EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
Dated as of October 27, 1997
by and among
BASE TEN SYSTEMS, INC.
AND
STRATEGIC TECHNOLOGIES, INC.
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637779.6
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..........................................................1
ARTICLE II
PURCHASE AND SALE OF ASSETS..........................................5
2.1 General.....................................................5
2.2 Acquired Assets.............................................6
2.3 Excluded Assets.............................................7
2.4 Documentary Assets..........................................8
2.5 Assumption of Liabilities...................................8
ARTICLE III
CONSIDERATION........................................................9
3.1 Consideration Payable at Closing............................9
3.2 Consideration Payable at Closing...........................10
ARTICLE IV
CLOSING.............................................................10
4.1 Closing....................................................10
4.2 Deliveries and Payments at Closing.........................11
4.3 Form of Instruments........................................12
4.4 Consents to Assignment.....................................12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER............................12
5.1 Organization...............................................12
5.2 Authorization..............................................13
5.3 No Conflicts...............................................13
5.4 Title to Assets............................................13
5.5 Contracts..................................................13
5.7 Intellectual Property Rights...............................14
5.8 Compliance with Environmental Laws.........................14
5.9 No Brokers.................................................14
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER.............................14
6.1 Organization of Buyer......................................15
6.2 Authorization..............................................15
6.3 No Conflict or Violation...................................15
6.4 Consents and Approvals.....................................15
6.6 No Brokers.................................................16
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7.1 Consents and Best Efforts..................................16
7.2 Novation of Government Contracts...........................16
7.4 PostClosing Payments.......................................17
ARTICLE VIII
COVENANTS NOT TO COMPETE............................................18
8.1 NonCompetition Period......................................18
8.2 Enforceability.............................................19
8.3 Replication of Business....................................19
8.4 Specific Performance; Injunctive Relief....................19
ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATIONS..................................20
9.1 Representations, Warranties and Covenants..................20
9.2 Deliveries.................................................20
9.5 Opinion of Counsel.........................................21
9.6 Consents...................................................22
9.7 Shareholder Approval.......................................22
ARTICLE X
CONDITIONS TO BUYER'S OBLIGATIONS...................................22
10.1 Representations, Warranties and Covenants..................22
10.2 Deliveries.................................................22
10.3 Required Consents..........................................22
10.4 No Governmental Proceedings................................22
10.5 Opinions of Counsel........................................22
10.6 Certificates of Seller.....................................23
10.7 Consents...................................................24
ARTICLE XI
INDEMNIFICATION.....................................................24
11.1 Indemnification by Seller..................................24
11.2 Indemnification by Buyer...................................25
11.3 Defense of Claims..........................................25
11.4 Exclusivity of Remedies For Environmental Matters..........26
ARTICLE XII
MISCELLANEOUS.......................................................26
12.1 Survival of Representations and Warranties.................26
12.2 Termination................................................26
12.3 Further Assurances.........................................27
12.5 Assignment.................................................27
12.6 Notices....................................................28
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12.7 Choice of Law..............................................29
12.8 Entire Agreement; Amendments and Waivers...................29
12.9 Multiple Counterparts......................................29
12.10 Expenses...................................................29
12.11 Invalidity.................................................29
12.12 Titles.....................................................29
12.13 Successors and Assigns.....................................29
12.14 Cumulative Remedies........................................29
12.15 Definition of Knowledge....................................30
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered
into as of October ___, 1997, by and among Base Ten Systems, Inc., a New Jersey
corporation ("Seller") and Strategic Technologies, Inc., a Nevada corporation
("Buyer").
RECITALS
Buyer desires to purchase from Seller and Seller desires to
sell to Buyer certain assets of the Seller, which assets are used to conduct a
business involving the design, development, manufacturing and marketing of
complex precision electronic systems for the defense applications and the
provision of contract manufacturing services for prime defense contractors (the
"Government Technology Division" or the "Business"), including all of the
Purchased Assets (as defined herein), on the terms and conditions contained
herein (the "Sale").
In connection with the Sale, Buyer desires to assume from
Seller, and Seller desires to transfer to Buyer, certain obligations and
liabilities of the Seller relating to the Government Technology Division, on the
terms and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
promises set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby mutually acknowledged, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms have the
meanings specified or referred to in this Article I.
"Agency Agreement" shall have the meaning set forth in Section
7.2.
"Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Ancillary Documents" shall mean the Buyer's Ancillary
Documents and the Seller's Ancillary Documents.
"Bills of Sale" shall have the meaning set forth in Section
4.2.2(a) of this Agreement.
"Business" shall have the meaning set forth in the recitals to
this Agreement.
"Business Proposal" shall have the meaning set forth in
Section 7.6.
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"Buyer" shall have the meaning set forth in the preamble to
this Agreement.
"Buyer's Ancillary Documents" shall mean the Transition
Agreement, the Sublease, and the instruments of assumption described in Section
4.2.1(a).
"Cash Payment" shall have the meaning set forth in Section
3.1.
"Closing" shall have the meaning set forth in Section 4.1.
"Closing Balance Sheet" shall have the meaning set forth in
Section 3.1.2(b).
"Closing Date" shall have the meaning set forth in Section
4.1.
"Contemplated Transactions" shall mean (i) the sale and
transfer of the Purchased Assets by Seller to Buyer, (ii) the purchase of the
Purchased Assets by Buyer from Seller subject only to the Assumed Liabilities,
(iii) the assignment of a certain Patent pursuant to the Patent Assignment, (iv)
the Sublease of the Leased Premises from Seller to Buyer pursuant to the
Sublease, and (v) the agreement between Seller and Buyer for to provide certain
services to Seller pursuant to the Transition Agreement.
"Contracts" shall have the meaning set forth in Section 5.5.
"Damages" shall have the meaning set forth in Section 11.1.
"DASA" shall have the meaning set forth in Section 3.2.1.
"Documentary Assets" shall have the meaning set forth in
Section 2.4.
"Encumbrances" shall mean any security interest, mortgage,
lien, charge, license, adverse claim or restriction of any kind, including, but
not limited to, any restriction on the use, voting, transfer, receipt of income
or other exercise of any attributes of ownership, including sole ownership,
other than (i) liens or encumbrances for Taxes not yet due and payable and (ii)
statutory liens arising or incurred in the ordinary cause of business with
respect to which the underlying obligations are not yet delinquent or the
validity of which is being contested in good faith by appropriate proceedings.
"Environmental Laws" shall mean all applicable laws relating
to the protection of the environment, or to any emission, discharge, generation,
processing, storage, holding, abatement, existence, Release, threatened Release
or transportation of any Hazardous Substances, including, without limitation,
(i) CERCLA and the Resource Conservation and Recovery Act,. and (ii) all other
requirements pertaining to reporting, licensing, permitting, investigation or
remediation of emissions, discharges, Releases or threatened Releases of
Hazardous Substances into the air, surface water, ground water or land, or
relating to the manufacture, processing,
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distribution, use, sale, treatment, receipt, storage, disposal, transport or
handling of Hazardous Substances.
"Excluded Assets" shall have the meaning set forth in Section
2.3. "Government Contract" shall have the meaning set forth in Section 7.2.
"Government Technology Division" shall have the meaning set
forth in the recitals to this Agreement.
"Government Technology Division Employees" shall mean
employees of the Seller that after the Closing will be employed by Buyer in
accordance with the Transition Agreement.
"Governmental Body" shall mean any domestic or foreign nation,
state or municipal or other local governmental or multi-national body, any
subdivision, agency, commission or authority thereof, or any quasi-governmental
or private body exercising any regulatory or taxing authority thereunder.
"Government Contract Novation Agreements" shall have the
meaning set forth in Section 7.2.
"Government Licenses" shall have the meaning set forth in
Section 7.3.
"Government License Novation Agreements" shall have the
meaning set forth in Section 7.3.
"Hazardous Substances" shall mean any chemical, material,
substance or waste (i) now or hereafter designated or defined or included in and
definition by an Governmental Body as "hazardous", "toxic", "pollutant", or
"containment" or words of similar import and (ii) the handling, use of, disposal
of or exposure to which is now or hereafter prohibited, limited or regulated by
any Governmental Body.
