AGREEMENT OF PURCHASE AND SALE
By and Among
L.B. Foster Company
And
Monitor Acquisition Co. LLC
September 13, 2000
TABLE OF CONTENTS
Page
1. Purchase and Sale of Assets..........................................1
1.1. Transfer of Assets..........................................1
1.2. Liabilities Retained by Seller..............................3
1.3. Liabilities Assumed by Buyer................................4
1.4. Excluded Assets.............................................4
1.5. Permitted Encumbrances......................................4
2. Purchase Price Payment; Other Closing Deliveries; Closing............5
2.1. Purchase Price..............................................5
2.2. Payment of the Purchase Price...............................5
2.3. Allocation of Purchase Price................................5
2.4. Closing and Closing Date....................................5
2.5. Items to be Delivered by Seller at Closing..................5
2.6. Items to be Delivered by Buyer at Closing...................8
3. Representations and Warranties of Seller............................10
3.1. Corporate Status...........................................10
3.2. Corporate Power and Authority..............................10
3.3. Enforceability.............................................10
3.4. Ownership of Assets........................................10
3.5. Adequacy of Assets.........................................10
3.6. Financial Statements; Undisclosed Liabilities..............10
3.7. Absences of Adverse Changes or Other Events................11
3.8. Leased Real Estate.........................................12
3.9. Owned and Leased Tangible Personal Property................12
3.10. [Intentionally Omitted.]...................................12
3.11. Patents and Certain other Intellectual Property Rights.....12
3.12. Engineering Drawings and Know-How..........................14
3.13. Prepaid Items and Deposits.................................14
3.14. Insurance and Bonds........................................14
3.15. Product Warranties.........................................14
3.16. Contracts..................................................14
3.17. Proposals and Bids.........................................15
3.18. Agreements with Employees..................................15
3.19. Insider Contracts..........................................15
3.20. Other Material Contracts...................................16
3.21. Customers..................................................16
3.22. Taxes......................................................16
3.23. Environmental Matters......................................17
3.24. Compliance with Other Laws.................................17
3.25. Absence of Conflict or Breach..............................18
3.26. Consents and Approvals.....................................18
3.27. Litigation.................................................18
3.28. No Undisclosed Information.................................18
4. Representations and Warranties of Buyer.............................18
4.1. Corporate Status...........................................19
4.2. Corporate Power and Authority..............................19
4.3. Litigation.................................................19
4.4. Disclosure.................................................19
5. Intentionally Omitted...............................................19
6. Covenants of Seller.................................................19
7. Intentionally Omitted...............................................22
8. Conditions to Obligations of Buyer..................................22
8.1. Representations, Warranties and Covenants..................22
8.2. FIRPTA Certificate.........................................22
8.3. Intentionally Omitted......................................22
8.4. Delivery of Assets to be Acquired..........................22
8.5. No Litigation..............................................22
8.6. Required Consents..........................................23
8.7. Satisfaction of Liens......................................23
8.8. Employment Agreements......................................23
8.9. Documents..................................................23
9. Conditions to Obligations of Seller.................................23
9.1. Representations, Warranties and Covenants..................23
9.2. No Litigation and Lack of Consent..........................23
9.3. Delivery of Purchase Price.................................24
10. Indemnification.....................................................24
10.1. Indemnification by Seller..................................24
10.2. Indemnification by Buyer...................................26
10.3. Notice of Claims...........................................26
10.4. Survival of Indemnity Obligation...........................27
10.5. Exclusive Remedy...........................................28
11. Earn-Out Payments...................................................28
11.1. General....................................................28
11.2. Definitions................................................28
11.3. Earn-Out Payments..........................................29
11.4. Earn-Out Statement.........................................30
11.5. Payment....................................................32
11.6. Buy-Out Provisions.........................................32
12. Prorations and Allocations..................................33
13. Costs and Expenses..........................................34
14. Absence Broker or Finder....................................34
15. Instruments of Further Assurance............................34
16. Right of Buyer to Nominate Related Company..................35
17. News Releases...............................................35
18. Successors and Assigns......................................35
19. Governing Law...............................................35
20. Execution in Counterparts...................................36
21. Miscellaneous...............................................36
21.1. Entire Agreement...........................................36
21.2. Amendments.................................................36
21.3. Headings and Captions......................................36
21.4. Gender and Number..........................................36
21.5. Notices....................................................36
21.6. Severability...............................................37
21.7. Bulk Sales.................................................37
21.8. No Third Party Beneficiaries...............................38
21.9. No Waiver..................................................38
21.10. Schedules and Exhibits.....................................38
21.11. Knowledge..................................................38
AGREEMENT OF PURCHASE AND SALE
This Agreement of Purchase and Sale (this "Agreement") is made this 13th
day of September, 2000 by and between L.B. FOSTER COMPANY, a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania
("Seller"), and MONITOR ACQUISITION CO. LLC, a limited liability company
organized and existing under the laws of the State of Delaware ("Buyer").
W I T N E S S E T H :
BACKGROUND
WHEREAS, Buyer desires to purchase from Seller, Fosmart Inc., a Delaware
corporation or Natmaya, Inc., a Delaware corporation, each a wholly-owned
subsidiary of the Seller (each, a "Subsidiary" and together, the
"Subsidiaries"), and Seller desires to sell to Buyer and to cause the
Subsidiaries to sell to Buyer, on the terms and conditions hereinafter set
forth, all of the properties, rights and assets of Seller of every kind and
description, except the Excluded Assets (as hereinafter defined), which are
primarily used or held for use in connection with, or necessary for or material
to, or directly resulting from the operation of, Seller's business of designing,
developing, marketing and manufacturing mass spectrometers (the "Acquired
Business"), including, but not limited to (i) all of the assets purchased by
Seller under that certain Agreement of Purchase and Sale (the "1997 Purchase
Agreement"), dated May 6, 1997, among Industrial Scientific Corporation ("ISC"),
a Pennsylvania corporation, Industrial Scientific of Delaware, Inc., a Delaware
corporation and Seller, and all products and works-in-process in any manner
arising therefrom or relating thereto, whether developed by Seller, the
Subsidiaries or, to the extent transferable, any of Seller's employees (the
"Predecessor Assets").
NOW, THEREFORE, for and in consideration of the mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby,
Seller and Buyer covenant, represent, warrant, stipulate and agree as follows:
1. Purchase and Sale of Assets.
1.1. Transfer of Assets. Subject to and in accordance with the terms of
this Agreement, on the Closing Date, as defined in Section 2.4 hereof, Seller
and the Subsidiaries shall sell, convey, transfer, assign and deliver to Buyer
free and clear of all liens, encumbrances or adverse claims of any kind
("Liens") (except for Permitted Encumbrances, as such term is defined in
Section 1.5 hereof), and Buyer shall purchase and accept from Seller, all of
Seller's (and any of its affiliates') right, title, interest and benefit in and
to the properties, rights and assets of Seller (or any such affiliate) of every
kind and character, real, personal, tangible, intangible or mixed, primarily
used by, or primarily held by Seller (or any such affiliate) in connection with,
or necessary for or material to, or directly resulting from the operation of,
the Acquired Business, except the Excluded Assets (collectively, the "Assets"),
which shall include but not be limited to, the following:
(a) all items of tangible personal property owned, leased or used by Seller
(or any of its affiliates) primarily in connection with the Acquired Business,
including, but not limited to, all equipment, inventory, supplies, vehicles,
furnishings and other personal property of any nature, all of which are more
fully described in Schedule 3.9 or Schedule 3.12, and all owned realty,
leasehold and other interests in real property, buildings and improvements and
construction-in-progress, all of which are more fully described in Schedule 3.8;
(b) all of the intangible property (including, without limitation, the
goodwill of the Acquired Business) and intellectual property and intellectual
property rights owned, leased, licensed, held or used by Seller or any of its
affiliates primarily in connection with the Acquired Business, and all licenses,
franchises, permits, authorizations, agreements and arrangements that concern
the same or that concern like items owned, licensed, leased, held or used by
others and used by Seller or any of its affiliates primarily in connection with
the Acquired Business (collectively, the "Intellectual Property"), including,
without limitation, all software (including, but not limited to, all source
codes and object codes), products, trade secrets, inventions, improvements,
technology, know-how, processes, methods, plans, data (including, but not
limited to, research data), marketing plans and strategies, forecasts,
trademarks, service marks, domain names, trade names (including, without
limitation, the names "Monitor Group" and "Monitor" and any variations thereof),
patents and patent rights, logos and copyrights, including, but not limited to
(i) any of the foregoing in respect of or in any manner primarily relating to or
resulting from the Predecessor Assets, and (ii) those trademarks and trademark
registrations (both state and federal), service marks and service mark
registrations (both state and federal), domain names and domain name
registrations, trade names, patents (including all reissues, divisions,
continuations, extensions and foreign counterparts thereof) and patent
disclosure documents, logos, copyright registrations and applications for any of
the foregoing (including all abandoned applications therefor) listed on Schedule
3.11;
(c) all operating data and records of Seller or any of its affiliates
primarily relating to the Acquired Business, including, without limitation,
client and customer lists and records, referral sources, research and
development reports and records, production reports and records, equipment logs,
operating guides and manuals, copies of financial, accounting and personnel
records, correspondence and other similar documents and records;
(d) all licenses, permits and other governmental approvals and
authorizations, whether federal, state or local, owned, held or utilized by
Seller or any of its affiliates primarily in connection with the Acquired
Business and all pending applications therefor, in each case to the extent
transferable to Buyer, each of which is listed on Schedule 3.24;
(e) all of the rights of Seller or any of its affiliates to, in and under
any existing contracts with purchasers which Buyer assumes pursuant to
Section 2.5, and all other contracts or agreements primarily relating to the
Acquired Business, including, but not limited to, all contracts and other
arrangements with employees of Seller or any of its affiliates primarily in
respect of the Acquired Business, and all variances, easements, right-of-way
agreements and options, claims, contract rights, goodwill and the right to use
the names "Monitor Group" and "Monitor" and all variants thereof; all of which
are more fully described in the various Schedules attached hereto; and
(f) all other properties, rights and assets of every kind, character or
description owned, leased, licensed, used or held for use by Seller or any of
its affiliates primarily in connection with the Acquired Business, whether or
not similar to the items specifically set forth above, including, without
limitation, the Predecessor Assets and, to the extent transferable, all
properties, rights and assets of every kind, character or description which
hereafter may become the property of Seller under the terms of Seller's
Employment Agreement with Anthony N. Duryea listed on Schedule 3.18 hereof.
