hereof.
"PATENTS" means all patents, patent applications and inventions and
discoveries that may be patentable, including any patents issuing therefrom, and
any reissues, reexaminations, divisions, continuations in whole or in part,
extensions and foreign counterparts thereof owned, used or licensed by any
Seller as licensee or licensor and that are used in or material to the conduct
of its business as it is currently conducted or as proposed to be conducted.
"PENSION PLAN" is defined in Section 4.16(h) hereof.
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"PERSON" means any individual, firm, partnership, association, trust,
corporation, limited liability company, governmental body or other entity.
"PRINCIPAL STOCKHOLDERS" is defined in the Preamble hereof.
"PROCEEDING" means any pending formal or informal claim, action,
investigation, arbitration, litigation or other judicial, regulatory or
administrative proceeding.
"PURCHASE SHARES" means that number of shares of Buyer Common Stock to be
delivered as payment for the Purchased Assets in accordance with Section 3.1
hereof.
"PURCHASED ASSETS" is defined in Section 2.1 hereof.
"RECEIVABLES" is defined in Section 4.10 hereof.
"REGISTRATION STATEMENT" is defined in Section 7.3(b) hereto.
"REGULATION D" means Regulation D promulgated under the Securities Act.
"RELATED PERSON" is defined in Section 4.25 hereof.
"RESOLUTION PERIOD" is defined in Section 3.3(d) hereof.
"RETAINED LIABILITIES" is defined in Section 2.4 hereof.
"RETURNS" is defined in Section 4.8(a) hereof.
"REVIEW PERIOD" is defined in Section 3.3(b) hereof.
"RULE 144" is defined in Section 4.28 hereto.
"SEC" means the U.S. Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" is defined in the Preamble hereof.
"SELLERS' INDEMNIFIED PERSONS" means each Seller and their respective
present and former directors, officers, employees, stockholders, representatives
and agents, including, but not limited to, the Principal Stockholders.
"SELLER OPTIONS" is defined in Section 3.10 hereof.
"SELLERS' UNAUDITED FINANCIAL STATEMENTS" is defined in Section 4.5 hereof.
"SELLING STOCKHOLDERS" AND "SELLING STOCKHOLDER" are defined in Section
7.3(a) hereof.
"SUBSIDIARY" means with respect to any Person, any corporation, joint
venture, limited liability company, partnership, association or other business
entity of which more than 50% of
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the total voting power of stock or other equity entitled to vote generally
in the election of directors or managers or equivalent persons thereof is
owned or controlled, directly or indirectly, by such Person.
"SUSPENSION NOTICE" is defined in Section 7.3(b) hereof.
"TAX AUTHORITY" is defined in the definition of "TAXES."
"TAXES" (including, with correlative meaning, the terms "Tax" and
"Taxable") means all income, profit, franchise, gross receipts, sales, use, real
property, personal property, ad valorem, excise, value added, alternative
minimum, employment, payroll, social security and withholding taxes, severance,
stamp, gains, transfer, license, documentary, customs, occupation,
environmental, windfall, and other taxes, duties, or assessments of any kind
whatsoever, and any interest or fines, and any and all penalties and additions
relating to such amounts, imposed by any Governmental Authority (a "TAX
AUTHORITY").
"THIRD PARTY ACTION" means any written assertion of a claim, or the
commencement of any action, suit, or proceeding, by a third party as to which
any Person believes it may be an Indemnified Person hereunder.
"TRADE SECRETS" means all trade secrets, know-how, confidential
information, customer lists, sales and marketing information, technical
information and documentation (which reproduce the types of information
otherwise listed in the definition of Trade Secrets herein), proprietary
information technologies, designs, procedures, processes and formulae, source
code, algorithms, architecture, structure, display screens and development
tools, data, patterns, plans, designs, drawings, models and blue prints,
specifications, flow sheets, equipment and parts lists, whether tangible or
intangible and whether stored, compiled, or memorialized physically,
electronically, photographically, or otherwise, and all descriptions and related
instructions, manuals, data, records and procedures related thereto owned, used
or licensed by any Seller as licensee or licensor and that are used in or
material to the conduct of its business as it is currently conducted or as
proposed to be conducted.
"TRADING DAY" means any day on which the Nasdaq National Market is open for
business.
"TRANSFER" is defined in Section 7.3(a) hereof.
"TRANSFER TAXES" is defined in Section 2.5(a) hereof.
"TRANSFER TAX RETURNS" is defined in Section 2.5(a) hereof.
ARTICLE 2. PURCHASE AND SALE OF PURCHASED ASSETS
2.1 PURCHASED ASSETS. Subject to the provisions of this Agreement and
except as expressly excluded in Section 2.2 below, each Seller agrees to sell
and the Buyer agrees to purchase, at the Closing, all of the properties, assets
and business of each Seller of every kind and description, tangible and
intangible, real, personal or mixed, and wherever located, including, without
limitation, all assets shown or reflected on the Base Balance Sheet and arising
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since the Base Balance Sheet Date in the ordinary course, and all of each
Seller's good will. The assets, property and business of the Sellers to be sold
to and purchased by the Buyer under this Agreement are hereinafter sometimes
referred to as the "PURCHASED ASSETS." The Purchased Assets include, but are not
limited to, the following assets and business of the Sellers:
(a) all of the Receivables, Inventory, machinery and equipment and
other assets shown on the Base Balance Sheet plus any assets listed on SCHEDULE
2.1(a) hereto and any assets owned by any Seller which previously have been
written off, with only such changes with respect to such Receivables and
Inventory as have occurred in the ordinary course of the Sellers' business
consistent with past practice since the date of the Base Balance Sheet and such
changes to such machinery, equipment and other assets as have occurred in the
ordinary course of the Sellers' business consistent with past practice since the
date of the Base Balance Sheet;
(b) all rights and interests of the Sellers in and to executory
contracts, commitments, plans, agreements, understandings, licenses and personal
property leases, other than in respect of any Retained Liability, including,
without limitation, those listed on SCHEDULE 2.1(b) hereto (the "ACQUIRED
CONTRACTS");
(c) all rights and interests of the Sellers in and to customer purchase
orders;
(d) all of the Sellers' books, records and accounts, correspondence and
any confidential information relevant to the operation of their business which
has been reduced to writing (which may be provided on computer disks, tape or
comparable media), including, but not limited to, engineering records, purchase
and sales records, production flow chart records; credit records, copies of
accounting records, and customer and vendor lists and records; personnel
records, payroll records and employee benefit summaries but excluding items
identified in Section 2.2(b) hereof;
(e) all of Sellers' rights, title and interest in and to the
Intellectual Property Assets (including, without limitation those Intellectual
Property Assets listed on Schedules 4.12(c), 4.12(d) and 4.12(e) hereto) and
agreements concerning such Intellectual Property Assets including, without
limitation, those agreements listed on SCHEDULE 4.12(B) hereto;
(f) all of Sellers' right, title and interest in, to and under
third-party manufacturers' warranties, other than in respect to any Retained
Liabilities; and
(g) any and all of the Sellers' Government Authorizations to the extent
that the same are transferable; and
(h) all rights and interests of Sellers in, to and under the kSARIA
Proceeding.
2.2 EXCLUDED ASSETS. The following assets shall be excluded from the
Purchased Assets (collectively, the "EXCLUDED ASSETS"):
(a) each Seller's corporate franchise, stock record books, corporate
record books containing minutes of meetings of directors and stockholders and
such other records as have to do exclusively with such Seller's organization or
stock capitalization;
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(b) any and all income, sales, use, corporation excise and franchise
tax refunds which any Seller may be entitled to receive from Governmental
Authorities which relate to its existence, ownership of the Purchased Assets or
operation of its business prior to Closing and any right of any Seller to claim
refunds for any Taxes in respect of any period prior to the Closing;
(c) any asset relating to or arising out of any Employee Benefit Plans;
(d) Sellers' cash and cash equivalents;
(e) any Receivables reflected on the Base Balance Sheet or the Closing
Balance Sheet the account debtors of which are other Sellers;
(f) all of the Sellers' right, title and interest in, to and under this
Agreement and each of the Ancillary Agreements; and
(g) the Aggregate Consideration.
2.3 ASSUMPTION OF LIABILITIES. Upon the sale and purchase of the
Purchased Assets, the Buyer shall assume, pay, perform or discharge those
liabilities and obligations of the Sellers set forth below to the extent
existing as of the Closing or subsequent thereto (the "ASSUMED LIABILITIES").
The Assumed Liabilities shall consist only of the following:
(a) all the liabilities and obligations of the Sellers shown on the
Base Balance Sheet which are outstanding at the time of the Closing other than
the Retained Liabilities identified in Section 2.4 hereof;
(b) all liabilities and obligations incurred by the Sellers in the
ordinary course of business since the date of the Base Balance Sheet which are
outstanding at the time of the Closing and shown on the Closing Balance Sheet,
other than the Retained Liabilities;
(c) any liabilities and obligations reflected on the Base Balance Sheet
or the Closing Balance Sheet to employees of the Sellers (including, without
limitation, the Key Employees and any other employee of Sellers hired by Buyer),
for accrued pay, accrued vacation or obligations related to or resulting from
severance of employment by the Sellers or the consummation by the Sellers of the
transactions contemplated hereby, including, without limitation, all immigration
liabilities and responsibilities related to the H-1B employment of employees
Xxxxxxx and Sane and attestations made on the original Form ETA-9035 as
certified by the Department of Labor and the liabilities that run from the Form
I-9;
(d) all liabilities and obligations of Sellers to provide COBRA
continuation coverage, in accordance with the requirements of Code Section 4980B
and sections 601 through 608 of ERISA, to all Qualified Beneficiaries (within
the meaning of Code Section 4980(g)(1) and Treasury Regulation 54.4980B-9);
(e) any liabilities and obligations of the Sellers with respect to
product warranty and product liability claims;
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(f) any liability relating to government grants, subsidies or other
assistance including, without limitation, any liability for reimbursement to a
government for any research and development grants, subsidies or assistance
previously paid by the government relating to or arising out of the Sellers'
business;
(g) all the liabilities and obligations arising out of (i) the kSARIA
Proceeding and (ii) any Proceedings, whether commenced or threatened prior to or
after the Closing Date and with or without the knowledge of the Sellers, or any
Court Orders whether outstanding prior to or after the Closing Date, arising out
of or relating to the kSARIA Proceeding;
(h) all liabilities and obligations arising after the Closing Date
under the Acquired Contracts; and
(i) up to $500,000 of Sellers' legal, accounting, investment banking
and other expenses to be paid by Buyer pursuant to Section 12.2 hereof.
The assumption of Assumed Liabilities by the Buyer hereunder shall be treated as
independent of the Buyer's existing business and shall not enlarge any rights of
third parties under contracts or arrangements with the Buyer or the Sellers.
Nothing herein shall prevent the Buyer from contesting in good faith any of the
Assumed Liabilities.
2.4 RETAINED LIABILITIES. Except to the extent expressly assumed
pursuant to Section 2.3 above, the Buyer does not assume and shall not be liable
for any debt, obligation, responsibility or liability of any Seller, or any
Affiliate of any Seller, or any claim against any of the foregoing, whether
known or unknown, contingent absolute or otherwise (collectively, the "RETAINED
LIABILITIES"). Without limiting the foregoing sentence, the Buyer shall have no
responsibility with respect to the following, whether or not disclosed in the
Base Balance Sheet or a schedule hereto:
(a) any liabilities and obligations related to or arising from
transactions among any or all of the Sellers, any Principal Stockholder or any
Affiliate of the Sellers;
(b) any liabilities and obligations for Taxes of any kind arising, or
with respect to any period of time, before the Closing, including the Transfer
Taxes;
(c) any liabilities or obligations of any kind arising out of or
relating to any indebtedness of the Sellers not reflected on the Base Balance
Sheet or the Closing Balance Sheet;
(d) any liabilities and obligations for damage or injury to person or
property based upon events occurring prior to the Closing Date;
(e) any liabilities and obligations to employees of the Sellers
(including, without limitation, the Key Employees and any other employee of
Sellers hired by Buyer), not reflected on the Base Balance Sheet or the Closing
Balance Sheet, for accrued pay, accrued vacation, or obligations related to or
resulting from severance of employment by the Sellers or the consummation by the
Sellers of the transactions contemplated hereby;
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(f) any liability relating to or arising from an Employee Benefit Plan,
including liabilities to employees of Sellers for accident, disability or
workers compensation insurance or benefits;
(g) all liabilities and obligations arising prior to the Closing Date
under the Acquired Contracts; and
(h) liabilities incurred by any Seller in connection with this
Agreement and the transactions provided for herein, including counsel and
accountant's fees, filing fees and expenses related to any Seller's performance
of its obligations hereunder; and
(i) all liabilities and obligations arising out of or relating to (i)
Proceedings pending, or Proceedings known by Sellers to be threatened, as of the
Closing Date, against or otherwise involving any of the Sellers or any of the
officers, directors, former officers or directors, employees, shareholders or
agents of any of the Sellers (in their capacities as such); including, without
limitation, those Proceedings listed on SCHEDULE 4.20 hereto; (ii) outstanding
Court Orders to which any of the Sellers is a party or by which any of he
Purchased Assets is bound, and (iii) any Proceedings, whether commenced or
threatened prior to or after the Closing Date and with or without the knowledge
of the Sellers, or any Court Orders whether outstanding prior to or after the
Closing Date, arising out of or relating to any of the Proceedings or Court
Orders set forth in clauses (i) or (ii) hereof, but excluding in the case of
items (i), (ii) and (iii) above, the kSARIA Proceeding.
2.5 TAXES. The Sellers shall be solely responsible for all Taxes
required by any Governmental Authority in any relevant jurisdiction which arise
out of or result from the sale of the Purchased Assets, the receipt of the
Aggregate Consideration or the assumption of the Assumed Liabilities (the
"TRANSFER TAXES"); provided, that the Buyer shall deliver to the Sellers at the
Closing a resale certificate and/or an exempt use certificate, as applicable,
which shall cover all of the Seller's inventory (including, without limitation,
raw materials, work-in-progress and finished goods inventories) included within
the Purchased Assets In addition, the Sellers shall, at their own expense,
properly complete, sign, and timely file any and all required Returns relating
to Transfer Taxes ("TRANSFER TAX RETURNS") and, if required by applicable law,
the Buyer will join in the execution of any such Transfer Tax Returns.
ARTICLE 3. AGGREGATE CONSIDERATION AND CLOSING
3.1 AGGREGATE CONSIDERATION AND PAYMENT.
(a) Subject to the adjustments contained in Section 3.2 and Section 3.3
below, the aggregate consideration to be paid by the Buyer to the Sellers in
consideration of the sale of the Purchased Assets shall be equal to:
(i) the aggregate amount of the Assumed Liabilities
as of the Closing;
(ii) $8,000,000 in cash, subject to adjustment as
provided in Section 3.2(b) hereof (the "CASH
CONSIDERATION"); plus
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(iii) that number of shares of Buyer Common Stock
obtained by dividing $9,862,500 by the Closing
Price; provided that such number shall be rounded
to the nearest whole number (the "PURCHASE
SHARES").
(b) The Aggregate Consideration shall be paid by Buyer as follows:
(i) the Cash Consideration shall be paid by wire
transfer to the Sellers at the Closing;
(ii) 68,973 of the Purchase Shares shall be delivered
to the Sellers at the Closing; and
(iii) 140,600 of the Purchase Shares (the "Holdback
Shares") shall be reserved for issuance by the
Buyer at Closing and, subject to Sections 3.4,
3.5, 10.1(b)(iv), 10(b)(v) and 10.5 hereof,
delivered to the Sellers as follows:
(A) 34,433 of the Holdback Shares shall be
delivered to the Sellers on the first
anniversary of the Closing Date;
(B) 71,734 of the Holdback Shares shall be
delivered to the Sellers on the second
anniversary of the Closing Date; and
(C) 34,433 of the Holdback Shares shall be
delivered to the Sellers on the third
anniversary of the Closing Date.
(c) At the Closing, the Buyer shall also assume the Assumed
Liabilities.
3.2 DETERMINATION OF ESTIMATED CLOSING NET BOOK VALUE; ADJUSTMENT OF
THE AGGREGATE CONSIDERATION AT CLOSING.
(a) Prior to the Closing Date, the Sellers shall have prepared and
delivered to the Buyer: (i) a balance sheet (the "ESTIMATED CLOSING BALANCE
SHEET") which shall reflect, in addition to the other assets and liabilities of
the Sellers, the Sellers' good faith estimate of the book value of both the
Purchased Assets and the Assumed Liabilities as of January 31, 2002; and (ii) a
statement (the "ESTIMATED CLOSING STATEMENT") indicating the Sellers' good faith
estimate of the book value of both the Purchased Assets and Assumed Liabilities
reflected in the Estimated Closing Balance Sheet and the difference between the
estimated aggregate net book value of the Purchased Assets and the estimated
aggregate net book value of the Assumed Liabilities as of January 31, 2002 (the
"ESTIMATED CLOSING NET BOOK VALUE"). The Estimated Closing Balance Sheet shall
be prepared on a basis consistent with the preparation of the Base Balance Sheet
and in accordance with GAAP. The Estimated Closing Balance Sheet shall be
accompanied by all necessary and appropriate supporting work papers and
materials.
(b) The Cash Consideration payable by the Buyer at Closing shall be
reduced to the extent that the Estimated Closing Net Book Value is less than
$1,189,718 (the "BASE NET BOOK VALUE"). The amount of any such reduction
determined pursuant to this Section 3.2 shall be referred to herein as the
"ESTIMATED ADJUSTMENT AMOUNT".
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3.3 DETERMINATION OF CLOSING NET BOOK VALUE; POST-CLOSING ADJUSTMENT OF
THE AGGREGATE CONSIDERATION.