"Intellectual Property Rights" shall mean all Patents,
trademarks and copyright.
"Leased Premises" shall mean the office space leased to Buyer
by Seller pursuant to the Sublease.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the Purchased Assets or the Business, or (ii) the ability of Seller or
Buyer, as the case may be, to consummate the transactions contemplated hereby.
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"Medical Technology Division" shall mean Seller's business of
designing, developing, manufacturing and marketing comprehensive software
solutions for pharmaceutical and medical device manufacturing industries.
"Net Asset Value" shall have the meaning set forth in Section
3.1.2(b).
"Net Worth" shall mean the total of all assets appearing on a
balance sheet prepared in accordance with generally accepted accounting
principles for Buyer, after deducting therefrom (i) all reserves, including but
not limited to reserves for liabilities, fixed or contingent, deferred income
taxes, obsolescence, depletion, insurance and inventory valuations, which are
not deducted from assets, (ii) all indebtedness of Buyer, and (iii) all other
liabilities of Buyer.
"Non-Competition Period" shall have the meaning set forth in
Section 7.2.
"Novation Agreements" shall have the meaning set forth in
Section 7.2.
"Neutral Auditor" shall have the meaning set forth in Section
3.1.2.
"October Balance Sheet" shall have the meaning set forth in
Section 3.1.2(b).
"Patents" shall mean all patents (including all reissues,
divisions, continuations, continuations in part and extensions thereof), patent
applications and invention disclosures.
"Patent Assignment" shall mean the Patent Assignment Agreement
between Seller and Buyer, substantially in the form attached hereto.
"Permits" shall mean all licenses, permits, registrations and
other governmental authorizations necessary to carry on the Business as
presently conducted and as proposed to be conducted.
"Person" shall mean any individual, corporation, partnership,
joint venture, limited liability company, association, joint stock company,
trust, bank, trust company, or unincorporated organization or other organization
or entity or Governmental Body.
"Principal Amount" shall have the meaning set forth in Section
3.1.2(b).
"Proxy Statement" shall have the meaning set forth in Section
7.5.
"Purchase Note" shall have the meaning set forth in Section
3.1.2.
"Purchased Assets" shall have the meaning set forth in Section
2.2,
"Raw Materials" shall have the meaning set forth in Section
2.2.
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"Required Consent" shall mean all consents, appraisals,
authorizations or declarations and notices to filings and registrations with any
Governmental Body, or any other Person or entity, and all Permits, that are
required to be made or obtained by Seller or Buyer, as appropriate, in
connection with the execution delivery and performance of this Agreement, the
Ancillary Documents and the consummations of the Sale and the Contemplated
Transactions.
"Retained Records" shall have the meaning set forth in Section
2.4.
"Release" shall mean any releasing, disposing, discharging,
injecting, spilling, leaking, leaching, pumping, dumping, emitting, seeping,
transporting, placing and the like, including without limitation, the moving of
any materials through, into or upon, any land, soil, surface water, ground water
or air, or otherwise entering the environment.
"Sale" shall have the meaning set forth in the recitals to
this Agreement.
"Seller" shall have the meaning set forth in the preamble to
this Agreement.
"Seller's Ancillary Documents" shall mean the Transition
Agreement, the Sublease and the Patent Assignment.
"Shared Documents" shall have the meaning set forth in Section
9.4.
"Sublease" shall mean the Sublease, dated as of the Closing
Date, between Seller and Buyer, substantially in the form attached hereto as an
exhibit.
"Tax" or "Taxes" shall mean all federal, state, local, foreign
and other taxes, assessments or other government charges, including, without
limitation, income, estimated income, business, occupation, franchise, gross
income, excise, ad valorem, gross receipts, property, sales, transfer, gains,
value-added, document, use, employment, commercial rent or withholding taxes,
including interest, penalties and additions in connection therewith.
"Transition Agreement" shall mean the Transition Agreement,
dated as of the Closing Date, between Seller and Buyer, substantially in the
form attached hereto as an exhibit.
"Warrant" shall have the meaning set forth in Section 3.1.3.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 General.
2.1.1 Upon the terms and subject to the conditions
set forth in this Agreement, Seller shall sell, assign, transfer, convey and
deliver to Buyer, and Buyer shall purchase from Seller, on the Closing Date, all
right, title and interest of Seller in and to the Purchased Assets, free and
clear of all Encumbrances and subject only to the Assumed Liabilities.
2.1.2 In connection with and in addition to the
purchase of the Purchased Assets as provided for above, Seller and Buyer shall
each grant to the other, pursuant to the Ancillary Documents, certain other
rights and Seller and Buyer acknowledge that such rights are an integral part of
the Contemplated Transactions.
2.2 Acquired Assets. The assets, properties, contracts,
goodwill and business of Seller with respect to the Business constituting the
assets, properties, contracts, goodwill and business to be transferred to Buyer
hereunder, are all of the assets, properties, contracts and goodwill of the
Business that fall within each of the following categories, except as listed or
referred to in Section 2.3 (collectively, the "Purchased Assets"):
(a) All tangible personal property, equipment, plant and
office furniture and fixtures, vehicles and trailers, tools, and machines
(including computers) used or needed for use in the Business, except as listed
on Schedule 2.2(a);
(b) All leases of personal property used or entered into by
Seller in connection with the Business, except as listed on Schedule 2.2(b);
(c) All inventory of the Business, including, without
limitation, spare parts, supplies, fuel and other consumable items, inventories
of fabricated products and all other inventories of finished products, work in
process and raw materials (including, without limitation, component parts, stock
ordered from third parties in transit or not yet delivered, or indirect
materials generally used in the manufacturing process, but not part of the
finished product (the "Raw Materials")), together with applicable certificates
of conformity and origin;
(d) To the extent assignable, all manufacturers', vendors' and
suppliers' warranties in respect of any item of property falling within the
scope of the Purchased Assets;
(e) All right, title and interest in all guarantees in favor
of Seller to the extent related primarily to the Business or the Purchased
Assets;
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(f) To the extent that such assets relate primarily to the
Purchased Assets and/or the Business, all originals and all copies of all
customer lists and supplier lists, advertising and promotional materials, price
lists of Raw Materials, source lists, Raw Material specifications, information
regarding the implementation procedure of quality control systems, personnel
records relating primarily to the Government Technology Division Employees,
financial and accounting records, contracts or any other documentation,
correspondence and other files and records in whatever form (including computer
records, operating systems and data bases) of Seller except as listed on
Schedule 2.2(f);
(g) All right, title and interest in the Patents identified on
Schedule 2.2(g) hereto, and all rights to sue for past infringement thereof;
(h) To the extent that such assets relate primarily to the
Purchased Assets and/or the Business, all right, title and interest in the
copyrights, processes, formulations, software, technology, know-how, trade
secrets, manufacturing procedures, designs and records, test procedures and
research and development results, and all other technical information and
proprietary rights of Seller, except as listed on Schedule 2.2(h).
(i) All licenses, Permits, certifications and authorizations
relating primarily to the Business or the Purchased Assets, except as listed on
Schedule 2.2(i);
(j) All engineering drawings, blueprints, specifications and
other similar documents of Seller relating primarily to the Purchased Assets
and/or the Business;
(k) To the extent that such assets relate primarily to the
Purchased Assets and/or the Business, all right, title and interest in and to
all contracts, purchase orders and other agreements of Seller including all
rights to assert claims for events occurring or circumstances existing with
respect to such contracts or other agreements prior to the Closing, except as
set forth on Schedule 2.2(k);
(l) All accounts receivable of Seller arising primarily from
the operation of the Business or the Purchased Assets, except as listed on
Schedule 2.2(l); and
(m) All restrictive covenants and obligations of present and
former Governmental Technology Division Employees of the Seller in favor of
Seller, including any rights under confidentiality agreements that relate
primarily to the Business or the Purchased Assets.
