ASSET PURCHASE AGREEMENT
among
Electro Scientific Industries, Inc.
an Oregon corporation,
Magellan Acquisition Corp.,
an Oregon corporation,
and
Minnetonka Investments,
a Minnesota general partnership
and
Xxxxxx X. Xxxxxxxxx,
and
Xxxx X. Xxxxxxx
January 29, 1999
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF ASSETS......................................1
1.01. Purchase and Sale.......................................1
1.02. Excluded Assets.........................................2
1.03. Assumption of Liabilities...............................2
ARTICLE II PURCHASE PRICE...................................................2
2.01. Purchase Price..........................................2
2.02. Allocation of Purchase Price............................3
2.03. Registration of Shares..................................3
ARTICLE III TRANSFER AND ASSIGNMENT OF ACQUIRED ASSETS;
FURTHER ASSURANCES...............................................3
3.01. Instruments of Conveyance and Transfer..................3
3.02. Further Assurances......................................3
ARTICLE IV CLOSING..........................................................4
4.01. Closing.................................................4
4.02. Payment at Closing......................................4
4.03. Buyer's Deliveries......................................4
4.04. Seller's Deliveries.....................................4
ARTICLE V TRANSFER TAX AND FEES............................................4
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER..........................5
6.01. Authorization...........................................5
6.02 Capitalization..........................................5
6.03 SEC Reports and Financial Statements....................5
6.04. Compliance..............................................5
6.05. Consents................................................6
6.06. Brokers and Finders.....................................6
i
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF SELLER AND
THE PARTNERS.....................................................6
7.01. Organization............................................6
7.02. Authority...............................................6
7.03. No Adverse Consequences.................................7
7.04. Brokers and Finders.....................................7
7.05. Litigation..............................................7
7.06. Compliance with Laws....................................7
7.07. Tangible Assets.........................................8
7.08. Title and Condition of Tangible Assets; Condition of
Real Property...........................................8
7.09. Absence of Certain Changes or Events....................9
7.10. Permits and Licenses................................... 9
7.11. Environmental Conditions...............................10
7.12. Filings and Notices....................................10
7.13. Consents and Approvals.................................11
7.14. Accredited Investor Status.............................11
7.15. Acquisition for Investment.............................11
7.16. Opportunity to Ask Questions...........................11
7.17. Rule 144...............................................11
7.18. No Other Assets........................................12
7.19. Reliance...............................................12
7.20. Definition of Knowledge................................12
7.21. Disclaimer.............................................12
ARTICLE VIII COVENANTS OF SELLERS AND PARTNERS...............................13
8.01. Access to Properties, Books and Records................13
8.02. Negative Covenants.....................................13
8.03. Affirmative Covenants..................................13
8.04. No Negotiations with Others............................14
8.05. Third Party/Governmental Consents, Approvals
and Filings............................................14
8.06. Title Insurance........................................14
ARTICLE IX JOINT COVENANTS.................................................15
9.01. Governmental Consents..................................15
9.02. Best Efforts; No Inconsistent Action...................15
9.03. Cooperation............................................15
9.04. Escrow Fees............................................15
ii
ARTICLE X CONDITIONS TO OBLIGATIONS OF BUYER..............................16
10.01. Third Party Approvals...................................16
10.02. Waivers/Consents........................................16
10.03. Representations, Warranties and Covenants...............16
10.04. Adverse Proceedings.....................................16
10.05. No Adverse Change.......................................16
10.06. Instruments of Conveyance and Transfer..................17
10.07. Closing and Signing of Related Transaction..............17
ARTICLE XI CONDITIONS TO OBLIGATIONS OF SELLER.............................17
11.01. Representations, Warranties and Covenants...............17
11.02. Adverse Proceedings.....................................17
11.03. Delivery of Buyer Closing Documents.....................18
ARTICLE XII TERMINATION.....................................................18
12.01. Rights of Parties to Terminate..........................18
ARTICLE XIII SURVIVAL........................................................18
13.01. Survival................................................18
ARTICLE XIV CONFIDENTIALITY; PRESS RELEASES.................................18
ARTICLE XV OTHER PROVISIONS................................................19
15.01. Benefit and Assignment..................................19
15.02. Entire Agreement........................................19
15.03. Fees and Expenses.......................................19
15.04. Risk of Loss............................................19
15.05. Amendment, Waiver, Etc..................................19
15.06. Headings................................................20
15.07. Choice of Law; Venue....................................20
15.08. Notices.................................................20
15.09. Breach; Equitable Relief................................21
15.10. Counterparts............................................21
15.11. Separability............................................21
iii
INDEX OF DEFINED TERMS
Location of
Term Definition
---- ----------
Acquired Assets.....................................................1.01
Assumed Liabilities...............................................2.01-2
Business.......................................................Recital A
Buyer.......................................................Introduction
Closing.............................................................4.01
Closing Date........................................................4.01
Contracts.........................................................1.01-3
Disclosure Schedule.............................Article VII Introduction
Encumbrances........................................................1.01
Environmental Law..............................................7.11-3(a)
Excluded Assets.....................................................1.02
ESI.........................................................Introduction
ESI's SEC Reports...................................................6.03
Hazardous Substance............................................7.11-3(b)
Leases............................................................1.01-6
Loss...............................................................15.04
Material Adverse Change.........................Article VII Introduction
Material Adverse Effect.........................Article VII Introduction
Merger Agreement...............................................Recital C
Partners....................................................Introduction
Permits.............................................................7.10
Permitted Encumbrances............................................7.08-1
Purchase Price......................................................2.01
Real Property.....................................................1.01-2
SEC.................................................................6.03
Seller......................................................Introduction
Shares............................................................2.01-1
Tangible Personal Property..........................................7.07
Taxes..........................................................Article V
iv
LIST OF EXHIBITS
Exhibit Item First Reference
------- ---- ---------------
A Real Property 1.01-2
A-1 Assumption Agreement 2.01-2
B Assignment and Xxxx of Sale 3.01
B-1 General Warranty Deed 3.01
v
LIST OF SCHEDULES
Schedule Content
-------- -------
Schedule 1.02-2 Excluded Assets
Schedule 2.02-2 Assumed Liabilities
Schedule 2.02 Allocation of Purchase Prices
Schedule 4.03 Buyer Closing Documents
Schedule 4.04 Seller Closing Documents
Schedule 7.05 Litigation
Schedule 7.08-1 Permitted Encumbrances
Schedule 7.09 Changes Since 11/30/98
Schedule 7.10 Permits of Licenses (Certificate of Occupancy)
Schedule 7.11 Environmental Exceptions
Schedule 7.13 Consents and Approvals
Schedule 8.05 Third Party Consents
vi
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
January 29, 1999 among Electro Scientific Industries, Inc., an Oregon
corporation ("ESI"), Magellan Acquisition Corp., an Oregon corporation
("Buyer"), Minnetonka Investments, a Minnesota general partnership ("Seller"),
and Xxxxxx X. Xxxxxxxxx and Xxxx X. Xxxxxxx (collectively, the "Partners").