(a) The Sellers shall use commercially reasonable efforts to prepare
and deliver to the Buyer within 45 days after the Closing Date, and shall, in
any event, within 90 days after the Closing Date, prepare and deliver to the
Buyer: (i) a balance sheet (the "CLOSING BALANCE SHEET") which shall reflect, in
addition to the other assets and liabilities of the Sellers, the book value of
both the Purchased Assets and the Assumed Liabilities as of the Closing Date;
and (ii) a statement (the "CLOSING STATEMENT") indicating the book value of both
the Purchased Assets and the Assumed Liabilities reflected in the Estimated
Closing Balance Sheet and the difference between the aggregate net book value of
the Purchased Assets and the aggregate net book value of the Assumed Liabilities
as of the Closing Date (the "CLOSING NET BOOK VALUE"). The Closing Balance Sheet
shall be prepared on a basis consistent with the preparation of the Base Balance
Sheet and in accordance with GAAP. The Closing Balance Sheet delivered to the
Buyer by the Sellers shall be accompanied by a review report from Tofias, PC,
the accountants of the Sellers, stating that Tofias, PC is not aware of any
material modification that should be made to the Closing Balance Sheet in order
for it to be in conformity with generally accepted accounting principles. The
Closing Balance Sheet shall also be accompanied by all necessary and appropriate
supporting work papers and materials. If these work papers and materials have
not been provided or prepared in a professional and workmanlike manner, the
Review Period referenced in Section 3.3(b) hereof shall be extended to give the
Buyer's accountants sufficient time to complete their audit of the Closing
Balance Sheet. Inventory shall be valued as provided in Section 4.11 hereof by
the Buyer as of the close of business on the Closing Date based on a physical
count undertaken by the Buyer at its expense on a mutually agreed upon date that
is on or near the Closing Date at which all parties or their representatives may
be present to observe.
(b) Following receipt of the Closing Balance Sheet, the Buyer and the
Buyer's accountants will be afforded a period of 30 calendar days (the "REVIEW
PERIOD") to audit, at the Buyer's cost, the Closing Balance Sheet. During such
Review Period, the Buyer and the Buyer's accountant will be afforded reasonable
access to any of the Sellers' employees involved in the preparation of the
Closing Balance Sheet and the records, work papers, trial balances and similar
materials prepared by the Sellers or their accountants in connection with the
preparation of the audit and certification of the Closing Balance Sheet;
provided, however, that the Buyer shall provide reasonable prior notice of any
such investigation to the Sellers. At or before the end of the Review Period,
the Buyer will either: (i) accept the Closing Balance Sheet and the Closing
Statement in their entirety, in which case the Closing Net Book Value will be
deemed to be as set forth on the Closing Statement, and the Closing Balance
Sheet and the Closing Statement shall become final, binding and conclusive on
the Sellers, the Principal Stockholders and the Buyer; or (ii) deliver to the
Sellers and the Principal Stockholders a written notice in accordance with
paragraph (d) of this Section 3.3 disputing the Closing Balance Sheet or the
Closing Statement If the Buyer fails to provide the notice set forth in (ii)
above within the Review Period, the Buyer shall be deemed to have accepted the
Closing Balance Sheet and the Closing Statement in their entirety.
(c) If the Closing Net Book Value is less than the Base Net Book Value,
as reduced by the Estimated Adjustment Amount, then the Sellers and the
Principal Stockholders shall pay the Buyer the amount of such difference in cash
within ten (10) days following the later
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of: (x) the date the Closing Balance Sheet and the Closing Statement are
accepted by Buyer; or (y) the final, binding and conclusive determination of
any dispute with respect to the Closing Balance Sheet, or the Closing Statement
as provided in paragraph (d) of this Section 3.3. If the Closing Net Book Value
is greater than the Base Net Book Value, as reduced by the Estimated Adjustment
Amount, then the Buyer shall pay the Principal Stockholders the lesser of (i)
the Estimated Adjustment Amount and (ii) the difference between the Closing Net
Book Value and the Base Net Book Value, as reduced by the Estimated Adjustment
Amount, in cash within ten (10) days following the later of: (x) the date the
Closing Balance Sheet and the Closing Statement are accepted by Buyer; or (y)
the final, binding and conclusive determination of any dispute with respect to
the Closing Balance Sheet, or the Closing Statement as provided in paragraph (d)
of this Section 3.3.
(d) In the event that any dispute shall arise as to the manner of
preparation or the accuracy of the Closing Balance Sheet or the Closing
Statement prior to the expiration of the Review Period, the Buyer shall provide
the Sellers with written notice of each disputed item detailing the amount
disputed and the basis of the dispute. In the event of such a dispute, the Buyer
and the Sellers shall attempt to reconcile in good faith their differences as to
such items within twenty (20) calendar days (the "RESOLUTION PERIOD") of the
Sellers' receipt of such notice, and any resolution by them as to any disputed
items shall be final, binding and conclusive on the Sellers, the Principal
Stockholders and the Buyer. If the Buyer and the Sellers are unable to reach a
resolution with such effect within the Resolution Period, the Buyer and the
Sellers shall submit the dispute to the Independent CPA. In resolving any such
dispute, the Independent CPA shall use GAAP consistently applied throughout the
periods involved and prior periods. The determination of such dispute by the
Independent CPA shall be final, binding and conclusive on the Sellers, the
Principal Stockholders and the Buyer. The fees and expenses of the Independent
CPA shall be assessed by the Independent CPA fifty percent (50%) against the
Sellers and fifty percent (50%) against the Buyer, and shall be paid by each of
them in those proportions; provided that, (i) if the Independent CPA adopts a
Closing Net Book Value within ten percent (10%) of that determined by the
Sellers pursuant to paragraph (a) of this Section 3.3 and not within ten percent
(10%) of that determined in accordance with Buyer's written notice of dispute
delivered pursuant to this paragraph (d), the Buyer shall pay one hundred
percent (100%) of such fees and expenses and (ii) if the Independent CPA adopts
a Closing Net Book Value within ten percent (10%) of that determined in
accordance with Buyer's written notice of dispute delivered pursuant to this
paragraph (d) and not within ten percent (10%) of that determined by the Sellers
pursuant to paragraph (a) of this Section 3.3, the Sellers shall pay one hundred
percent (100%) of such fees and expenses.
3.4 ADJUSTMENT OF HOLDBACK SHARES. During the period between the date
hereof and the third anniversary of the Closing Date, in the event of any
extraordinary distribution of cash or property, stock dividend, stock split,
recapitalization or other changes affecting the outstanding Buyer Common Stock
as a class effected without the payment of additional consideration, then any
new, substituted or additional securities, cash or other property that is, by
reason of any such transaction, distributed with respect to Holdback Shares then
reserved for issuance pursuant this Agreement shall additionally be reserved for
issuance and delivered to the Sellers together with such Holdback Shares, in
accordance with Section 3.1(b)(iii) hereof. Appropriate adjustments to reflect
the distribution of such securities or property shall be made to the number of
Holdback
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Shares reserved for issuance to reflect the effect of any such transaction upon
the Buyer's capital structure.
3.5 ACCELERATED ISSUANCE OF HOLDBACK SHARES.
(a) Notwithstanding any provision to the contrary herein, upon the
earlier of a Change of Control or termination of Xxxxxx'x employment with the
Company by the Company other than for "Cause" or by Xxxxxx for "Good Reason",
death or "Disability" (as such terms are defined in the Xxxxxx Agreement), the
Buyer shall issue and deliver to the Sellers the Holdback Shares then reserved
for issuance pursuant to Section 3.1(b)(iii) hereof, other than (i) any Holdback
Shares previously retained by the Buyer for the satisfaction of claims pursuant
to 10.1(b)(v) or 10.5 hereof, or (ii) any Holdback Shares that the Buyer may
have a right to retain at a later date pursuant to Section 10.1(b)(v) hereof if
a claim arises for liquidated damages, or pursuant to Section 10.5 hereof if a
Claim arises that is not satisfied in cash.
(b) Notwithstanding any provision to the contrary herein, upon earlier
of a Change of Control or the termination of Chin's employment with the Company
by the Company other than for "Cause" or by Chin for "Good Reason", death or
"Disability" (as such terms are defined in the Chin Agreement), the Buyer shall
issue and deliver to the Sellers the Holdback Shares then reserved for issuance
pursuant to Section 3.1(b)(iii) hereof, other than (i) any Holdback Shares
previously retained by the Buyer for the satisfaction of claims pursuant to
10.1(b)(iv) or 10.5 hereof; or (ii) any Holdback Shares that the Buyer may have
a right to retain at a later date pursuant to Section 10.1(b)(iv) hereof if a
claim arises for liquidated damages, or pursuant to Section 10.5 hereof if a
Claim arises that is not satisfied in cash.
3.6 CLOSING DELIVERIES AND OBLIGATIONS OF THE SELLERS AND PRINCIPAL
STOCKHOLDERS.
(a) At the Closing, the Sellers and the Principal Stockholders shall
execute and deliver or cause to be executed and delivered to the Buyer the
following agreements and documents:
(i) a Corporate Noncompetition Agreement
substantially in the form attached hereto as
EXHIBIT A;
(ii) a Xxxx of Sale from the Sellers transferring
title to the Purchased Assets to the Buyer, each
substantially in the form attached hereto as
EXHIBIT B;
(iii) Patent Assignment Agreements from the Sellers,
each substantially in the form attached hereto
as EXHIBIT C;
(iv) certificates of the Principal Stockholders and
the Presidents of the Sellers to the effect that
each of the conditions specified in Article 8
has been satisfied;
(v) Noncompetition, Nonsolicitation and Proprietary
Information Agreements, executed by each of the
Key Employees (other than the
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Principal Stockholders), substantially in the
form attached hereto as EXHIBIT D;
(vi) An Executive Compensation and Non-Competition
Agreement, executed by Xxxxxx (the "Xxxxxx
Agreement") and an Executive Compensation and
Non-Competition Agreement, executed by Chin (the
"Chin Agreement");
(vii) All consents and permits of others required to
permit the Sellers to complete the transactions
contemplated by this Agreement and the Ancillary
Agreements, in a form acceptable to the Buyer,
including, but not limited to, (i) the consent of
Massachusetts Institute of Technology, with
respect to license of U.S. Patent 5,540,889; (ii)
evidence of the delivery of notice of the
transactions contemplated hereby to the National
Institute of Health pursuant to grants from the
National Institute of Health to IAS dated
September 30, 1999 (Grant # 1 R24 HG02130-01) and
March 19, 2001 (Grant # 1 R43 HG02248-01); and
(iii) evidence of the delivery of notice of the
transactions contemplated hereby to General
Electric Company ("GE") in accordance with the
provisions of that certain Production Alliance
Agreement, dated July 31, 2001 (the "GE
Agreement"), between GE and Intelligent
Automation Systems, Inc.
(b) At the Closing, the Buyer shall have received from counsel for the
Sellers and Principal Stockholders, an opinion dated as of the Closing,
substantially in the form set forth as EXHIBIT E hereto. In rendering the
foregoing opinion, such counsel for the Sellers may state their opinions on
specific matters of fact to the best of their knowledge and, to the extent they
deem such reliance proper, may rely on: (i) certificates of public officials;
(ii) certificates, in form and substance satisfactory to the Buyer and its
counsel, of officers of the Sellers; and (iii) an opinion or opinions of other
counsel, satisfactory to the Buyer and its counsel, which opinions are in form
and substance satisfactory to the Buyer and its counsel. In the event such
counsel rely upon any such certificate or opinion, a counterpart of each thereof
shall be delivered to the Buyer and its counsel.
(c) At the Closing, the Sellers shall deliver or cause to be delivered
to the Buyer or its designee possession of originals (to the extent available
and copies where originals are not available) of all of Sellers' Contracts
included among the Purchased Assets, with such assignments thereof and consents
to assignments as are necessary to assure the Buyer of the full benefit of the
same. The Sellers shall also deliver to the Buyer or its designee at the Closing
possession of originals (to the extent available and copies where originals are
not available) of all of the Sellers' business records, tax returns, books and
other data relating to the Purchased Assets, and the business and operations
(except those which also relate the Excluded Assets or the Retained Liabilities
with respect to which copies of the portions which relate to the Purchased
Assets will be delivered at Closing) of the Sellers and shall take all requisite
steps to put the Buyer in actual possession and operating control of the
Purchased Assets. After the Closing, the Buyer shall afford to the Sellers and
their accountants and attorneys reasonable access to the books and records of
the Sellers delivered to the Buyer under this Section 3.6(c)
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and shall permit the Sellers to make extracts and copies therefrom for the
purpose of preparing such tax returns of the Sellers as may be required
after the Closing and for other proper purposes approved by the Buyer, which
approval shall not unreasonably withheld or delayed.
3.7 CLOSING DELIVERIES OF THE BUYER.
(a) At the Closing, the Buyer shall execute and deliver or cause to be
executed and delivered to the Sellers the following agreements and documents:
(i) Assignment and Assumption Agreement in favor of the
Sellers substantially in the forms attached hereto as
EXHIBIT F; and
(ii) the certificates contemplated in Section 2.5 hereof;
(iii) the Xxxxxx Agreement and the Chin Agreement;
(iv) letters confirming employment by the Buyer to each of
the Key Employees of the Sellers;
(v) a certificate of the Senior Vice President,
Finance & Administration and Chief Financial
Officer of the Buyer to the effect that each of
the conditions specified in Article 9 hereof has
been satisfied.
(b) At the Closing, the Sellers and the Principal Stockholders shall
have received from Xxxxx Xxxxxxx Xxxxxxx Israels LLP, counsel for Buyer, an
opinion dated as of the Closing, substantially in the form of EXHIBIT G hereto.
In rendering said opinion, such counsel may state their opinions on specific
matters of fact to the best of their knowledge and, to the extent they deem such
reliance proper, may rely on: (i) certificates of public officials; (ii)
certificates, in form and substance satisfactory to the Sellers and their
counsel; (iii) certificates of officers of the Buyer; and (iv) an opinion or
opinions, in form and substance satisfactory to the Sellers and its counsel, of
other counsel satisfactory to the Sellers and their counsel. In the event such
counsel for the Buyer relies upon any such certificate or opinion, a counterpart
of each thereof shall be delivered to the Sellers and their counsel.
3.8 OTHER DOCUMENTS; FURTHER ASSURANCES.
(a) At the Closing, the Sellers and the Principal Stockholders shall
deliver or cause to be delivered to the Buyer such other documents as may be
required by any Ancillary Agreement and the Buyer shall deliver or cause to be
delivered to the Sellers and the Principal Stockholders such other documents as
may be required by any Ancillary Agreement.
(b) The Sellers, the Principal Stockholders and the Buyer from time to
time after the Closing at the request of any other party hereto and without
further consideration shall execute and deliver further instruments of transfer
and assignment and take such other action as the Buyer may reasonably require to
more effectively transfer and assign to, and vest in, the Buyer each of the
Purchased Assets and the Assumed Liabilities. To the extent that the assignment
of any lease, contract, commitment or right shall require the consent of other
parties thereto, and such consent is not obtained, this Agreement shall not
constitute an assignment
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thereof; however, the Sellers and the Principal Stockholders shall use
their reasonable best efforts before and after the Closing to obtain any
necessary consents or waivers to assure the Buyer of the benefits of such
leases, contracts, commitments or rights. If such consent is not obtained, the
Sellers and the Principal Stockholders agree to cooperate with the Buyer in any
reasonable arrangement designed to provide for the Buyer the benefits
thereunder, including, but not limited to, having: (i) the Buyer act as agent
for the Sellers; and (ii) the Sellers enforce for the benefit of the Buyer any
and all rights of the Sellers against the other party thereto arising out of the
cancellation by such other party or otherwise. The Sellers and the Principal
Stockholders shall cooperate with the Buyer to permit the Buyer to enjoy the
Sellers' rating and benefits under the xxxxxxx'x compensation laws and
unemployment compensation laws of applicable jurisdictions, to the extent
permitted by such laws. Nothing herein shall be deemed a waiver by the Buyer of
its right to receive at the Closing an effective assignment of each of the
leases, contracts, commitments or rights of the Sellers.
3.9 ALLOCATION OF AGGREGATE CONSIDERATION. The parties hereto
acknowledge and agree that the transactions contemplated hereby will be treated
as a taxable transaction for income tax purposes. Attached hereto as SCHEDULE
3.9 is a schedule allocating the Aggregate Consideration among the Purchased
Assets. The parties hereto acknowledge and agree that such allocation will
reflect the respective fair market values of the Purchased Assets and that they
will not take a position inconsistent with such allocation or the treatment of
the transaction as a taxable transaction for federal, state or local Tax
purposes. The parties intend that the Cash Consideration shall first be treated
as acquiring Purchased Assets appearing on the Closing Balance Sheet, and any
remaining Cash Consideration and all other consideration shall be treated as
acquiring goodwill and any other Purchased Assets not appearing on the Closing
Balance Sheet.
3.10 SELLER OPTIONS. As of the Closing, all outstanding options to
purchase shares of beneficial interest granted by the IAS Trust, pursuant to its
2001 Stock Incentive Plan which were unvested as of December 31, 2001 and listed
on SCHEDULE 3.10(a) hereto (the "SELLER OPTIONS") shall be assumed by the Buyer.