2.3 Excluded Assets. Notwithstanding anything to the contrary
contained in Section 2.2, specifically excluded from sale to Buyer hereunder are
the following:
(a) the assets set forth on Schedule 2.3(a) hereto; and
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(b) all other assets, properties, powers and rights of Seller
that do not fall within the categories set forth in Section 2.2 hereof, as are
set forth in Schedule 2.3(b) hereto (collectively, the "Excluded Assets").
The term "Purchased Assets" shall not include any Excluded
Assets. In no event shall the consideration received by Seller in accordance
with Section 3.1 be a Purchased Asset.
2.4 Documentary Assets. With respect to the books, records and
other documents referred to in Section 2.2(f) (the "Documentary Assets"), Seller
agrees to transfer to Buyer physical possession of all such Documentary Assets
(whether originals or copies), wherever located, except (i) as otherwise
prohibited pursuant to the provisions of law and (ii) with respect to the
documents identified on Schedule 2.4 (collectively, the "Retained Records"). In
addition, Seller agrees to furnish to Buyer, at Buyer's reasonable request, and
at Buyer's discretion, copies (or relevant portions or extracts) of, and access
to, the Retained Records and of all books, records and other documents of the
types referred to in Section 2.2(f) that relate in part (but not exclusively) to
the Purchased Assets and/or the Business (collectively, the "Shared Documents").
Seller shall retain the originals of all of the Retained Records and the Shared
Documents for a period of at least five-years after the Closing Date, unless a
longer period is required by applicable law, rule or regulation. Before either
party shall dispose (after such five-year or longer period) of Documentary
Assets, Retained Records or Shared Documents, as the case may be, notice to such
effect (including a description of the Documentary Assets, Retained Records or
Shared Documents intended to be disposed of) shall be given to the other party,
which party shall have an opportunity, during the 30-day period commencing with
the receipt of such notice, at its cost and expense, to remove and retain all or
any part of such original Documentary Assets, Retained Records or Shared
Documents, as the case may be, intended to be disposed of as it may select;
provided, however, that Buyer shall not be permitted to remove any Shared
Documents which contain confidential information of Seller, but may obtain
relevant portions or extracts of such documents. During the five-year or longer
period Seller is required to retain the Retained Records and the Shared
Documents referred to above, duly authorized representatives of Buyer shall, on
reasonable prior notice to the other party, have access thereto during normal
business hours.
2.5 Assumption of Liabilities. Buyer agrees to assume, as of
the Closing Date:
(i) All liabilities incurred in the ordinary course of the
business of Seller related exclusively to the Business, as the same exist on the
Closing Date but only to the extent that (A) such liabilities are reflected on
the October Balance Sheet or (B) if such liabilities are incurred after the
October 31, 1997, such liabilities are incurred in the ordinary course of the
business of Seller since October 31, 1997 (and will be included on the Closing
Balance Sheet).
(ii) All liabilities related to warranty obligations incurred
in the ordinary course of business of Seller related primarily to the Business
except as set forth on Schedule 2.5(ii).
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(iii) All obligations and commitments, as the same exist on
the Closing Date, incurred pursuant to the Purchased Assets; and
(iv) The liabilities listed on 2.5 (iv) hereto.
All such obligations and liabilities are herein referred to as
the "Assumed Liabilities").
Except to the extent specifically set forth in this Agreement,
Buyer is not assuming, and shall not be bound by, any obligations or liabilities
of Seller of any kind or nature, known, unknown, expressed, implied, contingent
or otherwise, other than the Assumed Liabilities, and shall not be entitled to
receive any benefits under any contracts or agreements which are not Purchased
Assets.
ARTICLE III
CONSIDERATION
3.1 Consideration Payable at Closing. The consideration for
the Purchased Assets shall be payable by Buyer to Seller as follows:
3.1.1 Cash Payment. Buyer shall pay Seller $3,500,000
in cash which amount shall be payable at Closing (the "Cash Payment").
3.1.2 Purchase Note. (a) Buyer shall deliver to
Seller at Closing a promissory note (the "Purchase Note"), substantially in the
form attached hereto as an exhibit, which Purchase Note shall be made by Buyer
in favor of Seller, in an original principal amount equal to (x) the Principal
Amount (as defined below).
(b) At least three days prior to the Closing Date,
Seller shall deliver to Buyer (i) an unaudited balance sheet of the Government
Technology Division, dated at the date of delivery ("Closing Balance Sheet"),
and (ii) Seller's estimate of the Net Asset Value of the Government Technology
Division as of the date of delivery. "Net Asset Value" of the Government
Technology Division shall be equal to the difference between (a) the value of
the assets of the Government Technology Division, and (b) the amount of accounts
payable and accrued expenses which are directly attributable to the Government
Technology Division. Seller's estimate of the Net Asset Value shall be based on
the assets of the division as reflected on the Closing Balance Sheet and the
accounts payable and accrued expenses of the Government Technology Division as
reflected on the Closing Balance Sheet. The Principal Amount of the Purchase
Note shall be equal to the lesser of (i) Seller's estimated Net Asset Value, and
(ii) the Net Asset Value of the Government Technology Division as calculated
based on the assets of the Government Technology Division as reflected on the
October Balance Sheet, plus (y) $400,000 minus (z) the Cash Payment. To the
extent that Buyer objects to Seller's estimated Net Asset
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Value, the Closing Balance Sheet shall be submitted to an auditor to determine
the Net Asset Value of the Government Technology Division. If the parties cannot
agree on an auditor then Buyer and Seller shall each separately designate an
independent auditor, and, within 7 days after their appointment, the designated
independent auditors shall designate an independent auditor which shall make the
final determination of Net Asset Value (the "Neutral Auditor"). The failure by
either of the parties to appoint an independent auditor within the time allowed
shall be deemed equivalent to appointing the other party's independent auditor
as the Neutral Auditor. Within 10 days after the appointment of the Neutral
Auditor, the Neutral Auditor shall render its appraisal of the Net Asset Value,
which appraisal shall be binding and conclusive. The parties shall equally share
the costs of the Neutral Auditor.
3.1.3 Warrant. Buyer shall deliver to Seller at
Closing a warrant (the "Warrant"), substantially in the form attached hereto as
an exhibit.
3.2 Consideration Payable After Closing.
3.2.1 Daimler Benz Payment. If, within twelve months
of the Closing, Buyer enters into an agreement with Daimler Benz Aerospace or an
affiliate thereof ("DASA") pursuant to which DASA agrees to purchase at least
600 Pylon Decoder Units, then, as additional consideration, Buyer shall pay
Seller $400,000, which amount shall be payable in the amount of $100,000 per
fiscal quarter beginning three months after Buyer receives an order under such
agreement
3.2.2 Payments Upon Sale, Merger or Consolidation of
Buyer. In the event that Buyer is sold, merged, or liquidated prior to its
initial underwritten public offering and within ten years of the Closing, Seller
shall receive 15% of the gross proceeds in excess of $7,000,000 upon the closing
of such transaction, provided, however that the Warrant has been canceled or
tendered for cancellation by the Seller.
3.3 Allocation of Purchase Price; Taxes.
3.3.1 Seller and Buyer agree that (i) the Purchase
Price shall be allocated among the Purchased Assets as set forth on 3.3.1, and
(ii) both Seller and Buyer shall prepare and file their federal and state tax
returns based on the allocation of Purchase Price set forth in such schedule.
3.3.2 Seller agrees to pay all transfer and sales
taxes payable as a result of the Sale.
ARTICLE IV
CLOSING
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4.1 Closing. Upon the terms and subject to the conditions set
forth herein, the Closing of the Sale and the Contemplated Transactions (the
"Closing") shall take place at the offices of Seller, One Electronics Drive,
Trenton, New Jersey 08619 at 10:00 a.m. (New York City time) 30 days following
the date on which the Securities Exchange Commission shall have advised Seller
that it has no further comments with respect to Seller's Proxy Statement
relating to the Sale and Contemplated Transactions, or at such other place, date
and time as the parties may agree in writing. The date on which the Closing is
actually held hereunder is sometimes referred to herein as the "Closing Date."