RECITALS
A. Partners are the owners of all of the partnership interests of Seller.
Seller is the owner of certain equipment and certain real property, as
hereinafter specifically identified, used or useful in the business (the
"Business") of MicroVision Corp., a Minnesota corporation ("MicroVision").
B. Seller desires to sell, and Buyer desires to purchase, said assets on
the terms and conditions set forth in this Agreement.
C. This Agreement is entered into pursuant to Section 2.4 of the Agreement
of Reorganization and Merger dated January 28, 1999 among ESI, Magellan Merger
Corp., MicroVision Corp., and Xxxxxx X. Xxxxxxxxx, Xxxx X. Xxxxxxx and Xxxx X.
Xxxxxxx (the "Merger Agreement").
AGREEMENT
In consideration of the mutual promises and covenants contained in this
Agreement, the parties agree as follows:
ARTICLE I
Purchase and Sale of Assets
1.01. Purchase and Sale. Subject to all the terms and conditions of
this Agreement and for the consideration herein stated, on the "Closing Date,"
as that term is defined in Section 4.01, Seller agrees to sell, convey, assign,
transfer and deliver to Buyer, free and clear of all security interests, liens,
claims, charges, mortgages, debts or other encumbrances of any kind
(collectively referred to as "Encumbrances"), other than Permitted Encumbrances,
as contemplated in Section 7.08-1 below, and Buyer agrees to purchase and accept
from Seller, the following assets (the "Acquired Assets"):
1.01-1. The personal property used in the Business (the
"Equipment") identified on Exhibit B to the Lease Agreement dated January 17,
1995 (the "Lease") by and between Seller and MicroVision.
1.01-2. The real property owned by Seller and used in the
Business and legally described on Exhibit A hereto, including land and
improvements thereon, easements, rights-of-way and other real property rights
appurtenant thereto (collectively, the "Real Property");
1.01-3. All rights, benefits and interests of Seller under the
contracts, agreements, commitments, understandings, documents, instruments and
warranties to which Seller is a party or by which Seller is bound which relate
to the Acquired Assets (collectively, the "Contracts");
1.01-4. All of Seller's interest in and to the Lease.
1.02. Excluded Assets. The Acquired Assets shall not include the
assets identified on Schedule 1.02-2 (collectively, the "Excluded Assets").
1.03. Assumption of Liabilities. Except for the liabilities and
obligations to be assumed by Buyer pursuant to this Agreement, Buyer will not
assume and will not be liable for any other liabilities of Seller, known or
unknown, contingent or absolute, accrued or other, other than all the
liabilities incurred in connection with the Business.
ARTICLE II
Purchase Price
2.01. Purchase Price. The purchase price for the Acquired Assets (the
"Purchase Price") shall be:
2.01-1. 24,500 shares of ESI's Common Stock (the "Shares"); and
2.01-2. The assumption by Buyer, pursuant to the terms of an
Assumption Agreement in substantially the form attached hereto as Exhibit A-1,
of the obligations of Seller for the indebtedness listed on Schedule 2.01-2
hereto, which represents all the liabilities used in the Business (collectively
referred to as the "Assumed Liabilities"). Buyer agrees to escrow with Chicago
Title Insurance Company an amount sufficient to prepay, including any required
prepayment premium and related costs and expenses, the SBA Loan described on
Schedule 2.01-2 (the "SBA Loan") and to execute all documents reasonably
required by Chicago Title Insurance Company in connection therewith. Buyer
agrees to obtain
2
the consent of Firstar National Bank of Minnesota ("Firstar") to the assumption
of indebtedness listed on Schedule 2.01-2 or shall satisfy the obligation in
full, including accrued interest, within 30 days following the Closing Date, and
will use best efforts to obtain the release of any guaranties of such
indebtedness by Seller or the Partners.
2.02. Allocation of Purchase Price. The Purchase Price shall be
allocated for income tax purposes among the Acquired Assets in accordance with
Schedule 2.02, and Buyer and Seller shall be bound by that allocation. No party
shall make any filing with any taxing authority that is inconsistent with the
allocation in Schedule 2.02.
2.03 Registration of Shares. Seller shall be permitted to register the
Shares for resale on the same basis and under the same terms set forth in
Section 1.7.3 of the Merger Agreement.