1.2. Liabilities Retained by Seller. Seller shall retain, and Buyer shall
not assume and shall not have any liability or obligation of any kind whatsoever
with respect to, any indebtedness, obligations or other liabilities of Seller or
any of its affiliates of any kind whatsoever, whether pursuant to contract or
otherwise, except for those contractual liabilities and obligations of Seller
which shall be expressly assigned by Seller and assumed by Buyer pursuant to the
various assignment and assumption agreements identified in Section 2.5 hereof
(all such liabilities and obligations retained by Seller are collectively
referred to herein as the "Retained Liabilities"). In amplification thereof,
Seller and Buyer acknowledge and agree that Buyer shall not assume, and the
Retained Liabilities shall include, any liability for leasehold rentals, any
taxes (including, but not limited to, any federal, state or local income,
property, withholding, employment, sales, use, excise or other taxes) and any
interest and penalties thereon and additions thereto, any liability for wages,
salaries or overtime, vacation pay, holiday pay or for any other employee
benefits or arising under or relating to any employee benefit plan, or any other
obligation or liability of Seller or any of its affiliates whatsoever, on,
arising out of or attributable to the conduct of the Acquired Business or use of
the Assets through the Closing Date; provided, however, that Buyer shall assume
the liability for the performance after the Closing Date of all Seller's
obligations under the contracts which are expressly assigned to it by Seller and
assumed by Buyer as provided in Section 2.5 hereof.
1.3. Liabilities Assumed by Buyer. Buyer shall assume and be responsible
for all liabilities and obligations arising from and after the Closing Date
under those contracts assigned by Seller and assumed by Buyer pursuant to the
various assignment and assumption agreements identified in Section 2.5 hereof.
Except as expressly set forth in the preceding sentence, and without limiting
the generality of Section 1.2 hereof, Buyer shall not assume and shall not have
any liability or obligation for any of the liabilities or obligations of Seller
or any of its affiliates of any kind whatsoever, whether known or unknown,
absolute, accrued, contingent or otherwise, all of which shall constitute
Retained Liabilities.
1.4. Excluded Assets. Notwithstanding the foregoing, it is specifically
agreed that the following assets are excluded from the Assets: all cash in bank
accounts of Seller; all accounts receivable of Seller; all prepaid insurance and
surety bonds; all rights to refunds of federal and state taxes (and penalties
and interest thereon) previously paid by Seller; each of the assets which are
specifically listed on Schedule 1.4 as Excluded Assets; and all rights which
accrue to or are retained by Seller under and by virtue of this Agreement
(collectively, the "Excluded Assets").
1.5. Permitted Encumbrances. The Acquired Business and the Assets are to be
sold and conveyed to Buyer free and clear of all Liens except the following (the
"Permitted Encumbrances"):
(a) Any laws, regulations, building codes, or ordinances (including those
relating to zoning building and environmental protection) relating to the use,
occupancy, subdivision or improvement of the premises at which Seller conducts
operations of the Acquired Business which have been adopted or imposed by any
governmental body, provided that they do not, individually, or in the aggregate,
prohibit or interfere with the operations of the Acquired Business or the use of
the Assets in the manner in which such operations are presently conducted or the
manner in which the Assets are presently used or otherwise give rise to any
liability;
(b) Any taxes, assessments and other governmental charges in the nature of
taxes not yet due and payable as of the Closing Date, which shall be apportioned
as provided in Section 12 hereof;
(c) Any statutory Liens or encumbrances that apply generally in favor of
commercial landlords; provided, however, that no events have occurred which
would give any commercial landlord any right to enforce such Liens or
encumbrances; and
(d) Any mechanics', carriers', workmen's, repairmen's and other like Liens
which have not been perfected arising or incurred in the ordinary course of
business of the Acquired Business that will be satisfied by Seller in due course
following the Closing.
2. Purchase Price Payment; Other Closing Deliveries; Closing.
2.1. Purchase Price. Buyer shall acquire and accept the Assets from Seller
and shall pay to Seller the aggregate amount of One Million Five Hundred
Thousand Dollars ($1,500,000) for the Assets (the "Purchase Price"), plus the
Earn-Out Payments provided for in Section 11 hereof.
2.2. Payment of the Purchase Price. On the Closing Date, Buyer shall pay
the full amount of the Purchase Price to Seller by wire transfer of Federal
funds in the amount of One million Five Hundred Thousand Dollars ($1,500,000).
2.3. Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets in accordance with Schedule 2.3. Schedule 2.3 shall be prepared
in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"). Buyer and Seller agree to be bound by such allocation and to file
all returns and reports in respect of the transactions herein contemplated,
including, but not limited to, all federal, state and local tax returns, on the
basis of such allocation.
2.4. Closing and Closing Date. The closing hereunder (the "Closing") shall
take place at the offices of Seller (or by mail and facsimile, if the parties
hereto so agree) at 10:00 A.M., local time, on September 13, 2000 or at such
other place and time and date as may be agreed to in writing by Seller and
Buyer. The date for Closing as determined under this Section 2.4 is herein
called the "Closing Date."