4.2 Deliveries and Payments at Closing.
4.2.1 Deliveries by Buyer. At the Closing, Buyer
shall execute and
deliver to Seller
(a) The Cash Payment;
(b) The Purchase Note;
(c) The Warrant;
(d) The Transition Agreement;
(e) The Sublease;
(f) Such instruments of assumption evidencing Buyer's
assumption, pursuant to Section 2.5 hereof, of the Assumed Liabilities as Seller
shall reasonably request; and
(g) All consents, authorizations, waivers and similar
approvals of Governmental Bodies and other Persons, if any, which are required
to be obtained by Buyer in order to enable or permit Buyer to acquire ownership
of the Purchased Assets from Seller.
4.2.2 Deliveries by Seller. At Closing, Seller shall
execute and deliver to Buyer:
(a) Bills of Sale in favor of Buyer with respect to the
Purchased Assets and the Assumed Liabilities (the "Bills of Sale");
(b) The Patent Assignment;
(c) The Transition Agreement;
(d) The Sublease;
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(e) Such other assignments, agreements and instruments as
shall be reasonably requested by Buyer as necessary to vest in Buyer good and
valid title in and to the Business and the Purchased Assets in accordance with
the provisions hereof; and
(f) All consents, authorizations, waivers and similar
approvals of Governmental Bodies and other Persons, if any, which are required
to be obtained by Seller in order to enable or permit Seller to transfer
ownership of any of the Purchaser Assets to Buyer.
4.2.3 Certificates; Opinions; Agreements. At the
Closing, Buyer and Seller shall deliver to the other the other certificates,
opinions of counsel and other items described in Articles X and XI hereof.
4.3 Form of Instruments. All of the foregoing assignments,
agreements and instruments shall be in form and substance, and shall be executed
and delivered in a manner, satisfactory to Buyer in its sole discretion.
4.4 Consents to Assignment. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Contract or Permit or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
the consent of a third party thereto, would constitute a breach thereof or in
any way affect the respective rights of Buyer or Seller thereunder. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would affect the rights thereunder so that Buyer would not
receive all such rights, Seller will cooperate with Buyer, in all respects, to
provide to Buyer the benefits under any such Contract or Permit, including,
without limitation, enforcement for the benefit of Buyer of any and all rights
of Seller against a third party thereto, arising out of the breach or
cancellation by such third party or otherwise; and any transfer or assignment to
Buyer of any property or property rights or any Contract or Permit that shall
require the consent or approval of any third party shall be made subject to such
consent or approval being obtained.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the
following representations and warranties are, as of the date hereof, and as of
the Closing Date, true and correct:
5.1 Organization. Seller is duly organized, validly existing
and in good standing under the laws of the State of New Jersey, has full
corporate power and authority to conduct its business as it is presently being
conducted and to own and lease its properties and assets (including, without
limitation, the Purchased Assets). Seller is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which such
qualification is necessary under applicable laws as a result of the conduct of
its business and the ownership of its
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properties and assets (including, without limitation, the Purchased Assets)
except where the failure to be so qualified and in good standing would not have
a Material Adverse Effect.
5.2 Authorization. Seller has all necessary corporate power
and authority and has taken all corporate action, and prior to the Closing shall
have received all stockholder votes, consents and corporate approvals, necessary
or appropriate to execute and deliver this Agreement, the Seller's Ancillary
Documents and to consummate the transactions contemplated hereby and thereby and
to perform its obligations hereunder and thereunder, and no other proceedings on
the part of Seller (except for a stockholder vote) is necessary to authorize
this Agreement, the Seller's Ancillary Documents or the performance of the
transactions contemplated hereby and thereby. Each of this Agreement and the
Seller's Ancillary Documents has been duly executed and delivered by Seller and
is a valid, binding and enforceable obligation of Seller enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting creditors' rights generally and (ii) the general
principles of equity, regardless of whether asserted in a proceeding in equity
or at law.
5.3 No Conflicts or Violations. Except as set forth on
Schedule 5.3, neither the execution and delivery of this Agreement and the
Seller's Ancillary Documents by Seller, nor the consummation of any of the
transactions contemplated hereby and thereby will (i) violate any provision of
the certificate of incorporation or by-laws of Seller; (ii) violate, be in
conflict with, or constitute a default or an event which, with notice or lapse
of time or both, would constitute a default under or the creation of any right
of any party to accelerate, terminate or cancel any Contract or Permit by which
any of the Purchased Assets are bound; or (iii) violate any statute or law or
any judgment, decree, regulation or rule of any count or Governmental Body
applicable to Seller which violation would have a Material Adverse Effect.
5.4 Title to Assets. Except as set forth on Schedule 5.4,
immediately after the Closing, assuming that all required filings with
Governmental Bodies in connection with the assignment to Buyer of the
Intellectual Property Rights included in the Purchased Assets are made by Seller
or Buyer, Buyer shall have good and marketable title to the Purchased Assets,
free and clear of all Encumbrances and subject only to the Assumed Liabilities.
5.5 Contracts.
5.5.1 Schedule 5.5 identifies each written contract,
commitment,
agreement, lease, license, arrangement or understanding relating to the
operations of the Business to which Seller is a party (collectively, the
"Contracts"), in each case that relates exclusively to the Purchased Assets and
that individually (or collectively if related) involve transactions,
arrangements or services valued in excess of, $250,000 per annum or are not
cancellable, without material penalty, by Seller on 90 days' or less notice.
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5.5.2 Seller has delivered to Buyer a true, correct
and complete copy of each Contract listed in Schedule 5.5 hereto.
5.6 Required Consents. Schedule 5.6 hereto sets forth all
Required Consents, each of which either (i) has been obtained on or prior to the
date hereof, (ii) shall have been obtained on or prior to the Closing Date, or
(iii) to the extent legally permissible, shall be obtained by Seller as promptly
as practical following the Closing Date. Schedule 5.6 hereto indicates with
respect to each Required Consent listed therein whether such Required Consent
has been obtained as of the date hereof and, if not, when Seller reasonably
expects that such Required Consent will have been obtained pursuant to clauses
(ii) or (iii) above. If any Required Consent listed in Schedule 5.6 hereto is
not obtained in accordance with this Section 5.6, then Seller shall cooperate
with Buyer, in all respects, to provide to Buyer the benefits that would have
been available to Buyer had such Required Consent been obtained.
5.7 Intellectual Property Rights. Except as set forth in
Schedule 5.7 hereto, Seller owns, is licensed or otherwise would have the rights
to use all of the Intellectual Property Rights used in the conduct of the
Business as currently conducted, all of which Intellectual Property Rights are,
to the Seller's knowledge, valid and enforceable against third parties. Schedule
5.7 contains an accurate and complete description of (i) all material
Intellectual Property Rights owned by or registered in the name of the Seller
and (ii) all material agreements and arrangements to which Seller is a party
that involves the license, sale or other access to Intellectual Property Rights,
in each case that are used in or related exclusively to the Business and the
Purchased Assets. Except as indicated on Schedule 5.7, Seller owns outright, on
an exclusive basis, the Intellectual Property Rights listed on Schedule 5.7, in
each case free and clear of all Encumbrances, and no other Intellectual Property
Rights are necessary for the conduct of the Business as currently conducted
(other than the Intellectual Property Rights which are the subject of certain of
Buyer's Ancillary Agreements or that are set forth in Schedule 5.7). Except as
set forth on Schedule 5.7, all rights of Seller in and to such Intellectual
Property Rights are, or will be as of the Closing, transferable to Buyer as
herein contemplated without any restriction or required consent.
5.8 Compliance with Environmental Laws. Except as set forth in
Schedule 5.8.1, Seller has complied and is in compliance in all material
respects with all applicable Environmental Laws pertaining to the Leased
Premises. To the knowledge of Seller, no violation by Seller is being alleged of
any applicable Environmental Law relating to the Leased Premises, or the use or
ownership thereof, or to the operation of the Business.
5.9 No Brokers. Except as disclosed in the Proxy Statement,
Seller does not have nor will Seller have any obligation to pay any finder's
fee, brokerage commission or similar payment in connection with the transactions
contemplated hereby. Any such fees, commissions or payments shall remain the
obligation of Seller.
