ASSET PURCHASE AGREEMENT
by and between
CIRCLE SEAL CONTROLS, INC.,
as Buyer
and
SAES PURE GAS, INC.,
as Seller
August 4, 1994
TABLE OF CONTENTS
SECTION 1. PURCHASE AND SALE OF ASSETS.
1.1 Sale of Assets
1.2 Liabilities
1.3 Purchase Price and Payment
1.4 Place of Closing; Closing Date
1.5 Transfer of Subject Assets
1.6 Delivery of Records and Contracts
1.7 Further Assurances
1.8 Allocation of Purchase Price
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER.
2.1 Making of Representations and Warranties
2.2 Organization and Qualifications of Seller
2.3 Authority
2.4 Title to Properties; Liens; Condition of Properties
2.5 Location of Subject Assets
2.6 Undisclosed Liabilities
2.7 Inventories
2.8 Patents, Trade Names, Trademarks and Copyrights
2.9 Trade Secrets and Customer Lists
2.10 Financial Statements
2.11 Litigation
2.12 Compliance with Laws
2.13 Insurance
2.14 Finder's Fee
2.15 Permits; Governmental Consents
2.16 Material Adverse Change
2.17 Government Contracts
2.18 Products
2.19 Suppliers, Customers and Distributors
2.20 Disclosure
2.21 Backlog
2.22 Contracts.
SECTION 3. COVENANTS OF SELLER
3.1 Making of Covenants and Agreements
3.2 Breach of Representations and Warranties
3.3 Expenses
3.4 Notification
3.5 Non-Use of Trade Names, etc
3.6 Access and Cooperation of Seller
3.7 Non-Competition
3.8 Sales Orders
3.9 Notification of Foundries, Printers, Etc
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Making of Representations and Warranties
4.2 Organization of Buyer
4.3 Authority of Buyer
4.4 Litigation
4.5 Finder's Fees
4.6 Reliance
SECTION 5. COVENANTS OF BUYER
5.1 Making of Covenants and Agreements
5.2 Accounts Receivable
5.3 Inventory
5.4 Insurance
5.5 Confidentiality
5.6 Notification
5.7 Acquired Sales Orders
SECTION 6. SURVIVAL OF WARRANTIES.
6.1 Survival of Warranties
SECTION 7. INDEMNIFICATION
7.1 Indemnification by Seller
7.2 Indemnification by Buyer
7.3 Notice; Defense of Claims
7.4 Satisfaction of Indemnification Obligations
7.5 Unsalable Inventory
SECTION 8. MISCELLANEOUS.
8.1 Law Governing
8.2 Notices
8.3 Prior Agreements Superseded
8.4 Assignability
8.5 Captions and Gender
8.6 Certain Definitions
8.7 Execution in Counterparts
8.8 Amendments; Waivers
8.9 Severability
8.10 Bulk Sales Law
8.11 Publicity and Disclosures
8.12 Consent to Jurisdiction and Service
SCHEDULES
Schedules
Schedule 1.1(a)(i) - Inventory
Schedule 1.1(a)(iii) - Equipment
Schedule 1.1(a)(iv) - Intellectual Property
Schedule 1.1(b) - Certain Excluded Assets
Schedule 1.2(b)(i) - Acquired Sales Orders
Schedule 1.8 - Allocation of Purchase Price
Schedule 2.8 - Intangible Rights
Schedule 2.10 - Income Statements
Schedule 2.11 - Litigation
Schedule 2.13 - Insurance
Schedule 2.15 - Permits; Government Consents
Schedule 2.16 - Exceptions to No Material Adverse Changes
Schedule 2.19 - Suppliers, Customers Distributors, Etc.
Schedule 2.21 - Backlog
Schedule 2.22 - Contracts
ASSET PURCHASE AGREEMENT dated as of August 4, 1994
by and between Circle Seal Controls, Inc., a Delaware corporation
("Buyer") and SAES Pure Gas, Inc., a California corporation ("Seller").
WHEREAS, subject to the terms and conditions set forth
herein, Buyer desires to purchase from Seller, and Seller desires to
sell, transfer and assign to Buyer, substantially all of the properties
and assets comprising the business which manufactures and sells
the Cryolab product line of the Seller (the "Cryolab Business").
NOW, THEREFORE, in order to consummate said purchase
and sale and in consideration of the mutual agreements set forth
herein, the parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS.
1.1 Sale of Assets.
(a) Subject to the provisions of this Agreement, at the
Closing (as defined in Section 1.4 hereof) Seller shall sell, transfer
and assign to Buyer and Buyer shall acquire all right, title and
interest in and to all of the properties, assets and business of the
Cryolab Business (except as hereinafter provided in Section 1.1(b)) of
every kind and description, tangible and intangible, real, personal or
mixed, and wherever located, including without limitation, the
following:
(i) all inventory, stock in trade, work-in-progress,
finished goods and raw materials of or relating to the Cryolab
Business (collectively, the "Inventory"), including without
limitation as set forth on Schedule 1.1(a)(i) attached hereto;
(ii) all patterns, drawings, toolings and dies owned by
Seller or in which Seller has any rights or interest which are
used in the Cryolab Business, it being understood by the
parties hereto that at the Closing Seller shall provide Buyer
with written information as to the name, address and telephone
number of each foundry where patterns are located as well as
information identifying each pattern located at each such
foundry (the "Pattern Information");
(iii) machinery and the equipment listed on Schedule
1.1(a)(iii) attached hereto,all tools, spare parts, fixtures,
castings, and other tangible assets related to or used in
connection with such scheduled machinery and equipment and
all other tools, spare parts, fixtures and other tangible assets
used in the Cryolab Business (collectively, the "Equipment");
(iv) all goodwill and intellectual property rights,
including trade secrets, proprietary information, designs,
styles, technologies, inventions, know-how, formulae,
processes, procedures, research records, test information,
software and software documentation, market surveys,
marketing know-how and manufacturing, research and
technical information, trade names, copyrights and copyright
registrations, service marks and trademarks (including
applications and registrations therefor), patents and patent
applications (including without limitation the trade names,
copyrights and copyright registrations, service mark and
trademark registrations and applications and patents and
patent applications described in Schedule 1.1(a)(iv) attached
hereto), the "Cryolab" name and all related and associated
logos and trademarks, and all licenses to or from third parties
with respect to the foregoing or rights related thereto, in each
case relating primarily to or otherwise necessary to the
operation of the Cryolab Business; and
(v) all other assets and properties of every nature
whatsoever tangible and intangible, and wherever located, used
or held for use primarily in connection with the Cryolab
Business or otherwise necessary to the operation of the Cryolab
Business, including without limitation rights under contracts
or agreements with representatives marketing and selling the
products of the Cryolab Business, copies of customer lists,
customer records and histories, customer invoices (for last
three (3) years), lists of suppliers and vendors and all records
relating thereto, all records with respect to the repair business
of the Cryolab Business, engineering drawings, records with
respect to production, engineering, product development, costs,
advertising matter, catalogues, photographs, sales materials,
purchasing materials, media materials, manufacturing and
quality control records and procedures, research and
development, files, data and laboratory books, media materials
and plates and other records used primarily in connection with
the Cryolab Business or otherwise necessary to the operation of
the Cryolab Business.
The assets, property and business of Seller being sold to and
purchased by Buyer under this Section 1.1(a) are hereinafter
sometimes referred to as "Subject Assets."
(b) Notwithstanding the foregoing, there shall be
excluded from such purchase and sale the following property and
assets of Seller:
(i) the assets listed on Schedule 1.1(b) attached
hereto;
(ii) cash, bank deposits and bank accounts of
Seller;
(iii) all accounts receivable of Seller, including
without limitation intercompany receivables; and
(iv) all assets of Seller not used or held for use
primarily in connection with the Cryolab Business or
otherwise necessary to the operation of the Cryolab
Business.