ARTICLE III
Transfer and Assignment of Acquired Assets; Further Assurances
3.01. Instruments of Conveyance and Transfer. The sale, conveyance,
assignment, transfer and delivery of the Acquired Assets shall be effected by
Seller's execution and delivery to Buyer, on the Closing Date, of a general
warranty deed in the form attached hereto as Exhibit B-1 and a xxxx of sale in
substantially the form of the Assignment and Xxxx of Sale attached hereto as
Exhibit B. Seller shall also execute such documents and instruments reasonably
required by Chicago Title Insurance Company to close the transaction
contemplated by this Agreement.
3.02. Further Assurances. Seller agrees that, at any time and from
time to time on and after the Closing Date, it will, upon the request of Buyer
and without further consideration, take all steps reasonably necessary to place
Buyer in possession and operating control of the Acquired Assets, and Seller
will do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all further acts, deeds, assignments, conveyances,
transfers, powers of attorney or assurances as reasonably required to sell,
assign, convey, transfer, grant, assure and confirm to Buyer, or to aid and
assist in the collection of or reducing to possession by Buyer of, all of the
Acquired Assets, or to vest in Buyer good, valid and marketable title to the
Acquired Assets. Notwithstanding the foregoing, Buyer acknowledges the Equipment
is located at the Real Property and Seller shall have no obligation to prepare
or physically deliver the Equipment, which is being transferred to Buyer in
place on a "where is" basis.
3
ARTICLE IV
Closing
4.01. Closing. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx and
Xxxxxx, P.A., 0000 XXX Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, at 10:00 a.m. local time
on January 29, 1999, or at another date, time and place agreed upon in writing
by the parties (the "Closing Date").
4.02. Payment at Closing. Subject to the fulfillment or waiver of the
conditions set forth in Article X hereof, Buyer shall pay to Seller the
consideration contemplated under Section 2.01-1 hereof.
4.03. Buyer's Deliveries. Subject to the fulfillment or waiver of the
conditions set forth in Article X hereof, at Closing Buyer shall deliver or
execute and deliver to Seller the Assumption Agreement, a certificate in good
delivery form representing the Shares and the documents and instruments
reasonably required by Chicago Title Insurance Company to close the transaction
contemplated by this Agreement. The Assumption Agreement shall be effective
simultaneously as of the Closing, dated as of the Closing Date, and shall be
executed, and where necessary acknowledged, by the party or parties required to
give legal, binding effect to the document.
4.04. Seller's Deliveries. Subject to the fulfillment or waiver of the
conditions set forth in Article XI hereof, at Closing Seller shall deliver or
execute and deliver to Buyer the documents required by Section 3.01, which shall
be effective simultaneously as of the Closing, dated as of the Closing Date, and
shall be executed, and where necessary acknowledged, by the party or parties
required to give legal, binding effect to the document.
ARTICLE V
Transfer Tax and Fees
Seller shall be responsible for the expense and payment when due of the
entire amount of all sales, documentary, transfer, excise, stamp, use, state
deed or other taxes or conservation or recording fees imposed by reason of the
purchase of the Acquired Assets. Seller shall file all necessary tax returns and
pay all taxes due following the Closing Date when due.
4
ARTICLE VI
Representations and Warranties of Buyer and ESI
Buyer and ESI represent and warrant to Seller as follows:
6.01. Authorization. Each of ESI and Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own and operate its properties and to carry on its business as now
conducted. Each of ESI and Buyer has taken all corporate action necessary to
authorize its execution, delivery and performance of this Agreement. Each of ESI
and Buyer has full corporate power and authority to enter into this Agreement
and carry out the terms hereof. Each of ESI and Buyer has duly executed and
delivered this Agreement, and this Agreement is its valid and binding obligation
enforceable against Buyer and ESI in accordance with its terms, except as
enforceability may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
relating to creditors' rights generally or by the availability of equitable
remedies.
6.02. Capitalization. ESI has authorized capital stock consisting of
40,000,000 shares of Common Stock, without par value, of which 11,404,077 shares
were outstanding on November 30, 1998 and 1,000,000 shares of Preferred Stock,
of which no shares were outstanding on November 30, 1998. All of the outstanding
shares of capital stock of ESI have been duly authorized and are validly issued,
fully paid and nonassessable, and no shares were issued in violation of
preemptive or similar rights of any shareholder. The Shares will be duly
authorized, validly issued and fully paid and nonassessable, and will not be
issued in violation of preemptive or similar rights of any shareholder of ESI.
Except (a) for shares issued to the shareholders of Testec, Inc. pursuant to an
Agreement of Reorganization and Merger among ESI, Testec, Inc., TT Merger Corp.
and the shareholders of Testec, Inc., (b) under the terms of the various
employee or director benefit plans of ESI, or (c) as disclosed in ESI's SEC
Reports (as defined below) there are no subscriptions, options, warrants,
rights, convertible securities or other agreements or commitments of any
character obligating ESI to issue any shares of capital stock.
6.03. SEC Reports and Financial Statements. ESI has heretofore
furnished the Partners with complete copies of all registration statements,
reports and proxy statements, including amendments thereto, filed with the
Securities and Exchange Commission (the "SEC") since May 31, 1998 and prior to
the date of this Agreement (collectively, the "ESI's SEC Reports").
6.04. Compliance. The execution, delivery and performance of this
Agreement by Buyer and ESI, the compliance by Buyer and ESI with the provisions
of this Agreement and the consummation of the transactions described in this
Agreement will not
5
conflict with or result in the breach of any of the terms or
provisions of or constitute a default under:
6.04-1. The articles of incorporation or bylaws of Buyer or ESI;
6.04-2. Any note, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which Buyer or ESI is a
party or by which Buyer or ESI is bound; or
6.04-3. Any statute or any order, rule, regulation or decision of
any court or regulatory authority or governmental body applicable to Buyer or
ESI.