2.5. Items to be Delivered by Seller at Closing. In addition to its
delivery to Buyer of the Assets, at or prior to the Closing, Seller shall
execute, acknowledge and deliver (or, with respect to any patents or patent
applications held by the Subsidiaries, cause each Subsidiary to execute,
acknowledge and deliver) to Buyer the following in form and substance reasonably
acceptable to Buyer;
(a) an assignment agreement with respect to the lease for real property and
personal property, other than excluded Assets described in Schedule 3.8 and
Schedule 3.9, together with the executed consent to such assignment of the
landlord (and lessor) thereunder (the "Assignment and Amendment of Lease
Agreement");
(b) an assignment and assumption agreement with respect to each of the
contracts described in Schedule 3.16 and (to the extent transferable) any and
all transferable rights of Seller (but none of Seller's obligations) under each
of the employment agreements and confidentiality agreements described in
Schedule 3.18 (the "Assignment and Assumption of Contracts");
(c) an assignment agreement with respect to all Intellectual Property (as
defined in Section 1.1(b)) described in Section 1.1(b) or Schedule 3.11,
together with all of the goodwill connected or associated therewith (the
"Assignment of Intellectual Property");
(d) separate assignment agreements with respect to each of the patents and
patent applications, trademark registrations and applications therefor and
copyright registrations and applications therefor described in Schedule 3.11,
together with all of the goodwill connected or associated therewith, in form and
substance suitable for recording in the United States Patent and Trademark
Office or the United States Copyright Office, as the case may be (the "PTO
Assignments");
(e) separate master foreign patent assignments from each of the
Subsidiaries with respect to the foreign patents and patent applications,
described in Schedule 3.11, together with all goodwill connected or associated
therewith (the "Assignment of Foreign Rights");
(f) a general assignment and bill of sale with respect to the Assets (the
"Bill of Sale");
(g) possession of the business premises of the Acquired Business free of
all tenants, licensees and occupants, including sets of all keys to such
premises, codes and alarm codes in the possession or under the control of
Seller;
(h) originals (if available, otherwise photocopies) of each of the
permits, licenses and other authorizations described in Schedule 3.24, if
any;
(i) officer's certificates of Seller, each dated as of the Closing Date,
whereby Seller certifies the accuracy of the representations and warranties made
by it in Article III and that each of the conditions to the obligations of Buyer
hereunder has been satisfied;
(j) a certificate dated as of the Closing Date from the corporate secretary
or assistant secretary of Seller, certifying that attached to such certificate
are (i) resolutions of the Board of Directors of Seller which have duly
authorized Seller's execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated thereby, and (ii) the Articles
of Incorporation and By-laws of Seller as then in effect, together with a
signature and incumbency certificate;
(k) certificates of good standing of Seller dated not more than 20 days
prior to the Closing Date, issued by the Secretary of State of the Commonwealth
of Pennsylvania;
(l) copies of all real and personal property leases, operating contracts,
employment agreements and confidentiality agreements, patents, trademark, domain
name and copyright registration certificates and applications therefor and all
other written agreements and instruments described in the various Schedules
attached hereto;
(m) copies of all requisite governmental or other third party consents or
approvals with respect to the transactions contemplated in this Agreement; and
(n) an opinion of Seller's legal counsel, David L. Voltz, in form and
substance reasonably satisfactory to counsel for Buyer, to the effect that:
(i) Seller is a duly incorporated and existing corporation in good standing
under the laws of the Commonwealth of Pennsylvania;
(ii) This Agreement and the other agreements and instruments executed in
connection herewith have each been duly authorized, executed and delivered by
Seller and constitute the legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their terms, and the
enforceability thereof may be affected by applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights generally and the possible unavailability of certain equitable remedies,
including the remedy of specific performance;
(iii) Seller has the power and authority to execute, deliver and perform
this Agreement and each of the other documents and instruments contemplated
hereby, and to carry out its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and each of the other
documents and instruments contemplated hereby have been duly authorized by all
necessary action by law, the Articles of Incorporation and By-laws of Seller and
otherwise by Seller;
(iv) The execution and delivery of this Agreement and the other documents
and instruments contemplated hereby do not, and the performance by Seller of the
transactions contemplated hereby and thereby will not: (x) violate any statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency or court to which Seller is
subject or any provision of the Articles of Incorporation or By-laws of Seller;
or (y) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which Seller is a party or by which
Seller is bound or to which any of the Assets is subject (or result in the
imposition of any lien, charge or other encumbrance upon any of the Assets),
except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice or lien, charge
or encumbrance would not have a material adverse effect on the Acquired Business
or on the ability of the parties to this Agreement to fulfill their obligations
or consummate the transactions contemplated by this Agreement.
2.6. Items to be Delivered by Buyer at Closing. In addition to its payment
of the Purchase Price, at or prior to the Closing, Buyer shall execute,
acknowledge and deliver to Seller the following in form and substance reasonably
acceptable to Seller:
(a) the Assignment and Amendment of Lease Agreement;
(b) the Assignment and Assumption of Contracts;
(c) an officer's certificate dated as of the Closing Date whereby Buyer
certifies the accuracy of the representations and warranties set forth in
Article IV and that each of the conditions to the obligations of Seller
hereunder has been satisfied;
(d) a certificate from the managing member of Buyer, certifying that
attached to such certificate are (i) resolutions of the Members of Buyer which
have duly authorized Buyer's execution, performance and delivery of this
Agreement and the transactions contemplated thereby, and (ii) the Certificate of
Formation and Limited Liability Company Agreement of Buyer as then in effect,
together with a signature and incumbency certificate; and
(e) an opinion of its counsel, Debevoise & Plimpton, in form and substance
reasonably satisfactory to counsel for Seller, to the effect that:
(i) Buyer is a duly formed and existing limited liability company in good
standing under the laws of the State of Delaware with limited liability company
power to enter into and perform this Agreement; and
(ii) This Agreement has been duly authorized, executed and delivered by
Buyer and constitutes its legal, valid and binding obligation enforceable
against Buyer in accordance with its terms, except as the enforceability thereof
may be affected by applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting the enforcement of creditors' rights generally and the
possible unavailability of certain equitable remedies, including the remedy of
specific performance;
(iii) Buyer has the limited liability company power and authority to
execute, deliver and perform this Agreement, and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement have been
duly authorized by all necessary limited liability company action by Buyer; and
(iv) The execution and delivery of this Agreement and the other documents
and instruments contemplated hereby do not, and the performance by Buyer of the
transactions contemplated hereby and thereby will not: (x) to its knowledge,
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency or
court to which Buyer is subject, (y) violate any provision of the Certificate of
Formation of Buyer; or (z) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
Buyer is a party or by which Buyer is bound or to which any of Buyer's assets is
subject, except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice or lien, charge
or encumbrance would not have a material adverse effect on the ability of Buyer
to fulfill its obligations or consummate the transactions contemplated by this
Agreement.
3. Representations and Warranties of Seller.
Seller represents and warrants to Buyer, as of the date hereof and as of
the Closing Date, as follows:
3.1. Corporate Status. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Pennsylvania and will continue
to be so as of the Closing Date. Seller has full power and authority to carry on
its business, including the Acquired Business, as conducted at the present time.
3.2. Corporate Power and Authority. The execution and delivery by Seller of
this Agreement and each of the documents and instruments contemplated hereby to
be executed by it and the performance by Seller of its obligations hereunder and
thereunder have been duly authorized by Seller's Board of Directors and by any
and all other necessary corporate action. Seller has full corporate right,
power, legal capacity and authority to enter into and perform its obligations
under this Agreement and each of the documents and instruments contemplated
hereby to be executed by it in accordance with their respective terms and to
transfer to Buyer good and marketable title to the Assets.
3.3. Enforceability. This Agreement and each of the other agreements,
documents and instruments contemplated hereby, constitutes and will constitute
the valid and legally binding obligation of Seller in accordance with its terms.
3.4. Ownership of Assets. Each of Seller and/or the Subsidiaries is the
owner of the Assets, and has good and marketable title to all of the Assets,
free and clear of all Liens except for Permitted Encumbrances; no other person,
firm or corporation will have at Closing any interest whatsoever in any of the
Assets; and the purchase and sale provided for herein will vest in Buyer good
and marketable title to the Assets free and clear of all Liens except for
Permitted Encumbrances.
3.5. Adequacy of Assets. The Assets constitute, in the aggregate, all of
the property and assets, including, but not limited to, all of the Intellectual
Property (but excluding general corporate overhead and intellectual property
used by the Seller primarily in the operation of its other businesses) necessary
for the conduct of the Acquired Business in the manner in which and to the
extent to which it is currently being, and has historically been, conducted.
3.6. Financial Statements; Undisclosed Liabilities.
(a) The accounting information shown on the "Financial Statement" set forth
as Schedule 3.6 is in accordance with the books and records of the Seller, in
all material respects, and represents selected financial data, including
tangible and intangible asset investments, development expenses, sales and
marketing expenses, and sales data of the Seller directly related to the
Acquired Assets as of the dates and periods indicated, in each case in
conformity with GAAP consistently applied with the exception that inventory and
plant equipment expenditures following the acquisition of the Acquired Business
by Seller were routinely written off as period costs.
(b) Seller does not have, primarily in relation to the Acquired Business,
any liabilities or obligations of any nature, whether known, unknown, absolute,
accrued, contingent or otherwise and whether due or to become due, except (i) as
and to the extent disclosed on, or reserved against on the face of the Financial
Statements and (ii) for liabilities and obligations that are (A) incurred after
June 30, 2000 in the ordinary course of the business and are not prohibited by
this Agreement and (B) individually and in the aggregate would not have or
result in a material adverse effect on the Acquired Business.