ARTICLE VI
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REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the
following representations and warranties are, as of the date hereof, and as of
the Closing Date, true and correct:
6.1 Organization of Buyer. Buyer is duly organized, validly
existing and in good standing under the laws of the State of Nevada, has full
power and authority to conduct its business as presently being conducted, or as
expected to be conducted immediately following the Closing, and to own and lease
its properties and assets. As of the Closing, Buyer will be duly qualified to do
business and will be in good standing in each jurisdiction in which such
qualification is necessary under applicable laws as the result of the conduct of
its business, or the ownership of its properties, except where the failure to be
so qualified and in good standing would not have a Material Adverse Effect.
6.2 Authorization. Buyer has all necessary power and authority
and has taken all corporate action and has obtained all approvals necessary to
execute, deliver and perform its obligations under this Agreement, the Buyer's
Ancillary Documents and to consummate the transactions contemplated hereby and
thereby, and no other proceedings on the part of Buyer are necessary to
authorize this Agreement, the Buyer's Ancillary Documents or the transactions
contemplated hereby and thereby. Each of this Agreement and the Buyer's
Ancillary Documents has been duly executed and delivered by Buyer and is a
valid, binding and enforceable obligation of Buyer, enforceable against it in
accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights generally and (ii) the general principles of equity,
regardless of whether asserted in a proceeding in equity or at law.
6.3 No Conflict or Violation. Neither the execution, delivery
and performance of this Agreement and the Buyer's Ancillary Documents by Buyer
nor the consummations of the transactions contemplated hereby and thereby will
result in (i) a violation of or a conflict with any provision of the certificate
of incorporation or by-laws of Buyer, (ii) a breach of, or a default under any
term or provision of any contract, agreement, indebtedness, lease, commitment,
license, franchise, Permit, authorization or concession to which Buyer is a
party, which breach or default would have a Material Adverse Effect, or (iii) a
violation by Buyer of any statute or law or any judgment, decree, regulation or
rule of any court or Governmental Body applicable to Buyer, which violation
would have a Material Adverse Effect.
6.4 Consents and Approvals. Except as set forth in Schedule
6.4 hereto, no consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Body, or any other Person, is required to be
made or obtained by Buyer in connection with the execution, delivery and
performance of this Agreement and the consummation of the transaction
contemplated hereby.
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6.5 Financing. Buyer possesses adequate financial wherewithal,
including, without limitation, commitments from financial institutions and third
party investors, to consummate the transactions contemplated by this Agreement
in a timely manner.
6.6 No Brokers. With the exception of any agreement
specifically entered into between Buyer and Andrew Garrett, Inc., Buyer does not
have nor will have any obligation to pay any finder's fee, brokerage commission
or similar payment in connection with the transaction contemplated hereby. Any
such fees, commissions or payments shall remain the obligation of Buyer.
ARTICLE VII
COVENANTS OF SELLER AND BUYER
Each of Seller and Buyer covenants and agrees as follows:
7.1 Consents and Best Efforts. As soon as practicable
following the date hereof, Seller and Buyer will commence all reasonable action
to obtain all Required Consents within the time periods set forth in Section 5.6
hereof, all Permits, and to give all notices and make all filings with, any
third parties or Governmental Bodies as may be necessary to authorize, approve
or permit the consummation of the Sale, the Contemplated Transactions and the
other transactions contemplated hereby.
7.2 Novation of Government Contracts. On or before the Closing
Date, Buyer and Seller shall have entered into novation agreements in form
reasonably satisfactory to Buyer (the "Government Contract Novation Agreements")
with respect to each Contract between Seller and the United States federal
government or any department or agency thereof (each such Contract, a
"Government Contract"), and Buyer and Seller shall have entered into an
agreement in form reasonably satisfactory to such parties whereby Buyer shall
agree to undertake Seller's obligations under the Government Contracts in force
as of the Closing Date (the "Agency Agreement"). Prior to the execution of the
Government Contract Novation Agreements by the appropriate representatives of
the United States federal government (or a department or agency thereof), Buyer
shall perform the obligations of a contracting party under each Government
Contract, pursuant to the terms and provisions of the Agency Agreement, as
though Buyer were the contracting party thereunder. Seller and Buyer each hereby
agrees to use its best efforts to effect the novation of the Government
Contracts contemplated by the Government Contract Novation Agreements as soon as
possible following the Closing Date, including, without limitation, using best
efforts to provide to the contracting officers responsible under United States
federal government regulations for the management of the Government Contracts
all information and documentation required to be delivered to such contracting
officers; provided, however, that nothing in this Agreement shall be interpreted
to mean that Seller has any obligation to post any performance bonds as may be
required by the United States federal government.
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7.3 Novation of Government Licenses. On or before the Closing
Date, Buyer and Seller shall have entered into novation agreements in form
reasonably satisfactory to Buyer (the "Government License Novation Agreement")
with respect to each license between Seller and the United States federal
government or any department or agency thereof as listed on Schedule 7.3, which
licenses relate to the export of certain information by Seller (the "Government
Licenses"). Seller and Buyer each hereby agrees to use its best efforts to
effect the novation of the Government Licenses contemplated by the Government
License Novation Agreement as soon as possible following the Closing Date.
7.4 Post-Closing Payments. Seller agrees that if, after the
Closing, it receives any amounts from the United States federal government or
any department or agency thereof with respect to a Government Contract or any
amounts or assets from any other source with respect to Contracts or other
agreements which are part of the Purchased Assets or from any other source with
respect to the Business, Seller shall promptly notify Buyer of such occurrence
and promptly pay such funds, without any setoff or deduction therefrom, and
until such transfer, shall hold all such funds separate and apart from all other
funds of Seller, in trust for the account of Buyer.
7.5 Proxy Statement. Seller shall, as promptly as practicable,
prepare and file with the SEC a proxy statement and form of proxy in connection
with the vote of the Seller's stockholders with respect to the Sale and the
other transactions contemplated hereby (such proxy statement, together with any
amendments thereof or supplements thereto, in each case in the form or forms
mailed to the Seller's stockholders, the ("Proxy Statement"). The Seller shall
(i) use its best efforts to have the Proxy Statement cleared by the SEC as
promptly as practicable, (ii) mail the Proxy Statement and proxy to stockholders
of Seller as promptly thereafter as practicable, and (iii) otherwise comply with
all applicable legal requirements in connection with the vote of stockholders of
Seller with respect to this Agreement, the Sale, the Contemplated Transactions
and the other transactions contemplated herein.
7.6 Insurance Coverage.
7.6.1 Buyer's Insurance Coverage. Buyer shall
maintain worldwide product liability insurance with respect to products
designed, manufactured or sold worldwide by Buyer after the Closing Date, and
other acts or omissions, occurring after the Closing Date, for a period of at
least five years after the Closing Date and in an amount not less than
$3,000,000. Seller shall be an additional named insured with rights of
subrogation under such policy, and Buyer shall supply Seller with a certificate
of insurance evidencing such.
7.6.2 Seller's Insurance Coverage. Seller shall
maintain worldwide occurrence-based product liability insurance, with respect to
products designed, manufactured and sold by the Business prior to the Closing
Date, and other acts or omissions, occurring prior to the Closing Date, for a
period of at least five years after the Closing Date, and in an amount not less
than $3,000,000. Buyer shall be an additional named insured with rights of
subrogation under such policy, and Seller shall supply Buyer with a certificate
of insurance evidencing such.
637779.6
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7.7 No Solicitation. Neither Seller nor its affiliates shall
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any Person
(other than Buyer and its affiliates and representatives) concerning sale of
assets or similar transactions involving the Business (a "Business Proposal").
Notwithstanding the foregoing, Seller may furnish information pursuant to
appropriate confidentiality agreements, and may negotiate and participate in
discussions and negotiation with such entity or group concerning a Business
Proposal, if the board of directors of Seller concludes in good faith after
consultation with independent legal counsel that the failure to take such action
would present a reasonable possibility of violating the fiduciary obligations of
such board of directors under applicable law. The Company will immediately
communicate to Buyer the terms of any Business Proposal or request for
information or to negotiate and the identity of the party making such Business
Proposal or request which it may receive in respect of such transaction.