The assets, property and business of Seller which are excluded
from the Subject Assets under this Section 1.1(b) are hereinafter
sometimes referred to as "Excluded Assets."
1.2 Liabilities. Except for the Sales Order Liabilities (as
defined below), Buyer shall not assume or be bound by any
obligations or liabilities of Seller or any affiliate of Seller of any kind
or nature, known, unknown, accrued, absolute, contingent or
otherwise, whether now existing or hereafter arising whatsoever.
Seller shall be responsible for and pay any and all losses, damages,
obligations, liens, assessments, judgments, fines, disposal and other
costs and expenses, liabilities and claims, including, without
limitation, interest, penalties and reasonable fees of counsel,
engineers and experts, as the same are incurred, of every kind or
nature whatsoever (all the foregoing being a "Claim" or the "Claims"),
made by or owed to any person to the extent any of the foregoing
relates to (a) Seller's operations and assets other than the operations
and assets of the Cryolab Business, (b) the Excluded Assets or (c) the
operations and assets of the Cryolab Business and arises in
connection with or on the basis of events, acts, omissions, conditions
or any other state of facts occurring or existing prior to or on the
Closing Date (including, in each case, without limitation, any Claim
relating to or associated with product liability matters, warranty
claims, tax matters, pension and benefits matters, any failure to
comply with applicable laws and/or permitting or licensing
requirements, personal injury and property damage matters and
environmental and worker health and safety matters). Buyer shall be
responsible for and pay any and all Claims to the extent they relate to
(x) the Sales Order Liabilities or (y) the operation by Buyer of the
Subject Assets after the Closing Date and arise in connection with or
on the basis of events, acts, omissions, conditions or any other state
of facts occurring or existing after the Closing Date (including, in
each case, without limitation, any Claim relating to or associated
with product liability matters, warranty claims, tax matters, pension
and benefit matters, any failure to comply with applicable laws
and/or permitting or licensing requirements, personal injury and
property damage matters and environmental and worker health and
safety matters). Any Claim, other than for the payment of liabilities,
relating to operations and assets of the Seller and arising in
connection with or on the basis of events, acts, omissions, conditions
or any other state of facts occurring or existing both before and after
the Closing Date will be apportioned between Seller and Buyer
according to their relative degrees of causation as may be reasonably
determined by Seller and Buyer under the circumstances; provided,
however, that Buyer will not be considered to have caused the
relevant problem to any extent for purposes of this Agreement if it
takes all reasonable actions to address such problem after first
obtaining actual knowledge thereof notwithstanding the fact that the
relevant problem may have continued to exist for a period of time
after the Closing Date. Pursuant to the foregoing, Seller agrees with
Buyer that Seller shall be solely responsible for any and all warranty
claims or claims for injury (including death) or claims for damage,
direct or consequential, resulting from or connected with products or
services of the Cryolab Business sold or provided on or prior to the
Closing Date, and Buyer shall have no liability for such claims.
Buyer agrees with Seller that Buyer shall be solely responsible for
any and all warranty claims or claims for injury (including death) or
claims for damage, direct or consequential, resulting from or
connected with products or services sold or provided by Buyer after
the Closing Date, and, subject to Seller's indemnification obligations
under Section 6 hereof, Seller shall have no liability for such claims.
(b) Upon the sale and purchase of the Subject Assets, Buyer
agrees to perform in accordance with their terms only the obligations
of Seller under the unfilled portions of those sale orders from
customers of the Cryolab Business as set forth on Schedule 1.2(b)(i)
(the "Acquired Sales Orders"). The liabilities to be assumed by Buyer
pursuant to the preceding sentence are hereinafter sometimes
referred to as the "Sales Order Liabilities." The assumption of the
Sales Order Liabilities by Buyer hereunder shall not enlarge any
rights of third parties under contracts or arrangements with Buyer or
Seller or any of their respective affiliates or subsidiaries.
Notwithstanding anything contained in this Section 1.2 to the
contrary, the only liabilities and obligations of Seller existing on or
prior to the Closing Date (including, without limitation, contractual
liabilities and obligations) to be assumed by Buyer under this
Agreement are the Sales Order Liabilities.
1.3 Purchase Price and Payment. In consideration of the
sale by Seller to Buyer of the Subject Assets, subject to the
assumption by Buyer of the Sales Order Liabilities, Buyer shall pay to
Seller on the Closing Date by federal funds wire transfer in
immediately available funds to an account designated by Buyer, the
sum of $886,122.03 (the "Purchase Price").
1.4 Place of Closing; Closing Date. The closing of the
purchase and sale provided for in this Agreement (herein called the
"Closing") shall be held at the offices of Goodwin, Procter & Hoar,
Exchange Place, Boston, Massachusetts 02109, on August 1, 1994,
or at such other place or earlier or later date as may be fixed by
mutual agreement of Buyer and Seller (the "Closing Date").
1.5 Transfer of Subject Assets. At the Closing, Seller shall
deliver or cause to be delivered to Buyer good and sufficient
instruments of transfer transferring to Buyer title to all of the Subject
Assets. Such instruments of transfer (a) shall be in the form which is
usual and customary for transferring the type of property involved
under the laws of the jurisdictions applicable to such transfers,
(b) shall be in form and substance satisfactory to Buyer and its
counsel, (c) shall effectively vest in Buyer good and marketable title to
all of the Subject Assets free and clear of all liens, restrictions and
encumbrances, and (d) where applicable, shall be accompanied by
evidence of the discharge of all liens and encumbrances against the
Subject Assets.
1.6 Delivery of Records and Contracts. At the Closing, Seller
shall deliver or cause to be delivered to Buyer all of the Acquired
Sales Orders. Seller shall also deliver to Buyer at the Closing, or
substantially concurrently with the removal by Buyer of the Subject
Assets, all of Seller's business records, books and other data relating
to the assets, business and operations of the Cryolab Business, to
the extent the same constitute part of the Subject Assets. Seller at
the Closing shall also provide Buyer with written information as to
the name, address and telephone number of each printer where
literature plates are located as well as information identifying each
literature plate located at each such printer (the "Literature Plate
Information").
1.7 Further Assurances. Seller from time to time after the
Closing at the request of Buyer and without further consideration
shall (a) execute and deliver further instruments of transfer and
assignment (in addition to those delivered under Section 1.6) and
take such other actions as Buyer may reasonably require to more
effectively transfer and assign to, and vest in, Buyer each of the
Subject Assets and (b) cooperate with and provide assistance to
Buyer in removing the Subject Assets from Seller's premises (or
wherever located) as more fully described in Section 3.6 hereof.
1.8 Allocation of Purchase Price. The purchase price payable
by Buyer pursuant to Section 1.3 and the amount of the Sales Order
Liabilities assumed by Buyer shall represent payment for the Subject
Assets and the covenants set forth in Section 3.7 hereof in the
amounts set forth on Schedule 1.8 hereto. The amounts reflected in
said Schedule shall represent the fair market values of the Subject
Assets at the Closing, to the best of the knowledge and belief of the
parties hereto. At or as soon as practicable after the Closing, Buyer
and Seller shall execute an IRS Form 8594 in accordance with the
allocation set forth in said Schedule and in compliance with Section
1060 of the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder. All tax returns and reports filed by
Buyer and Seller with respect to the transactions contemplated by
this Agreement shall be consistent with such Schedule.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER.