3.7. Absences of Adverse Changes or Other Events. Except as set forth on
Schedule 3.7, since June 30, 2000, Seller has not, primarily with respect to the
Acquired Business or the Assets:
(A) created or incurred any liability (absolute or contingent) except for
unsecured current liabilities under contracts entered into in the ordinary
course of business consistent with past practices;
(B) loaned any money or otherwise pledged the credit of Seller, or
mortgaged, pledged or subjected to any Lien or otherwise encumbered any of the
Assets;
(C) sold, transferred, conveyed, assigned, returned to the vendor thereof
or otherwise disposed of any of the Assets except for the sale of products in
the ordinary course of business consistent with past practices, or increased or
decreased its inventory above or below levels customarily maintained;
(D) waived any rights of substantial value;
(E) made any capital commitments or expenditures or capital additions or
improvements which in the aggregate exceed Five Thousand Dollars ($5,000), or
made any unusual or extraordinary commitment or expenditure;
(F) suffered any labor disputes or organization activity by its employees;
(G) become bound by or entered into any contract, commitment or transaction
other than in the ordinary course of business consistent with past practices;
(H) adjusted in any way, either directly or indirectly the compensation or
benefits paid or payable to any shareholder, officer, director, consultant,
agent or employee;
(I) transferred, granted or been granted any rights or licenses under any
Intellectual Property other than in the ordinary course of business consistent
with past practices, or entered into any settlement regarding the breach or
infringement of any Intellectual Property;
(J) entered into any contract or agreement to do or perform any of the
foregoing actions; or
(K) suffered or sustained any material adverse change in the Assets or
liabilities or in the business or condition, financial or otherwise, of the
Acquired Business.
3.8. Leased Real Estate. Seller is the lessee under the real estate leases
described on Schedule 3.8, and Seller (primarily in connection with the Acquired
Business) has no other interest in any real estate and does not conduct business
or operations at any location other than those described in such Leases. Seller
now enjoys quiet and undisturbed possession under each lease described on
Schedule 3.8. Such real estate is free and clear of any zoning or use or
building restriction or any pending, proposed or threatened zoning or use or
building restriction which would either singly or in the aggregate, interfere in
any material way with the present or any currently intended use of any of such
leased real estate. Each lease is valid and binding and in full force and
effect, and is not in default as to the payment of rent or otherwise.
3.9. Owned and Leased Tangible Personal Property. All material items of
tangible personal property owned or leased by Seller in connection with the
Acquired Business (other than personal property used generally by the Seller in
its corporate offices) are fully described on Schedule 3 9. Except as described
on Schedule 3.9, Seller has good and marketable title to all such owned tangible
personal property free and clear of any Lien whatsoever, except for Permitted
Encumbrances. All leases with respect to such leased tangible personal property
are valid and binding and in full force and effect, and are not in default as to
the payment of rent or otherwise.
3.10. [Intentionally Omitted.]
3.11. Patents and Certain other Intellectual Property Rights. Attached
hereto as Schedule 3.11 is a true and correct listing of all of the patents and
patent applications (including all reissues, divisions, continuations,
extensions and foreign counterparts thereof), patent disclosure documents,
inventions, improvements, trademarks and service marks, trademark and service
mark registrations (both state and federal), trademark and service mark
applications, domain names and domain name registrations, trade names and
copyrights (whether or not registered) and copyright registrations and
applications owned, licensed, leased, held or used by Seller or any affiliate of
Seller in connection with the Acquired Business and which constitute a portion
of the Intellectual Property (other than intellectual property that is used by
the Seller primarily in its other businesses) (including the nature of Seller's
or its affiliate's interest, i.e., whether owned, licensed or leased), and all
licenses, franchises, permits, authorizations, agreements and arrangements that
concern the same or that concern like items owned, licensed, leased, held or
used by others and used by Seller in connection with the Acquired Business
(other than those that are used by Seller primarily in its other businesses),
true and correct and complete copies of all such licenses, franchises, permits,
authorizations, agreements and arrangements having heretofore been delivered by
Seller to Buyer. Except as disclosed on Schedule 3.11, all such patents,
trademarks, trade names, domain names, service marks, copyrights and
registrations and all licenses, franchises, permits, authorizations, agreements
and arrangements are subsisting and in force and free from any default on the
part of Seller, and Seller has not received any notice of any action, suit,
proceeding or investigation relating thereto or threatening the ownership,
validity or enforceability of any thereof. Except as disclosed on Schedule 3.11,
no claims have been asserted or threatened in writing, and no claims are
pending, by any person or entity regarding the use of any Intellectual Property,
or challenging or questioning the ownership, validity or effectiveness of any of
the Intellectual Property or of any license, agreement or arrangement relating
thereto, and Seller does not know of any basis for any such claim, nor does
Seller know of any such claim against any third party for infringement or
misappropriation of any of Seller's rights to the Intellectual Property. Except
as disclosed on Schedule 3.11, in the conduct of the Acquired Business, Seller
has not, and Seller's use of the Intellectual Property in the ordinary course of
the Acquired Business as currently conducted does not misappropriate the
property of or breach or infringe on the rights of any person or entity within
any of the countries which are covered by the patents (whether issued or
pending) listed on Schedule 3.11. The Assets include, and Seller owns or is
licensee of, all rights to all of the items of Intellectual Property that are
listed on Schedule 3.11, and all such items constitute the only intellectual
property and intellectual property rights that are necessary to conduct the
Acquired Business in the manner in which it is currently conducted. Each item of
Intellectual Property is fully transferable to Buyer free and clear of any Liens
other than Permitted Encumbrances and the purchase and sale provided for herein
will vest in Buyer good and marketable title to (or full right to make, use,
copy, distribute and sell, with respect to any and all licenses of rights held
by Seller) all of the Intellectual Property, no assignment, sale, agreement or
encumbrance having heretofore been entered into by Seller or any predecessor
thereof which would conflict with the assignment to Buyer of any of the
Intellectual Property. Seller has the right to assign to Buyer any and all
licenses (if any) to which Seller is a party that relate to the Intellectual
Property.
3.12. Engineering Drawings and Know-How. Except as set forth on
Schedule 3.12, Seller owns free and clear of any claim or restriction or royalty
or other payment all of the Assets owned by Seller, and has the right to use all
other Assets in the manner as currently used in the Acquired Business. The
Assets include all of Seller's right title and interest to all manufacturing,
engineering and other drawings, designs, product formulae, technology, and other
data and information (whether completed or in development), and trade secrets
and know-how, owned or used by, and material to, Seller in connection with any
mass spectrometer and/or the Acquired Business (other than any of the foregoing
used by the Seller primarily in its other businesses).
3.13. Prepaid Items and Deposits. Attached hereto, made part hereof and
marked Schedule 3.13 is a true and correct description of all of the prepaid
items and deposits of or in respect of the Acquired Business as of August 31,
2000.
3.14. Insurance and Bonds. Attached hereto, made part hereof and marked
Schedule 3.14 is a true and correct description listing all policies of
insurance and all surety and other bonds to which Seller in respect of the
Acquired Business now is a party, or during the immediately preceding
seventy-two (72) months was a party. All of such policies and bonds which have
expired were valid and in full force and effect during their respective terms,
and all other of such policies and bonds are valid and in full force and effect
at the present time, and no claim has been made, or notice given, and there
exists no ground, to cancel or avoid any of said policies or bonds or to reduce
the coverage provided thereby.
3.15. Product Warranties. Except as set forth on Schedule 3.15, which is
made part hereof, neither Seller nor, to the best of Seller's knowledge, any
predecessor of Seller (with respect to the Acquired Business), has at any time
prior to the date hereof sold or otherwise distributed any products relating to
or in connection with the Assets or the Acquired Business. Except as set forth
in Schedule 3.12, there are no product warranties outstanding with respect to
any such products, the Assets or the Acquired Business, no such products have
been returned to Seller or any predecessor of Seller with respect to the
Acquired Business by any third party purchaser, no product warranty claims
relating to or in connection with the Assets or the Acquired Business have been
made against Seller or any predecessor of Seller with respect to the Acquired
Business, and Buyer will have no obligation or liability in respect of any
products or product warranties sold, distributed or issued, as the case may be,
relating to or in connection with the Assets or the Acquired Business on or
prior to the Closing Date.
3.16. Contracts. Attached hereto, made part hereof and marked Schedule 3.16
is a true and correct description of all of the contracts or like obligations of
every kind of Seller in respect of the Acquired Business (other than those
contracts of Seller applicable primarily to the Seller's other businesses) which
have not been described on one or more of the various Schedules hereto. Except
as set forth on Schedule 3.16, Seller is not in default under any of said
contracts, and no claim of default thereunder has been asserted against Seller,
and no condition or state of facts exists which, with notice or the passage of
time or both, would constitute a default under any of said contracts, as to time
or manner of performance, or as to warranties thereunder, or otherwise.