Notwithstanding the foregoing, those options issued to consultants and listed on
SCHEDULE 3.10(b) hereto shall not be "Seller Options" hereunder and shall not be
assumed by the Buyer. Immediately after the Closing, each Seller Option
outstanding immediately prior to the Closing shall be deemed to constitute an
option to acquire, on the same terms and conditions as were applicable under
such Seller Option at the Closing, that number of shares of Buyer Common Stock
(rounded down to the nearest whole share) as is equal to the number of shares of
beneficial interests in the IAS Trust subject to the unexercised portion of such
Seller Option multiplied by the Exchange Ratio. The exercise price per share of
each such assumed Seller Option shall be equal to the exercise price of such
Seller Option immediately prior to the Closing, divided by the Exchange Ratio
(rounded up to the nearest whole cent). The terms, exercisability, vesting
schedule and all of the other terms of the Seller Options shall otherwise remain
unchanged, provided, however, that the Buyer shall not guarantee the status of
any option as an "incentive stock option" under Section 422 of the Code ("ISO")
and shall not be required to indemnify any Person for any Loss resulting from
the failure of any option to qualify as an ISO. As soon as practicable after the
Closing, Buyer shall deliver to the holders of Seller Options appropriate
notices setting forth such holders' rights pursuant to such Seller Options, as
amended by this Section 3.10, and the agreements evidencing such Seller
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Options shall continue in effect on the same terms and conditions (subject
to the amendments provided for in this Section 3.10.) The Buyer shall
adopt such resolutions and take such actions as may be required to cause each
Seller Option outstanding at the Closing to be assumed by Buyer in accordance
with this Section 3.10 and shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Buyer Common Stock for delivery
upon exercise of the Seller Options. As soon as practicable after the Closing
and for so long as any of the Seller Options remain outstanding, Buyer will use
commercially reasonable efforts to cause the shares of Buyer Common Stock
issuable upon exercise of the Seller Options to be registered under the
Securities Act and to comply with the requirements of Securities Act Rule 428
and Form S-8 with respect thereto, provided, however that the Buyer shall have
no obligation to register such shares unless a Form S-8 (or a successor form) is
available for such registration pursuant to the provisions of the Securities
Act.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE PRINCIPAL
STOCKHOLDERS
Each of the Sellers and the Principal Stockholders hereby, jointly and
severally, represents and warrants to the Buyer as follows:
4.1 ORGANIZATION AND QUALIFICATION OF THE SELLERS. Each of IAS and IAS
Products is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts, with full power and
authority to own, operate or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it. IAS Trust is a business trust duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts, with full power and authority to own, operate or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it. The
copies of each Seller's Constituent Documents which are attached to SCHEDULE 4.1
hereto, are complete and correct. Each Seller is duly qualified to do business
and in good standing as a foreign corporation in each of the jurisdictions
identified on SCHEDULE 4.1 and it is not required to be licensed or qualified to
conduct its business or own its property in any other jurisdiction, except where
the failure to be so licensed or qualified would not have a Material Adverse
Effect on the Sellers taken as a whole.
4.2 AUTHORITY; NO VIOLATION. Each of IAS and IAS Products have all
requisite corporate power and authority to enter into and deliver this Agreement
and each Ancillary Document to which it is a party and to carry out the
transactions and perform its obligations contemplated hereby and thereby. IAS
Trust has all requisite trust power and authority to enter into and deliver this
Agreement and each Ancillary Document to which it is a party and to carry out
the transactions and perform its obligations contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and each Ancillary
Document to which the Sellers are a party by the Sellers and all transactions
contemplated herein and therein have been duly and validly authorized and
approved by all necessary corporate (or in the case of IAS Trust, other
appropriate) action of the Sellers. Each such agreement constitutes the legal,
valid and binding obligation of the Sellers and the Principal Stockholders,
enforceable in accordance with its terms except: (a) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; and (b) that the remedy of
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specific performance and injunctive and other forms of equitable relief
may be subject to the equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought. Assuming the accuracy of
the representations and warranties of the Buyer hereunder, the entering into of
this Agreement and the Ancillary Agreements to which it is a party by each
Seller and each Principal Stockholder does not, and the consummation by the
Seller and the Principal Stockholders of the transactions contemplated hereby
and thereby will not: (i) violate the provisions of any federal, state or local
Law of the jurisdictions where the Sellers do business; (ii) violate any
provision of any Seller's Constituent Documents; (iii) except as set forth on
SCHEDULE 4.2 hereto, breach, result in a default or acceleration of any
obligation under, or cause the loss of any right under, any contract, agreement,
license, lease, instrument, indenture, order, arbitration award, judgment, or
decree to which the Sellers and the Principal Stockholders are parties or by
which the Sellers and the Principal Stockholders are bound, or to which any
Seller's properties (other than the Excluded Assets) are subject; (iv) violate
or conflict with any resolution adopted by the Board of Directors or the
stockholders of any Seller; (v) violate any legal requirement or Court Order to
which any Seller or any Principal Stockholder or any of the assets or properties
owned or used by any Seller (other than the Excluded Assets) is subject; or (vi)
violate any Governmental Authorization which is held or used by any Seller. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby do not require
the consent, waiver, approval, authorization, exemption of or giving of notice
to any Governmental Authority except as otherwise provided for in this
Agreement.
4.3 CAPITALIZATION. As of the date hereof, the authorized equity
securities of IAS consists of 450,000 shares of Class A Voting Common Stock,
having no par value, of which 15,000 shares are issued and outstanding, all of
which are validly issued and outstanding in the names of the Persons set forth
on Schedule 4.3(a) hereto, and 50,000 shares of Class B Non-voting Common Stock,
having no par value, of which no shares are issued and outstanding. As of the
date hereof, the authorized equity securities of IAS Products consists of 15,000
shares of Common Stock, having no par value, of which 100 shares are issued and
outstanding, all of which are validly issued and outstanding in the names of the
Persons set forth on Schedule 4.3(b) hereto. As of the date hereof 30,706,162
shares of beneficial interest in the IAS Trust are issued and outstanding, all
of which are validly issued and outstanding in the names of the Persons set
forth on Schedule 4.3(c) hereto.
4.4 SUBSIDIARIES; OTHER INVESTMENTS. Except as set forth on Schedule
4.4, (i) none of the Sellers owns, directly or indirectly, any capital stock or
ownership interest of any corporation or other business organization and (ii)
none of the Sellers is a partner or participant in any joint venture or
partnership of any kind.
4.5 FINANCIAL STATEMENTS.
(a) Attached as SCHEDULE 4.5(a) hereto are the unaudited Balance Sheets
and Combined Balance Sheets as of December 31, 2000, September 31, 2001,
December 31, 2001 and January 31, 2002 (ii) Income Statements and Combined
Income Statements for the years ending December 31, 2000 and December 31, 2001,
the nine months ending September 31, 2001 and the month ending January 31, 2002,
and (iii) Statements of Cash Flows and Combined Statements of Cash Flows for the
years ending December 31, 2000 and December 31, 2001, the
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nine months ending September 30, 2001 and the month ended January 31, 2002
of the Sellers (the "SELLERS' UNAUDITED FINANCIAL STATEMENTS"), together
with all related compilations, reviews and other reports issued by the Sellers'
independent certified public accountants with respect thereto, all of which
statements (including the notes thereto) are complete and correct in all
material respects and present fairly the assets, liabilities and financial
position of the Sellers on the date of such statements, and the results of
operations and changes in the financial condition of the Sellers for the periods
covered thereby. The Sellers' Unaudited Financial Statements have been prepared
in accordance with GAAP, consistently applied throughout the periods involved
and prior periods (except in the case of interim financial statements, for the
absence of footnotes and subject to year-end adjustments).
(b) The books of account of the Sellers for the periods referenced in
Section 4.5(a) are complete and correct in all material respects and have been
maintained on a consistent basis.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. There are no material
liabilities of any nature with respect to the Sellers, whether accrued,
absolute, contingent or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others, or liabilities for
Taxes due or then accrued or to become due), except: (a) liabilities stated or
adequately reserved against on the Base Balance Sheet; (b) liabilities incurred
since the Base Balance Sheet Date in the ordinary course of business consistent
with past practices which liabilities, to the extent outstanding on the Closing
Date, will be reflected on the Closing Balance Sheet; and (c) liabilities
disclosed on SCHEDULE 4.6 hereto or otherwise referenced in the Schedules
hereto.
4.7 CONDUCT OF BUSINESS; ABSENCE OF CERTAIN CHANGES. Since the Base
Balance Sheet Date, except as disclosed on Schedule 4.7, the Sellers have
conducted their business only in the ordinary course, consistent with prior
practices and, whether or not in the ordinary course of business, there has not
been any change in the financial condition (including working capital, earnings,
reserves, properties, assets or liabilities), of the Sellers which change, by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has had a Material Adverse Effect upon the
Sellers taken as a whole. Without limiting the generality of the foregoing,
except as disclosed on SCHEDULE 4.7 hereto, since the Base Balance Sheet Date
there has not been:
(a) any amendment or other modification to the Constituent Documents of
the Sellers;
(b) any sale, lease or other disposition, or any agreement or other
arrangement for the sale, lease or other disposition, of any of asset or
property of any Seller with a value individually, or in the aggregate, in excess
of $50,000, other than in the ordinary course of business consistent with past
practice;
(c) any Encumbrance placed on any of the Purchased Assets which remains
in existence on the date hereof;
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(d) any obligation or liability (other than Retained Liabilities)
incurred by any Seller, other than obligations and liabilities incurred in the
ordinary course of business consistent with past practice;
(e) any entry into Contracts or agreements by any Seller, except
contracts made in the ordinary course of business consistent with past
practices;
(f) any entry into, termination of, or receipt of notice of termination
of any Contract or transaction involving a total remaining commitment by or to
any Seller of at least $50,000 including the entry into: (i) any document
evidencing any indebtedness; (ii) any capital or other lease; or (iii) any
guaranty;
(g) cancellation, compromise, release or waiver of any debt, claim or
right with a value to any Seller in excess of $50,000;
(h) payment, discharge or satisfaction of any material obligation or
liability of any Seller, absolute, accrued, contingent or otherwise, whether due
or to become due, except for any current liabilities, and the current portion of
any long-term liabilities, shown on the Base Balance Sheet (or not required as
of the date thereof to be shown thereon in accordance with GAAP) or incurred
since the date of the Base Balance Sheet in the ordinary course of business
consistent with past practice;
(i) institution or settlement of any Proceeding before any Governmental
Authority relating to any Seller;
(j) except in the ordinary course of business consistent with past
practice, commitment by any Seller to provide services or goods for an
indefinite period or a period of more than six (6) months;
(k) any capital investment, capital expenditure, capital improvement,
addition or betterment or commitment to enter into the same in amounts which
exceed $50,000 in the aggregate or lease or agreement to lease assets with an
annual rental which exceeds $50,000 in the aggregate;
(l) any damage to or destruction of any Purchased Assets whether
covered by insurance or not;
(m) any intercorporate loan or transfer between any Seller and any
Affiliate of any Seller;
(n) any change in the compensation or other amounts payable or to
become payable by any Seller to any of their directors, officers, employees,
consultants, representatives or agents; or any change in any bonus, pension or
profit sharing payment, entitlement or arrangement made to or with any of such
directors, officers, employees, consultants, representatives or agents; or any
grant of any loans or severance or termination pay (other than as set forth on
SCHEDULE 4.7(n)); entry into or variation of any employment, severance or
similar contract with any director, officer, employee, consultant,
representative or agent; payment of any bonuses, salaries or other compensation
to any shareholder, director, officer, consultant, agent or
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sales representative or (except in the ordinary course of business
consistent with past practice) employee; or any entrance into or variation of
the terms of any employment agreement or consulting agreement or adoption of, or
increase in, the benefits under any Employee Benefit Plan;
(o) any change with respect to the management or supervisory personnel
of any Seller;
(p) any write-downs of the value of any inventory included in the
Purchased Assets (including write-downs by reason of shrinkage or xxxx-down) or
write-offs as uncollectible of any notes or accounts receivable included in the
Purchased Assets, except for write-downs or write-offs that are in the aggregate
less than $50,000 incurred in the ordinary course of business;
(q) any disposal, sale, assignment, license or lapse of any rights of
the Sellers to the use of any Intellectual Property Asset, or (ii) the license
or disposal, sale, assignment, or disclosure to any person other than the Buyer
of any trade secret or other confidential information of any Seller not
theretofore a matter of public knowledge other than pursuant to confidentiality
agreements;
(r) any change in any method of accounting or accounting practice of
any Seller except as required by GAAP; or
(s) any agreement, whether in writing or otherwise, to take any action
described in this Section 4.7.
4.8 PAYMENT OF TAXES.
(a) The Sellers have filed or caused to be filed with the appropriate
Tax Authorities in a timely manner all Tax returns, reports and forms,
statements, declarations, claims for refund, and other documents and information
with respect to Taxes, including any schedule or attachment thereto, and
including any amendment thereof ("RETURNS") required to be filed by them with a
Tax Authority prior to the date hereof.
(b) The information reported on such Returns is complete and accurate.
(c) The Sellers have paid in full on a timely basis all Taxes or made
adequate provision in the Sellers' financial statements for all Taxes (whether
or not shown on any Return) required to be paid by them (including any Taxes of
another Person for which any Seller may have liability pursuant to Treasury
Regulation Section 1.1502-6, or any similar provision of state, local, or
foreign law, as a transferee or successor, by contract or otherwise).
(d) There are no Encumbrances for Taxes upon the assets or properties
of any of the Sellers other than for Taxes not yet due and payable.
(e) No deficiencies for Taxes have been claimed, proposed, or assessed
in writing or otherwise to the Sellers' knowledge by any Tax Authority or other
Governmental Authority with respect to the Sellers, and there are no pending or,
to the Sellers' knowledge,
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threatened audits, investigations or claims for or relating to any liability
in respect of Taxes of the Sellers.
(f) The Sellers have delivered or made available to the Buyer correct
and complete copies of all income tax returns filed by the Sellers since
December 31, 1999.
(g) The Sellers have no examination reports and statements or notices
of deficiency asserted, proposed, or assessed against or agreed to by the
Seller.
(h) There are no outstanding Contracts or written waivers with respect
to the Sellers extending the statutory period of limitation applicable to any
Taxes, and none of the Sellers has requested any extension of time within which
to file any Return, which has not yet been filed.
(i) The Sellers have withheld and timely paid to the appropriate Tax
Authority all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third Person.
(j) IAS Trust and IAS Products have each been validly electing S
corporations, within the meaning of Code Sections 1361 and 1362 and for state
Tax law purposes, except in those states which do not recognize S corporation
status or in which such status does not apply to the respective entity, at all
times during their existence, and have each filed all forms and taken all action
necessary to maintain such status. IAS has been since January 1, 1997 a validly
electing S corporation, within the meaning of Code Sections 1361 and 1362 and
for state Tax law purposes, except in those states which do not recognize S
corporation status or in which such status does not apply to the respective
entity, has since that date been a "qualified subchapter S subsidiary" within
the meaning of Code Section 1361(b)(3)(B), and has filed all forms and taken all
action necessary to maintain such status. IAS Trust and IAS Products will be
validly electing S corporations up to and including the Closing Date and IAS
will be a qualified subchapter S subsidiary up to and including the Closing
Date. None of the Sellers has, in the past 10 years, (i) acquired assets from
another corporation in an transaction in which the acquirer's tax basis for the
acquired assets was determined, in whole or in part, by reference to the tax
basis of the acquired assets (or any other property) in the hands of the
transferor or (ii) acquired the stock of any corporation which is a qualified
subchapter S subsidiary (other than the acquisition by IAS Trust of the Stock of
IAS on October 2, 2001.
4.9 TITLE TO PROPERTIES; ENCUMBRANCES; CONDITION OF PROPERTIES.
(a) The Purchased Assets do not include any real property. None of the
Sellers currently owns, nor has ever owned, real property. Set forth on SCHEDULE
4.9(a) hereto is a listing of all real property leased by any Seller, including
a description of the real estate and any Encumbrances on the property
(collectively, the "MATERIAL REAL PROPERTY").
(b) Set forth on SCHEDULE 4.9(b) hereto is a listing of: (i) all
machinery, equipment and other tangible personal property with an original cost
in excess of $25,000 used or owned by any Seller; and (ii) a listing of all
leases under which any Seller leases any personal property requiring annual
rental payments in excess of $25,000, together with a list of such
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property (collectively, the "MATERIAL PERSONAL PROPERTY"). SCHEDULE 4.9(b)
hereto lists all locations where Material Personal Property is located.
(c) Except for assets or properties acquired since the Base Balance
Sheet Date and set forth on SCHEDULE 4.9(c) hereto, all of the assets and
properties of the Sellers are reflected on the Base Balance Sheet (except to the
extent not required to be so reflected by GAAP). The only intangible assets and
properties owned or used by the Sellers are Intellectual Property Assets
described in Section 4.12. The Purchased Assets include all of the assets owned
or leased by the Sellers that are used in their business other than the Excluded
Assets.
(d) Each Seller is in compliance with all terms and conditions of each
lease of Material Real Property or Material Personal Property and no event has
occurred nor, to the Sellers' knowledge, does any circumstance exist that (with
or without notice or the passage of time or both) would constitute a material
violation or default under any such lease and none of the Sellers has given or
received notice of any alleged violation or of any default under any such
agreement.
(e) Each Seller has good title to all of its owned personal property
included in the Purchased Assets. None of the Material Real Property or Material
Personal Property owned by any Seller is subject to any Encumbrance (other than
for taxes not yet due and payable) of any kind against such Seller's rights in
such property.
(f) To the knowledge of the Sellers with respect to the Material
Personal Property which is used by any Seller but owned by a third party, there
are no Encumbrances (other than for taxes not yet due and payable) of any kind
against such third party's rights in such property.
(g) All buildings, machinery and equipment included in the Purchased
Assets are in satisfactory condition, are presently in working order and repair,
normal wear and tear excepted, and are adequate for the uses to which they are
being put.
(h) There are no outstanding contracts, agreements or understandings
made by any Seller for the construction or repair of any improvements to the
Material Real Property that have not been fully paid for.
(i) None of the Sellers has received any written notice from any
insurance carrier of any defects or inadequacies in the Material Real Property,
or in any portion thereof, that would adversely affect the insurability thereof
or the cost of such insurance, or that requires corrective action. Except as set
forth on Schedule 4.09, there are no pending insurance claims of any Seller
related to the Material Real Property.