2.1 Making of Representations and Warranties. Seller
hereby makes the representations and warranties contained in this
Section 2. For the purposes of this Section 2, references to the
"knowledge" or "best knowledge" of Seller shall be deemed to include
such knowledge as any executive officer of Seller actually has or
reasonably ought to have in the prudent exercise of his or her duties.
2.2 Organization and Qualifications of Seller. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of California with full power and authority
to own 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.
2.3 Authority. The Seller has full corporate power and
authority to execute, deliver and perform this Agreement and each
other agreement or instrument contemplated hereby and the
execution and delivery of this Agreement and each other agreement
or instrument contemplated hereby and the performance of all
obligations hereunder and thereunder have been duly authorized by
all necessary action of Seller. This Agreement and each other
agreement, document and instrument executed by Seller pursuant to
or in connection with this Agreement constitute, or when executed
and delivered will constitute, valid and binding obligations of Seller,
enforceable in accordance with their respective terms. The execution,
delivery and performance by the Seller of this Agreement and each
other agreement, document and instrument executed and delivered
by the Seller pursuant to this Agreement and the execution, delivery
and performance by the Seller of any agreements, documents and
instruments required to be executed and delivered by it pursuant to
this Agreement:
(i) do not and will not violate any provision of the
Articles of Incorporation or By-laws of Seller, each as amended
or restated to date;
(ii) do not and will not violate any law or regulation
applicable to Seller or require Seller to obtain any approval,
authorization, declaration, consent or waiver of, or make any
filing with or give notice to, any person, entity or public or
governmental authority that has not been obtained, made or
given; and
(iii) do not and will not result in a breach of, constitute
a default under, accelerate any obligation under, require a
consent under or give rise to a right of termination of any
indenture or loan or credit agreement or any other agreement,
contract, instrument, mortgage, lien, lease, permit, license,
authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which the Seller is a
party or by which Seller or the property of Seller is bound or
affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or
encumbrance on any property or asset owned by Seller or on
any of the Subject Assets.
2.4 Title to Properties; Liens; Condition of Properties.
(a) The Subject Assets do not include any real property or
leases. Seller owns all of the Subject Assets and Seller has and is
conveying to Buyer hereunder good and marketable title to all of its
personal property, tangible and intangible, included in the Subject
Assets. None of such property or assets of Seller tangible or
intangible, is subject to any mortgage, pledge, lien, conditional sale
agreement, security interest, encumbrance or other charge or
restraint on transfer (collectively "Liens"). No financing statement
under the Uniform Commercial Code with respect to any of the
Subject Assets has been filed in any jurisdiction, and Seller has not
signed any such financing statement or any security agreement
authorizing any secured party thereunder to file any such financing
statement. The Subject Assets and Excluded Assets listed on
Schedule 1.1(b) are all of the assets necessary for the operation of the
business of the Cryolab Business as the same has been operated
prior to the date hereof. The Subject Assets (including the
Equipment) (i) are in working order (reasonable wear and tear
excepted, and in each case taking into account age), (ii) have been
and shall through the Closing be maintained in a manner consistent
with the past maintenance practices of Seller, (iii) are suitable for the
manufacture of parts in accordance with the engineering
specifications for Cryolab Products and (iv) to the best knowledge of
Seller, conform with all applicable California and federal statutes,
ordinances, regulations and laws.
(b) Upon delivery to Buyer of the instruments of transfer
referred to in Section 1.6 hereof, Buyer will receive good, marketable
and valid title to all of the Subject Assets, free and clear of all liens,
encumbrances, charges, equities and claims of every kind.
2.5 Location of Subject Assets. The tangible Subject Assets
are located at Seller's facility at 4175 Santa Fe Road, San Luis
Obispo, California (the "Facility"), with the exception of (a) patterns
(which are located as set forth in the Pattern Information provided
pursuant to Section 1.1(a)(ii)) and (b) literature plates (which are
located as set forth in the Literature Plate Information provided
pursuant to Section 1.6).
2.6 Undisclosed Liabilities. Except as set forth on Schedule
2.6, Seller has no material liabilities of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or
unknown, which relate primarily to the Cryolab Business.
2.7 Inventories. All of the Inventory is in existence on the
date hereof. The Inventory complies with the descriptions and
specifications set forth on Schedule 1.1(a)(i) and the Inventory
consisting of component parts is of a quality sufficient to permit
Buyer to manufacture products of the Cryolab Business in a manner
consistent with all of such descriptions and specifications. On the
date hereof, the Inventory is of the types, quantities and quality
necessary to conduct the business of the Cryolab Business in a
manner consistent with past practices. All of the items included in
the Inventory are of a quality and quantity salable in the ordinary
course of business of Seller. The values of the Inventory items as set
forth on Schedule 1.1(a)(i) are true and correct and reflect valuations
not in excess of the net realizable values of such items in the
ordinary course of business.
2.8 Patents, Trade Names, Trademarks and Copyrights. All
patents, patent applications, trade names, trademarks, trademark
applications and registrations, copyrights or other proprietary rights
owned by or licensed to Seller and used or to be used by or in
connection with the Cryolab Business (the "Intangible Rights") are
listed on Schedule 2.8 attached hereto. Except as set forth on said
Schedule, all of the registered patents, trademarks and copyrights
constituting Proprietary Rights have been duly registered in, filed in
or issued by the United States Patent and Trademark Office, the
United States Register of Copyrights or the corresponding offices of
other countries identified on said Schedule, and have been properly
maintained and renewed in accordance with all applicable provisions
of law and administrative regulations in the United States and each
such country. Except as set forth in said Schedule, the Intangible
Rights are freely transferable and Seller has exclusive ownership or
exclusive license to use all of the Intangible Rights free and clear of
any attachments, liens, encumbrances or adverse claims. Except as
set forth on said Schedule, (a) no other person has a license to use,
or the right to license others to use, and, to the best knowledge of
Seller, no person has an interest in or right to, any of the Intangible
Rights, (b) there are no claims or demands of any other person or
entity pertaining thereto and no proceedings have been instituted, or
are pending or to the best knowledge of Seller, threatened, which
challenge the rights of Seller in respect thereof, (c) none of the
Intangible Rights is subject to any outstanding order, decree,
judgment or stipulation or, to the best knowledge of Seller, is being
infringed by others, (d) no proceeding charging Seller with
infringement of any patent, trade name, trademark or copyright that
is used by or in connection with the Cryolab Business has been filed
or, to the best knowledge of Seller, is threatened to be filed and
(e) there does not exist (i) any unexpired patent with claims relating
to products of the Cryolab Business or to apparatus, methods or
designs employed by the Cryolab Business in manufacturing its
products or (ii) to the best knowledge of Seller, any invention, patent
or application therefor which could reasonably be expected to
adversely affect any such product, apparatus, method or design of
the Cryolab Business.
2.9 Trade Secrets and Customer Lists. Seller has the right to
use, free and clear to the best knowledge of Seller of any claims or
rights of others, all trade secrets, customer lists, manufacturing and
secret processes required for or incident to the manufacture or
marketing of (a) all products formerly or presently produced by the
Cryolab Business and (b) all products currently under development
by the Cryolab Business, including products licensed from others
(hereinafter collectively referred to as the "Proprietary Information").
The Cryolab Business is not using or in any way making use of any
confidential information or trade secrets of any third party in
violation of such third party's rights, including without limitation,
any former employer of any present or past employee of Seller or any
person or entity affiliated with any of them.