6.05. Consents. Except as set forth in Schedule 6.05, no consent,
approval, authorization, order, designation or declaration of any court or
regulatory authority or governmental body, federal or other, or third person is
required to be obtained by Buyer or ESI nor is any filing or registration
required to be made therewith by Buyer or ESI for the consummation of the
transactions described in this Agreement.
6.06. Brokers and Finders. Neither ESI nor Buyer has employed any
broker, finder or investment banker or incurred any liability for any
commission, brokerage or investment banking fee or finder's fee in connection
with the transactions contemplated by this Agreement.
ARTICLE VII
Representations and Warranties of Seller and the Partners
As used in this Agreement, "Material Adverse Effect" means a material
adverse effect on the Acquired Assets, and "Material Adverse Change" means any
change that has resulted, will result or is reasonably likely to result in a
Material Adverse Effect. Seller and each of the Partners covenant, represent and
warrant to Buyer that, except as set forth in a Schedule attached hereto (each a
"Disclosure Schedule"):
7.01. Organization. Seller is a general partnership duly organized and
validly existing under the laws of the State of Minnesota, and has all necessary
power and authority to own, lease and operate its properties and assets and to
carry on its business as now conducted and as proposed to be conducted. The
Partners are the sole partners of Seller and no person has any right to become a
partner of Seller or to acquire any partnership interest in Seller.
7.02. Authority. Seller has the full legal power and authority to
enter into this Agreement and carry out its terms. Seller has taken all action
necessary to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly and
6
validly executed and delivered by each of Seller and the Partners and is binding
upon and enforceable against each of Seller and the Partners in accordance with
its terms, except as enforceability may be limited or affected by applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the rights of creditors and except as enforceability
may be limited by rules of law governing specific performance, injunctive relief
or other equitable remedies.
7.03. No Adverse Consequences. Subject to final payoff of the SBA Loan
and the consent of Firstar to be obtained in accordance with Section 2.01-2
hereof, neither the execution and delivery of this Agreement by Seller or the
Partners nor the consummation of the transactions contemplated by this Agreement
will:
7.03-1. Result in the creation or imposition of any lien, charge
or encumbrance on any of the Acquired Assets,
7.03-2. Violate or conflict with any provision of Seller's
Partnership Agreement,
7.03-3. Violate any law, judgment, order, injunction, decree,
rule, regulation or ruling of any governmental authority applicable to either
Seller or the Partners, or
7.03-4. Either alone or with the giving of notice or the passage
of time or both, conflict with, constitute grounds for termination or
acceleration of, result in the breach of the terms, conditions or provisions of,
result in the loss of any benefit to Seller under or constitute a default under
any agreement, instrument, license or permit to which either Seller or the
Partners are parties or by which any of them is bound, except as set forth on
Schedule 7.03-4.
7.04. Brokers and Finders. Neither Seller nor the Partners have
employed any broker, finder or agent or dealt with anyone purporting to act in
such capacity or agreed to pay any brokerage fee, finder's fee or commission
with respect to the transaction contemplated by this Agreement, except that
Seller has employed NationsBanc Xxxxxxxxxx Securities LLC as its investment
banker.
7.05. Litigation. Except as set forth on Schedule 7.05, Seller has not
been served with any claim or litigation and, to Seller's knowledge, no
proceeding or governmental investigation is pending or threatened by or against
or relating to Seller, the Partners or the Acquired Assets.
7.06. Compliance with Laws. Seller has at all relevant times conducted
its business in compliance with its Partnership Agreement and all applicable
laws and regulations.
7
Seller is not in violation of any applicable laws or regulations which would
have a Material Adverse Effect on the Acquired Assets. Seller is not subject to
any outstanding order, writ, injunction or decree, and Seller has not been
charged with, or threatened with a charge of, a violation of any provision of
federal, state or local law or regulation.
7.07. Tangible Assets. [INTENTIONALLY DELETED]
7.08. Title and Condition of Tangible Assets; Condition of Real
Property.
7.08-1. Seller owns all of the Acquired Assets free and clear of
all mortgages, pledges, security interests, consignment interests, claims,
charges or other encumbrances or restrictions of any kind, except as set forth
on Schedule 7.08-1 hereof ("Permitted Encumbrances").
7.08-2. Seller has good and absolute fee simple title to the Real
Property, subject to the Permitted Encumbrances, and good and absolute title to
the Equipment.
7.08-3. The Equipment has been maintained and operated in
accordance with manufacturer's specifications and prudent industry practices, is
in a good state of maintenance and repair, ordinary wear and tear excepted, and
is adequate for the conduct of the Business.
7.08-4. No improvements on the Real Property violate any
applicable material building code, zoning requirement or other statute or
ordinances. Seller has not received any notice of any pending or contemplated
special assessments against the Real Property.
7.08-5. [INTENTIONALLY OMITTED]
7.08-6. The plants, buildings and structures included in the Real
Property have access to
(a) public roads or perpetual easements over private streets or
private property for ingress to and egress from the Real Property;
(b) water supply, storm and sanitary sewer facilities, telephone,
gas and electrical connections, fire protection, drainage and other
public utilities, in each case as is necessary for the conduct of the
Business as now conducted.
8
7.08-7. None of the material structures on the Real Property
encroaches upon real property of another person, and no structure of any other
person substantially encroaches upon any of the Real Property.
7.08-8. [INTENTIONALLY OMITTED]
7.08-9. At the Closing, Seller shall cause conveyance to Buyer
and Buyer will acquire good title to all the Acquired Assets, free and clear of
all mortgages, pledges, security interests, claims, charges or other
encumbrances or restrictions of any kind, other than the Permitted Encumbrances.