4.10 COLLECTIBILITY OF RECEIVABLES. All of the accounts receivable,
trade accounts, notes receivable, contract receivables, unbilled invoices and
other receivables, net of reserves ("RECEIVABLES") of the Sellers shown or
reflected on the Base Balance Sheet (other than Receivables the account debtors
of which are other Sellers) are, and those to be reflected on the Closing
Balance Sheet will be: (a) valid and enforceable claims; (b) which arose out of
transactions with unaffiliated parties; and (c) subject to no set-off, defense
or counterclaim.
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4.11 INVENTORIES. All inventories of finished goods and raw materials
of the Sellers reflected on the Base Balance Sheet ("INVENTORIES") are, and
those to be reflected on the Closing Balance Sheet will be, of a quantity and
quality normally salable in the ordinary course of business at commercially
reasonable prices and, to the extent of a type previously sold, consistent with
the Sellers' prior experience, except to the extent of the obsolete inventory
reserve in the amount shown on the Base Balance Sheet or to be shown on the
Closing Balance Sheet. All Inventories are valued on a lower of cost or market
basis and in accordance with the Sellers' normal valuation methods and policies,
consistently applied, which methods and policies are in accordance with GAAP.
Purchase commitments for raw materials and parts are not in excess of normal
requirements and none are at prices in excess of current market prices. Except
as set forth on SCHEDULE 4.11 hereto, since the date of the Base Balance Sheet,
no Inventories have been sold or disposed of except through sales in the
ordinary course of business at prices no less than prevailing market prices and
in no event less than cost.
4.12 INTELLECTUAL PROPERTY ASSETS.
(a) The Sellers: (i) own all right, title and interest in and to, free
and clear of all Encumbrances; or (ii) license or otherwise possess legally
valid and enforceable rights to use, each of the Intellectual Property Assets,
and, in each case of clause (i) or (ii), the Sellers may transfer such rights as
contemplated by this Agreement. The Sellers have made all filings and
recordations which are commercially reasonable to protect and maintain its
interest in the Intellectual Property Assets except where the failure to so
protect or maintain does not relate to a material Intellectual Property Asset.
The Intellectual Property Assets included in the Purchased Assets include all
the intellectual property rights owned or licensed by any of the Sellers and
used in the ordinary course of their business and necessary for Buyer to (i)
operate the business consistent with past practice; and (ii) deliver existing
products and services and the products and services under development set forth
on SCHEDULE 4.12(a) hereto to customers, free of Encumbrances
(b) SCHEDULE 4.12(b) hereto contains a true, correct and complete list
of all contracts, agreements or understandings relating to the Intellectual
Property Assets to which any Seller is a party or by which any Seller is bound.
Other than as set forth on SCHEDULE 4.12(b), none of the Sellers is or will be
as a result of the execution and delivery of this Agreement or the performance
of its obligations hereunder, in breach or violation of any agreement listed on
SCHEDULE 4.12(b). Each license of Intellectual Property Assets listed in
SCHEDULE 4.12(b) is valid, subsisting, and enforceable, and shall continue in
effect on its current terms upon consummation of the transactions contemplated
by this Agreement.
(c) SCHEDULE 4.12(c) hereto contains a true, correct and complete list
of all issued patents and patent applications. All such issued patents and
patent applications are valid and subsisting and all maintenance fees, annuities
and the like have been paid and, to the knowledge of the Sellers, none of such
patents or patent applications is infringed or has been challenged or threatened
in any way by any Person.
(d) SCHEDULE 4.12(d) hereto contains a true, correct and complete list
of:
(i) all registered Marks;
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(ii) all such Marks are valid and subsisting;
(iii) to the knowledge of the Sellers, none of such
Marks is infringed;
(iv) none of such Marks has been challenged or
threatened in any way by any Person, and no
claims are pending or threatened against the use
by any Seller of such Marks in their business as
currently conducted;
(v) to the extent that Sellers have determined in the
ordinary course of their operations that marking
is useful, all materials encompassed by such
Marks have been marked with appropriate trademark
and registration notices; and
(vi) all uses of such Marks are in conformance with
applicable statutory and common law.
(e) SCHEDULE 4.12(e) hereto contains a true, correct and complete list
of:
(i) all registered Copyrights;
(ii) all such Copyrights are valid and enforceable;
(iii) to the knowledge of the Sellers, none of such
Copyrights is infringed or has been challenged
or threatened in any way;
(iv) no claims are pending or threatened against the
use by the Sellers of any writings or other
expressions used in their business as currently
conducted or as proposed to be conducted; and
(v) to the extent that Sellers have determined in the
ordinary course of their operations that marking
is useful, all works encompassed by the
Copyrights have been marked with appropriate
copyright notices.
(f) Except as set forth on SCHEDULE 4.12(f) hereto, the Sellers have
taken commercially reasonable precautions to protect the confidentiality and
value of their Trade Secrets. Except to the extent described on Schedule
4.12(f), to the knowledge of the Sellers, the Trade Secrets have not been used,
divulged or appropriated either for the benefit of any Person (other than the
Sellers) or to the detriment of the Sellers. None of the Trade Secrets is
subject to any material adverse claim or, to the knowledge of the Sellers, has
been challenged or threatened in any way.
(g) None of the products or technology used, sold, offered for sale or
licensed or proposed for use, sale, offer for sale or license by the Sellers,
including those products and services under development set forth under SCHEDULE
4.12(a) hereto, infringes any proprietary rights owned, possessed or used by any
Person nor is any claim pending or threatened alleging such infringement.
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(h) To the knowledge of the Sellers, no Intellectual Property Asset is
subject to any outstanding Court Order, Proceeding (other than pending
applications for patent, trademark registration or copyright registration) or
stipulation restricting in any manner the licensing thereof by the Sellers.
Except as set forth on Schedule 4.12(h), none of the Sellers has entered into
any agreement to indemnify any other person against any charge of infringement
of any Intellectual Property Asset.
(i) Except as set forth on Schedule 4.12(i), all All employees,
contractors, agents and consultants of the Sellers have executed a nondisclosure
and assignment of inventions agreement in the form attached to SCHEDULE 4.12(i)
hereto to protect the confidentiality and to vest in the Sellers exclusive
ownership of such Intellectual Property Assets. Except as set forth on Schedule
4.12(i), to the knowledge of the Sellers, no employee, former employee,
contractor, agent or consultant of any Seller has used any Trade Secrets or
other confidential information of any other person in the course of their work
for any Seller. The Sellers have written or oral agreements with employees,
contractors, agents or consultants with respect to the ownership of the
Intellectual Property Assets created by them as a result of which any such
employee, contractor, agent or consultant may have exclusive or nonexclusive
rights to the portions of the Intellectual Property Assets so created by such
individual.
(j) To the knowledge of the Sellers, no officer, employee, contractor,
agent or consultant of any Seller is, or is now expected to be, in violation of
any term of any employment contract, patent disclosure agreement, proprietary
information agreement, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, or any other similar contract or agreement or any
restrictive covenant relating to the right of any such officer, employee,
contractor, agent or consultant to be employed or engaged by any Seller because
of the nature of the business conducted or to be conducted by such Seller or
relating to the use of Trade Secrets or proprietary information of others, and
to the Sellers' knowledge, the continued employment or retention of its
officers, employees, contractors, agents or consultants does not subject the
Seller to any liability with respect to any of the foregoing matters in
connection with the Sellers' business as currently conducted or proposed to be
conducted.
(k) Except as set forth on Schedule 4.12(k), none of the Sellers has
deposited, or is obligated to deposit, any source code regarding its products
into any source code escrows or similar arrangements and none of the Sellers is
under any contractual or other obligation to disclose the source code or any
other material proprietary information included in or relating to its products.
4.13 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 4.13(a) contains a complete and accurate list, and the
Sellers have delivered to Buyer true, correct and complete copies, of:
(i) each Contract involving remaining payments of at
least $50,000 that involves performance of
services or delivery of goods or materials by
any Seller;
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(ii) each Contract involving remaining payments of at
least $50,000 that involves performance of
services or delivery of goods or materials to
any Seller;
(iii) each Contract obligating any Seller to purchase
of all or substantially all of its requirements
of a particular product from a supplier;
(iv) each Contract or plan of any Seller, including,
without limitation, any stock option plan, stock
appreciation right plan or stock purchase plan,
any of the benefits of which will be increased,
or the vesting of benefits of which will be
accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or
the value of any of the benefits of which will be
calculated on the basis of any of the
transactions contemplated by this Agreement;
(v) each Contract for joint marketing, teaming or
development to which any Seller is a party;
(vi) each Contract with any dealer, franchiser,
original equipment manufacturer, value-added
reseller, or manufacturer's representative to
which any Seller is a party;
(vii) each Contract involving payments or other
obligations in excess of $25,000 pertaining to
the Sellers' maintenance or support of its
products, services or supplies;
(viii) each Contract for the sale of any Seller's
products not made in the ordinary course of
business;
(ix) each Contract with any sales agent or distributor
of products of the Sellers;
(x) each Contract for a license (other than
off-the-shelf, fully paid up, shrink wrap
software licenses) or franchise (as licensor or
licensee or franchisor or franchisee) to which
any Seller is a party;
(xi) each Contract involving any arrangement or
obligation with respect to the return of any
Seller's products other than on account of a
defect in condition, or failure to conform to the
applicable Contract;
(xii) each Contract between any Seller and the United
States government;
(xiii) each Contract which is material to the assets or
business of the Sellers;
(xiv) each lease, license and other Contract affecting
any leasehold or other interest in any Material
Real Property or Material Personal Property to
which any Seller is a party;
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(xv) each licensing agreement or other Contract to
which any Seller is a party with respect to
Intellectual Property Assets, including
agreements with current or former employees,
consultants or contractors regarding the use or
disclosure of any Intellectual Property Assets;
(xvi) each Contract to which any Seller is a party
containing covenants that in any way purport to
restrict the business activity of any Seller or
any of the employees of any Seller or limit the
freedom of any Seller or any of the employees to
engage in any line of business or to compete with
any Person or hire any Person;
(xvii) each agreement between any Seller and an officer
or director of any Seller or any Affiliate of
any of the foregoing;
(xviii) each power of attorney granted by any Seller that
is currently effective and outstanding;
(xix) each Contract for capital expenditures by any
Seller in excess of $50,000;
(xx) each agreement of any Seller containing
restrictions with respect to the payment of
dividends or other distributions in
respect of its capital stock;
(xxi) each stock purchase, merger or other similar
agreement pursuant to which any Seller acquired
any material assets (other than capital
expenditures), and all relevant documents and
agreements delivered in connection therewith;
(xxii) each other agreement to which any Seller is a
party having an indefinite term or a fixed term
of more than one (1) year (other than those that
are terminable at will or upon not more than
thirty (30) days' notice by any Seller without
penalty) or requiring payments by any Seller of
more than $50,000 per year; and
(xxiii) each standard form of agreement pursuant to which
any Seller provides services or goods to
customers.
(b) Each of the Contracts listed on SCHEDULE 4.13(a) hereto (the
"MATERIAL CONTRACTS") is valid, binding and enforceable against such Seller and,
to the knowledge of the Sellers, against the other parties thereto (except; (a)
as such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (b) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefore may be brought); each Seller is in full
compliance with all terms and conditions of each Material Contract to which it
is a party; and, except as set forth on SCHEDULE
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4.13(b) hereto, no event has occurred or circumstance exists that (with
or without notice or the passage of time or both) would constitute a material
violation of or default under such Material Contract by such Seller or, to the
knowledge of the Sellers, by the other party or parties thereto, and such Seller
has not given or received notice of any alleged violation of or default under
any such Material Contract. Except as listed on Schedule 4.13(b)(1) hereto,
neither the execution and delivery of this Agreement by any Seller nor the
consummation or performance by any Seller or the transactions contemplated
hereby will, directly or indirectly, with or without notice or lapse of time or
both give rise to a right of termination, cancellation or acceleration or
require the consent, authorization or approval of or any notice to or filing
with any third Person under any Material Contract included among the Purchased
Assets. Except as described in SCHEDULE 4.13(b)(2) hereto, none of the Sellers
has received prepayments of any kind on any Material Contract.
(c) Since September 30, 2001, none of the Sellers has experienced any
termination, cancellation, limitation or modification or change in any business
relationship with any material supplier or customer, and none of the Sellers has
received notice or otherwise has knowledge that any material customer or
supplier intends to cease, or materially reduce or change the terms of, doing
business with any Seller or to terminate any agreement with any Seller where
such action has had or would have a Material Adverse Effect upon the Sellers
taken as a whole. SCHEDULE 4.13(c) hereto lists every material customer or
supplier of the Sellers and the amount of business with that customer between
January 1, 2000 and December 31, 2001 For purposes hereof, "material customers"
mean the top 10 customers of the Sellers based upon revenue recognized since
January 1, 2000. For purposes hereof, "material suppliers" mean the top 5
suppliers to the Sellers based upon expenses incurred or accrued since January
1, 2000.
(d) The aggregate of all outstanding purchase orders issued by the
Sellers with respect to their business (including all contracts or commitments
for the purchase by the Sellers of materials or other supplies) is not
materially more than the purchase order amount set forth on SCHEDULE 4.13(d)
hereto. All such purchase commitments were made in the ordinary course of
business.
4.14 EMPLOYEES. SCHEDULE 4.14 hereto sets forth a true and complete
list of: (a) all employees of the Sellers currently or since January 1, 2000;
and (b) all technical and business consultants and independent contractors
retained by the Sellers currently or since December 1, 2000. Also shown on
SCHEDULE 4.14 is the name, job title, base salary (or base rate of
compensation), bonus, vacation accrued, and service credited for purposes of
vesting and eligibility to participate under any Employee Benefit Plan of any
nature for each persons listed on SCHEDULE 4.14.
4.15 LABOR AND EMPLOYEE RELATIONS.
(a) Complete and accurate copies of all written employment and
consulting agreements of the persons required to be listed on SCHEDULE 4.14 to
which any Seller is a party have been made available to the Buyer.
(b) Except as shown on SCHEDULE 4.15(b) hereto: (i) none of the
employees of any Seller are covered in their employment with any Seller by any
collective bargaining
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agreement with any trade or labor union, employees' association or
similar association or any industry-wide labor agreement; (ii) no labor
organization or group of employees has made a pending demand for recognition;
(iii) there are no labor representation questions involving any Seller; and (iv)
there is no organizing activity involving any Seller pending by any labor
organization or group of employees. There are no representation elections,
arbitration proceedings, labor strikes, slowdowns or stoppages, material
grievances or lockouts pending, or to the knowledge of Sellers, threatened, with
respect to the employees of any Seller, nor has any Seller experienced any work
stoppage or other material organized labor difficulty during the three (3) years
immediately preceding the date of this Agreement.
(c) Except as set forth on SCHEDULE 4.15(c) hereto, the Sellers have
complied in all material respects with all applicable Laws of each relevant
jurisdiction relating to the employment of labor, including, without limitation,
those relating to dismissal, redundancy, minimum notice, wages, hours, unfair
labor practices, discrimination, civil rights, plant closings, immigration and
the collection and payment of social security and similar taxes.
(d) Except as set forth on SCHEDULE 4.15(d) hereto, there are no
complaints that have been served to any Seller and, to the Sellers' knowledge,
there are no other complaints, proceedings, investigations or charges against
any Seller pending or threatened before any Governmental Authority, by or on
behalf of any employee or former employee of any Seller.
(e) Except as set forth on SCHEDULE 4.15(e) hereto, the Sellers have
paid in full (or accrued for payment in full) to its employees, agents and
contractors all wages, salaries, commissions, bonuses and other direct
compensation for all services performed by them. None of the Sellers has or will
have on the Closing Date, any contingent liability for sick leave, vacation
time, holiday pay, severance pay or similar items, whether arising as a matter
of law, labor agreement, or otherwise, other than as set forth on the Base
Balance Sheet or arising after the date thereof in the ordinary course of
business consistent with past practices and set forth on the Closing Estimated
Balance Sheet. Except as set forth in SCHEDULE 4.15(e) hereto, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not trigger any severance pay obligation
under any contract or at law.
(f) Except as set forth on SCHEDULE 4.15(f) hereto, since January 1,
2000 there has not been any fine or penalty imposed or asserted against any
Seller under any laws (whether national, regional or local) of any applicable
jurisdiction relating to employment, immigration or occupational safety matters.
4.16 EMPLOYEE BENEFITS.
(a) SCHEDULE 4.16(a) hereto lists each Employee Benefit Plan.
(b) There are no agreements or commitments of any Seller, whether or
not legally binding, to create any additional Employee Benefit Plan not listed
on SCHEDULE 4.16(a) hereto. Except as set forth on SCHEDULE 4.16(a) hereto or
reserved against on the Base Balance Sheet or arising in the ordinary course of
business since September 30, 2001 and reflected on the Estimated Closing Balance
Sheet, there are no Employee Benefit Plans for which any Seller has
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any liability, contingent or otherwise, either for funding, benefit
payments, withdrawal or termination liability, or otherwise. For any Employee
Benefit Plan for which a liability exists, the liability is identified on
SCHEDULE 4.16(a).
(c) The Sellers have delivered or made available to the Buyer or its
counsel prior to the date hereof true and complete copies of: (i) plan
instruments and amendments thereto for all Employee Benefit Plans (or written
summaries of any Employee Benefit Plans that are unwritten) and, if applicable,
related trust agreements, insurance and other contracts, summary plan
descriptions, and summaries of material modifications, and material
communications distributed to the participants of each Employee Benefit Plan;
(ii) to the extent annual reports on Form 5500 are required to be filed with
respect to any Employee Benefit Plan, the three most recent annual reports and
attached schedules for each Employee Benefit Plan as to which such report is
required to be filed; and (iii) where applicable, the most recent (A) opinion,
notification and determination letters, (B) audited financial statements, (C)
actuarial valuation reports, and (D) nondiscrimination and coverage tests
performed under the Code (including 401(k), 401(m) and 410(b) tests) for each
Employee Benefit Plan.