7.8 Employees. Within one week after the execution of this
Agreement, Seller shall provide Buyer with a list of all of the employees of the
Business. Buyer shall be entitled to interview the persons named in such list
with a view toward extending offers of employment, but shall not be entitled to
access to or to converse with any other employees of Seller without Seller's
prior written consent. Seller shall cooperate with Buyer's reasonable efforts to
induce employees of the Business to accept offers of employment with Buyer.
7.9 Plant Closing and Layoff. Any liability incurred by reason
of actions or omissions contemplated after the Closing (and not by reasons of
actions or omissions contemplated by this Agreement) with respect to employees
of the Business shall otherwise be Buyer's.
7.10 Public Announcements. During the period after the
execution of this Agreement and prior to the Closing Date, neither party shall
make any news release or public announcement without the prior written approval
of the other party. If any such announcement or other disclosure is required by
law, the disclosing party shall give to the non-disclosing party prior notice
and an opportunity to comment on the proposed disclosure.
ARTICLE VIII
COVENANTS NOT TO COMPETE
8.1 Non-Competition Period.
8.1.1 Seller Non-Competition Period. In order that
Buyer may have and enjoy the full benefit of the Purchased Assets and the
Business and as an inducement for Buyer to enter into this Agreement, Seller
agrees that during the period commencing on the Closing Date and ending on the
fifth anniversary thereof (the "Non-Competition Period") Seller shall not,
without Buyer's prior written consent, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, or be connected as a
637779.6
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partner, consultant or otherwise with, any profit or non-profit business or
organization that, directly or indirectly, competes with, or is about to compete
with, the Business as it shall exist immediately prior to the Closing Date. In
addition, during the Non-Competition Period, Seller shall not, without Buyer's
prior written consent, have any direct or indirect equity interest in any such
business or organization, other than as holder of the Warrant or as a 5% or less
stockholder of a public corporation.
8.1.2 Buyer Non-Competition Period. As an inducement
for Seller to enter into this Agreement, Buyer agrees that during the
Non-Competition Period, Buyer shall not, without Seller's prior written consent,
directly or indirectly, own, manage, operate, joint, control or participate in
the ownership, management, operation or control of, or be connected as a
partner, consultant or otherwise with, any profit or non-profit business or
organization that, directly or indirectly, competes with, or is about to compete
with, Seller's Medical Technology Division as it shall exist immediately prior
to the Closing Date or as developed by Seller following the Closing Date. In
addition, during the Non-Competition Period, Buyer shall not, without Seller's
prior written consent, have any direct or indirect equity interest in any such
business or organization, other than as a 5% or less stockholder of a public
corporation.
8.2 Enforceability. In the event the agreements in this
Article VIII shall be determined by any court of competent jurisdiction to be
unenforceable by reason of their extending for too great a period of time or
over too great a geographical area or by reason of its being too extensive in
any other respect, they shall be interpreted to extend only over the maximum
period of time for which they may be enforceable and/or over the maximum
geographical area as to which they may be enforceable and/or to the maximum
extent in all other respects as to which they may be enforceable, all as
determined by such court in such action.
8.3 Replication of Business. Notwithstanding anything to the
contrary contained in this Agreement, in no event shall Seller replicate or
replace (through acquisition or otherwise) the Business, and hereby represents,
warrants and covenants that it has no intent to, and shall not, do so during the
Non-Competition Period.
8.4 Specific Performance; Injunctive Relief. Seller and Buyer
each acknowledge that a breach of any of the covenants contained in this Article
VIII will cause irreparable damage to the other party, the exact amount of which
will be difficult to ascertain, and that the remedies at law for any such breach
will be inadequate. Accordingly, Seller and Buyer each agree that if either of
them breaches the covenants contained in this Article VIII, in addition to any
other remedy that may be available at law or in equity, the other party shall be
entitled to specific performance and injunctive relief, without posting bond or
other security and the prevailing party who obtains such specific performance or
injunctive relief shall also be entitled to receive from the other party the
reasonable attorneys fees it incurred in connection therewith.
637779.6
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ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the Sale, the
Contemplated Transactions and the other transactions contemplated hereby are
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived in writing by Seller:
9.1 Representations, Warranties and Covenants. All
representations and warranties of Buyer contained in this Agreement shall be
true and correct at and as of the date of this Agreement and Buyer shall have
performed all agreements and covenants required hereby to be performed by it on
or prior to the Closing Date.
9.2 Deliveries. Buyer shall have delivered to Seller at or
prior to the Closing Date the documents listed in Section 4.2.1 hereof.
9.3 No Governmental Proceedings or Litigation. No action by
any Governmental Body or other Person shall have been instituted or threatened
for the purpose of enjoining or preventing the Sale or the Contemplated
Transactions or the other transactions contemplated hereby or that questions the
validity or legality of the Sale, the Contemplated Transactions or the other
transactions contemplated hereby.
9.4 Certificates. Buyer shall have furnished Seller with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article IX as may reasonably be requested by Seller
which shall include, but not be limited to:
(a) A certificate executed by the corporate secretary of Buyer
certifying as of the Closing Date: (i) a true and complete copy of the
resolutions and/or minutes of meetings of Buyer's board of directors authorizing
the execution, delivery and performance of this Agreement and the Buyer's
Ancillary Documents by Buyer and the consummation of the Sale, the Contemplated
Transactions and the other transactions contemplated hereby, and (ii) incumbency
matters.
(b) A certificate executed by the corporate secretary of Buyer
certifying that, as of the Closing Date, the conditions in Article IX hereof
have been satisfied; and
(c) A copy of the certificate of incorporation of Buyer and
all amendments thereto, certified as of a recent date by the Secretary of State
of the State of Nevada.
(d) A certificate of good standing of Buyer issued by the
Secretary of State of the State of Nevada.
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9.5 Opinion of Counsel. Buyer shall have delivered to Seller
the opinion of Kogan & Associates, dated as of the Closing Date, in form and
substance satisfactory to Seller, to the effect that:
(a) Buyer is duly organized, validly existing and in good
standing under the laws of the state of Nevada and Buyer is duly qualified to do
business and is in good standing in each jurisdiction where the ownership of its
property or nature of its business requires such qualification and where the
failure to be so qualified would have a Material Adverse Effect on Buyer.
(b) Buyer has all necessary corporate power and authority to
own, lease and operate its properties and assets, has taken all corporate
actions necessary to enter into this Agreement and the Buyer's Ancillary
Documents, to consummate the Sale, the Contemplated Transactions and the other
transactions contemplated hereby and to perform its obligations hereunder, and
has obtained all Permits, consents, approvals and waivers from Governmental
Bodies and other Persons necessary to conduct, following the Closing Date, the
Business, except for any of the foregoing that have not been obtained by Seller
in accordance with this Agreement.
(c) All corporate actions by Buyer required in order to
authorize (i) the execution, delivery and performance of this Agreement, the
Buyer's Ancillary Agreements and the other agreements and documents contemplated
hereby and to which it will be a party, and (ii) the consummation of the Sale
constitutes the Contemplated Transactions and the other transactions
contemplated hereby, have been duly and validly taken.
(d) Each of this Agreement, the Buyer's Ancillary Agreements
and the other agreements and documents contemplated hereby has been duly
executed and delivered by Buyer and constitutes the legal, valid and binding
obligations of Buyer, enforceable against it in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization and other similar laws affecting creditors' rights
generally and (ii) the general principles of equity, regardless of whether
asserted in a proceeding in equity or at law.