7.09. Absence of Certain Changes or Events. Except as set forth on
Schedule 7.09, since November 30, 1998, there has not been:
7.09-1. Any Material Adverse Change or any event, occurrence,
development or state of circumstances or facts which could reasonably be
expected to result in a Material Adverse Change;
7.09-2. Any material damage, destruction or casualty loss,
whether insured against or not, to any of the Acquired Assets;
7.09-3 Any incurrence of any non-contract liability which, either
singly or in the aggregate is material to the Acquired Assets;
7.09-4. Any encumbrance or consent to encumbrance of the Acquired
Assets; or
7.09-5. Any incurrence of indebtedness resulting in aggregate
indebtedness related to the Acquired Assets in excess of $765,000.
7.10. Permits and Licenses. Schedule 7.10 contains a complete and
correct list of all governmental licenses, permits, franchises, easements and
authorizations (collectively, "Permits") held by Seller and which relate to the
Acquired Assets, the expiration date for each such Permit, and whether such
Permit is assignable to Buyer. Seller holds, and, to Seller's knowledge, at all
times has held, all Permits necessary for the lawful conduct of its business
pursuant to all applicable statutes, laws, ordinances, rules and regulations of
all governmental bodies, agencies and other authorities having jurisdiction over
it or any part of its operations. Seller is in compliance with all the terms of
each Permit, and there are no claims of violation received by Seller of any
Permit. Complete and accurate copies of all Permits have been delivered to
Buyer.
9
7.11. Environmental Conditions.
7.11-1. Except as disclosed on Schedule 7.11, Seller's Real
Property and assets are and have been in compliance with all Environmental Laws.
All wastes generated in connection with Seller's business are and have been
transported and disposed of off-site in compliance with all Environmental Laws,
and true and correct logs of such transportation and disposal have been made
available to Buyer.
7.11-2. No Hazardous Substance has been disposed of, spilled,
leaked or otherwise released on, in, under or from the Real Property or has
otherwise come to be located in the soil or water (including surface and ground
water) on or under the Real Property. None of Seller's assets or the
improvements on the Real Property have incorporated into them any asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls (including in any floor
coverings, ceiling tiles, electrical transformer or capacitor located on the
Real Property), or any other Hazardous Substance which is prohibited, restricted
or regulated when present in buildings, structures, fixtures or equipment, other
than in material compliance with Environmental Laws. No Hazardous Substance is
or has been generated, manufactured, treated, stored, transported, used or
otherwise handled on the Real Property or in connection with Seller's business,
other than in material compliance with Environmental Laws. There are not and
never have been any above-ground or underground storage tanks on the Real
Property (whether or not regulated and whether or not out of service, closed or
decommissioned).
7.11-3. As used in this Agreement:
(a) "Environmental Law" means any federal, state or local
statute, ordinance or regulation pertaining to the protection of human
health or the environment and any applicable orders, judgments,
decrees, permits, licenses or other authorizations or mandates under
such statutes, ordinances or regulations; and
(b) "Hazardous Substance" means any hazardous, toxic, radioactive
or infectious substance, material or waste as defined, listed or
regulated under any Environmental Law, and includes without limitation
petroleum oil and its fractions.
7.12. Filings and Notices. Seller has timely filed all required
reports, obtained all required approvals and permits, and generated and
maintained all required data, documentation and records under all applicable
Environmental Laws. All notifications required by any Environmental Law in
respect of any discharge, release or emission, including any notices required to
be provided under applicable Minnesota law, if any, have been made within the
time prescribed by such Environmental Law, and copies of all such notifications
10
have been provided to Buyer. To the knowledge of Seller, no part of the Real
Property is listed as a site contaminated by Hazardous Substances pursuant to
any Environmental Law.
7.13. Consents and Approvals. Except as set forth in Schedules 7.13 or
7.10, no consent, approval or authorization of any court, regulatory authority,
governmental body, or any other entity or person not a party to this Agreement
is required for the consummation of the transactions described in this Agreement
by Seller or the Partners.
7.14. Accredited Investor Status. Each of the Partners is an
"accredited investor" as defined in Rule 501 of the Securities and Exchange
Commission. Each Partner has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
investment in the Shares.
7.15. Acquisition for Investment. Each Partner is acquiring the Shares
for investment for his own account, and not with a view to, or for resale in
connection with, any distribution of the Shares. Neither Partner is a party to
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to any such person or any third party with
respect to the Shares.
7.16. Opportunity to Ask Questions. Each Partner acknowledges that he
has had the opportunity to ask questions of and receive answers from officers
and employees of Buyer about Buyer, the terms and conditions of the investment
and to receive and review Buyer's SEC Reports (as defined below) and such
documents concerning Buyer as he has reasonably requested.
7.17. Rule 144. Seller and Partners have been informed by ESI that the
Shares have not been registered under the Securities Act of 1933 (the "Act"),
and that the Shares must be held for the time required by SEC Rule 144, unless
(i) the distribution for sale of the ESI Common Stock has been registered under
the Act in accordance with Section 2.03 or otherwise, (ii) a sale of the Shares
is made in conformity with the provisions of Rule 144, or (iii) in the opinion
of counsel, which opinion is reasonably acceptable to ESI, some other exemption
from registration is available with respect to any such sale, transfer or other
disposition of the Shares.
7.17-1 Stock Certificate Legends. Seller and Partners acknowledge
and understand stock transfer instructions will be given to ESI's transfer agent
with respect to the Shares and that there will be placed on the certificates for
the Shares, or any substitution therefor, the following legends:
"The securities represented by this certificate have been
issued without registration under the Securities Act of 1933
(the 'Act') or any state securities laws. They may not be
sold, assigned,
11
pledged or otherwise transferred for value unless they are
registered under the Act and any applicable state securities
laws or the Corporation receives an opinion of counsel
satisfactory to it, or otherwise satisfies itself, that
registration is not required."