3.17. Proposals and Bids. There are no proposals or bids which Seller in
respect of the Acquired Business has outstanding with respect to prospective
contracts.
3.18. Agreements with Employees.
(A) Except as set forth on Schedule 3.18, Seller is not (with respect to
the Acquired Business) a party to any employment, severance or change of control
agreement, written or oral.
(B) Except as set forth on Schedule 3.18, Seller has, with respect to the
Acquired Business, no pension, profit sharing, short term disability or other
employee benefit plan (including, without limitation, any equity based plan or
incentive compensation plan), or any health care, life insurance or other
employee welfare plan, for its employees (collectively, "Employee Benefit
Plans"). Each of the Employee Benefit Plans has been operated in material
compliance with its applicable terms and applicable law.
(C) Schedule 3.18 sets forth a true and correct listing of all employment
and confidentiality agreements relating to the Acquired Business and/or to
Seller's use of the Assets (other than those agreements of the Seller applicable
primarily to the Seller's other businesses), naming each signatory thereto.
(D) The employees of Seller, with respect to the Acquired Business, are not
parties to any collective bargaining agreement with Seller and there are no
grievances, disputes or controversies with any union or any other organization
of the employees of Seller, or threats of strikes, work stoppages or any pending
demands for collective bargaining by any union or organization. Schedule 3.18
lists each of the employees currently primarily engaged in the Acquired Business
(other than those employees of Seller providing corporate overhead services to
the Acquired Business).
3.19. Insider Contracts. There are no contracts, agreements, purchase
orders, licenses, commitments, leases, agreements, understandings or
arrangements, including loan arrangements, between Seller and any of its
officers, directors or shareholders, or any related or affiliated person,
corporation or other entity which primarily relate to the Acquired Business,
except as set forth on Schedule 3.19 attached hereto and made part hereof, or as
set forth and identified as such on any other Schedule hereto (a true and
correct and complete copy of each such written document and a true, correct and
complete written description of each such oral relationship having heretofore
been delivered by Seller to Buyer). Without limiting the generality of the
foregoing, the Seller has not entered into any patent licensing or similar
agreement with Anthony Duryea or his assigns (other than the employment
agreement between Anthony Duryea and Seller listed on Schedule 3.18).
3.20. Other Material Contracts. There are no other (i.e., not identified on
one or more of the foregoing Schedules hereto) written or oral material
contracts, agreements, understandings and arrangements which relate in any
manner to the Acquired Business or the Assets and to which Seller is a party or
by which Seller is bound (other than contracts of the Seller applicable
primarily to the Seller's other businesses) ("material contracts"). For purposes
of this Section 3.20, "material" shall mean containing an obligation (i)
requiring, or reasonably anticipated to require, the payment of more than $5,000
in the aggregate, or (ii) not terminable by Seller, without penalty, within one
year after the Closing Date, or (iii) any loan, credit or financing agreement
for any future loans, credits or financing, or (iv) of guaranty or suretyship
irrespective of the term or amount involved.
3.21. Customers. Attached hereto, made part hereof and marked Schedule 3.21
is a true and correct listing of each customer of Seller in respect of the
Acquired Business. Seller has no reason to believe that there will be any
adverse change in any such relationship, whether as a result of the consummation
of the transactions provided for by this Agreement or otherwise.
3.22. Taxes. Seller has timely and properly filed all federal, state, local
and foreign tax returns and reports and forms relating to the Acquired Business
and/or the Assets which Seller is or has been required to file, either on its
own behalf or on behalf of its employees or other persons or entities, including
but not limited to income, profits, franchise, sales, use, occupation, property,
excise, ad valorem, and payroll (including employee taxes withheld), and all
such returns and reports and forms are true and correct and complete in all
respects. Seller has paid all taxes, including penalties and interest and any
other additions thereto, if any, which have become due pursuant to such returns
or reports or forms or pursuant to assessments received by Seller with respect
to the Acquired Business and/or the Assets, and there is no further liability
(whether or not disclosed on such returns or reports or forms or assessments).
All taxes (including all interest and penalties thereon and additions thereto)
required to be withheld by Seller in respect of the Acquired Business and/or the
Assets have been duly and timely withheld, and such withheld taxes have been
either duly and timely paid to the proper governmental authority or properly set
aside in accounts for such purpose and, to the extent due on or prior to the
Closing Date, will be duly and timely paid to the proper governmental authority.
No waiver has been granted, and on or prior to the Closing Date no waiver will
be granted, extending the time for examination of any of such returns. Seller,
with respect to the Acquired Business and/or the Assets, has not filed a consent
of any type described in Section 341 (f) of the Code.
3.23. Environmental Matters. Seller (i) is currently in compliance with all
applicable Environmental Laws pertaining to its operation of the Acquired
Business, and has obtained all permits and other authorizations needed to
operate the facilities of the Acquired Business, (ii) has not violated any
applicable Environmental Law in the operation of the Acquired Business, and
(iii) is unaware of any present requirements of any applicable Environmental Law
which is due to be imposed upon it and which will increase its cost of complying
with such Environmental Laws in the operation of the Acquired Business. All past
on-site generation, treatment, storage and disposal of Waste, including then
Hazardous Waste, by Seller and its predecessors pertaining to the Acquired
Business have been done in compliance with the currently applicable
Environmental Laws; and all past off-site treatment, storage and disposal of
Waste, including Hazardous Waste, generated by Seller and its predecessors
pertaining to the Acquired Business have been done in compliance with the then
currently applicable Environmental Laws. As used in this Agreement, the terms
(i) "Environmental Laws" include but are not limited to any federal, state or
local law, statute, charter or ordinance, and any rule, regulation, binding
interpretation, binding policy, permit, order, court order or consent decree
issued pursuant to any of the foregoing, which pertains to, governs or otherwise
regulates any of the following activities, including without limitation (a) the
emission, discharge, release or spilling of any substance into the air, surface
water, groundwater, soil or substrata; (b) the manufacturing, processing, sale,
generation, treatment, storage, disposal, labeling or other management of any
waste, hazardous substance or hazardous waste, and (ii) "Waste," "Hazardous
Substance," and "Hazardous Waste" include any substance defined as such by any
applicable environmental law.
3.24. Compliance with Other Laws. Seller's operation of the Acquired
Business has complied in all material respects with all governmental laws,
statutes, rules, regulations and orders not addressed in Section 3.23, and has
secured all necessary and material permits and authorizations and licenses
issued by, federal, state, local and foreign agencies and authorities,
applicable to the operation of the Acquired Business, properties and operations
(including but not limited to those concerned with energy, pollution control,
franchising and other distribution arrangements, antitrust and trade regulation,
civil rights, labor and discrimination, safety and health, zoning and land use),
the violation of which (or, in the case of necessary permits, authorizations or
licenses, the failure to secure) could have a material adverse effect on the
business, operations, properties or Assets, or on the condition, financial or
otherwise, of the Acquired Business. A complete list of all such permits,
authorizations and licenses is attached hereto, made part hereof and marked
Schedule 3.24. All such permits, authorizations and licenses are valid and in
full force and effect, Seller is in compliance with their requirements, and no
proceeding is pending or, to the best of Seller's knowledge, threatened to
revoke or amend any of them. Except as set forth on Schedule 3.24, none of such
permits, authorizations and licenses is or will be in any way impaired or
affected by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
3.25. Absence of Conflict or Breach. The execution, delivery and
performance of this Agreement by Seller will not conflict with or result in a
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or By-laws of Seller, or of any law, statute, rule or regulation
of any governmental authority, or conflict with or result in a breach of any of
the terms, conditions or provisions of any judgment, order, injunction, decree
or ruling of any court or arbitration tribunal or governmental authority to
which Seller is subject, or of any provision of any contract, agreement,
understanding or arrangement to which Seller is a party or by which Seller is
bound, including, without limitation, any contracts, licenses, agreements,
understandings or arrangements listed on any of the Schedules hereto or any
other material contract, or constitute a material default thereunder, or give to
others any interests or rights thereunder, including any rights of acceleration,
termination or cancellation, in or with respect to the business or assets of
Seller.
3.26. Consents and Approvals. Except as set forth on Schedule 3.26, there
are no authorizations, consents, approvals or notices required to be obtained or
given or waiting periods required to expire in order that this Agreement
(including, without limitation, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended) and the transactions provided for herein
may be consummated by Seller without giving rise to any liability or material
loss of rights by Seller of the Acquired Business.