(e) Neither the execution and delivery of this Agreement nor
the Buyer's Ancillary Agreements, nor the consummation of the Sale, the
Contemplated Transactions and the other transactions contemplated hereby, will
result in (i) a violation of or a conflict with any provision of the certificate
of incorporation or by-laws of Buyer, (ii) a breach of, or a default under, any
term or provision of any material contract or agreement to which Buyer is a
party, which breach or default would have a Material Adverse Effect on the
business or financial condition of Buyer or its ability to consummate the Sale
and the other Contemplated Transactions or (iii) a violation by Buyer of any
statute or law or any judgment, decree, regulation or rule of any court or
Government Body applicable to Buyer which violation would have a Material
Adverse Effect on the Buyer or its ability to consummate the Sale, the other
Contemplated Transactions and the other transactions contemplated hereby.
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(f) No action is pending or, to the best knowledge of such
counsel, threatened against Buyer or its businesses or in relation to the Sale
and the Contemplated Transactions.
9.6 Consents. All Permits, consents, approvals and waivers
from. Governmental Bodies and other Persons necessary to permit the consummation
of the Sale, the Contemplated Transaction, and the other transactions
contemplated hereby shall have been obtained
9.7 Shareholder Approval. Seller shall have received all
Required Consents from its shareholders to approve this Agreement, the Sale and
the Contemplated Transactions.
ARTICLE X
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the Sale, the
Contemplated Transactions and the other transactions contemplated hereby are
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived in writing by Buyer.
10.1 Representations, Warranties and Covenants. All
representations and warranties of Seller contained in this Agreement shall be
true and correct at and as of the date of this Agreement and Seller shall have
performed all agreements and covenants required hereby to be performed by Seller
prior to or at the Closing Date
10.2 Deliveries. Seller shall have delivered to Buyer at or
prior to the Closing Date the documents listed in Section 4.2.2 hereof.
10.3 Required Consents. All Required Consents shall have been
obtained.
10.4 No Governmental Proceedings. No action by any
Governmental Body shall have been instituted or threatened for the purpose of
enjoining or preventing the Sale, the Contemplated Transactions or the other
transactions contemplated hereby, that questions the validity or legality of the
Sale and the Contemplated Transactions or the other transactions contemplated
hereby, or that could reasonably be expected to affect materially the right or
ability of Buyer to own, operate or possess any of the Purchased Assets after
the Closing.
10.5 Opinions of Counsel. (A) Seller shall have delivered to
Buyer an opinion of Pitney, Kipp, Harden & Szuch, dated as of the Closing Date,
in form and substance satisfactory to Buyer, to the effect that:
(a) Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New Jersey, and
Seller is duly qualified to do business as a
637779.6
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foreign corporation and is in good standing in each jurisdiction where the
ownership of its property or nature of its business requires such qualification
and where the failure to be so qualified would have a Material Adverse Effect on
Seller or the Business;
(b) Seller has all necessary corporate power and authority to
own, lease and operate the Business, and to enter into this Agreement, the
Seller's Ancillary Documents and the documents to be delivered by Seller on the
Closing Date to effect the transfer and assignment to Buyer of all right, title
and interest in and to the Purchased Assets, to consummate the Sale, the
Contemplated Transactions and the other transactions contemplated hereby, and to
perform its obligations hereunder;
(c) All corporate actions by Seller and its shareholders
required in order to authorize the execution, delivery and performance of this
Agreement, the Seller's Ancillary Documents and the other documents and
instruments to be delivered by Seller on the Closing Date, and the consummation
of the Sale the Contemplated Transactions and the other transactions
contemplated hereby, have been duly and validly taken;
(B) Seller shall have delivered to Buyer an opinion of Battle
Fowler LLP, dated as of the Closing Date, in form and substance satisfactory to
Buyer, to the effect that:
(a) Each of this Agreement, the Seller's Ancillary Documents
and the other agreements and documents contemplated hereby has been duly
executed and delivered by Seller, constitutes the legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally and (ii) the general principles of equity, regardless of whether
asserted in a proceeding at law or in equity;
(b) Neither the execution and delivery of this Agreement by
Seller nor the consummation of the Sale, the Contemplated Transactions and the
other transactions contemplated hereby will (i) violate the certificate of
incorporation or bylaws of Seller, (ii) breach, or cause a default under, any
term or provision of any Contract to which Seller is a party or (iii) violate
any statute or law or any judgment, decree, regulation or rule of any court or
Governmental Body applicable to Seller which would have a Material Adverse
Effect on Seller or the Business, or the ability of Seller to consummate the
Sale, the Contemplated Transactions and the other transactions contemplated
hereby; and
(c) No action is pending or, to the best knowledge of such
counsel, threatened against Seller, or its properties or businesses or in
relation to the Sale and the Contemplated Transactions.
10.6 Certificates of Seller. Seller shall furnish Buyer with
such certificates of its officers and others to evidence compliance with the
conditions set forth in this Article X as may be reasonably requested by Buyer,
which shall include, but not be limited to:
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(a) A certificate executed by the corporate secretary of
Seller certifying as of the Closing Date (i) a true and complete copy of the
certificate of incorporation of Seller; (ii) a true and complete copy of the
bylaws of Seller; (iii) a true and correct copy of the resolutions and/or
minutes of meetings of the board of directors and of the shareholders of Seller
authorizing the execution, delivery and performance of this Agreement and the
Seller's Ancillary Documents by Seller and the consummation of the Sale, the
Contemplated Transactions and the other transactions contemplated hereby; and
(iv) incumbency matters.
(b) A certificate executed by an officer of Seller certifying
that, as of the Closing Date, the conditions set forth in Article X with respect
to Seller have been satisfied;
(c) A copy of the certificate of incorporation of Seller and
all amendments thereto, certified as of a recent date by the Secretary of State
of the State of New Jersey;
(d) A certificate of good standing of Seller issued by the
Secretary of State of the State of New Jersey;
(e) Any and all forms, certificates and/or other instruments
required to pay the transfer, gains, sales, use and other conveyance Taxes and
other Taxes and charges arising from the Sale and the Contemplated Transactions,
together with evidence reasonably satisfactory to Buyer that such transfer Taxes
and charges have been paid; and
(f) A certificate of non-foreign status with respect to Seller
pursuant to section 1445 of the Code.
10.7 Consents. Except as set forth on Schedule 10.7, all of
the Contracts shall have been assigned to Buyer and all Required Consents shall
have been obtained or granted.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Seller. Seller agrees that it shall,
indemnify, save and hold harmless Buyer and its affiliates, from and against any
and all costs, losses, liabilities, damages, lawsuits, deficiencies, claims and
expenses (whether or not arising out of third-party claims), including, without
limitation, interest, penalties, additions, attorneys' fees and all amounts paid
in investigation, defense or settlement of any of the foregoing (herein,
collectively, the "Damages"), incurred in connection with or arising out of or
resulting from (i) any breach of the representatives and warranties made by
Seller in Section 5.8, or the inaccuracy of the representatives and warranties
made by Seller in Section 5.8; (ii) any liabilities arising out of the presence,
release or disposal of any Hazardous Substances, or the violation of any
Environmental Laws prior to the Closing Date (whether or not such liabilities
are described, listed or reflected on Schedules 5.8);(iii) any liability of
Seller that is not an Assumed Liability being imposed or
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threatened to be imposed upon Buyer reason of Buyer's status as transferee of
the Business or the Purchased Assets or Assumed Liabilities of Seller or
otherwise; and (iv) any failure by Seller to perform or comply with any covenant
contained in this Agreement or Seller's Ancillary Agreement except as set forth
in Schedule 11.1;
11.2 Indemnification by Buyer. Buyer agrees that it shall
indemnify and hold harmless Seller and its affiliates from and against any and
all Damages incurred in connection with or arising out of or resulting (i) any
failure by Buyer to perform or comply with any covenants contained in this
Agreement or Buyer's Ancillary Documents, except as set forth on Schedule 11.2;
and (ii) the Assumed Liabilities, including, without limitation, any claim by
any employee of the Business who is employed by Buyer after the Closing Date,
whether arising after, or as a consequence of the Closing, provided such claim
did not arise, or was not pending or, to the knowledge of Seller, threatened as
of or prior to the Closing Date.