(d) None of the Sellers has or has ever had an ERISA Affiliate. "ERISA
AFFILIATE" means any entity (whether or not incorporated) other than Sellers
that, together with the Sellers, is a member of: (i) a controlled group of
corporations within the meaning of Section 414(b) of the Code; (ii) a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Code; or (iii) an affiliated service group within the meaning of Section
414(m) of the Code.
(e) None of the Sellers maintains or has ever maintained or contributed
to an Employee Benefit Plan subject to Title IV of ERISA (including a
multiemployer plan) and none of the Employee Benefit Plans is a "multiple
employer plans" as described in Section 3(40) of ERISA or Section 413(e) of the
Code. To the knowledge of the Sellers, no facts exist under which any Seller
could be reasonably expected to incur any liability under Title IV of ERISA.
(f) With respect to each Employee Benefit Plan: (i) no party in
interest or disqualified person (as defined in Section 3(14) of ERISA and
Section 4975 of the Code, respectively) has at any time engaged in a transaction
which could be reasonably expected to subject the Buyer or any Seller, directly
or indirectly, to a tax, penalty or liability for prohibited transactions
imposed by ERISA or the Code; and (ii) no fiduciary (as defined in Section 3(21)
of ERISA) with respect to any Employee Benefit Plan, for whose conduct any
Seller could have any liability (by reason of indemnities or otherwise), has
breached any of the responsibilities or obligations imposed upon the fiduciary
under Title I of ERISA.
(g) Each Employee Benefit Plan which is a "welfare plan" within the
meaning of Section 3(1) of ERISA and which provides health, disability or death
benefits is fully insured; none of the Sellers is obligated to directly pay any
such benefits or to reimburse any third Person payor for the payment of such
benefits.
(h) Each Employee Benefit Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "PENSION PLAN") and which
is subject to Sections 201, 301 or 401 of ERISA has received a favorable
determination letter or is the subject
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of an opinion letter from the Internal Revenue Service covering all
amendments required by the Tax Reform Act of 1986 and prior legislation and
there are no circumstances that could reasonably be expected to result in
revocation of any such favorable determination letter. Except as noted on
SCHEDULE 4.16(a) hereto, no Pension Plan has assets other than securities listed
on a public exchange, mutual fund shares registered under federal law, publicly
traded debt or government debt instruments, or participant loans extended in
accordance with terms of the relevant Employee Benefit Plan. Each Employee
Benefit Plan is and has been operated in material compliance with its terms and
all applicable Laws, Court Orders or governmental rules and regulations
currently in effect with respect thereto, and by its terms can be amended and/or
terminated at any time. As of and including the Closing Date, the Sellers: (i)
shall have performed all material obligations required to be performed by it
under, and shall not be in material default under or in material violation of
any Employee Benefit Plan; and (ii) shall have made all contributions or
payments required to be made by it up to and including the Closing Date with
respect to each Employee Benefit Plan, or adequate accruals (including accruals
for 401(k) match, if any) therefor will have been provided for on the Sellers'
Unaudited Financial Statements and will be reflected on the financial statements
provided to the Buyer by the Seller pursuant to Section 8.3 below. All notices,
filings and disclosures required by ERISA or the Code (including notices under
Section 4980B of the Code and certifications under the Health Insurance
Portability and Accountability Act) have been timely made.
(i) None of the Sellers has received notice of or is aware of any
Proceeding (other than routine claims for benefits) pending or, to the knowledge
of Sellers, threatened with respect to any Employee Benefit Plan or against any
fiduciary of any Employee Benefit Plan, and there are no facts that could
reasonably be expected to give rise to any such Proceeding.
(j) There are no complaints, charges or claims against any Seller
pending or threatened to be brought by or filed with any Governmental Authority
and no facts exist as a result of which any Seller could reasonably be expected
to have any liability based on, arising out of, in connection with or otherwise
relating to the classification of any individual by the Sellers as an
independent contractor or "leased employee" (within the meaning of Section
414(n) of the Code) rather than as an employee.
(k) SCHEDULE 4.16(k) hereto sets forth a true and complete list of each
current or former employee, officer or director of the Sellers who holds: (i)
any option to purchase any Seller's Common Stock (or interests in a trust
holding shares of any Seller's Common Stock), together with the number of shares
of such Seller's Common Stock (or trust interests) subject to such option, the
option price of such option (to the extent determinable), the vesting schedule
of any such option, the portion of such option which is vested, the portion of
the option which is unvested, whether such option is intended to qualify as an
incentive stock option within the meaning of Section 422(b) of the Code, and the
expiration date of such option; (ii) any shares of Seller's Common Stock that
are restricted as a result of an agreement with any Seller or any stock plan of
any Seller; and (iii) any other right, directly or indirectly, to receive
Seller's Common Stock (or trust interests) or any other compensation based in
whole or in part on the value of Seller's Common Stock (or trust interests),
together with the number of shares of Seller's Common Stock (or trust interests)
subject to such right.
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(l) SCHEDULE 4.16(l) hereto sets forth a true and complete list of: (i)
all agreements with consultants obligating the Seller to make annual cash
payments in an amount exceeding $50,000; and (ii) all agreements of any Seller
with respect to the services of independent contractors or leased employees who
are individuals or individuals doing business in a corporate form whether or not
they participate in any of the Employee Benefit Plans.
(m) Except as set forth on Schedule 4.16(m) hereto, the consummation of
the transactions contemplated by this Agreement will not, alone or together with
any other event, (A) entitle any employee or former employee of any Seller to
any payment, (B) result in an increase in the amount of compensation or benefits
or accelerate the vesting or timing of payment of any benefits or compensation
payable in respect of any employee or former employee of any Seller, or (C)
result in any parachute payment to any employee of any Seller under Section 280G
of the Code, whether or not such payment is considered reasonable compensation
for services rendered.
(n) No Employee Benefit Plan provides benefits, including, without
limitation, death or medical benefits (through insurance or otherwise) with
respect to any employee or former employee of any Seller beyond their retirement
or other termination of service other than: (i) coverage mandated by applicable
Law; (ii) retirement or death benefits under any Pension Plan; (iii) disability
benefits under any welfare plan that have been fully provided for by insurance
or otherwise; (iv) deferred compensation benefits accrued as liabilities on the
consolidated books of the Sellers; or (v) benefits in the nature of severance
pay.
(o) No Employee Benefit Plan, other than a Pension Plan, is funded
through a trust intended to be exempt from tax pursuant to Section 501 of the
Code.
(p) Except as set forth on SCHEDULE 4.16(p) hereto, none of the Sellers
has proposed, agreed to or announced any changes to any Employee Benefit Plan
that would cause an increase in benefits under any such Employee Benefit Plan
(or the creation of new benefits or plans) or to change any employee coverage
which would, in either case, cause an increase in the expense of maintaining any
such plan, except as a result of a change in applicable law.
4.17 ENVIRONMENTAL MATTERS.
(a) Except as disclosed on SCHEDULE 4.17(a) hereto, any Hazardous
Materials used or generated by any Seller have always been and are being
generated, used, stored, treated and disposed on and at any Environmental Site
in compliance in all material respects with all applicable Laws, Court Orders,
Government Authorizations, including Environmental Laws. The Sellers are in
compliance in all material respects with all Environmental Laws.
(b) Except as set forth on SCHEDULE 4.17(b)hereto, none of the Sellers
has become subject to Court Order, or has received, or, to the knowledge of the
Sellers, become subject to any written claim, notice, complaint or request for
information from any Governmental Authority of the United States or other
relevant Governmental Authority or any private party: (i) alleging violation of
or noncompliance with any Environmental Law; (ii) asserting potential liability
under any Environmental Law; or (iii) requesting investigation or clean-up of
any Environmental Site under any Environmental Law.
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(c) Except as disclosed in SCHEDULE 4.17(c) hereto, no Hazardous
Materials used or generated by any Seller, its present and former Affiliates,
or, to its knowledge, any predecessors-in-interest to any Seller, have ever
been, are being, or are intended to be or are threatened with being spilled,
released, discharged, disposed, placed, leaked, or otherwise caused to become
located in the air, soil or water in, under or upon an Environmental Site or any
land adjacent thereto in material violation of any Environmental Law. The
Sellers have provided the Buyer with copies of all notices filed pursuant to any
Environment Law.
(d) Except as disclosed in SCHEDULE 4.17(d) hereto, no Hazardous
Materials have ever been shipped by or for the Sellers, their present and former
Affiliates, or, to the knowledge of the Sellers, any predecessor-in-interest to
any Seller, to other sites or facilities for treatment, storage or disposal, and
none of the Sellers has received any notice that any sites or facilities to
which any such wastes have been shipped or sent to are subject to or threatened
to become subject to any governmental response action or clean up order. The
Sellers have provided the Buyer with access to copies of all manifests, bills of
lading and other receipts or evidence documenting disposal or recycling of
Hazardous Materials.
(e) Except as set forth on SCHEDULE 4.17(e) hereto, none of the
Sellers, their present and former Affiliates or to the knowledge of any Seller,
any predecessor-in-interest to the Sellers, has treated, stored for more than
ninety (90) days, disposed of or recycled any Hazardous Materials on any
Environmental Site nor has anyone else, during the period any Seller or any
present or former Affiliate of any Seller has occupied any Environmental Site,
treated, stored for more than ninety (90) days, disposed of or recycled any of
the foregoing on any Environmental Site.
(f) Except as disclosed in SCHEDULE 4.17(f) hereto, Hazardous Materials
have been collected, managed, recycled, shipped and disposed by the Sellers and
their present and former Affiliates in accordance with all Environmental Laws.
(g) All of any Seller's underground tanks and other storage facilities
for Hazardous Materials located at any Environmental Site are disclosed in
SCHEDULE 4.17(g) hereto and, to the knowledge of the Sellers, no other
underground tanks or other storage facilities for Hazardous Materials have been
located on an Environmental Site and copies of all notifications made to
federal, state or local authorities pursuant to Environmental Laws relating to
underground storage tanks have been provided to the Buyer. As of the date
hereof, none of such tanks and other underground storage facilities are in
violation of any Environmental Law in any respect.
(h) None of the Sellers produces, purchases or uses in its products, or
purchases or uses any material, part, component or subassembly incorporated into
its products, containing any chemical or other material to which local packaging
and/or disclosure laws apply except as set forth on SCHEDULE 4.17(h) hereto.
(i) There are no Encumbrances under Environmental Laws on any
Environmental Site chargeable against the rights of the Sellers with respect to
their businesses or on any Purchased Assets and, to the knowledge of the
Sellers, no government actions have been taken or are in process which could
subject any Environmental Site or any such Purchased
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Assets to such encumbrances, and the Sellers would not be required to
place any notice or restriction relating to Hazardous Materials at any
Environmental Site in any deed to such property except as set forth on SCHEDULE
4.17(j) hereto.
(j) The Sellers have made available to the Buyer all environmental
audits, assessments, questionnaires or studies within the possession of the
Sellers with respect to the Sellers' facilities or any Environmental Site and
the results of sampling and analysis of any asbestos, air, soil, or water,
including ground and surface water, undertaken with respect to its facilities or
any Environmental Site.
(k) Except as disclosed on SCHEDULE 4.17(k) hereto, each Seller is in
compliance with all federal and state worker safety laws and requirements,
including, but not limited to, applicable requirements under the Occupational
Safety and Health Act.
4.18 GOVERNMENT AUTHORIZATIONS/COMPLIANCE WITH LAWS.
(a) Each Seller holds all Government Authorizations which are required
to own its properties and assets and to permit it to conduct its businesses as
presently conducted. All such Government Authorizations are listed on SCHEDULE
4.18 hereto, together with the applicable expiration date. All such Governmental
Authorization are now, and, will be at the Closing, valid and in full force and
effect. Except as described on SCHEDULE 4.18 hereto, the Buyer shall have full
benefit of the same. No proceeding is pending or, to the knowledge of the
Seller, threatened seeking the revocation or limitations of any Government
Authorization.
(b) Each Seller is in compliance in all material respects with all
applicable Laws, Court Orders and Governmental Authorizations affecting the
assets or properties owned or used by such Seller or the business or operations
of such Seller. Each Seller has not been charged with violating, or to the
knowledge of the Sellers, threatened with a charge of violating, nor, to the
Sellers' knowledge, is any Seller under investigation with respect to a possible
violation of, any applicable Law, Court Order or Governmental Authorization
relating to any of its or their assets or properties or any aspect of its or
their business.
4.19 WARRANTY OR OTHER CLAIMS. Except as set forth on SCHEDULE 4.19(a)
hereto, none of the Sellers knows of any existing or threatened claims, or any
facts upon which a claim is likely to be asserted against it, for services or
merchandise which are defective or fail to meet any service or product
warranties. None of the Sellers has any liability or obligation for any claims
for services or merchandise which are defective or fail to meet any service or
product warranties in excess of reserves therefor reflected on the Base Balance
Sheet or to be reflected on the Closing Balance Sheet.
4.20 LITIGATION. Except for matters described in SCHEDULE 4.20 hereto,
there is no Proceeding pending (or, to the knowledge of the Sellers, threatened)
against or otherwise naming any of the Sellers or to the Sellers' knowledge any
of the officers, directors, former officers or directors, employees,
shareholders or agents of any of the Sellers (in their capacities as such), and
there are no outstanding Court Orders to which any of the Sellers is a party or
issued against any of the Sellers by which any of the Purchased Assets are
bound, any of which: (i) question this Agreement or any Ancillary Agreements or
any action to be taken hereby or thereby or
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affect the transactions contemplated hereby or thereby; (ii) materially
restrict the present business properties, operations, prospects, assets or
condition, financial or otherwise, of any of the Sellers; or (iii) will result
in any Material Adverse Effect upon the Sellers taken as whole.
4.21 BORROWINGS AND GUARANTEES. Except as shown on SCHEDULE 4.21
hereto, there are no agreements or undertakings pursuant to which Sellers,
either singly or together: (a) are borrowing or are entitled to borrow any
money; (b) are lending or have committed themselves to lend any money; or (c)
are a guarantor or surety with respect to the obligations of any Person.
Complete and accurate copies of all such written agreements have been delivered
to the Buyer and are attached to SCHEDULE 4.21 hereto.
4.22 INSURANCE.
(a) The Sellers maintain: (i) insurance on all of their property
(including leased or owned real or personal property) that insures against loss
or damage by fire or other casualty (including extended coverage); and (ii)
insurance against liabilities, claims and risks of a nature and in the amounts
set forth on SCHEDULE 4.22.
(b) SCHEDULE 4.22 hereto contains a complete and correct list of all
policies of insurance maintained by or on behalf of the Sellers (including
insurance providing benefits for employees) in effect on the date hereof,
together with complete and correct information with respect to the premiums,
coverages, insurers, expiration dates, and deductibles in respect of such
policies. The policies listed on SCHEDULE 4.22 hereto provide sufficient
coverage to enable the Sellers to comply with all requirements of Law and all
agreements to which any of them is subject. SCHEDULE 4.22 hereto also sets forth
all other insurance policies in effect at any time during the last two full
fiscal years and the current fiscal year, under which the Sellers may currently
be entitled to give notice or otherwise assert a claim.
(c) Except for amounts deductible under the policies of insurance
described on SCHEDULE 4.22 hereto or with respect to risks assumed as a
self-insurer and described on such schedule, none of the Sellers is or has been,
subject to any liability as a self-insurer of the business or assets of the
Seller.
(d) Except as set forth on SCHEDULE 4.22 hereto, there are no claims
pending under any of said policies, or disputes with insurers, and all premiums
due and payable thereunder have been paid, and all such policies are in full
force and effect in accordance with their respective terms. SCHEDULE 4.22 hereto
also sets forth the insurance claims expenses of the Seller for the last two
full fiscal years and the current fiscal year. No notice of cancellation or
termination has been received with respect to any such policy and to the
knowledge of the Seller there is no basis upon which the insurance company would
have the right to terminate any such policy during the policy term and no notice
relating to non-renewal, reduction of coverage or increase in premium has been
received by any Seller with respect to any such policy. None of the Sellers has
been refused any insurance, nor has its coverage been limited by any insurance
carrier with which it has applied for any such insurance or with which it has
carried insurance. None of the Sellers has any knowledge of any insurance
carrier's insolvency or inability to perform its obligations or pay any claims
pursuant to any of the insurance policies maintained by any Seller.
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(e) Except as set forth on SCHEDULE 4.22 hereto, none of the Sellers
has any current or prior insurance policy that remains subject to a
retrospective adjustment of the premiums payable thereunder.
4.23 CORPORATE BOOKS, RECORDS AND ACCOUNTS.
(a) The minute books and stock records of the Seller accurately record
all action taken by the stockholders, board of directors and committees thereof
of the Sellers, and all issuances and transfers of capital stock of the Sellers.
Complete and accurate copies of all minute books and stock records of the
Sellers have been delivered to or made available for inspection by Buyer.
(b) The books, records and accounts of the Sellers fairly and
accurately reflect transactions and dispositions of assets by the Sellers, and
the system of internal accounting controls of the Sellers is sufficient to
assure that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
4.24 FINDER'S FEE. Except for fees payable to U.S. Bancorp Xxxxx
Xxxxxxx, neither the Sellers, the Principal Stockholders nor their agents has
incurred or become liable for any broker's commission or finder's fee or agent's
commissions or financial advisory services or other similar payments relating to
or in connection with the transactions contemplated by this Agreement.