3.27. Litigation. There are no actions at law or in equity, or arbitration
proceedings, or claims or investigations, pending or, to the best knowledge of
Seller, threatened, or state of facts existing which could give rise to any such
action, proceedings, claim or investigation, to which Seller is (or, in the case
of threatened actions, would be) a party which would adversely affect the
Acquired Business or any of the Assets or which might impair the ability of
Seller to perform this Agreement; there are no proceedings pending or, to the
best knowledge of Seller, threatened against Seller by or before any
governmental board, department, commission, bureau, instrumentality or agency
relating primarily to the Acquired Business.
3.28. No Undisclosed Information. To Seller's knowledge, no representation,
warranty or covenant by Seller in this Agreement or in any Schedule or
certificate furnished by or on behalf of Seller in connection with this
Agreement contains any untrue statement of a material fact or omits to state a
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein not misleading.
4. Representations and Warranties of Buyer.
Buyer represents and warrants to Seller, as of the date hereof and as of
the Closing Date, as follows:
4.1. Corporate Status. Buyer is a limited liability company duly organized
and validly existing and in good standing under the laws of the State of
Delaware.
4.2. Corporate Power and Authority. The execution and delivery by Buyer of
this Agreement and the performance by Buyer of its obligations hereunder have
been duly authorized by all required limited liability company action of Buyer.
Buyer has the limited liability company power to enter into and perform its
obligations under this Agreement in accordance with its terms and has no
contractual or other restriction upon its so doing. This Agreement and each of
the other agreements, documents and instruments contemplated hereby constitutes
and will constitute the valid and legally binding obligation of Buyer in
accordance with its terms.
4.3. Litigation. There is no action, suit or proceeding pending, or to the
best knowledge of Buyer, threatened against or affecting Buyer which questions
the legality or propriety of the transactions contemplated by this Agreement.
4.4. Disclosure. No representation, warranty or covenant by Buyer in this
Agreement or in any certificate furnished by or on behalf of Buyer in connection
with this Agreement contains any untrue statement of a material fact or omits to
state a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein not misleading.
5. Intentionally Omitted.
6. Covenants of Seller.
(A) To assure that Buyer will realize the value and goodwill inherent in
the Acquired Business and the Assets, Seller covenants and agrees that from and
after the date of this Agreement and for a period of five years after the
Closing Date, neither Seller nor any entity under Seller's direct or indirect
control shall:
(1) directly or indirectly (a) engage in (as an owner, partner, consultant
or otherwise) any business which would be competitive with the Acquired Business
in any manner, whether with respect to the design, development, manufacture or
sale of mass spectrometers or any other business currently conducted by the
Acquired Business or the sale, license, manufacture or marketing of infrared gas
analyzers or quadropole analyzers, anywhere in the world; or (b) acquire or
retain any financial interest having a fair value in excess of the greater of
$5,000 in, or 5% of the equity of, any business which is so engaged; or
(2) directly or indirectly (a) induce any of Seller's customers with
respect to the Acquired Business to patronize any business similar to any of
those described in clause (1) above; (b) canvass, solicit or accept from any of
Seller's customers with respect to the Acquired Business any business similar to
any of those described in clause (1) above; or (c) request or advise any
individual or company which is a customer of Seller with respect to the Acquired
Business to withdraw, curtail or cancel any such customer's business with Buyer;
or
(3) directly or indirectly, at any time following the Closing Date, in any
way utilize, disclose, copy, reproduce or retain in its possession any of the
Intellectual Property provided that Seller may retain copies of Intellectual
Property that is in the public domain (other than as a result of Seller's breach
of this Agreement).
Seller acknowledges and agrees that the foregoing restrictions set forth in
this Section 6(B) are reasonable in scope and duration and are necessary to
protect Buyer after the Closing Date. If, however, any provision of this Section
6(B) is under any circumstances adjudged by a court of competent jurisdiction to
be invalid or unenforceable, the same will in no way affect any other provision
of Section 6(B) or any other part of this Agreement, the application of such
provision in any other circumstances or the validity or enforceability of this
Agreement. If any such provision, or any part thereof, is held to be
unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination will have
the power to reduce the duration and/or area of such provision, and/or to delete
specific words or phrases in order to render the provision enforceable, and in
its reduced form such provision will then be enforceable and will be enforced.
Upon breach of any provision of Section 6(B) of this Agreement, Buyer will he
entitled to injunctive relief since the remedy at law would be inadequate and
insufficient. In addition to such injunctive relief, Buyer shall be entitled to
such damages as it can show it has sustained by reason of such breach.
(B) Seller further covenants and agrees that from and after the Closing
Date it shall:
(1) Upon Buyer's request (and at Buyer's expense), promptly provide to
Buyer all pertinent facts and documents relating to any of the Intellectual
Property as may be known and accessible to Seller, and Seller, at Buyer's
expense, will testify as to the same in any proceeding, interference, litigation
and adversarial proceeding related thereto and will promptly execute and
deliver, at Buyer's expense, to Buyer or Buyer's legal representative any and
all papers, instruments or affidavits required to apply for, obtain, maintain,
issue and enforce any of the Intellectual Property which may be necessary to
carry out the purposes thereof;
(2) Cooperate with Buyer to ensure an orderly transition in respect of
those employees of Seller who accept employment with Buyer from and after the
Closing Date; and
(3) Use its reasonable efforts, upon the request and at the expense of
Buyer, to make available to Buyer all of Seller's rights and benefits under the
1997 Purchase Agreement and to otherwise cooperate with Buyer to enable Buyer to
enjoy the practical realization thereof.
(C) Seller hereby covenants and agrees that from and after the date of this
Agreement, except as may be required by law, rule or regulation or court order,
Seller and each entity which is now or hereafter under Seller's direct or
indirect control shall:
(1) Subject to Seller's rights set forth in Section 17 hereof, at all times
preserve the confidentiality of the Assets, including, but not limited to, each
of the items of the Intellectual Property, and all data, documents, financial
reports and other information primarily relating to the past, present and future
operations of the Acquired Business, whether now possessed by Seller or acquired
by Seller prior to or after the Closing Date (collectively, the "Confidential
Information"). Seller agrees that it shall take all steps necessary or advisable
to ensure that each entity now or hereafter directly or indirectly controlled by
Seller, and all officers, directors, employees, agents and representatives of
Seller, and any entity which is now or hereafter directly or indirectly
controlled by Seller, at all times keep the Confidential Information
confidential and do not divulge any of the Confidential Information to any other
person, firm or entity without Buyer's prior written consent.
(2) At no time during the two year period after the Closing Date, initiate,
solicit, encourage or, make, have or engage in any communications, whether
written or oral and whether private or public, with or to any person, firm or
entity (other than Buyer or Buyer's officers, directors, employees, agents and
representatives) concerning the future conduct or business prospects of the
Acquired Business, the adequacy, sufficiency, usefulness or quality of the
Assets, including, but not limited to, any of the Intellectual Property, or
Buyer's ability to operate the Acquired Business in a profitable manner. Seller
agrees that each shall take all steps necessary or advisable to ensure that each
entity now or hereafter directly or indirectly controlled by Seller, and all
officers, directors and management employees of Seller and such entities, and
all technical and sales personnel of Seller who have worked directly or
indirectly with the Assets, comply in all respects with the provisions of this
Section 6(C) provided, that if an individual was, but no longer is, an officer,
director, employee or otherwise considered personnel of the Seller or its
affiliates, Seller shall use its commercially reasonable efforts to enforce any
confidentiality agreements entered into by such individual with Seller, at
Buyer's expense.
(3) Notwithstanding the foregoing paragraphs (1) and (2), the parties
hereto expressly agree that statements relating to the expenses incurred by
Seller relating to the Acquired Business and statements concerning Seller's
decision to sell the Assets and the Acquired Business that are consistent with
and in the nature of prior public statements made by Seller or that are
otherwise required or appropriate by law shall not constitute a violation of the
restrictions set forth in the two immediately preceding paragraphs.
(D) Seller further covenants that it shall (i) pay all stamp, sales, use,
value added, documents, excise, property transfer, recording, registration and
other similar taxes and charges ("Transfer Taxes") attributable to the transfer
of the Assets to Buyer pursuant to this Agreement and (ii) shall prepare and
timely file all returns and reports and forms required to be filed in respect of
the Transfer Taxes.