11.3 Defense of Claims. If any action or proceeding (including
any governmental investigation or inquiry by any Governmental Body) shall be
brought or asserted or threatened to be brought or asserted against an
indemnified party in respect of which indemnity may be sought from an
indemnifying party, such indemnified party shall promptly notify the
indemnifying party in writing, and the indemnifying party may, in its sole
discretion, promptly upon receipt of such notice, assume the defense thereof,
including the employment of counsel (who may be counsel for the indemnifying
party) reasonably satisfactory to such indemnified party and the payment of all
expenses therefor. The indemnifying party shall not, except with the written
consent of the indemnified party (or if such consent is unreasonably withheld),
consent to the entry of a judgment or settlement. If the indemnifying party
elects to assume the defense of any such action or proceeding, the indemnified
party shall have the right, in its sole discretion, to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be the expense of such indemnified party unless
(a) the indemnifying party has agreed to pay such fees and expenses or (b) the
indemnifying party shall have elected not to assume the defense of such action
or proceeding or shall have failed to promptly assume the defense of such action
or proceeding or shall have failed to employ counsel satisfactory to such
indemnified party in any such action or proceeding or (c) the named parties to
any such action or proceeding (including any impeded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to such indemnified party that are different from or additional to
those available to the indemnifying party (in which case, if such indemnified
party notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of such indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for such indemnified party and any
other indemnified parties, which firm shall be designated in writing by such
indemnified parties). The
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indemnifying party shall not be liable for any settlement of any such action or
proceeding effected without its written consent, but if settled with its written
consent (which shall not be unreasonably withheld), or if there be a final
judgment for the plaintiff in any such action or proceeding, the indemnifying
party agrees to indemnify and hold harmless such indemnified parties from and
against any loss or liability by reason of such settlement or judgment. If
either party shall claim indemnification for Damages hereunder for any claim
other than a third party claim, the indemnified party shall promptly notify the
indemnifying party of the nature of the claim and the amount of the Damages and
payment therefor shall be made by the indemnifying party forthwith upon receipt
of such notice. In addition, the indemnified party shall cooperate with the
indemnifying party and its representatives in connection with the defense or
investigation of any claim or other matter for which indemnification is sought,
as reasonably requested by the indemnifying party (including by providing access
to books and records and representatives of the indemnified party on reasonable
request, provided that such access does not unreasonably interfere with Buyer's
business.
11.4 Exclusivity of Remedies For Environmental Matters. The
indemnification provisions of this Article XI shall be the sole and exclusive
remedy of the parties, as against each other, with respect to maters arising
under or relating to Environmental Laws under any form of theory of action,
whatsoever, whether in contract, tort, statute or otherwise, including, without
limitation, CERCLA and comparable state and local statues.
ARTICLE XII
MISCELLANEOUS
12.1 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement shall survive until
the first anniversary of the Closing Date, provided however, that the
representations and warranties in Section 5.8 shall survive until the third
anniversary of the Closing Date.
12.2 Termination.
12.2.1 Termination. This Agreement may be terminated
any time prior to Closing:
(a) by either Seller or Buyer if, upon a vote at a duly held
shareholders' meeting of Seller or any adjournment thereof, any required
approval of the shareholders of Seller shall not have been obtained;
(b) by mutual written consent of Buyer and Seller;
(c) by either Buyer or Seller if Closing shall not have
occurred on or before the first to occur of (x) 30 days following the date on
which the Securities and Exchange Commission
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shall have advised Seller that it has no further comments with respect to the
Seller's Proxy Statement relating to the Sale and Contemplated Transactions, or
(y) January 7, 1998, provided that the delay or failure to consummate Closing by
that date is not because of a breach of this Agreement by the party seeking to
terminate it and that Seller has made the necessary filings with the Securities
and Exchange Commission on or before October 27, 1997; or
(d) by either party in the event of either (i) a material
breach by the other party of any representation or warranty contained in this
Agreement, which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach; or (ii) a
material breach by the other party of any of the covenants or agreements
contained in this Agreement, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party of such
breach.
12.2.2 Effect of Termination. In the event of
termination of this Agreement by either Buyer or Seller as provided in Section
12.2.1, this Agreement shall forthwith become void and have no effect, without
any liability on the part of Seller or Buyer, other than pursuant to Section
12.2.3. Except as otherwise provided in Section 12.2.3, nothing contained in
this Section shall relieve any party from any liability resulting from any
material breach of the representations, warranties, covenants or agreements set
forth in this Agreement.
12.2.3 Certain Fees. If Seller terminates this
Agreement other than in accordance with Sections 12.2.(b) or (d) or if Buyer
terminates this Agreement in accordance with Sections 12.2.1(a), (c) or (d),
then Seller shall pay to Buyer upon demand an amount in cash equal to 3% of the
sum of (x) the Net Asset Value as of the date of termination, plus (y) $400,000.
This fee shall serve as the exclusive remedy to Buyer in the event of a breach
by Seller of any provision of this Agreement.
12.3 Further Assurances. Each of Buyer and Seller shall use
all commercially reasonable efforts to take all action and to do all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement (including, without limitation, satisfying the
conditions set forth in Articles IX and X hereof). Following the Closing the
parties hereto shall furnish to each other and their respective representatives
such necessary and available information as may reasonably be requested in
connection with Tax, accounting and similar matters relating to the Purchased
Assets or the Business. In addition, Seller agrees to execute such documents and
take such actions as may reasonably be requested by Buyer's representatives and
otherwise cooperate with Buyer and its representatives in connection with such
matters.
12.4 Bulk Sales. Buyer hereby waives any requirements for
compliance with any bulk sales laws in connection with the Sale and the
Contemplated Transactions.
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12.5 Assignment. The parties to this Agreement may not assign
their rights or obligations under this Agreement without the prior written
consent of all other parties to this Agreement.
12.6 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given: (i) upon receipt if
personally delivered; (ii) when transmitted with confirmation of transmission if
transmitted by telecopy or facsimile; (iii) the day after it is sent, if sent
for next day delivery to a domestic address by recognized overnight courier
service; and (iv) upon receipt, if sent by certified or registered mail, return
receipt requested. In each case notice shall be sent:
If to Buyer to:
Strategic Technologies, Inc.
One Electronics Drive
Trenton, NJ 08619-0151
Attn: Chief Executive Officer
with a copy to:
Louis E. Taubman
39 Broadway
Suite 2704
New York, NY 10006
Facsimile: (212) 482-8104
If to Seller, to:
Base Ten Systems, Inc.
One Electronics Drive
Trenton, NJ 08619-0151
Attn: Chief Executive Officer
with a copy to:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
Facsimile: (212) 856-7822
Attention: David Warburg, Esq.
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or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
12.7 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
agreements to be performed therein.
12.8 Entire Agreement; Amendments and Waivers. This Agreement,
together with all exhibits and schedules hereto (including, without limitation,
the Schedules), constitutes the entire agreement among the parties pertaining to
the subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
12.9 Multiple Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.10 Expenses. Except as expressly set forth in this
Agreement, Buyer and Seller shall each pay for its respective legal, accounting,
brokerage, investment banking, out-of-pocket and all other fees, costs and
expenses which they incur or cause to be incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement, and the
transactions contemplated hereby.
12.11 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
12.12 Titles. The titles, captions or headings of the Articles
and Sections herein are inserted for convenience of reference only and are not
intended to be a part of this Agreement.
12.13 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
12.14 Cumulative Remedies. Except as otherwise provided
herein, all rights and remedies of either party hereto are cumulative of each
other and of every other right or remedy such party may otherwise have at law or
in equity, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
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12.15 Definition of Knowledge. Any reference in this Agreement
or in any certificate delivered pursuant hereto to the "knowledge" of Seller
(whether to "the best of Seller's knowledge", to "the Seller's knowledge" or
other similar expressions relating to the knowledge or awareness of Seller)
shall include all matters which the senior executive officers of Seller actually
knew or should have known after diligent inquiry.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by each of the parties hereto as of the date first above written.
BASE TEN SYSTEMS, INC.
By:
-----------------------
Name:
Title:
STRATEGIC TECHNOLOGIES, INC.
By:
-----------------------
Name:
Title:
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