4.25 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth on
SCHEDULE 4.25 hereto, no shareholder, Affiliate, officer, director or employee
of any Seller, nor any spouse or child of any of them or any Person associated
with any of them ("RELATED PERSON"), has, in a capacity other than as
shareholder, Affiliate, officer, director or employee, any interest in any
assets or properties used in or pertaining to the business of any Seller. None
of the shareholders, Affiliates, officers or directors of any Seller nor, to the
Sellers' knowledge, any employee of any Seller or any Related Person has owned,
directly or indirectly, and whether on an individual, joint or other basis, any
equity interest or any other financial or profit interest in a Person (other
than less than two percent (2%) of the outstanding capital stock of a Person
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended) that has: (a) had business dealings with the Seller; or (b) engaged in
competition with any Seller. None of the shareholders, Affiliates, officers or
directors of any Seller or any Related Person has owned, directly or indirectly,
and whether on an individual, joint or other basis, any equity interest or any
other financial or profit interest in excess of 10% of the aggregate equity
interest or any other financial or profit interest in a Person that has: (i) had
business dealings with any Seller; or (ii) engaged in competition with any
Seller. Except as set forth on SCHEDULE 4.25, no shareholder, Affiliate,
officer, director or employee of the Seller nor, to the Sellers' knowledge, any
Related Person is a party to any Contract with, or has any claim or right
against, or owes any amounts to, any Seller.
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4.26 ABSENCE OF SENSITIVE PAYMENTS. None of the Sellers has, and to the
knowledge of the Sellers, none of any Seller's directors, officers, agents,
stockholders or employees or any other person associated with or acting on
behalf of any Seller have:
(a) made or agreed to make any solicitations, contributions, payments
or gifts of funds or property to any governmental official, employee or agent
where either the payment or the purpose of such solicitation, contribution,
payment or gift was or is illegal under the Laws of any applicable jurisdiction
or prohibited by the policy of such Seller or of any of their suppliers or
customers;
(b) established or maintained any unrecorded fund or asset for any
purpose, or has made any false or artificial entries on any of its books or
records for any reason; or
(c) made or agreed to make any contribution or expenditure, or
reimbursed any political gift or contribution or expenditure made by any other
person to candidates for public office, whether national, regional or local
where such contributions were or would be a violation of applicable law.
4.27 INVESTMENT INTENT. The Sellers and the Principal Stockholders are
purchasing or acquiring the Purchase Shares for their own account for investment
and not with a present view to, or for sale in connection with, any distribution
thereof in violation of the Securities Act. The Sellers and Principal
Stockholders hereby consent to the imposition of a legend substantially similar
to the following on the certificate(s) for the Purchase Shares and agree to
abide by the restrictions contained therein:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold, transferred or
assigned unless such shares are registered under the
Securities Act or an opinion of counsel, acceptable to the
Corporation, is obtained to the effect that such sale,
transfer or assignment is exempt from the registration
requirements of the Securities Act."
4.28 RESTRICTED SECURITIES. The Sellers and the Principal Stockholders
understand that the Purchase Shares have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the Sellers' and the Principal Stockholders' investment
intent as expressed herein. Subject to the provisions of Section 7.3 below, the
Sellers and the Principal Stockholders acknowledge that the Purchase Shares,
when received, shall be "restricted securities" within the meaning of Rule 144
promulgated pursuant to the Securities Act ("Rule 144") and must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Furthermore, the Sellers and
the Principal Stockholders acknowledge that once the Purchase Shares are
registered under the Securities Act pursuant to Section 7.3 below for so long as
such Registration Statement is effective and the Buyer has not suspended the use
of the Registration Statement, the shares may be sold under such Registration
Statement only if the applicable prospectus delivery requirements under the
Securities Act are satisfied.
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4.29 PAYABLES. There has been no Material Adverse Effect upon any
Seller since the date of the Base Balance Sheet in connection with the amount or
delinquency of accounts payable of any Seller (either individually or in the
aggregate).
4.30 COPIES OF DOCUMENTS. Complete and correct copies of any underlying
documents listed or described in this Article IV or any schedules delivered
pursuant to this Article IV, together with all amendments, renewals and
modifications related thereto, have been delivered to Buyer to the extent
requested by Buyer.
4.31 SUFFICIENCY. Following the Closing, by means of the transfer of
the Purchased Assets, Buyer will own, license or otherwise have use of all of
the assets reasonably necessary to operate the Sellers' business in
substantially the same manner operated by Sellers, except for the Excluded
Assets.
4.32 DISCLOSURE OF MATERIAL INFORMATION. No representation or warranty
of the Sellers and Principal Stockholders contained in this Article IV omits to
state a material fact necessary to make the statements herein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers as follows:
5.1 ORGANIZATION OF BUYER. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to own, operate or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it.
5.2 AUTHORIZATION OF TRANSACTION. The Buyer has all requisite corporate
power and authority to enter into and deliver this Agreement and each Ancillary
Document to which it is a party and to carry out the transactions and perform
its obligations contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and each of the Ancillary Agreements to which
Buyer is a party by Buyer and all transactions contemplated herein and therein
have been duly and validly authorized and approved by all necessary action,
corporate or otherwise, of Buyer, and each such agreement is the valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except: (a) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and (b) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to the equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
5.3 NO CONFLICT OF TRANSACTION WITH OBLIGATIONS AND LAWS.
(a) Neither the execution, delivery or performance of this Agreement
nor the Ancillary Agreements to which the Buyer is a party, nor the performance
of the transactions contemplated hereby and thereby, will: (i) constitute a
breach or violation of the Buyer's Constituent Documents; (ii) require any
consent, approval or authorization of or declaration,
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filing or registration with any person other than a Governmental Authority
described in paragraph (b) below; (iii) conflict with or constitute
(with or without the passage of time or the giving of notice) a breach of, or
default under any debt instrument to which the Buyer is a party, or give any
person the right to accelerate any indebtedness or terminate, modify or cancel
any material right; (iv) constitute (with or without the passage of time or
giving of notice) a default under or breach of any other material agreement,
instrument or obligation to which the Buyer is a party or by which it or its
assets are bound; or (v) result in a violation of any Law or Court Order
applicable to the Buyer or its business or assets, except where such breach,
violation, default, failure to obtain any consent, approval, authorization or
declaration, or make any filing or registration would not, either individually
or in the aggregate, have a Material Adverse Effect upon the Buyer or materially
impair or preclude the Buyer's ability to consummate the transactions
contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement and the
Ancillary Agreements to which the Buyer is a party and the transactions
contemplated hereby and thereby by the Buyer do not require the consent, waiver,
approval, authorization, exemption of or giving of notice by the Buyer to any
Governmental Authority, except for those: (i) provided for in this Agreement;
and (ii) which would not, either individually or in the aggregate, have a
Material Adverse Effect upon the Buyer or materially impair or preclude the
Buyer's ability to consummate the transactions contemplated by this Agreement.
5.4 REPORTS AND FINANCIAL STATEMENTS. The Buyer has previously
furnished to the Seller complete and accurate copies, as amended or
supplemented, of its: (a) Annual Report on Form 10-K for the fiscal year 2000,
as filed with the SEC; (b) proxy statements relating to all meetings of its
stockholders (whether annual or special) since January 1, 2001; and (c) all
other reports or registration statements, other than Registration Statements on
Form S-8, filed by the Buyer with the SEC since October 30, 2000 (such annual
reports, proxy statements, registration statements and other filings, together
with any amendments or supplements thereto, are collectively referred herein as
the "BUYER REPORTS"). The Buyer Reports constitute all of the documents filed by
the Buyer with the SEC since October 30, 2000, other than any Registration
Statement on Form S-8. As of their respective dates, the Buyer Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated audited financial statements and consolidated unaudited interim
financial statements of the Buyer included in the Buyer Reports (together, the
"BUYER FINANCIAL STATEMENTS"): (i) comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto; (ii) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated by Form 10-Q under the Securities Exchange Act of 1934, as
amended, and subject to normal recurring year-end adjustments); (iii) fairly
present the consolidated financial condition, results of operations and cash
flows of the Buyer and each of its Subsidiaries as of the respective dates
thereof and for the periods referred to therein; and (iv) are consistent in all
material respects with the books and records of the Buyer.
5.5 CAPITALIZATION. All of the Purchase Shares will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. The authorized capital stock of
the Buyer consists of: (a) 43,000,000 shares
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of Buyer Common Stock, of which, as of January 31, 2002, 20,041,121 shares
were issued and outstanding, all of which were validly issued and
outstanding, fully paid and nonassessable; and (b) 1,000,000 shares of Buyer
Preferred Stock, $0.01 par value per share, of which, as of January 31, 2002, no
shares were issued or outstanding.
5.6 LITIGATION. There is no Proceeding pending (or, to the knowledge of
the Buyer, threatened) against or otherwise involving the Buyer or any of the
officers, directors, former officers or directors, employees, shareholders or
agents of the Buyer (in their capacities as such) and there are not outstanding
Court Orders to which the Buyer is a party or by which any of the Buyer's assets
are bound, any of which: (a) question this Agreement or any Ancillary Agreements
or any action to be taken hereby or thereby or affect the transactions
contemplated hereby; or (b) will result in any Materially Adverse Effect to the
Buyer.
5.7 DISCLOSURE. Except as set forth on SCHEDULE 5.7 hereto, no
representation or warranty of Buyer contained in this Article V omits to state a
material fact necessary to make the statements herein, in light of the
circumstances under which they were made, not misleading.
5.8 BROKERS OR FINDERS. Neither Buyer nor any of its agents has
incurred any obligations or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or financial advisory services or other
similar payment in connection with this Agreement or the Ancillary Agreements or
the transactions contemplated hereby or thereby.
ARTICLE 6. COVENANTS OF THE SELLERS AND THE PRINCIPAL STOCKHOLDERS
The Sellers and the Principal Stockholders, jointly and severally,
covenant and agree with the Buyer as follows:
6.1 CHANGE OF NAME. Immediately following the Closing, each Seller
shall make an amendment to its Constituent Documents and make all filings and
take all steps required in its jurisdiction in order to change the name of the
Seller to a name which does not include the words "Intelligent", "Automation" or
"IAS". In addition, in connection with the Closing, the Sellers shall deliver to
the Buyer consents, in forms satisfactory to the Secretary of the Commonwealth
of the Commonwealth of Massachusetts, consenting to the use of the name
Intelligent Automation Systems, Inc. and IAS by the Buyer or any affiliate
thereof.
6.2 CERTAIN FILINGS. The Sellers and Principal Stockholders shall
cooperate with the Buyer with respect to all filings with Governmental
Authorities that are required to be made by the Sellers to carry out the
transactions contemplated by this Agreement. The Sellers and Principal
Stockholders shall assist the Buyer in making all such filings, applications and
notices as may be necessary or desirable in order to obtain the authorization,
approval or consent of any Governmental Authority which may be reasonably
required or which the Buyer may reasonably request in connection with the
consummation of the transactions contemplated hereby.
6.3 DISPOSITION OF PURCHASE SHARES. The Sellers and Principal
Stockholders agree that they will not sell or otherwise dispose of any of the
Purchase Shares in violation of the
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registration requirements of the Securities Act or in violation of any other
federal or state laws or regulations governing the sale or other
disposition of securities.
6.4 EMPLOYEE BENEFITS. The Sellers and Principal Stockholders shall
terminate the Intelligent Automation Systems, Inc. 401(k) Plan ("Seller's 401(k)
Plan") as of the day immediately preceding the Closing Date, in accordance with
the terms of such plan and applicable law, and shall cause account balances of
employees participating therein to be distributed in accordance with the terms
of such plan and applicable law, it being specifically acknowledged that the
Seller's 401(k) Plan shall permit a roll over of participant loans to any
qualified plans (including any sponsored by Buyer), subject to the terms of such
plan and applicable law.
6.5 TRANSFER OF GOODWILL In order to ensure the effective transfer of
goodwill and going concern value from the Sellers to the Buyer hereunder:
(a) Xxxxxx, severally and not jointly, covenants to the Buyer that, for
a period of three years following the Closing Date, in accordance with the terms
of the Xxxxxx Agreement, that his employment by the Buyer will not be terminated
by the Buyer for "Cause" or by him other than for "Good Reason", death or
"Disability" (as such terms are defined in the Xxxxxx Agreement); and
(b) Chin, severally and not jointly, covenants to the Buyer that , for
a period of three years following the Closing Date, in accordance with the terms
of the Chin Agreement, that his employment by the Buyer during such period will
not be terminated by the Buyer for "Cause" or by him for other than for "Good
Reason", death or "Disability" (as such terms are defined in the Chin
Agreement).
6.6 S CORPORATION STATUS. During the Buyer's 2002 taxable year, none of
the Sellers will, and neither Principal Stockholder will take any action to
cause a Seller to, redeem the interest of a shareholder of IAS Trust or IAS
Products, whether in cash or in kind, other than in an amount equal to the fair
market value of the interest redeemed, and each Seller and Principal Stockholder
hereby covenants to take all actions necessary to maintain the S corporation
status of IAS Trust and IAS Products and the qualified subchapter S subsidiary
status of IAS.
ARTICLE 7. COVENANTS OF BUYER
7.1 REASONABLE BEST EFFORTS. Except as otherwise contemplated herein,
the Buyer shall use reasonable best efforts to take all actions and to do all
things necessary, proper or advisable to consummate the Agreement and the
transactions contemplated by this Agreement, including, but not limited to, the
delivery of certificates reasonably requested in connection with any opinions to
be delivered hereunder.
7.2 NOTICES AND CONSENTS. The Buyer shall use reasonable best efforts
to obtain, at its reasonable expense, all such waivers, permits, consents,
approvals or other authorizations from third parties and governmental entities
or authorities, and to effect all such registrations, filings and notices with
or to third parties and governmental entities or authorities, as may be
necessary or desirable in connection with the transactions contemplated by this
Agreement.
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7.3 REGISTRATION OF THE PURCHASE SHARES ON FORM S-3.
(a) The rights and obligations of Sellers, or any transferee of
Purchase Shares, under this Article VII shall inure to the benefit of and be
binding upon any such transferee upon the transfer of any Purchase Shares by any
Seller or IAS Shareholder to any transferee (in each case, a "TRANSFER"); and
(ii) such transferee shall acknowledge and agree that in the event of a
Transfer, he or she (as applicable) shall assume all of the obligations and
agreements of the Sellers under this Article VII with respect to the Purchase
Shares so transferred. The Sellers and such transferees are sometimes referred
to in this Article VII as "Selling Stockholders" and each as a "Selling
Stockholder."
(b) Buyer shall use its commercially reasonable efforts to promptly
file within thirty (30) days after the Closing Date, and in any event shall file
within 90 days after the Closing Date, with the SEC a Registration Statement on
Form S-3 (or any successor short form registration involving a similar amount of
disclosure; or if then ineligible to use any such form, then any other available
form of registration statement) (the "REGISTRATION STATEMENT") for resale the
number of Purchase Shares delivered to the Sellers on the Closing Date to be
made on a continuous basis pursuant to Rule 415 of the Securities Act. The Buyer
will use its commercially reasonable efforts to cause such Registration
Statement to become effective (subject to review of such Registration Statement
by the SEC) as soon as possible thereafter, and remain continuously effective
until the earlier of: (i) two years after the effective date thereof; or (ii)
such time as all of the Purchase Shares may be sold pursuant to Rule 144
promulgated under the Securities Act on a single day. The Buyer may, upon
written notice to the Selling Stockholders listed therein (the "SUSPENSION
NOTICE"), suspend use of the Registration Statement up to four (4) times, but no
more than four (4) times, in a twelve (12) month period, if the Buyer in its
reasonable judgment believes it may possess material nonpublic information the
disclosure of which at that point in time in its reasonable judgment would have
a Material Adverse Effect on the Buyer and its Subsidiaries taken as a whole.
The Suspension Notice shall (i) be executed by either the Chief Executive
Officer or Chief Financial Officer of Buyer and (ii) confirm (x) the suspension
of all other Buyer registration statements and (y) the prohibition of sales of
Buyer Common Stock by Buyer, its Subsidiaries and Affiliates and their
respective directors, officers, employees, controlling persons and agents. Each
Suspension Notice shall be limited to no more than thirty (30) days. Buyer may
suspend use of the Registration Statement for up to three (3) consecutive thirty
(30) day periods (not to exceed ninety (90) consecutive days) and shall issue a
separate Suspension Notice to Selling Stockholders for each thirty (30) day
period. Buyer shall confirm with written notice to the Selling Stockholders, the
termination of the suspension of use of the Registration Statement within
forty-eight (48) hours of any such termination but in any event concurrently
with such similar notification to Selling Stockholders under subparagraphs (x)
and (y) above.
(c) The Selling Stockholders agree to use a broker acceptable to the
Buyer, in its reasonable discretion, in connection with sales of their Purchase
Shares under the Registration Statement.
(d) All Registration Expenses incident to the Buyer's performance of or
compliance with this Section 7.3 shall be paid by the Buyer. The term
"Registration Expenses" includes without limitation all registration filing
fees, professional fees and other expenses of the
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Buyer's compliance with federal, state and other securities laws,
printing expenses, messenger, telephone and delivery expenses; fees and
disbursements of counsel for the Buyer; fees and disbursements of the Buyer's
independent certified public accountants; and applicable stock exchange and NASD
registration and filing fees. The term "Registration Expenses" does not include
any discounts or commissions to any broker attributable to the sale of the
Purchase Shares or any fees (including but not limited to attorney fees) or
expenses incurred by the Seller Stockholders in connection with the registration
of the Purchase Shares pursuant to this Section 7.3.
(e) To the extent permitted by law, the Buyer will indemnify and hold
harmless the Selling Stockholders, their respective officers and directors and
each person, if any, who controls any Selling Stockholder within the meaning of
the Securities Act, against any Losses, joint or several, to which any of them
may become subject under the Securities Act or otherwise, insofar as such Losses
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained or expressly incorporated by reference in any such
Registration Statement, including any preliminary prospectus or final prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Selling Stockholders and their respective
officers and directors and each such controlling person for any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such Loss; PROVIDED, HOWEVER, that the indemnity agreement
contained in this Section 7.3(e) shall not apply to amounts paid in settlement
of any such Loss if such settlement is effected without the consent of the Buyer
(which consent shall not be unreasonably withheld) nor shall the Buyer be liable
in any such case for any such Loss to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement thereto in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by the such Selling Stockholder or any
person controlling the such Selling Stockholder.