"The securities represented by this certificate were issued
pursuant to a business combination which is being accounted
for as a pooling of interests and may not be sold, nor may
the owner thereof reduce his risk relative thereto in any
other way, until such time as the Corporation has published
the financial results covering at least 30 days of combined
operations after [here will be inserted the effective date
of the Merger], the Effective Time of the merger through
which the business combination was effected."
Seller and Partners acknowledge and understand the Shares are (i) being
issued in a business combination that is being accounted for as a pooling of
interests and (ii) subject to the restrictions on transfer described above.
Seller and Partners agree they will not sell, assign, transfer, pledge or
otherwise dispose of any of the Shares or any interest therein until such time
as ESI has published financial results covering at least 30 days of combined
operations of MicroVision and ESI after the Closing Date. Upon the publication
of such financial results, ESI will promptly provide instructions to its
transfer agent to cause the "pooling legend" to be removed from the Shares held
of record by Seller.
7.18. No Other Assets. Except for the Acquired Assets, Seller has no
right, title or interest in or to any operating assets of the Business.
7.19. Reliance. Seller and the Partners recognize and agree that,
notwithstanding any investigation by Buyer, Buyer is relying upon the
representations and warranties made by Seller and the Partners in this
Agreement.
7.20 Definition of Knowledge. For purposes of this Agreement, the
phrase "to the knowledge of Seller" and phrases of similar intent shall mean the
actual knowledge of the Partners, including knowledge that an individual with
responsibilities similar to the Partners would reasonably be expected to have in
the ordinary course of performing his duties, without an obligation of
independent investigation.
7.21 Disclaimer. Except for the representations and warranties set
forth herein, no representation or warranty of any type or kind is made by
Seller as to the condition, quality, value, function, suitability for any
particular purpose, or any other matter about or relating to the Acquired
Assets.
12
ARTICLE VIII
Covenants of Seller and Partners
8.01. Access to Properties, Books and Records. Prior to the Closing
Date, Partners and Seller shall, at Buyer's request, afford or cause to be
afforded to the agents, attorneys, accountants and other authorized
representatives of Buyer reasonable access during normal business hours to all
properties, books and records relating to the Business and shall permit such
persons, at Buyer's expense, to make copies of such books and records. In
addition, Seller shall afford Buyer and its authorized representatives
reasonable access to the Real Property for the purpose of conducting
investigations and examinations thereof and for preparation of surveys, making
appraisals and ascertaining the condition thereof. Buyer shall treat, and shall
cause all of its agents, attorneys, accountants and other authorized
representatives to treat, all information obtained pursuant to this Section 8.01
as confidential in accordance with Article VIII hereof.
8.02. Negative Covenants. Except as otherwise permitted by this
Agreement or as set forth on Schedule 8.02, prior to the Closing Date, Seller
shall not in connection with the Acquired Assets:
8.02-1. Mortgage, pledge, otherwise encumber or subject to lien
any of the Acquired Assets, or commit itself to do any of the foregoing;
8.02-2. Dispose of, or agree to dispose of, any of the Acquired
Assets or lease or license to others (including Partners), or agree so to lease
or license, any of the Acquired Assets; or
8.02-3. Agree or commit to do any of the foregoing.
8.03. Affirmative Covenants. Except as otherwise permitted by this
Agreement, prior to the Closing, Seller shall:
8.03-1. Advise Buyer in writing of any litigation or
administrative proceeding that challenges or otherwise materially affects the
transactions contemplated hereby and of any Material Adverse Change or any
event, occurrence or circumstance which is reasonably likely to cause a Material
Adverse Change in the Acquired Assets;
8.03-2. When the consent of any third party to the transactions
contemplated by this Agreement is required under the terms of any contract or
agreement material to the Acquired Assets to which Seller is a party or by which
it is bound, use its best efforts to obtain such consent on terms and conditions
not materially less favorable than those in effect on the date hereof;
13
8.03-3. Maintain all of the tangible Acquired Assets in good
operating condition, reasonable wear and tear excepted, consistent with past
practices;
8.03-4. Not cancel or change any policy of insurance (including
self-insurance) or fidelity bond relating to the Acquired Assets or any policy
or bond providing substantially the same coverage, unless such cancellation or
change is effective only on or after the Closing; and
8.03-5. Pay and discharge all taxes, assessments, governmental
charges and levies imposed upon the Acquired Assets in all cases prior to the
date on which penalties attach thereto.
8.04. No Negotiations with Others. Partners and Seller shall refrain,
and shall cause their employees and any investment banker, attorney, accountant
or other agent retained by either of them to refrain, from initiating or
soliciting any inquiries or making any proposals with respect to, or engaging in
negotiations concerning, or providing any confidential information or data to or
having any discussions with any person relating to, any acquisition, business
combination or purchase of all or any significant portion of the assets of, or
any partnership interest in, Seller. Partners and Seller will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
8.05. Third Party/Governmental Consents, Approvals and Filings. Except
as disclosed on Schedule 8.05, prior to the Closing Date, Seller and Partners
shall use their best efforts to (a) obtain waivers or consents from all other
parties to the Contracts, as well as any obligation of Seller for borrowed
money, (b) obtain consent from all applicable governmental entities and agencies
that have issued any Permits where such consent is necessary, and (c) obtain all
consents, authorizations or approvals (including the termination of any relevant
waiting periods) of any other third parties required in connection with the
performance of this Agreement by Seller or the consummation of the transaction
contemplated by this Agreement. Prior to the Closing Date, Seller and the
Partners shall make all registrations or filings with any governmental authority
required for the consummation of the transaction contemplated hereby.