2.10 Financial Statements. Seller has delivered to Buyer
unaudited statements of income for the Cryolab Business for each of
the twelve-month periods ended December 31, 1991, 1992 and 1993,
and for the six-month period ended June 30, 1994, certified by
Seller's Chief Financial Officer, copies of which are attached hereto as
Schedule 2.10 (the "Income Statements"). The Income Statements
(except for the six-month period ended June 30, 1994) were prepared
by Seller based on the audited statements of income of Seller for the
periods covered thereby, as certified by Seller's independent public
accountants (the "Audited Income Statements"). The Income
Statements (i) have been prepared in accordance with generally
accepted accounting principles applied consistently during the
periods covered thereby (except for the absence of accompanying
footnotes), (ii) have been prepared on a basis consistent with the
Audited Income Statements, (iii) are complete and correct in all
material respects, (iv) present fairly the results of operations of the
Cryolab Business for the periods covered thereby and (v) contain no
omission of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
2.11 Litigation. Except as set forth on Schedule 2.11, there is
no litigation, claim or governmental, arbitration or other proceeding,
investigation, order or decree pending or in effect or, to the best
knowledge of Seller, threatened against Seller relating to or affecting
any of the Subject Assets or the Cryolab Business. All of the matters
set forth on Schedule 2.11 are subject to and are being defended by
Seller's insurance carrier.
2.12 Compliance with Laws. To the best knowledge of Seller,
the Cryolab Business and the Subject Assets have been and as of the
date hereof are in compliance with all applicable laws, rules,
regulations, codes, ordinances, requirements and orders of
governments or governmental bodies, and Seller has received no
notice asserting any noncompliance therewith. In addition, all
engineering drawings included in the Subject Assets are in full
compliance with all applicable industry standards, guidelines and
regulations, including without limitation industry standard ANSI
Y14.5, to the extent applicable to the Cryolab Business.
2.13 Insurance. Schedule 2.13 identifies all policies of
insurance in effect as of the date of this Agreement covering the
assets, properties and business of the Cryolab Business. Said
insurance policies are in full force and effect and all premiums with
respect thereto are currently paid. Seller's product liability insurance
provides for occurrence based coverage. Except as set forth on
Schedule 2.13, there have been no material losses, claims or
settlements during the last three fiscal years.
2.14 Finder's Fee. Seller has not incurred or become liable for
any broker's commission or finder's fee relating to or in connection
with the transactions contemplated by this Agreement.
2.15 Permits; Governmental Consents. To the best knowledge
of Seller, Seller has obtained and is operating in compliance with all
franchises, licenses, permits, registrations, applications,
certifications, code approvals and other approvals (collectively the
"Permits") which are required primarily to permit it to conduct the
business of the Cryolab Business and each such Permit is valid and
in full force and effect. As of the Closing Date, to the extent Seller is
allowed to do so, Seller is conveying and assigning to Buyer each
Permit, other than those Permits required to operate the Facility.
Seller is not subject to or bound by any agreement, judgment, decree
or order which may materially and adversely affect any of the Subject
Assets or the business, prospects or condition (financial or otherwise)
of the Cryolab Business. No consent, approval, or authorization of,
or declaration, filing or registration with, any United States federal,
foreign or state governmental or regulatory authority is required to be
made or obtained by Seller in connection with the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement.
2.16 Material Adverse Change. Except as specifically
disclosed on Schedule 2.16 to this Agreement, since December 31,
1993:
(a) there has not been any material adverse change in
the business, results of operations, condition (financial or
otherwise), properties, assets, liabilities or obligations of the
Cryolab Business;
(b) there has not been any damage, destruction or loss
(whether or not covered by insurance), materially and adversely
affecting the business, prospects, results of operations,
condition (financial or otherwise) assets or properties of the
Cryolab Business;
(c) there has not been any change in the relationships
of Seller with respect to its suppliers, distributors, licensees,
licensors, customers or others with whom it has business
relationships which would have a material adverse effect on the
Cryolab Business, and Seller does not have knowledge of any
fact or contemplated event which may cause any such material
adverse change;
(d) the business conducted by the Cryolab Business
has been conducted and carried on only in the ordinary and
regular course; and
(e) there has not been any alteration or change in the
methods of operation employed by the Cryolab Business.
2.17 Government Contracts. Seller has no pending or
proposed contracts or subcontracts with any agency of the United
States Government relating to the Cryolab Business.
2.18 Products. Except as set forth on Schedule 2.13, there
are no existing or, to the best knowledge of Seller, threatened product
liability, warranty or other similar claims, or, to the best knowledge of
Seller, any facts upon which a claim of such nature could be based,
against Seller for products or services of the Cryolab Business which
are defective or fail to meet any product or service warranties. There
are no statements, citations or decisions by any government or
political subdivision thereof, whether federal, state, local or foreign,
or any agency or instrumentality of any such government or political
subdivision, or any court or arbitrator (collectively, "Governmental
Bodies") stating that any product manufactured, marketed or
distributed by the Cryolab Business at any time on or prior to the
Closing Date ("Cryolab Products") is defective or unsafe or fails to
meet any product warranty or any standards promulgated by any
such Governmental Body. There have been no recalls ordered by any
such Governmental Body with respect to any Cryolab Product. Seller
does not know and has no reason to know of (a) any fact relating to
any Cryolab Product that may impose upon Seller a duty to recall any
Cryolab Product or a duty to warn customers of a defect in any
Cryolab Product, (b) any latent or overt design, manufacturing or
other defect in any Cryolab Product, or (c) any material liability for
warranty or other claims or returns with respect to any Cryolab
Product. The sales and advertising brochures and literature relating
to the Cryolab Products do not contain any material omission or
misstatement.
2.19 Suppliers, Customers and Distributors. Schedule 2.19
sets forth all of the suppliers, customers and distributors (inclusive of
sales representatives and agents) of Seller with respect to the Cryolab
Business. The relationships of Seller with such suppliers, customers
and distributors are good commercial working relationships and
(a) no person or entity listed on Schedule 2.19 within the last 12
months has threatened in writing to cancel or otherwise terminate, or
to the best knowledge of Seller intends to cancel or otherwise
terminate, the relationship of such person with Seller, (b) no such
person or entity has during the last twelve months modified
materially, and Seller has no knowledge that such persons or entities
intend to materially modify their relationship in such a way as to
cause a materially adverse effect on the Cryolab Business.
2.20 Disclosure. The representations, warranties and
statements made or contained in this Agreement, in the documents,
certificates, filings, Schedules and Exhibits given or delivered by
Seller in connection with and pursuant to this Agreement and in any
other written materials relating to the Cryolab Business provided by
Seller to Buyer or any of its affiliates, do not either individually or
when taken together, contain any untrue statement of a material fact,
and do not omit to state a material fact required to be stated therein
or necessary in order to make such representations, warranties and
statements not misleading in light of the circumstances in which they
were made or delivered. Other than as specifically disclosed herein
or in the Schedules hereto, Seller is unaware of any facts which could
reasonably be expected to result in a material adverse impact on the
Subject Assets or on the business, properties, prospects, operations
or condition (financial or otherwise) of the Cryolab Business.
2.21 Backlog. As of the date hereof, the Cryolab Business has
a backlog of firm written non-contingent orders for the sale of
products for which revenues have not been fully recognized by Seller,
as set forth in Schedule 2.21 hereto (the "Backlog") and the amount
of the Backlog reflected on such Schedule is true and correct.