(f) To the extent permitted by law, each Selling Stockholder will,
severally and not jointly, indemnify and hold harmless the Buyer, its directors,
its officers who have signed such Registration Statement and each person, if
any, who controls the Buyer within the meaning of the Securities Act against any
Losses to which the Buyer or any such director, officer or controlling person
may become subject, under the Securities Act or otherwise, insofar as such
Losses arise out of or are based upon any untrue or alleged untrue statement of
any material fact contained or expressly incorporated by reference in such
Registration Statement, including any preliminary prospectus or final prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such Registration Statement, preliminary prospectus, final prospectus or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished by such Selling Stockholder expressly for use in
connection with such registration; and such Selling Stockholder will
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reimburse any legal or other expenses reasonably incurred by the Buyer
or any such director, officer and controlling person in connection with
investigating or defending any such Loss. It is agreed that the indemnity
agreement contained in this Section 7.3(f) shall not apply to amounts paid in
settlement of any such Loss if such settlement is effected without the consent
of the indemnifying party (which consent shall not be unreasonably withheld).
(g) If the indemnification provided for in Sections 7.3(e) and (f)
hereof is unavailable to a person entitled to indemnification hereunder, then
each person that would have been an indemnifying party hereunder will, in lieu
of indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified person for which indemnification is provided herein in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and such indemnified party, respectively, in connection with the
statements or omissions which resulted in the costs or expenses (including
reasonable attorney's fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement underlying such indemnification
obligations. Relative fault will be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or such indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Buyer and each Selling Stockholder agree
that it would not be just and equitable if contribution pursuant to this Section
7.3(g) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to above in this Section 7.3(g). No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(h) Promptly after receipt by a party indemnified under this Section
7.3 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 7.3, notify the indemnifying party in writing of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; PROVIDED HOWEVER, that if the defendants
in any such action include both the indemnified party and the indemnifying party
and, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of the indemnified party and the
indemnifying party exists, the indemnified party or parties shall have the right
to select one separate law firm, at the indemnifying party's or parties'
expense, to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. The
failure to notify any indemnifying party promptly of the commencement of any
such action, shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 7.3, except to the extent that such
indemnifying party is actually prejudiced thereby.
(i) After registration of the Purchase Shares pursuant to Section
7.3(b) above, if: (i) the Registration Statement has not been suspended or
withdrawn; and (ii) the Selling Stockholders provide the Buyer with any
documentation reasonably requested by the Buyer in order to comply with the
securities laws of the United States of America, the Buyer shall effect
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the removal of the restrictive legend set forth in Section 4.27 above from
the certificate(s) surrendered by a Selling Stockholder.
7.4 EMPLOYEE BENEFITS. Buyer shall take such action as necessary to
provide all employees of Sellers who are hired by Buyer after the Closing Date
("Transferred Employees") with credit for employment service with Sellers for
purposes of determining eligibility under any employee benefit plans sponsored
by Buyer and for determining the period of service under any vacation, sick pay
or other paid time off program of Buyer. Buyer shall be responsible for
providing COBRA continuation coverage, in accordance with the applicable
requirements of Code Section 4980B and Section 601 through 608 of ERISA (and any
state law counterpart) to any "covered employee" and any "qualified beneficiary"
(within the meaning of Sections 4980B(f)(7) and (g)(1) of the Code,
respectively), determined as of the Closing Date, whether the "qualifying event"
(within the meaning of Section 4980B(f)(3)) for such continuation coverage
occurred or occurs on or before the Closing Date, and irrespective of whether
such qualifying event occurs or occurred in relation to the transaction
contemplated herein. Buyer shall permit all Transferred Employees who were
participants in Seller's 401(k) Plan to roll over his or her account balance
(including promissory notes evidencing participant loans) from such plan. Buyer
agrees to waive any preexisting conditions limitations, evidence of insurability
provisions, waiting periods or similar limitations under Buyer's group health
plans and, for purposes of computing deductible amounts, co-pays and other
maximums under such plans, subject to the terms and conditions of such plan
and/or any contracts with the applicable health care provider.
7.5 XXXXXXX LITIGATION. Buyer shall make available, at the Sellers'
expense, those former employees of the Sellers, at the times while they are
employed by Buyer, to cooperate to the extent reasonably requested by Sellers,
with respect to the litigation identified as Xxxxx Xxxxxxx v. Intelligent
Automation Systems, Inc. and Xxxxxxxx Properties Co. Civ. Action No. 0115CV1795
on Schedule 4.20 hereto.
7.6 CONFIRMATIONS OF EMPLOYMENT. Following the Closing, the Buyer shall
deliver letters to each of the former employees of the Sellers confirming
employment by the Buyer.
ARTICLE 8. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of the Buyer to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing the actions required by this Article will have been accomplished.
8.1 ENCUMBRANCE TERMINATIONS. The Sellers shall have delivered to the
Buyer evidence satisfactory to the Buyer and its counsel that the Sellers are
able to deliver the Purchased Assets free and clear of all Encumbrances.
8.2 ANCILLARY AGREEMENTS. The Sellers and/or the Principal Stockholders
(as applicable) shall have executed and delivered to the Buyer the documents and
agreements set forth in Section 3.6 hereof.
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8.3 GOVERNMENTAL CONSENTS AND APPROVALS. All consents and permits of
others required to permit the Sellers and Principal Stockholders to complete the
transactions contemplated hereby shall have been received by the Sellers.
8.4 KEY EMPLOYEES. The employees listed on SCHEDULE 8.4 attached hereto
(the "Key Employees") shall have agreed to accept employment with the Buyer.
8.5 GE CONTRACT. The Buyer shall have had the opportunity to discuss
the transactions contemplated hereby and the GE Agreement with GE.
8.6 ABSENCE OF CERTAIN LITIGATION. There shall not be any: (a) Court
Order of any nature issued by any court of competent jurisdiction which directs
that this Agreement or any material transaction contemplated hereby shall not be
consummated as herein provided; (b) Proceeding by any federal, state, local or
foreign government (or any agency thereof) pending before any court or
governmental agency, or threatened to be filed or initiated, wherein such
complainant seeks the restraint or prohibition of the consummation of any
material transaction contemplated by this Agreement or asserts the illegality
thereof; or (c) Proceeding by a private party pending before any court or
governmental agency, or threatened to be filed or initiated, which in the
reasonable opinion of counsel for the Buyer is likely to result in the restraint
or prohibition of the consummation of any material transaction contemplated
hereby or the obtaining of an amount in payment (or indemnification) of material
damages from or other material relief against any of the parties or against any
directors or officers of the Buyer, in connection with the consummation of any
material transaction contemplated hereby.
8.7 NO BANKRUPTCY. The Sellers shall not: (a) have commenced a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
substantially all of its property, or have consented to any such relief or to
the appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or have made a general assignment
for the benefit of its creditors; or (b) have an involuntary case or other
proceeding commenced against it seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereinafter in effect or seeking the appointing of a trustee,
receiver, liquidator, custodian or similar official of it or substantially all
of its property; or (c) have an attachment placed on all or a significant
portion of its assets.
8.8 IAS SHAREHOLDER DOCUMENTS.
(a) The Sellers and Principal Stockholders shall have obtained and
delivered the following to the Buyer prior to the Closing Date (each in form and
substance satisfactory to the Buyer in its reasonable discretion):
(i) a questionnaire executed by each IAS Shareholder
as to personal wealth and financial
sophistication; and
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(ii) with respect to each IAS Shareholder reasonably
deemed by the Buyer not to be an "Accredited
Investor" as defined in Rule 501 of Regulation
D, either (i) a written certification that
such IAS Shareholder has such knowledge and
experience in financial and business matters
that such IAS Shareholder is capable of
evaluating the merits and risks of a prospective
investment in the Buyer Common Stock (within the
meaning of Rule 506 of Regulation D) or (ii) a
written agreement between such IAS Shareholder
and a purchaser representative (who shall make
written certifications reasonably satisfactory
to the Buyer that he is a purchaser
representative within the meaning of Regulation
D) regarding the representation of such
IAS Shareholder in connection with this Agreement
and the transactions contemplated hereby,
together with such other representations and
agreements as the Buyer may reasonably request.
8.9 APPROVAL OF BUYER'S COUNSEL. All actions, proceedings, instruments
and documents required to carry out this Agreement and all related legal matters
contemplated by this Agreement, including, without limitation, opinions of
counsel, shall have been approved by counsel for the Buyer, provided that the
approval of such counsel shall not be unreasonably withheld.
8.10 DUE DILIGENCE. Buyer shall be satisfied, in its sole and exclusive
discretion, with the results of its due diligence investigation and the
evaluation of the Sellers' business, including, but not limited to, its
investigation of Sellers' Intellectual Property Assets, outstanding Court Orders
and Proceedings pending or threatened against any of the Sellers.
ARTICLE 9. CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing the actions required by this Article will have been accomplished.
9.1 ANCILLARY AGREEMENTS. The Buyer shall have executed and delivered
to the Sellers and Principal Stockholders the agreements and documents set forth
in Section 3.7 hereof.
9.2 GOVERNMENTAL CONSENTS AND APPROVALS. All consents and permits of
others required to permit the Buyer to complete the transaction shall have been
received by the Buyer.
9.3 ABSENCE OF CERTAIN LITIGATION. There shall not be any: (a) Court
Order of any nature issued by any court of competent jurisdiction which directs
that this Agreement or any material transaction contemplated hereby shall not be
consummated as herein provided; (b) Proceeding by any federal, state, local or
foreign government (or any agency thereof) pending before any court or
governmental agency, or threatened to be filed or initiated, wherein such
complainant seeks the restraint or prohibition of the consummation of any
material transaction contemplated by this Agreement or asserts the illegality
thereof; or (c) Proceeding by a private party pending before any court or
governmental agency, or threatened to be filed or initiated, which in the
reasonable opinion of counsel for the Sellers is likely to result in the
restraint or
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prohibition of the consummation of any material transaction contemplated
hereby or the obtaining of an amount in payment (or indemnification) of
material damages from or other material relief against any of the parties or
against any directors or officers of the Sellers, in connection with the
consummation of any material transaction contemplated hereby.
9.4 NO BANKRUPTCY. The Buyer shall not: (a) have commenced a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or substantially
all of its property, or have consented to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or have made a general assignment for the
benefit of its creditors; or (b) have an involuntary case or other proceeding
commenced against it seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereinafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or similar official of it or substantially all of its
property; or (c) have an attachment placed on all or a significant portion of
its assets.
ARTICLE 10. INDEMNIFICATION
10.1 INDEMNIFICATION BY THE SELLERS AND THE PRINCIPAL STOCKHOLDERS.
(a) Subject to the limitations in paragraph (b) below, the Sellers and
Xxxxxx, jointly and severally, and Chin, severally and not jointly (meaning that
Chin shall be responsible only for that fraction of any indemnifiable Losses
equal to (Y) the number of shares of beneficial ownership of the IAS Trust held
by him as of the Closing Date divided by (Z) the number of shares of beneficial
ownership of the IAS Trust held by all owners of shares of beneficial ownership
the IAS Trust as of the Closing Date), shall defend, indemnify and hold harmless
the Buyer's Indemnified Persons from and against all Losses directly or
indirectly incurred by or sought to be imposed upon any of them and whether or
not caused by negligence or willful act:
(i) resulting from or arising out of any breach of
any of the representations or warranties (other
than those in Sections 4.2, 4.3, 4.8, 4.9(e),
4.10, 4.11, 4.17 and those in Section 4.12
relating to the Intellectual Property Assets
related to the patent applications listed as
items 1 through 10 on SCHEDULE 4.12(c)) made by
the Sellers or the Principal Stockholders in or
pursuant to this Agreement or any Ancillary
Agreement;
(ii) resulting from or arising out of any breach of
any of the representations or warranties made
by the Sellers or the Principal Stockholders
pursuant to Sections 4.2, 4.3 and 4.9(e);
(iii) resulting from or arising out of any breach of
any of the representations and warranties made by
the Sellers or the Principal Stockholders
pursuant to Sections 4.10 and 4.11;
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(iv) resulting from or arising out of any breach of
any of the representations or warranties made by
the Sellers or the Principal Stockholders
pursuant to Section 4.12 relating to the
Intellectual Property Assets related to the
patent applications listed as items 1 through 10
on SCHEDULE 4.12(c);
(v) resulting from or arising out of any breach of
any covenant or agreement made by the Sellers
or the Principal Stockholders in or pursuant to
this Agreement or any Ancillary Agreement;
(vi) in respect of any Retained Liabilities;
(vii) resulting from or arising out of any breach of
any of the representations and warranties made by
the Sellers or the Principal Stockholders
pursuant to Section 4.8 or any liability, payment
or obligation in respect of any Taxes owing by
any of the Sellers, by any Principal Stockholder
or the Buyer, as successor to the Sellers'
businesses, of any kind or description (including
interest and penalties with respect thereto) for
all periods, or portions thereof, up to and
including the Closing Date; or
(viii) resulting from or arising out of any breach of
any of the representations and warranties made by
the Sellers or the Principal Stockholders
pursuant to Section 4.17 or any third party
action, whether by a Governmental Authority or
other third party for damages, including fines or
penalties, or clean-up costs or other compliance
costs under any Environmental Law or from the
violation of any Environmental Law arising out of
the operations of the Company on or before the
Closing Date.
(b) The right to indemnification under paragraph (a) is subject to the
following limitations:
(i) The Sellers and the Principal Stockholders shall
have no liability under paragraph (a) unless one
or more of the Buyer's Indemnified Persons gives
written notice to the Sellers or the Principal
Stockholders asserting a claim for Losses,
including reasonably detailed facts and
circumstances pertaining thereto, before the
expiration of the period set forth below:
(A) for claims under clauses (i) and
(iii) of paragraph (a) above, a
period of two (2) years from the
Closing Date;
(B) for claims under clause (iv) of
paragraph (a) above, a period of
three (3) years from the Closing
Date.
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(C) for claims under clauses (vii) and
(viii) of paragraph (a) above, for
so long as any claim may be made in
respect of such matters under any
applicable Tax or Environmental Law
statute of limitations, as it may be
extended; and
(D) for claims under clauses (ii), (v)
and (vi) of paragraph (a) above,
without limitation as to time.
(ii) Indemnification for claims under paragraph (a)
above (other than under clauses (a)(ii), (v),
(vi), (vii) and (viii)) shall be payable by the
Sellers and the Principal Stockholders only if
the aggregate amount of all Losses hereunder by
the Buyer's Indemnified Persons exceeds $200,000
(the "Deductible"), at which point the Sellers
and the Principal Stockholders shall be
responsible for only those Losses in excess of
the Deductible. The Sellers' and the Principal
Stockholders' aggregate liability for
indemnification under clauses (i) and (iii) of
paragraph (a) above shall not be greater than
twenty percent (20%) of the Aggregate
Consideration. The Sellers' and the Principal
Stockholders' aggregate liability for
indemnification under clauses (i), (iii) and (iv)
of paragraph (a) above shall not be greater than
thirty percent (30%) of the Aggregate
Consideration. The Sellers' and the Principal
Stockholders' aggregate liability for
indemnification under paragraph (a) shall not be
greater than eighty percent (80%) of the
Aggregate Consideration. For purposes of this
paragraph, each Purchase Share shall be deemed to
have a value equal to the Closing Price.
(iii) At their option, the Sellers or the Principal
Stockholders may repurchase from the Buyer, for
an amount equal to the value reflected in the
Closing Balance Sheet, all or any part of the
Receivables or Inventory included in the
Purchased Assets which is subject to any claims
for Losses under clause (iii) of paragraph (a)
above. Upon payment by the Sellers or the
Principal Stockholders for any claim for Losses
with respect to any Receivables or Inventory
under clause (iii) of paragraph (a) above, the
Buyer shall concurrently therewith assign such
Receivables or Inventory to the Sellers or the
Principal Stockholders free and clear of any
Encumbrances.
(iv) As liquidated damages for any breach by Xxxxxx of
the covenants made by him in Section 6.5(a)
hereof, as its sole remedy under this Agreement,
the Buyer shall retain, and shall be released of
any further obligation to issue, 31,850 of the
Holdback Shares otherwise issuable pursuant to
Section 3.1(b)(iii) on each anniversary of the
Closing Date occurring subsequent to the date of
such breach.
(v) As liquidated damages for any breach by Chin of
the covenant made by him in Section 6.5(b)
hereof, as its sole remedy under this
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Agreement, the Buyer shall retain and shall be
released of any obligation to issue, 2,583 of the
Holdback Shares otherwise issuable pursuant to
Section 3.1(b)(iii) on each anniversary of the
Closing Date occurring subsequent to the date of
such breach.
(vi) Notwithstanding any provision to the contrary in
this Agreement, the amount of any Losses for
which indemnification is provided under this
Section 10.1 shall be calculated net of any
accruals, reserves or provisions reflected in the
Closing Balance Sheet.
10.2 INDEMNIFICATION BY BUYER.
(a) Subject to the limitations in paragraph (b) below, from and after
the Closing Date, the Buyer shall indemnify and hold harmless the Sellers'
Indemnified Persons from any and all Losses directly or indirectly incurred by
or sought to be imposed upon them and regardless of whether or not caused by
negligence or willful act:
(i) resulting from or arising out of any breach of
any of the representations or warranties (other
than those in Sections 5.2, 5.3 and 5.5) made by
the Buyer, in or pursuant to this Agreement or in
any Ancillary Agreement;
(ii) resulting from or arising out of any breach of
any of the representations or warranties made
by the Buyer pursuant to Sections 5.2, 5.3 and
5.5;
(iii) resulting from or arising out of any breach of
any covenant or agreement made by the Buyer in or
pursuant to this Agreement or any Ancillary
Agreement;
(iv) in respect of any Assumed Liabilities; or
(v) resulting from or arising out of any liability,
payment or obligation in respect of any Taxes
owing by the Buyer of any kind or description
(including interest and penalties with respect
thereto), for all periods, or portions thereof,
after the Closing Date.