8.06. Title Insurance. At the Closing, Seller and Partners shall
furnish to Buyer a commitment for an ALTA extended coverage owner's policy of
title insurance insuring fee title to the Real Property in Buyer in the amount
of the total purchase price allocated to the Real Property as set forth on
Schedule 2.02, subject to Permitted Encumbrances and the general survey
exception. The title company shall also provide such other endorsements as Buyer
may require. Seller and Partners shall provide such affidavits and indemnity
agreements and other instruments customarily reasonably required by the title
company in similar circumstances to close the transaction contemplated by this
Agreement.
14
Seller and Partners shall pay the abstracting costs associated with obtaining
the title insurance commitment pursuant to this Section 8.06, and Buyer shall
pay the commitment fee and premium for the title insurance policy and
endorsements to be delivered to Buyer pursuant to this Section 8.06.
ARTICLE IX
Joint Covenants
Buyer, Partners and Seller covenant and agree that they will act in
accordance with the following:
9.01. Governmental Consents. Promptly following the execution of this
Agreement, the parties will proceed to prepare and file with the appropriate
governmental authorities any requests for approval or waiver, if any, that are
required from governmental authorities in connection with the transactions
contemplated hereby, and the parties shall diligently and expeditiously
prosecute and cooperate fully in the prosecution of such requests for approval
or waiver and all proceedings necessary to secure such approvals and waivers.
9.02. Best Efforts; No Inconsistent Action. Each party will use its
best efforts to effect the transactions contemplated by this Agreement and to
fulfill the conditions to the obligations of the opposing parties set forth in
Article 11 or 12 of this Agreement. No party will take any action inconsistent
with its obligations under this Agreement or that could hinder or delay the
consummation of the transactions contemplated by this Agreement, except that
nothing in this Section 9.02 shall limit the rights of the parties under
Articles 11, 12 and 13.
9.03. Cooperation. Each party to this Agreement will cooperate with
the other in (a) preparing and filing all notices, applications, reports, and
other instruments and documents which are required by any law, regulation or
ordinance in connection with the transactions contemplated by this Agreement and
(b) obtaining consents or waivers from third parties required in connection with
the transaction contemplated by this Agreement.
9.04. Escrow Fees. The fees payable to Chicago Title Insurance Company
in connection with the escrow described in Section 2.01-2 shall be shared
equally by Buyer and Seller.
15
ARTICLE X
Conditions to Obligations of Buyer
The obligations of Buyer under Sections 1.01 and 2.01 are, at its option,
subject to satisfaction, at or prior to the Closing, of each of the following
conditions:
10.01. Third Party Approvals. All authorizations, consents and
approvals of all governmental agencies and authorities and other third parties
required to be obtained in order to permit consummation of the transactions
contemplated by this Agreement shall have been obtained and be satisfactory in
form and content to Buyer.
10.02. Waivers/Consents. Seller and Partners shall have obtained all
waivers or consents from third parties relating to the items set forth on
Schedules 7.10 and 7.13.
10.03. Representations, Warranties and Covenants.
10.03-1. All representations and warranties of Partners and
Seller made in this Agreement, or in any certificate delivered pursuant hereto,
shall in all material respects be true and complete on and as of the Closing
Date with the same force and effect as if made on and as of that date.
10.03-2. All of the terms, covenants and conditions to be
complied with and performed by Partners and Seller at or prior to the Closing
shall in all material respects have been complied with or performed thereby.
10.03-3. Buyer shall have received a Certificate of Partners and
Seller, dated as of the Closing Date and executed by the President of Seller and
by Partners, to the effect that the representations and warranties of Partners
and Seller contained in this Agreement are in all material respects true and
complete on and as of the Closing Date as though made on and as of the Closing
Date and that Partners and Seller have in all material respects each complied
with or performed all terms, covenants and conditions to be complied with or
performed by such party at or prior to the Closing.
10.04. Adverse Proceedings. No suit, action, claim or governmental
proceeding shall have been instituted or threatened against, and no order,
decree or judgment of any court, agency or other governmental authority shall
have been rendered against, Buyer, Seller or Partners to restrain or prohibit,
or obtain damages in respect of, this Agreement or the transactions contemplated
by this Agreement.
10.05. No Adverse Change. There shall not have been any Material
Adverse Change to Seller or the Acquired Assets.
16
10.06. Instruments of Conveyance and Transfer. Seller shall have
delivered to Buyer the general warranty deed, assignment and xxxx of sale and
other documents reasonably required by Chicago Title Insurance Company to close
the transaction contemplated by this Agreement. Such instruments of transfer and
conveyance of the Acquired Assets shall warrant to Buyer that the Acquired
Assets are transferred to Buyer free and clear of all debts, liens, security
interests, mortgages, trusts, claims or other liabilities or encumbrances
whatsoever except as specifically permitted by this Agreement.
10.07. Closing and Signing of Related Transaction. The transactions
contemplated by the Merger Agreement shall close simultaneously with the
Closing.
ARTICLE XI
Conditions to Obligations of Seller
The obligations of Seller under Section 1.01 and 3.01 are, at its option,
subject to satisfaction, at or prior to the Closing, of each of the following
conditions:
11.01. Representations, Warranties and Covenants.
11.01-1. All representations and warranties of Buyer made in this
Agreement and in any certificate delivered pursuant hereto shall in all material
respects be true and complete on and as of the Closing Date with the same force
and effect as if made on and as of that date.
11.01-2. All of the terms, covenants and conditions to be
complied with and performed by Buyer on or prior to the Closing shall in all
material respects have been complied with or performed by Buyer.
11.01-3. Seller shall have received a Certificate of Buyer and
ESI, dated as of the Closing Date, executed by the President or other authorized
officer of Buyer and ESI, to the effect that the representations and warranties
of Buyer and ESI contained in this Agreement are in all material respects true
and complete on and as of the Closing Date as though made on and as of the
Closing Date and that Buyer and ESI have in all material respects complied with
or performed all terms, covenants and conditions to be complied with or
performed by them at or prior to the Closing.