2.22 Contracts. Except for contracts, commitments, plans,
agreements and licenses listed in Schedule 2.22 attached hereto (true
and complete copies (or, in the case of oral agreements, written
descriptions) of which have been delivered to Buyer), Seller is not a
party to or subject to any of the following contracts or agreements, in
each case which relates primarily to, or is necessary in connection
with the operation of, the Cryolab Business:
(a) any contract or agreement for the purchase of any
commodity, material or equipment, except purchase orders in the
ordinary course of the Cryolab Business;
(b) any other contracts or agreements creating any
obligation of Seller of $10,000 or more with respect to any such
contract or $50,000 in the aggregate with respect to all such
contracts, except purchase orders in the ordinary course of the
Cryolab Business;
(c) any contract or agreement providing for the
purchase of all or substantially all of its requirements of a particular
product from a supplier;
(d) any contract or agreement which by its terms does
not terminate or is not terminable without penalty by Seller or any
successor or assign within one year after the date hereof;
(e) any contract or agreement for the sale or lease of
its products, except sales orders in the ordinary course of the Cryolab
Business;
(f) any contract with any sales agent or distributor of
products of Seller;
(g) any contract containing covenants limiting the
freedom of Seller to compete in any line of business or with any
person or entity;
(h) any contract or agreement for the purchase of any
fixed asset for a price in excess of $2,500 whether or not such
purchase is in the ordinary course of business;
(i) any license agreement (as licensor or licensee);
(j) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for the
borrowing of money and any related security agreement;
(k) any contract or agreement with any officer,
employee, director or stockholder of Seller or with any persons or
organizations controlled by or affiliated with any of them; or
(l) any oral contract, agreement, arrangement or
understanding involving (individually or in the aggregate) more than
$10,000 which pertains to the suppliers or customers of the Cryolab
Business.
All contracts, agreements, leases and instruments to which
Seller is a party or by which the Seller is obligated, in each case
which relate primarily to the Cryolab Business, including without
limitation any relating to continuing warranty or service obligations
(collectively, the "Cryolab Contracts"), are valid and are in full force
and effect and constitute legal, valid and binding obligations of Seller
enforceable in accordance with their respective terms. To the best
knowledge of Seller, each Cryolab Contract constitutes the legal, valid
and binding obligation of each party thereto other than Seller
enforceable in accordance with its terms. Neither Seller nor, to the
best knowledge of Seller, any other party to any Cryolab Contract is
in material default in complying with any provisions thereof, and no
condition or event or facts exist which, with notice, lapse of time or
both would constitute a material default thereof on the part of Seller
or, to the best knowledge of Seller, on the part of any other party
thereto.
SECTION 3. COVENANTS OF SELLER.
3.1 Making of Covenants and Agreements. Seller hereby
covenants and agrees as set forth in this Section 3.
3.2 Breach of Representations and Warranties. Promptly
upon the occurrence of, or promptly upon becoming aware of the
impending or threatened occurrence of any event which would cause
or constitute a breach, or would with the giving of notice, the passage
of time or both constitute a breach of (a) any of the representations
and warranties of Seller contained in or referred to in this Agreement
or in any Schedule referred to in this Agreement, (b) any other
provision of this Agreement, or (c) any other agreement executed and
delivered in connection with this Agreement, Seller shall give detailed
written notice thereof to Buyer and shall use its best efforts to
prevent or promptly remedy the same.
3.3 Expenses. All expenses of Seller in connection with the
negotiation and performance of this Agreement and the transactions
contemplated hereby and all transfer, excise or other taxes payable
by any party to this Agreement to any jurisdiction by reason of the
sale and transfer of the Subject Assets pursuant to this Agreement, if
any (excluding any such taxes arising solely from the identity or
location of Buyer or any affiliate of Buyer), shall be paid by Seller out
of the proceeds of the sale of the Subject Assets or otherwise, and, no
such expenses shall be payable by Buyer or any affiliate of Buyer.
3.4 Notification. Until the third anniversary of the Closing
Date, Seller hereby agrees to give Buyer written notice of any change
of Seller's address within five days after such change, specifying such
new address.
3.5 Non-Use of Trade Names, etc. After the Closing Date,
neither Seller, nor any person controlling, controlled by or under
common control with Seller will for any reason, directly or indirectly,
for itself or any other person, (a) use any Intangible Rights
transferred pursuant to this Agreement, or (b) use or disclose any
trade secrets, confidential information, know-how, proprietary
information or other intellectual property described in
Section 1.1(a)(iv) hereof and transferred pursuant to this Agreement,
except (i) Seller may disclose such information to Buyer in connection
with the operation of the Cryolab Business by Buyer after the Closing
Date and (ii) Seller may, for a period of 180 days after the Closing
Date, continue to use the name "Cryolab" to the extent it is contained
in product literature which relates both to Cryolab Products and
other products of Seller which do not compete with Cryolab Products.
3.6 Access and Cooperation of Seller. In connection with the
relocation of the Subject Assets from the Facility (or wherever located)
to Buyer's premises (the "Relocation"), Seller shall cooperate with and
assist Buyer and comply with all reasonable requests of Buyer at the
Facility. Seller shall use its best efforts to provide Buyer with access
to Seller's premises at all times during normal working hours until
the Relocation has been completed. In addition, Seller shall provide
Buyer with use of forklifts, trucks and other materials handling
equipment, as well as sufficient labor to accomplish the Relocation.
Buyer shall reimburse Seller, subject to reasonable substantiation
and documentation, for actual out-of-pocket expenses incurred by
Seller after the date of this Agreement in connection with the
Relocation. Any labor costs incurred by Seller for Seller's employees
assisting with the Relocation shall be reimbursed by Buyer at hourly
rates agreed upon in advance without any payments by Buyer on
account of or with respect to the cost of any benefits (health,
retirement, etc.) incurred by Seller with respect to such employees.
Buyer agrees to defend, indemnify and hold Seller harmless from and
against any and all claims for property damage arising out of the
Relocation which are caused by negligent acts of Buyer or its
employees or agents. Buyer agrees not to cross claim against Seller
in the event that any action is brought against Buyer for personal
injury arising out of the Relocation which is caused by a negligent act
of Buyer or its employees or agents.
3.7 Non-Competition. Seller, in order to induce Buyer to
enter into this Agreement, expressly covenants and agrees that
neither Seller nor any of its affiliates will, directly or indirectly, (a) for
a period of ten (10) years following the Closing Date disclose or
furnish to any person, other than Buyer, any proprietary information
of, or confidential information concerning, the Cryolab Business
except as required by law; and (b) for a period of two (2) years
following the Closing Date anywhere in the United States or in any
foreign country, own, manage, operate, join, control, or participate in
or be connected with any business, individual, partnership, firm or
corporation, which is at the time engaged, wholly or partly, in the
design, manufacture, development, distribution, marketing or sale of
any valves designed for and/or used in any Cryogenic application.
For purposes of this Agreement, the term "Cryogenic" means any gas
or liquid exhibiting a temperature of -100 F (minus one hundred
degrees Fahrenheit) or lower. Seller agrees that this provision is
reasonable in view of the nature of the business being transferred
and the relevant market for the Seller's products and services and
that any breach hereof would result in continuing and irreparable
harm to Buyer and would adversely affect the value to Buyer of the
Subject Assets and related goodwill being transferred under this
Agreement. The Seller expressly covenants and agrees that the
remedy at law for any breach of this Section 3.7 will be inadequate
and that, in addition to any other remedies Buyer may have, Buyer
shall be entitled to temporary and permanent injunctive relief without
the necessity of proving actual damage. To the extent that any part
of this provision may be invalid, illegal or unenforceable for any
reason, it is intended that such part shall be enforceable to the extent
that a court of competent jurisdiction shall determine that such part
if more limited in scope would have been enforceable and such part
shall be deemed to have been so written and the remaining parts
shall as written be effective and enforceable in all events.
3.8 Sales Orders. Seller will not send any invoices to, or
request payment in any other manner from, customers of the Cryolab
Business for sales orders unfulfilled as of the Closing Date. Any and
all amounts received by Seller from any such customer in respect of
any such unfulfilled sales order shall be promptly remitted to Buyer.