(E) Seller further covenants and agrees that, promptly after the Closing
Date, it shall request the return of all Confidential Information provided to
potential purchasers of the Acquired Business and it shall take all other
reasonable actions requested by Buyer (and at Buyer's expense) to enforce its
rights under any confidentiality or similar agreements with any such potential
purchasers.
7. Intentionally Omitted.
8. Conditions to Obligations of Buyer.
The obligations of Buyer hereunder shall be subject to the following
conditions, any or all of which may be waived in writing by Buyer:
8.1. Representations, Warranties and Covenants. Each of the representations
and warranties of Seller set forth in Article III hereof shall be true and
correct on and as of the Closing Date with the same effect as if made at such
time; and Seller shall have in all respects performed and complied with each of
the agreements, covenants, stipulations, terms and conditions hereof applicable
to it.
8.2. FIRPTA Certificate. Seller shall have delivered to Buyer a
certificate, as contemplated under and meeting the requirements of Section
1.1445-2(b)(2)(i) of the treasury regulations, to the effect that Seller is not
a foreign person within the meaning of the Code and the applicable treasury
regulations.
8.3. Intentionally Omitted.
8.4. Delivery of Assets to be Acquired. Seller shall have delivered the
Assets to Buyer, free and clear of all Liens other than Permitted Encumbrances.
8.5. No Litigation. No action or proceeding shall have been instituted or
threatened to set aside the transactions provided for herein or to enjoin or
prevent the consummation thereof.
8.6. Required Consents. All required or advisable governmental and other
third party consents and approvals for the consummation of the transactions
provided for herein shall have been secured, including, but not limited to, all
third party consents required by the terms of the applicable agreement to be
obtained in connection with the assignment to and assumption by Buyer of the
various leases, contracts, licenses and other agreements of Seller as provided
herein, all of which are listed on Schedule 8.6 hereto.
8.7. Satisfaction of Liens. Seller shall have caused to be removed all
Liens on the Assets other than the Permitted Encumbrances, and shall have
furnished evidence thereof to Buyer.
8.8. Employment Agreements. Each of the employees of Seller listed on
Schedule 3.18 which Buyer elects to hire, other than Anthony N. Duryea, shall
have resigned their employment with Seller, accepted employment with Buyer
effective upon consummation of the transactions contemplated hereby and executed
a Confidentiality Agreement with Buyer acceptable to Buyer. Each of Anthony N.
Duryea's, Gary M. Duryea's and Alan B. Celo's employment agreement with Seller
listed on Schedule 3.18 hereof shall have been terminated without any future
liability of any kind on behalf of Buyer and Anthony N. Duryea shall have
executed and delivered an Employment Agreement with Buyer in a form acceptable
to Mr. Duryea and Buyer.
8.9. Documents. Seller shall have executed and delivered all documents and
instruments necessary or appropriate to consummate the transactions contemplated
hereby, including, but not limited to, each of those documents and instruments
provided for in Section 2.5, and all such other documents reasonably requested
by Buyer in connection with the consummation of the transactions contemplated by
this Agreement.
9. Conditions to Obligations of Seller.
The obligations of Seller hereunder shall be subject to the following
conditions, any or all of which may be waived in writing by Seller:
9.1. Representations, Warranties and Covenants. Each of the representations
and warranties of Buyer set forth in Article IV hereof shall be true and correct
on and as of the Closing Date with the same effect as if made at such time; and
Buyer shall have in all respects performed and complied with each of the
agreements, covenants, stipulations, terms and conditions hereof applicable to
Buyer.
9.2. No Litigation and Lack of Consent. No action or proceeding shall have
been instituted or threatened to set aside the transactions provided for herein
or to enjoin or prevent the consummation thereof; and all required governmental
consents and approvals for the consummation of such transactions shall have been
secured.
9.3. Delivery of Purchase Price. Buyer shall have delivered the Purchase
Price to Seller.
10. Indemnification.
10.1. Indemnification by Seller. Seller agrees to indemnify Buyer and its
affiliates (together with its successors and assigns) and hold them harmless
from and against and with respect to, and to pay and reimburse such indemnified
persons for: any and all damage, loss, liability, deficiency, claim, expense
(including any reasonable attorney and accountant fees, legal costs or
expenses), action, suit, proceeding, demand, assessment or judgment to or
against Buyer (and/or its affiliates) or an appeal of any of the foregoing,
whether or not resulting from third-party claims, arising out of or in
connection with:
(A) any Retained Liability;
(B) any breach or violation of, or non-performance by, Seller of any of its
representations, warranties, covenants or agreements contained in this Agreement
or in any document, certificate or schedule required to be furnished pursuant to
this Agreement;
(C) any actual or alleged infringement of any third-party patent right in
any of the countries covered by the patents or patent applications set forth in
Schedule 3.11 issued or published prior to the third anniversary of the Closing
Date arising out of or in connection with the commercial exploitation of any
matter covered by any of the claims set forth in U.S. Patent No. 5,304,799
titled "Cycloidal Mass Spectrometer and Ionizer For Use Therein" issued April
19, 1994 (the "Patent"), except to the extent such actual or alleged
infringement is attributable to additions or modifications to cycloidal mass
spectrometers which have not been completely or substantially developed prior to
the Closing by Seller, as reflected in any design, drawing, prototype, computer
software or other tangible embodiment of any such development in existence on
the Closing Date and made available to Buyer on or prior to the Closing Date,
provided, however, that:
(i) in the event Buyer makes a product covered by a patent or patent
application in Schedule 3.11 that contains an optional addition or optional
modification that is not reasonably necessary in order to implement the
invention disclosed and claimed in the relevant patent or patent applications in
Schedule 3.11 (an "Optional Addition"), Seller shall not be obligated to
indemnify Buyer against a claim of patent infringement by a third-party arising
out of Buyer's use of such Optional Addition up to and including the date that
Buyer receives an Infringement Notice (defined below) with respect to such
Optional Addition if Buyer had, at the time of its commercialization of the
product utilizing such Optional Addition, a commercially reasonable alternative
to such Optional Addition that would have caused Buyer's product not to have
infringed such third-party patent or any other patent (an "Alternative") and
(ii) if, with respect to an Optional Addition, Buyer receives a cease and desist
letter or a patent notification letter or is sued claiming that such Optional
Addition is infringing a third party patent (an "Infringement Notice"), Buyer,
as a condition precedent to any right of indemnification with respect to the
claim set forth in such Infringement Notice hereunder, shall (A) determine
whether there is an Alternative to the applicable Optional Addition and (B)
obtain an opinion of qualified counsel as to the validity and enforceability of
such third party patent and whether it is infringed by the Optional Addition.
Such opinion shall, at minimum, be based on a review of the product, the patent
alleged to be infringed and its file history. In the event that there is no
Alternative, Seller shall remain liable with respect to its indemnification
obligations in connection with the actual or alleged infringement of such
third-party patent by such Optional Addition from and after the date of Buyer's
receipt of the Infringement Notice, whether or not counsel has determined that
the third-party patent is valid, enforceable and/or infringed by such Optional
Addition. In the event that there is an Alternative and Buyer does not implement
an Alternative, Seller shall not be liable with respect to its indemnification
obligations in connection with the actual or alleged infringement of such
third-party patent by such Optional Addition from and after the date of Buyer's
receipt of the Infringement Notice, whether or not counsel has determined that
the third-party patent is valid, enforceable and/or infringed by such Optional
Addition. In all cases, if Buyer determines that there is an Alternative, and
Buyer chooses to implement such Alternative, Seller shall remain liable with
respect to its indemnification obligations hereunder with respect to the use of
such Alternative to the extent otherwise applicable. Notwithstanding anything in
this proviso to the contrary, if Buyer has notified Seller of its receipt of an
Infringement Notice or any other claim or charge made by a third party which
would be subject to indemnification under this Article X, Seller may, at its
option, negotiate in good faith with the appropriate third parties to obtain, at
Seller's expense, a license for Buyer from such third party, provided that Buyer
shall have the right to approve the terms and conditions of any such license,
which approval shall not be unreasonably withheld. Buyer shall promptly provide
to Seller copies of all opinions of counsel obtained under this section. This
proviso shall not be interpreted to expand in any way Seller's indemnification
obligations set forth elsewhere in this Article X;
and
(D) Transfer Taxes for which Seller is responsible pursuant to
Section 6(E).