(b) The right to indemnification under paragraph (a) is subject to the
following limitations:
(i) The Buyer shall have no liability under paragraph
(a) above unless a Sellers' Indemnified Person
gives written notice to the Buyer asserting a
claim for Losses, including reasonably detailed
facts and circumstances pertaining thereto,
before the expiration of the period set forth
below:
(A) for claims under clause (i) of
paragraph (a) above, two (2) years
from the Closing Date;
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(B) for claims under clause (v) of
paragraph (a) above, for so long as
any claim may be made in respect of
such matters under any applicable
statute of limitations, as it may be
extended; and
(C) for claims under clauses (ii), (iii)
and (iv) of paragraph (a) above,
without limitation as to time.
(ii) Indemnification for claims under paragraph (a)
above (other than under clauses (a)(ii), (iii),
(iv) and (v)) shall be payable by the Buyer only
if the aggregate amount of all Losses hereunder
by the Sellers' Indemnified Persons exceeds the
Deductible, at which point the Buyer shall be
responsible for only those Losses in excess of
the Deductible. The Buyer's aggregate liability
for indemnification under clause (i) of paragraph
(a) above shall not be greater than twenty
percent (20%) of the Aggregate Consideration. The
Buyer's aggregate liability for indemnification
under paragraph (a) shall not be greater than
eighty percent (80%) of the Aggregate
Consideration. For purposes of this paragraph,
each Purchase Share shall be deemed to have a
value equal to the Closing Price.
10.3 DEFENSE OF THIRD PARTY ACTIONS.
(a) Promptly after receipt of notice of any Third Party Action, any
person who believes he, she or it may be an Indemnified Person will give notice
to the potential Indemnifying Person of such action. The omission to give such
notice to the Indemnifying Person will not relieve the Indemnifying Person of
any liability hereunder unless it was prejudiced thereby, nor will it relieve it
of any liability which it may have other than under this Article.
(b) Upon receipt of a notice of a Third Party Action, the Indemnifying
Person shall have the right, at its option and at its own expense, to
participate in and be present at the defense of such Third Party Action, but not
to control the defense, negotiation or settlement thereof, which control shall
remain with the Indemnified Person, unless the Indemnifying Person makes the
election provided in paragraph (c) below.
(c) By written notice within forty-five (45) days after receipt of a
notice of a Third Party Action, an Indemnifying Person may elect to assume
control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
Indemnifying Person agrees: (i) to promptly indemnify the Indemnified Person for
its expenses to date; and (ii) to hold the Indemnified Person harmless from and
against any and all Losses caused by or arising out of any settlement of the
Third Party Action approved by the Indemnifying Person or any judgment in
connection with that Third Party Action. The Indemnifying Persons shall not in
the defense of the Third Party Action enter into any settlement which does not
include as a term thereof the giving by the third party claimant of an
unconditional release of the Indemnified Person, or consent to entry of any
judgment except with the consent of the Indemnified Person.
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(d) Upon assumption of control of the defense of a Third Party Action
under paragraph (c) above, the Indemnifying Person will not be liable to the
Indemnified Person hereunder for any legal or other expenses subsequently
incurred in connection with the defense of the Third Party Action, other than
reasonable expenses of investigation.
(e) If the Indemnifying Person does not elect to control the defense of
a Third Party Action under paragraph (c), the Indemnifying Person shall promptly
reimburse the Indemnified Person for expenses incurred by the Indemnified Person
in connection with defense of such Third Party Action, as and when the same
shall be incurred by the Indemnified Person.
(f) Any person who had the right hereunder but did not assume control
of the defense of any Third Party Action shall have the duty to cooperate with
the party which assumed such defense.
10.4 MISCELLANEOUS.
(a) Buyer's Indemnified Persons shall be entitled to indemnification
under Section 10.1(a) regardless of whether the matter giving rise to the
applicable liability, payment, obligation or expense may have been previously
disclosed to any such person, unless expressly assumed on the particular
Schedule.
(b) If any Loss is recoverable under more than one provision hereof,
the Indemnified Person shall be entitled to assert a claim for such Loss until
the expiration of the longest period of time within which to assert a claim for
Loss under any of the provisions which are applicable.
(c) Except for claims for indemnification provided for in Sections
7.3(e) and 7.3(f) and as provided in Section 12.11, the indemnification provided
for in this Article X shall be the exclusive remedy for breaches of
representations, warranties and covenants contained in this Agreement provided
that no party hereto shall be deemed to have waived any right of recourse
(whether a claim under this Article X or otherwise) arising from fraud or
intentional misconduct of any other party hereto.
10.5 PAYMENT OF INDEMNIFICATION. Claims for indemnification under this
Article 10 (other than pursuant to Sections 10.1(b)(iv) and 10.1(b)(v))
("Claims") shall be paid or otherwise satisfied by Indemnifying Persons within
thirty (30) days after notice thereof is given by the Indemnified Person. Any
Claim which may become due and payable to any of the Buyer's Indemnified Persons
under Section 10.1(a) above may be satisfied, at the election of the Sellers and
the Principal Stockholders, (i) in cash, (ii) the retention by the Buyer of up
to an aggregate of 37,301 of the Holdback Shares valued at the Closing Price; or
(iii) any combination thereof. Prior to the second anniversary of the Closing
Date, upon satisfaction by the Sellers and Principal Stockholders of a Claim or
any portion thereof in cash, the Buyer shall issue and deliver to the Sellers
the number of Holdback Shares valued at the Closing Price equal to the amount of
the cash satisfaction of such Claim or portion thereof. On the second
anniversary of the Closing Date, the Buyer shall issue and deliver to the
Sellers the balance of such 37,301 Holdback Shares that have not been retained
by the Buyer in satisfaction of Claims or released to the Sellers in accordance
with the preceding sentence, provided that, if there are any Claims then
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pending, the Buyer shall have the right to retain, to the extent of such
balance, such number of Holdback Shares valued at the Closing Price equal to the
aggregate dollar amount of such pending Claims until the resolution of such
Claims at which time such Holdback Shares shall be issued and delivered (to the
extent they are not used to satisfy such Claim pursuant to Sellers and Principal
Stockholders election) and retained by the Buyer to the extent they are used to
satisfy such Claim pursuant to an election by the Sellers and the Principal
Stockholders.
ARTICLE 11. [INTENTIONALLY OMITTED]
ARTICLE 12. MISCELLANEOUS
12.1 SURVIVAL OF WARRANTIES. All representations, warranties,
agreements, covenants and obligations herein or in any schedule, certificate or
financial statement delivered by any party to another party pursuant to the
transactions contemplated hereby are material, shall be deemed to have been
relied upon by the other party and shall survive the Closing for the applicable
periods set forth in Article X and shall be further actionable subject to the
limitations set forth therein, regardless of any investigation and shall not
merge in the performance of any obligation by any party hereto.
12.2 FEES AND EXPENSES. Except as otherwise expressly provided in this
Agreement, the Buyer will pay its own and up to $500,000 of Sellers' and the
Principal Stockholders' legal, accounting, investment banking and other expenses
in connection with this Agreement and the transactions contemplated herein and
the Sellers and the Principal Stockholders will pay their respective legal,
accounting, investment banking and other expenses in connection with this
Agreement and the transactions contemplated herein in excess of $500,000.
12.3 NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder by any party hereto shall be in
writing and shall be deemed to have been duly given: (a) when received if
delivered personally; (b) one business day after delivered to a prepaid
domestically recognized overnight receipted courier if sent domestically; (c)
three business days after delivered to a prepaid internationally recognized
overnight receipted courier if sent internationally; (d) when receipt
telephonically acknowledged if sent by telecopier transmission on a business day
or, if not a business day, on the next following business day; or (e) when
answered back if sent by telex, if on a business day, or if not a business day,
on the next following business day, to the parties at the following addresses
(or at such other addresses as shall be specified by the parties by like
notice):
If to the Sellers or to Xxxxxx:
Xxxxxx X. Xxxxxx, Ph.D.
c/o Brooks Automation, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
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with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esquire
If to Chin:
Xxxxxxxx Xxxx
c/o Brooks Automation, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
If to the Buyer, to:
Xxxxxx Automation, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx,
Senior Vice President, Finance & Administration
and Chief Financial Officer
with a copy to:
Brown, Rudnick, Freed & Gesmer
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx, Xx., Esquire
and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.
12.4 PUBLICITY AND DISCLOSURES. Unless required by law, any public
announcement or similar publicity with respect to this Agreement, the Closing or
any transaction contemplated by this Agreement will be issued, if at all, at
such time and in such manner as the Buyer determines with the concurrence of the
Sellers, which concurrence shall not be unreasonably withheld or delayed by the
Sellers. Pursuant to this Section 12.4, the parties agree that the Buyer shall
issue
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a press release as soon as practical after the execution of this Agreement
(unless such disclosure is required to be made prior to the execution of this
Agreement under applicable law, in which case such press release shall be issued
at a time determined by the Buyer in its sole discretion) in such form as shall
be approved by the Sellers which such approval shall not be unreasonably
withheld or delayed. Unless disclosure is consented to by the Buyer in advance
or required by law or disclosure has otherwise already been made, the Sellers
and the Principal Stockholders shall keep this Agreement and the transactions
contemplated hereby strictly confidential and may not make disclosure of this
Agreement or such transactions to any Person other than the Sellers' and the
Principal Stockholders' directors, officers, employees or agents who need to
know such information to enable them to comply with this Agreement, provided
that each such director, officer, employee or agent shall agree, for the benefit
of the Buyer, to maintain the confidentiality of such information as provided in
this Section 12.4. The Sellers, the Principal Stockholders and the Buyer will
consult with each other concerning the means by which the Sellers' employees,
customers and suppliers and other Persons having dealings with the Sellers will
be informed of this Agreement, the Closing, and the transactions contemplated
hereby, and representatives of the Buyer may at the Buyers' option be present
for any such communication.
12.5 CONFIDENTIALITY. The parties agree that until the third
anniversary hereof they will keep confidential and not disclose or divulge any
confidential, proprietary or secret information which they may obtain from any
of the other in connection with the transactions contemplated herein, or
pursuant to inspection rights granted hereunder, or reveal the financial or
other terms and conditions of this Agreement unless such information
(collectively, the "CONFIDENTIAL INFORMATION"): (a) is now, or hereafter
becomes, through no act or failure to act on behalf of the receiving party,
generally known or available to the public; (b) was known by the receiving party
before receiving such information from the disclosing party; (c) is hereafter
received by the receiving party from a third party without breach of any
obligation to the disclosing party; (d) is independently developed by the
receiving party without use of or reference to the Confidential Information of
the disclosing party by persons who had no access to the Confidential
Information of the disclosing party; or (e) is required to be disclosed by
applicable law or a Court Order, including applicable securities laws or stock
exchange rules or regulations, PROVIDED HOWEVER, that in the event that a
receiving party intends to disclose the providing party's Confidential
Information pursuant to this Section 12.5(e), the receiving party shall provide
the disclosing party with prompt written notice of such intended disclosure such
that the disclosing party may seek an appropriate protective order or other
appropriate remedy.
12.6 ENTIRE AGREEMENT. This Agreement together with the Ancillary
Agreements (including all exhibits or schedules appended to this Agreement and
all documents delivered pursuant to or referred to in this Agreement, all of
which are hereby incorporated herein by reference) constitutes the entire
agreement between the parties, and all promises, representations,
understandings, warranties and agreements with reference to the subject matter
hereof and inducements to the making of this Agreement relied upon by any party
hereto, have been expressed herein or in the documents incorporated herein by
reference.
12.7 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid or unenforceable
to any extent, the remainder of this Agreement, or the application of such
provision to such party or circumstances other than those to which it is so
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determined to be invalid or unenforceable, shall not be affected thereby, and
each provision hereof shall be enforced to the fullest extent permitted by law.
If the final judgment of a court of competent jurisdiction declares that any
item or provision hereof is invalid or unenforceable, the parties hereto agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration or area of the term or provision,
to delete specific words or phrases and to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified.
12.8 ASSIGNABILITY. This Agreement may not be assigned (otherwise than
by operation of law): (a) by Buyer without the prior written consent of the
Sellers, PROVIDED HOWEVER, that the Buyer may assign any of its rights under
this Agreement or in any agreement, document or instrument executed and
delivered pursuant hereto or in connection with the Closing (without the prior
written consent of the Seller): (i) to any successor to all or substantially all
of its business and assets relating to the subject matter of this Agreement, to
the extent that such entity agrees to assume all of the Buyer's obligations
hereunder; or (ii) to one or more Affiliates of the Buyer, to the extent that
any such entity agrees to assume all of the Buyer's obligations hereunder and
Buyer agrees to guarantee the performance of such Affiliate or Affiliates; or
(b) by the Seller without the prior written consent of Buyer. Furthermore, any
or all rights of the Buyer to receive performance (but not the obligations of
the Buyer hereunder) and rights to assert claims against the Sellers or the
Principal Stockholders in respect of breaches of representations, warranties or
covenants of the Sellers or the Principal Stockholders hereunder, may be
assigned by the Buyer to any Affiliate of the Buyer, but any assignee of such
rights shall take such rights subject to any defenses, counterclaims and rights
of setoff to which the Sellers or the Principal Stockholders might be entitled
under this Agreement and (ii) any or all rights of the Sellers to receive
performance (but not the obligations of the Sellers hereunder) and rights to
assert claims against the Buyer in respect of breaches of representations,
warranties or covenants of the Buyer hereunder, may be assigned by the Sellers
to any beneficial owner of any of the Sellers, but any assignee of such rights
shall take such rights subject to any defenses, counterclaims and rights of
setoff to which the Buyer might be entitled under this Agreement. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing expressed or referred to in
this Agreement will be construed to give any Person other than the parties to
this Agreement any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement.
12.9 AMENDMENT. This Agreement may be amended only by a written
agreement executed by the Buyer, the Sellers and the Principal Stockholders.
12.10 GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts
(other than the choice of law principles thereof), except that any
representations and warranties with respect to real and tangible property shall
be governed by and construed in accordance with the laws of the jurisdiction
where such property is situated if other than in The Commonwealth of
Massachusetts.
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12.11 REMEDIES. The parties hereto acknowledge that the remedy at law
for any breach of the obligations undertaken by the parties hereto is and will
be insufficient and inadequate and that the parties hereto shall be entitled to
equitable relief, in addition to remedies at law. In the event of any action to
enforce the provisions of this Agreement, the parties shall waive the defense
that there is an adequate remedy at law. The Sellers hereby acknowledge that the
Purchased Assets are unique and cannot be obtained on the open market. Without
limiting any remedies any party may otherwise have hereunder or under applicable
law, in the event any other party refuses to perform its obligations under this
Agreement, the first party shall have, in addition to any other rights at law or
equity, the right to specific performance.
12.12 DEFINITION OF SELLERS' KNOWLEDGE. As used in this Agreement, the
phrase "to the Sellers' knowledge" and any similar phrase shall mean the actual
knowledge after due inquiry as of the date of this Agreement of the executive
officers of Sellers.
12.13 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
12.14 EFFECT OF TABLE OF CONTENTS AND HEADINGS. Any table of contents,
title of an article or section heading herein contained is for convenience of
reference only and shall not affect the meaning of construction of any of the
provisions hereof.
12.15 INTERPRETATION. The parties hereto acknowledge and agree that:
(a) each party and its counsel reviewed and negotiated the terms and provisions
of this Agreement and have contributed to its revision; (b) the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (c) the terms and provisions of this Agreement shall be construed fairly as
to all parties hereto and not in favor of or against any party, regardless of
which party was generally responsible for the preparation of this Agreement.
12.16 ARBITRATION. Without limiting the remedies any party may
otherwise have pursuant to Section 12.11 hereof, any controversy, dispute or
claim arising out of or in connection with this Agreement, or the breach,
termination or validity hereof, shall be settled by final and binding
arbitration to be conducted by a single arbitrator in Boston, Massachusetts,
pursuant to the rules of the American Arbitration Association. The arbitrator
shall be selected in accordance with the Commercial Rules of the American
Arbitration Association. The Buyer, on the one hand, and the Principal
Stockholders, on the other hand, shall share equally in the costs and expenses
of the arbitration; provided, that the arbitrator may rule otherwise. The
decision or award of the arbitrator shall be final, and judgment upon such
decision or award may be entered in any competent court within The Commonwealth
of Massachusetts or application may be made to any competent court within The
Commonwealth of Massachusetts for judicial acceptance of such decision or award
and an order of enforcement. In the event of any procedural matter not covered
by the aforesaid rules, the procedural law of The Commonwealth of Massachusetts
shall govern.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be executed as an instrument under seal in multiple counterparts as of the date
set forth above by their duly authorized representatives.
XXXXXX AUTOMATION, INC.
By:
---------------------------------
Name:
Title:
INTELLIGENT AUTOMATION SYSTEMS, INC.
By:
---------------------------------
Name:
Title:
INTELLIGENT AUTOMATION SYSTEMS, INC.
TRUST
By:
---------------------------------
Name:
Title:
IAS PRODUCTS, INC.
By:
---------------------------------
Name:
Title:
------------------------------------
XXXXXX X. XXXXXX, PH.D.
------------------------------------
XXXXXXXX XXXX
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ASSET PURCHASE AGREEMENT
LIST OF SCHEDULES AND EXHIBITS
EXHIBIT DOCUMENT
Exhibit A Corporate Noncompetition Agreement
Exhibit B Xxxx of Sale
Exhibit C Patent Assignment Agreements
Exhibit D Noncompetition, Nonsolicitation and Proprietary
Information Agreement (Key Employees)
Exhibit E Opinion of Counsel to the Sellers
Exhibit F Assignment and Assumption of Liabilities
Exhibit G Opinion of Counsel to the Buyer
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