11.02. Adverse Proceedings. No suit, action, claim or governmental
proceeding shall have been instituted or threatened against, and no order,
decree or judgment of any court, agency or other governmental authority shall
have been rendered against, Buyer, Seller or Partners to restrain or prohibit
this Agreement or the transactions contemplated by this Agreement.
17
11.03. Delivery of Buyer Closing Documents. Seller shall have received
an executed copy of the Assumption Agreement and a certificate in good delivery
form representing the Shares. Buyer shall have executed all documents and
instruments reasonably required by Chicago Title Insurance Company to close the
transaction contemplated by this Agreement.
ARTICLE XII
Termination
12.01. Right of Parties to Terminate. This Agreement may be terminated
by either party on the same basis as, but only simultaneously with, proper
termination by either party to the Merger Agreement.
ARTICLE XIII
Survival
13.01. Survival. All representations and warranties of any party
contained in this Agreement shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, but
shall be extinguished and be of no further force or effect one year after the
Closing Date.
ARTICLE XIV
Confidentiality; Press Releases
Seller and Partners agree to keep confidential and not disclose to third
parties (except to legal, accounting and investment banking advisors for the
purposes of evaluating the transactions contemplated by this Agreement) the
terms and conditions or the existence of this Agreement, or the consummation of,
or intention to consummate, the transactions contemplated by this Agreement,
prior to or following the Closing, without the written consent of the other
parties to this Agreement. Notwithstanding the foregoing, after having given
prior notice to the other parties, a party to this Agreement may disclose such
terms and conditions as necessary to comply with applicable laws, regulations or
governmental rules, orders of any governmental entity.
18
ARTICLE XV
Other Provisions
15.01. Benefit and Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. No party hereto may voluntarily or involuntarily assign
such party's interest under this Agreement without the prior written consent of
the other parties; provided, however, that Buyer may assign its rights hereunder
to any affiliate of Buyer, provided further, however, that no such assignment
shall relieve Buyer or ESI from any liability hereunder. Nothing express or
implied in this Agreement is intended or shall be construed to confer upon or
give to a person, firm or corporation other than the parties hereto any rights
or remedies under or by reason of this Agreement or any transaction contemplated
hereby.
15.02. Entire Agreement. This Agreement, including the schedules and
the exhibits hereto, constitutes the entire agreement between the parties hereto
and supersede all prior agreements and understandings, oral and written, among
the parties hereto with respect to the subject matter hereof.
15.03. Fees and Expenses. Except as provided above or in the Merger
Agreement, each party shall be solely responsible for all costs and expenses
incurred by it in connection with the negotiation, preparation and performance
of and compliance with the terms of this Agreement. Nothing in this Agreement is
meant to limit the right of a non-breaching party to obtain reimbursement of
expenses and other damages, including attorneys fees, incurred as a result
breach of this Agreement by the other party.
15.04. Risk of Loss. The risk of any loss, damage, impairment,
confiscation or condemnation of any of the Acquired Assets (a "Loss") from any
cause shall be borne by Seller at all times prior to the Closing. If any such
Loss occurs, Seller shall apply the proceeds of any insurance policy, judgment
or award with respect thereto to repair, replace or restore the Acquired Assets
as soon as possible to their prior condition. The parties acknowledge that, so
long as the Loss will not have a Material Adverse Effect, such Loss, by itself,
shall not cause the Closing to be delayed.
15.05. Amendment, Waiver, Etc. The provisions of this Agreement may be
amended or waived only by an instrument in writing signed by the party against
which enforcement of such amendment or waiver is sought. Any waiver of any term
or condition of this Agreement or any breach hereof shall not operate as a
waiver of any other such term, condition or breach, and no failure to enforce
any provision hereof shall operate as a waiver of such provision or of any other
provision hereof.
19
15.06. Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
15.07. Choice of Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon, exclusive of
choice of law rules, except that the provisions of this Agreement relating to
transfer of the Real Property shall also be governed by the real property laws
of the State of Minnesota.
15.08. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or facsimile (in each case with evidence of confirmed transmission) as
follows:
If to the Partners, to them at:
Xxxxxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Xxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
with copies to:
Xxxxxx and Xxxxxx
0000 XXX Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
If to Buyer or ESI, to it at:
00000 XX Xxxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: President and Chief Executive Officer
Fax: (000) 000-0000
20
with copies to:
Stoel Rives LLP
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing. All such notices, requests, demands, waivers and communications shall
be deemed to have been received on the date of delivery or on the third business
day after the mailing thereof.
15.09. Breach; Equitable Relief. The parties acknowledge that the
Acquired Assets and rights of the parties described in this Agreement are unique
and that money damages alone for breach of this Agreement would be inadequate.
Any party aggrieved by a breach of the provisions hereof may bring an action at
law or suit in equity to obtain redress, including specific performance,
injunctive relief or any other available equitable remedy. Time and strict
performance are of the essence in this Agreement.
15.10. Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
15.11. Separability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
21
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
[SIGNATURE PAGE FOLLOWS.]
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
BUYER: MAGELLAN ACQUISITION CORP.
By: X. X. XXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxx
Vice President, Business Development
ESI: ELECTRO SCIENTIFIC INDUSTRIES, INC.
By: X. X. XXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxx
Vice President, Business Development
SELLER: MINNETONKA INVESTMENTS
By: XXXX X. XXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Partner
PARTNERS:
XXXXXX X. XXXXXXXXX
-----------------------------------------
Xxxxxx X. Xxxxxxxxx
XXXX X. XXXXXXX
-----------------------------------------
Xxxx X. Xxxxxxx
23