3.9 Notification of Foundries, Printers, Etc. Seller agrees
from time to time, as often as is reasonably requested by Buyer, that
Seller shall contact the foundries, printers, and other entities,
respectively, where the patterns and literature plates acquired by
Buyer pursuant to this Agreement are located, and notify them that
Buyer has acquired such patterns and literature plates and that
Buyer is the lawful owner thereof and Seller shall otherwise cooperate
as requested by Buyer to effect the transfer to Buyer of such patterns
and literature plates.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
4.1 Making of Representations and Warranties. As a
material inducement to Seller to enter into this Agreement and
consummate the transactions contemplated hereby, Buyer hereby
makes the representations and warranties to the Seller contained in
this Section 4.
4.2 Organization of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware with full corporate power and authority to own 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.
4.3 Authority of Buyer. Buyer has full corporate power and
authority to enter into this Agreement and each agreement,
document and instrument to be executed and delivered by Buyer
pursuant to this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance by
Buyer of this Agreement and each such other agreement, document
and instrument have been duly authorized by all necessary action of
Buyer and no other action on the part of Buyer is required in
connection therewith. This Agreement and each other agreement,
document and instrument executed and delivered by Buyer pursuant
to this Agreement constitute valid and binding obligations of Buyer
enforceable in accordance with their terms. The execution, delivery
and performance by Buyer of this Agreement and each such
agreement, document and instrument:
(i) do not and will not violate any provision of the certificate
of incorporation or by-laws of Buyer;
(ii) do not and will not violate any laws of the United States,
or any state or other jurisdiction applicable to Buyer or
require Buyer to obtain any approval, consent or waiver
of, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained
or made; and
(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give
rise to a right of termination of any indenture or loan or
credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination
or arbitration award, whether written or oral, to which
Buyer is bound or affected.
4.4 Litigation. There is no litigation pending or, to the best
knowledge of Buyer, threatened against Buyer which would prevent
or hinder the consummation of the transactions contemplated by this
Agreement.
4.5 Finder's Fees. Except for the fees of Penrose Associates,
which shall be paid solely by Buyer, Buyer has not incurred or
become liable for any broker's commission or finder's fee relating to
or in connection with the transactions contemplated by this
Agreement.
4.6 Reliance. Buyer is relying on each of the representations
and warranties of Seller contained in this Agreement.
SECTION 5. COVENANTS OF BUYER.
5.1 Making of Covenants and Agreements. Buyer hereby
covenants and agrees as set forth in this Section 5.
5.2 Accounts Receivable. Buyer agrees to promptly remit to
Seller any amounts received by Buyer with respect to Seller's
accounts receivable. Buyer agrees to cooperate with Seller to inform
customers of the Cryolab Business with outstanding accounts
receivable due to Seller as of the Closing Date that payments should
be directed to Seller and not to Buyer.
5.3 Inventory. Buyer agrees to use commercially reasonable
efforts in the ordinary course of business to sell the Inventory, except
the parties recognize a reserve of $104,000 for obsolete or scrap
inventory items for which Buyer shall have no such obligation.
5.4 Insurance. Buyer (or its affiliates) shall continue to
maintain for a period of five years after the Closing, product liability
insurance in the amount of at least $2,000,000 (and on such other
terms and conditions as are customarily contained in such policies of
Buyer and its affiliates) and such insurance shall apply to products
sold or provided by Buyer after the Closing Date.
5.5 Confidentiality. In the event that Buyer should acquire
any proprietary or confidential information of or concerning SAES
and/or the business of SAES in connection with or as a result of the
transactions contemplated by this Agreement, Buyer agrees not to
disclose and to maintain the confidentiality of such information,
except Buyer may disclose any such information (i) to the extent
required by law and (ii) which relates to the operation of the Cryolab
Business.
5.6 Notification. Until the third anniversary of the Closing
Date, Buyer hereby agrees to provide to Seller written notice of any
change of Buyer's address within five days after such change,
specifying such new address.
5.7 Acquired Sales Orders. Upon the sale and purchase of
the Subject Assets, Buyer agrees to pay, perform and discharge in
accordance with their terms only the Sales Order Liabilities.
SECTION 6. SURVIVAL OF WARRANTIES.
6.1 Survival of Warranties. All representations, warranties,
agreements, covenants and obligations herein or in any schedule,
exhibit, certificate or financial statement delivered by any party
incident to the transactions contemplated hereby are material, shall
be deemed to have been relied upon by the parties receiving the same
and shall survive the Closing (subject to Section 7.1 hereof)
regardless of any investigation and shall not merge into the
performance of any obligation by any party hereto.
SECTION 7. INDEMNIFICATION.
7.1 Indemnification by Seller. Seller (subject to the following
paragraph of this Section 7.1), agrees to defend, indemnify and hold
Buyer, its parent and its and their respective subsidiaries and
affiliates and persons serving as officers, directors, partners or
employees thereof (individually a "Buyer Indemnified Party" and
collectively the "Buyer Indemnified Parties") harmless from and
against any and all Claims (as defined in Section 1.2 hereof),
whether or not arising out of third-party claims, without regard to
any investigation by any of the Buyer Indemnified Parties and
including all reasonable amounts paid in investigation, defense or
settlement of the foregoing, which may be sustained or suffered by
any of them based upon, arising out of, by reason of or otherwise in
respect of or in connection with (a) any inaccuracy in or breach of
any representation or warranty made by Seller in this Agreement or
in any Schedule, exhibit, certificate, agreement or other document
delivered hereunder or in connection with this Agreement, or any
claim, action or proceeding asserted or instituted or arising out of
any matter or thing covered by such representations or warranties
(collectively, "Buyer Representation and Warranty Claims"); (b) any
breach of any covenant or agreement made by Seller in this
Agreement or in any Schedule, exhibit, certificate, agreement or other
instrument delivered under or in connection with this Agreement, or
any claim, action or proceeding asserted or instituted arising out of
any matter or thing covered by any such covenant or agreement;
(c) any Claim relating to the business or operations of Seller other
than the Cryolab Business; (d) any Claim relating to the operations
and assets of the Cryolab Business which arises in connection with
or on the basis of events, acts, omissions, conditions or any other
state of facts occurring or existing prior to or on the Closing Date
(including, in each case, without limitation, any Claim relating to or
associated with the litigation set forth on Schedule 2.11, warranty
claims or claims for injury (including death) or claims for damage,
direct or consequential, resulting from or connected with products or
services of the Cryolab Business sold or provided on or prior to the
Closing Date, product liability matters, warranty claims, tax matters,
pension and benefits matters, any failure to comply with applicable
laws and/or permitting or licensing requirements, personal injury
and property damage matters and environmental and worker health
and safety matters); or (e) any Claim relating to the Unsalable
Inventory Amount (as defined in Section 7.5) (collectively, "Inventory
Claims"). The rights of Buyer Indemnified Parties to recover
indemnification in respect of any occurrence referred to in clause (b),
(c), (d) or (e) of this Section 7.1 shall not be limited by the fact that
such occurrence may not constitute an inaccuracy in or breach of
any representation or warranty referred to in clause (a) of this Section
7.1.
The right of Buyer Indemnified Parties to recover
indemnification under this Section 7.1 shall be subject to the
following limitations:
(i) No indemnification shall be payable by Seller
with respect to Buyer Representation and Warranty Claims and
Inventory Claims unless the total of all amounts payable
pursuant to this Section 7.1 shall exceed $25,000 in the
aggregate, whereupon the total amount of such Claims shall be
recoverable in accordance with the terms thereof, provided that
such $25,000 limitation shall not apply with respect to Claims
involving intentional misrepresentation or intentional
concealment.
(ii) All rights to indemnification under
Sections 7.1(a) and 7.2(a) with respect to Buyer Representation
and Warranty Claims and Seller Representation and Warranty
Claims, respectively, shall expire on the Second Anniversary
Date, except that Buyer Representation and Warranty Claims
and Seller Representation and Warranty Claims relating to or
involving intentional misrepresentation or intentional
concealment shall survive until and shall expire on the date
three months after the termination of the applicable statute of
limitations relating thereto. Notwithstanding the preceding
sentence, if on or prior to the second anniversary of the Closing
Date (the "Second Anniversary Date") a specific state of facts
shall have become known which may give rise to a claim for
indemnification under Section 7.1(a) or 7.2(a), as the case may
be, and an Indemnified Party shall have given written notice of
such facts known by such Indemnified Party at such time to
Seller in the case of a Buyer Indemnified Party, or to Buyer in
the case of a Seller Indemnified Party, then the right to
indemnification with respect thereto shall remain in effect
without regard to when such matter shall be finally determined
and disposed of. All rights with respect to indemnification with
respect to Inventory Claims shall expire on the day after the
third anniversary of the Closing Date (the "Third Anniversary
Date"). All rights to indemnification under Sections 7.1(a) and
7.2(a) with respect to claims other than Buyer Representation
and Warranty Claims, Seller Representation and Warranty
Claims and Inventory Claims shall, except as they may
otherwise be extended, survive until and shall expire on the
date three months after the termination of the applicable
statute of limitations relating thereto. The limitations herein
with respect to Buyer Representation and Warranty Claims and
Seller Representation and Warranty Claims shall not limit the
rights of any Indemnified Party with respect to any other
claims.
(iii) Notwithstanding anything contained in this
Section 7 to the contrary, Seller shall not be required to
indemnify Buyer Indemnified Parties with respect to (A) Buyer
Representation and Warranty Claims and Inventory Claims in
an aggregate amount in excess of $500,000, except with
respect to claims relating to or involving intentional
misrepresentation or intentional concealment, as to which no
such limit shall apply, and (B) Inventory Claims in an aggregate
amount in excess of $250,000, except with respect to claims
relating to or involving intentional misrepresentation or
intentional concealment, as to which no such limit shall apply.
(iv) No indemnification shall be payable with
respect to Inventory Claims until after the Second
Anniversary Date, at which time such indemnification, if any,
shall be payable, but Seller shall not (subject to the following
sentence) be required to pay an amount in excess of an
aggregate amount (the "Initial Inventory Claims Amount") equal
to the lesser of (A) $125,000 or (B) 50% of the Inventory
Claims. The amount of any Inventory Claims remaining
unpaid following payment of the Initial Inventory Claims
Amount (the "Unpaid Inventory Claims Amount") shall (subject
to the limitation set forth in Section 7.1(iii)(B) hereof) be paid by
Seller to the relevant Buyer Indemnified Party on the Third
Anniversary Date; provided, however, that if following the
Second Anniversary Date and prior to the Third Anniversary
Date items of Inventory with respect to which Inventory Claims
were made are sold, the Unpaid Inventory Claims Amount shall
be reduced by an amount (the "Inventory Sales Amount") equal
to the lesser of (X) the aggregate amount of Inventory Claims
represented by such sold Inventory items or (Y) the actual
aggregate net sales proceeds to Buyer in respect of such sold
Inventory items; provided further, however, that if the
Inventory Sales Amount exceeds the Unpaid Inventory Claims
Amount, Buyer shall pay to Seller on the Third Anniversary
Date the amount of such excess.
7.2 Indemnification by Buyer. Buyer agrees to defend,
indemnify and hold Seller, its parent and its and their respective
subsidiaries and affiliates and persons serving as officers, directors,
partners or employees thereof (individually a "Seller Indemnified
Party" and collectively the "Seller Indemnified Parties") harmless from
and against any and all Claims (as defined in Section 1.2 hereof),
whether or not arising out of third-party claims and including all
reasonable amounts paid in investigation, defense or settlement of
the foregoing, which may be sustained or suffered by any of them
based upon, arising out of, by reason of or otherwise in respect of or
in connection with (a) any inaccuracy in or breach of any
representation or warranty made by Buyer in this Agreement or in
any Schedule, exhibit, certificate, agreement, or other document
delivered hereunder or in connection with this Agreement, or any
claim, action or proceeding asserted or instituted or arising out of
any matter or thing covered by such representations or warranties
("Seller Representation and Warranty Claims"); (b) any breach of any
covenant or agreement made by Buyer in this Agreement or in any
Schedule, exhibit, certificate, agreement or other instrument
delivered under or in connection with this Agreement, or any claim,
action or proceeding asserted or instituted arising out of any matter
or thing covered by any such covenant or agreement; (c) any Claim
relating to the operation by Buyer of the Subject Assets after the
Closing Date which arises in connection with or on the basis of
events, acts, omissions, conditions or any other state of facts
occurring or existing after the Closing Date (including, in each case,
without limitation, any Claim relating to or associated with warranty
claims or claims for injury (including death) or claims for damage,
direct or consequential, resulting from or connected with products or
services sold or provided by Buyer after the Closing Date, product
liability matters, warranty claims, tax matters, pension and benefit
matters, any failure to comply with applicable laws and/or permitting
or licensing requirements, personal injury and property damage
matters and environmental and worker health and safety matters);
and (d) the non-performance of the Sales Order Liabilities to the
extent assumed by Buyer hereunder as they become due, in
accordance with their respective terms.
The rights of Seller Indemnified Parties to recover
indemnification under this Section 7.2 shall be subject to the
following limitations:
(i) No indemnification shall be payable by Buyer with
respect to Seller Representation and Warranty Claims unless the
total of all amounts payable pursuant to this Section 7.2 shall exceed
$25,000 in the aggregate, whereupon the total amount of such
Claims shall be recoverable in accordance with the terms thereof,
provided that such $25,000 limitation shall not apply with respect to
Claims involving intentional misrepresentation or intentional
concealment.
(ii) Notwithstanding anything contained in this
Section 7 to the contrary, Buyer shall not be required to indemnify
Seller Indemnified Parties with respect to Seller Representation and
Warranty Claims in an aggregate amount in excess of $500,000,
except with respect to claims relating to or involving intentional
misrepresentation or intentional concealment, as to which no such
limit shall apply.
7.3 Notice; Defense of Claims. Promptly after receipt by an
indemnified party of notice of claims of third parties or litigation filed
with respect to, or the commencement of any governmental
proceeding or investigation relating to, any claim, liability or expense
to which the indemnification obligations hereunder would apply, the
indemnified party shall give notice thereof in writing to the
indemnifying party, but the omission to so notify the indemnifying
party promptly will not relieve the indemnifying party from any
liability except to the extent that the indemnifying party shall have
been prejudiced as a result of the failure or delay in giving such
notice. Such notice shall state in reasonable detail the information
then available regarding the amount and nature of such claim,
liability or expense and shall specify the provision or provisions of
this Agreement under which the liability or obligation is asserted. If
within 20 days after receiving such notice the indemnifying party
gives written notice to the indemnified party stating that it disputes
and intends to defend against such claim, liability or expense at its
own cost and expense, then counsel for the defense shall be selected
by the indemnifying party (subject to the consent of the indemnified
party which consent shall not be unreasonably withheld) and the
indemnified party shall make no payment on such claim, liability or
expense as long as the indemnifying party is conducting a good faith
and diligent defense. Notwithstanding anything herein stated, the
indemnified party shall at all times have the right fully to participate
in such defense at its own expense directly or through counsel and
shall have the right to consent to any settlement proposed by the
indemnifying party, which consent shall not be unreasonably
withheld; provided, however, if the named parties to the action or
proceeding include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would
be inappropriate under applicable standards of professional conduct,
the expense of separate counsel for the indemnified party shall be
paid by the indemnifying party. If no such notice of intent to dispute
and defend is given by the indemnifying party, or if such diligent good
faith defense is not being or ceases to be conducted, the indemnified
party shall, at the expense of the indemnifying party, undertake the
defense of (with counsel selected by the indemnified party), and shall
have the right to compromise or settle (exercising reasonable
business judgment) such claim, liability or expense. The indemnified
party shall make available all information and assistance that the
indemnifying party may reasonably request and shall cooperate with
the indemnifying party in such defense.
7.4 Satisfaction of Indemnification Obligations. Any
indemnity payable pursuant to this Section 7 shall be paid within the
later of (a) ten (10) days after the indemnified party's request therefor
(in the case of claims not involving a third party) or (b) ten (10) days
prior to the date on which the loss upon which the indemnity is
based is required to be satisfied by the indemnified party. In order
to satisfy any indemnification obligations of Seller, Buyer shall have
the right (in addition to collecting directly from Seller in whole or in
part, at its option) to set off the amount of any indemnification owed
to it or its affiliates under Section 7.1 against any amounts otherwise
due from Buyer or its affiliates to Seller (including without limitation
any amounts due under Section 7.1(iv) hereof).
7.5 Unsalable Inventory. For purposes of this Agreement,
the term "Unsalable Inventory Amount" means the amount, if any, by
which (a) the aggregate value of any Inventory set forth on Schedule
2.11 which is not sold on or prior to the Second Anniversary Date
exceeds (b) the amount of the reserve for obsolete or scrap inventory
set forth on Schedule 1.1(a)(i). For purposes of determining the value
of any Inventory remaining unsold, the value of such Inventory shall
be as reflected on Schedule 1.1(a)(i). For purposes of determining
whether an Inventory item has been sold, all parts included in
products manufactured and sold by Buyer after the Closing (or which
would have been included in such products but for the fact that
Buyer modified such product after the Closing Date, unless such
modification was made by Buyer as a result of facts which would
result in a breach of any of the representations or warranties
contained in Section 2 of this Agreement) which are the same as
parts which are included in the Inventory, shall be deemed to have
been sold whether or not such parts were in fact included in the
Inventory or whether Buyer purchased or manufactured such parts
after the Closing.
SECTION 8. MISCELLANEOUS.
8.1 Law Governing. This Agreement shall be construed
under and governed by the laws of the Commonwealth of
Massachusetts without regard to the conflicts of laws provisions
thereof.
8.2 Notices. All communications, notices and consents
provided for herein shall be in writing and be given in person or by
means of telex, facsimile or other means of wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type) or by mail, and shall become effective
(x) on delivery if given in person, (y) on the date of transmission if
sent by telex, facsimile or other means of wire transmission, or
(z) four business days after being deposited in the United States
mails, with proper postage, for first-class registered or certified mail,
prepaid.
Notices shall be addressed as follows:
If to Buyer, to:
c/o Watts Industries, Inc.
815 Chestnut Street
North Andover, MA 01845
Attn: President
Facsimile Number: 508-688-5841
With a copy to:
c/o Watts Industries, Inc.
815 Chestnut Street
North Andover, MA 01845
Attn: Suzanne M. Zabitchuk, Esq.
Facsimile Number: 508-688-5841
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Attn: John R. LeClaire, P.C.
Facsimile Number: 617-523-1231
If to Seller:
SAES Pure Gas, Inc.
4175 Santa Fe Road
San Luis Obispo, CA 93401
Attn: President
Facsimile Number: 805-541-9399
With a copy to:
Martin J. Tangeman, Esq.
Sinsheimer, Schiebelhut & Baggett
1010 Peach Street
P.O. Box 31
San Luis Obispo, CA 93406-0031
Facsimile Number: 805-541-2802
provided, however, that if any party shall have designated a different
address by notice to the others in accordance with this Section 8.2,
then to the last address so designated.
8.3 Prior Agreements Superseded. This Agreement
supersedes all prior understandings and agreements among the
parties relating to the subject matter hereof.
8.4 Assignability. This Agreement shall not be assignable by
any party, except by Buyer to an affiliate of Buyer (which assignment
shall not relieve Buyer of any of its obligations hereunder), without
the prior written consent of the other parties hereto. This Agreement
(including without limitation the provisions of Section 7) shall be
binding upon and enforceable by, and shall inure to the benefit of,
the parties hereto and their respective successors, heirs, executors,
administrators and permitted assigns.
8.5 Captions and Gender. The captions in this Agreement
are for convenience only and shall not affect the construction or
interpretation of any term or provision hereof. The use in this
Agreement of the masculine pronoun in reference to a party hereto
shall be deemed to include the feminine or neuter pronoun, as the
context may require.
8.6 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person shall mean a person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the
first mentioned person;
(b) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly
or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management policies of a person,
whether through the ownership of stock, as trustee, partner or
executor, by contract or credit arrangement or otherwise;
(c) "person" means an individual, corporation,
partnership, association, trust or any unincorporated
organization; and
(d) "subsidiary" of a person means any corporation
more than 50 percent of whose outstanding voting securities,
or any partnership, joint venture or other entity more than 50
percent of whose total equity interest, is directly or indirectly
owned by such person.
8.7 Execution in Counterparts. For the convenience of the
parties and to facilitate execution, this Agreement may be executed in
two or more counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same document.
8.8 Amendments; Waivers. This Agreement may not be
amended or modified except by a writing duly and validly executed by
each party hereto. Compliance with any condition or covenant set
forth herein may not be waived except by a writing duly and validly
executed by the party or parties to be bound. No delay on the part of
any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any
party of any such right, power or privilege, or any single or partial
exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or
privilege.
8.9 Severability. Each of the provisions contained in this
Agreement shall be severable and the unenforceability of one shall
not affect the enforceability of any other provision or the remainder of
this Agreement.
8.10 Bulk Sales Law. Buyer waives compliance by Seller with
the provisions of any applicable bulk sales, fraudulent conveyance or
other law for the protection of creditors, and Seller agrees (in addition
to and independent of Seller's indemnification obligations contained
in Section 7) to indemnify and hold Buyer harmless from, and
reimburse Buyer for, any loss, cost, expense, liability or damage
(including reasonable counsel fees and disbursements and expenses)
which Buyer may suffer or incur by virtue of the non-compliance by
Seller with such laws.
8.11 Publicity and Disclosures. Buyer and its affiliates and
Seller shall be permitted to make such press releases and disclosures
of the transactions contemplated by this Agreement as they desire,
provided however, (i) the Purchase Price shall not be publicly
disclosed, unless in the reasonable opinion of the disclosing party
such disclosure is required to comply with the laws, rules or
regulations now applicable to it or which in the future become
applicable to it and (ii) neither Seller nor its affiliates in any such
press release shall refer to Buyer, Watts Industries, Inc. or any
affiliate of either one, except solely to disclose the name Circle Seal
Controls, Inc. as the Buyer hereunder.
8.12 Consent to Jurisdiction and Service. Each of the parties
hereto consents to personal jurisdiction, service of process and venue
in the federal or state courts of Massachusetts with respect to any
and all claims or disputes between the parties, arising directly or
indirectly in connection with this Agreement and the related
agreements and schedules, including but not limited to any and all
claims for indemnification and other rights established by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above by their
duly authorized representatives.
BUYER:
CIRCLE SEAL CONTROLS, INC.
By:/s/Rick L Needham
Rick L. Needham
President
SELLER:
SAES PURE GAS, INC.
By:
Francesco della Porta
Chief Executive Officer