10.2. Indemnification by Buyer. Buyer shall indemnify Seller (together with
its successors and assigns) and hold it harmless from, against and with respect
to: any and all damage, loss, deficiency, expense (including any reasonable
attorney and accountant fees, legal costs or expenses), action, suit,
proceeding, demand, assessment or judgment to or against Seller or an appeal of
any of the foregoing arising out of or in connection with:
(A) any debt, obligation, claim, commitment, liability or damage
specifically assumed by Buyer pursuant to this Agreement, incurred or accrued
against Buyer subsequent to the Closing Date or arising out of the business
activities of Buyer subsequent thereto except to the extent the same is a
Retained Liability or is the subject of any right to indemnification of Buyer
under Section 10.1 hereof; and
(B) any breach or violation of, or nonperformance by, Buyer of any of its
representations, warranties, covenants or agreements contained in this Agreement
or in any document, certificate or schedule required to be furnished pursuant to
this Agreement.
10.3. Notice of Claims. If any claim is made by or against a party which,
if sustained, would give rise to a liability of another party hereunder, that
party (the "Claiming Party") shall within ten (10) days thereafter cause notice
of the claim to be delivered to the other party (the "Indemnifying Party") and
shall afford the Indemnifying Party and its counsel, at the Indemnifying Party's
sole expense, the opportunity to defend or settle the claim (and, with respect
to claims made by third parties, the Claiming Party shall have the right to
participate at its sole expense), provided that the failure of any Claiming
Party to give such notice shall not relieve the Indemnifying Party of its
indemnification obligations hereunder except to the extent that such failure
results in a lack of actual notice to the Indemnifying Party and the
Indemnifying Party is materially prejudiced as a result of such failure to give
notice. Any notice of a claim shall state, with reasonable specification, the
alleged basis for the claim and the amount of liability asserted by or against
the other party by reason of the claim, to the extent then known. Failure by an
Indemnifying Party to notify a Claiming Party in writing of the Indemnifying
Party's election to defend or settle any such claim within ten (10) days after
notice thereof shall have been delivered to the Indemnifying Party shall be
deemed a waiver by the Indemnifying Party of its right to defend or settle such
claim. If notice is given and the Indemnifying Party fails to assume the defense
of the claim in writing within ten (10) days thereof, the claim may be defended,
compromised or settled by the Claiming Party without the consent of the
Indemnifying Party and the Indemnifying Party shall remain liable under this
Article X. Except for claims related to Retained Liabilities or assumed by Buyer
as provided in Section 1.3, claims made for a breach of representation or
warranty under Section 3.4 hereof and claims related to fraud or willful
misconduct (as to which foregoing claims no deductible shall apply), no party
shall be required to indemnify any other party until a Twenty-Five Thousand
Dollar ($25,000) deductible (the "Deductible") has been exceeded. The aggregate
liability of any party hereto under the provisions of this Article X shall be
limited to an amount not to exceed $1,500,000 plus the aggregate amount of all
Earn-Out Payments made by Buyer under Section 11 hereof (the "Cap") provided,
however, that:
(A) the Cap shall not apply to any claim that Buyer may have for
indemnification pursuant to this Article X to the extent that such claim relates
to a Retained Liability, fraud or willful misconduct by Seller, provided that,
if such claim relates to a Retained Liability, Buyer gives Seller the
opportunity to assume the defense or settlement of such claim in accordance with
the foregoing provisions of this Section 10.3; and
(B) the Cap shall not apply to any claim that Seller may have for
indemnification pursuant to this Article X to the extent that such claim relates
to a liability or obligation assumed by Buyer as provided in Section 1.3 or the
operation of the Acquired Business after the Closing Date, provided that Seller
gives Buyer the opportunity to assume the defense or settlement of such claim in
accordance with the foregoing provisions of this Section 10.3.
10.4. Survival of Indemnity Obligation. The rights of Buyer and Seller to
assert claims for indemnification set forth in Sections 10.1 and 10.2 shall
survive the Closing Date and shall expire:
(A) with respect to all claims other than third party claims, claims
related to the nonpayment of taxes or other similar claims pursuant to any
federal, state, county or other local taxing statutes, claims made for a breach
of representation or warranty under Section 3.4 and claims subject to subclause
(D) below, on the second (2nd) anniversary of the Closing Date;
(B) with respect to claims relating to the nonpayment of taxes or other
similar claims pursuant to any federal, state, county or other local taxing
statutes, or with respect to Transfer Taxes, upon the expiration of ninety (90)
days following the date on which the running of the statute of limitations with
respect to any such claim shall bar such assessment and collection of claim;
(C) with respect to third party claims against Buyer or its successors or
assigns relating to any actual or alleged infringement of any third-party patent
right in any of the countries covered by the patents or patent applications set
forth in Schedule 3.11 arising out of or in connection with the commercial
exploitation of any matter covered by any of the claims set forth in the
applicable patent or patent application in such country (as such right to assert
claims for indemnification is limited by the terms of Section 10.1(C) hereof),
on the third (3rd) anniversary of the Closing Date; provided, however, that the
right to assert claims for indemnification with respect to such third party
claims shall expire on the second (2nd) anniversary of the Closing Date in the
event that, prior to such anniversary, Buyer or its successors or assigns shall
have sold or otherwise transferred the applicable patent or patent application
to a third party that is unaffiliated with Buyer; and
(D) (1) except as specifically set forth to the contrary in paragraph (C)
of this Section 10.5, with respect to Buyer's claims for indemnification
relating to Retained Liabilities and liabilities arising out of the business
activities of Seller prior to the Closing Date, and (2) with respect to claims
for indemnification by Seller relating to liabilities specifically assumed by
Buyer as provided in Section 1.3 of this Agreement, upon the expiration of
ninety (90) days following the date on which the running of all applicable
statute of limitations applicable to any such claim shall bar initiation of
legal proceedings with respect to such claim.
10.5. Exclusive Remedy. The remedies provided in this Section 10 shall be
the exclusive remedies for any breach of this Agreement (other than with respect
to Sections 6, 11, 12, 14 and 21.7 hereof).
11. Earn-Out Payments.
11.1. General. Subject to the terms set forth herein, Buyer shall make the
Earn-Out Payments (as defined in Section 11.3(A) below) on or before 60 days
after the end of each Earn-Out Year (as defined in Section 11.2 below). The
right to receive the Earn-Out Payments shall represent only a right to receive a
cash payment and shall not include any attributes of common stock and shall not
entitle Seller to any rights of any kind other than as specifically set forth
herein.
11.2. Definitions. (A) "Earn-Out Year" shall refer to each calendar year
beginning with 2001 and ending the earlier of (i) 2012 and (ii) the first year
during which there are no Valid Patent Claims (whether due to the expiration,
revocation or cancellation of the Patent or otherwise, but subject to the
proviso at the end of Section 11.2(C)).
(B) "Eligible Product" shall mean any product of Buyer (or its affiliates,
successors and assigns, as the case may be; as used in this Article XI, "Buyer"
shall be deemed to include Buyer and its successors and assigns) (x) in which a
Valid Patent Claim is part of such product's operation or performance or
incorporated into such product's design or structure and shall also include any
product designed by Buyer with a principal purpose of circumventing the Earn-Out
Payments, and (y) which has been shipped to a country where a Valid Patent Claim
exists in a commercial arrangement under which revenues are received by Buyer or
its affiliates (under the meaning with respect thereto in the Securities
Exchange Act of 1934, as amended). Without limiting the generality of the
foregoing, the parties agree as follows: (i) a product that would otherwise be
an Eligible Product that is shipped for no immediate consideration, but with the
expectation of the development of a commercial relationship with the receiver of
the product shall not be deemed to be an Eligible Product unless and until the
earlier of (i) payment being made on or in connection with such product or (ii)
the date that is 150 days after such product's shipment, unless such product has
been returned to Buyer prior to such date; (ii) a product that would otherwise
be an Eligible Product that is shipped as a replacement of a previously shipped
Eligible Product shall not be deemed to be an Eligible Product, (iii) a product
that is returned to the Buyer, its successors or assigns or any licensee of
Buyer or its successors or assigns for a refund shall not be deemed to be an
Eligible Product and; (iv) an Eligible Product shall not be deemed to have been
shipped more than once.
(C) "Valid Patent Claims" shall mean the claims of the patents and pending
applications listed on Schedule 3.11 hereto which have been granted or are
pending on the date hereof and which have not expired or been revoked, canceled,
nullified or finally held invalid ("Patent Rights"), and any and all
Improvements (defined below) thereof. The term "Improvements" means any
improvement, enhancement, extension or modification of such Patent Rights and
any patentable or non-patentable process or development of any kind based on or
derived from such Patent Rights; provided that no Valid Patent Claim shall be
deemed to have expired, been revoked, canceled, nullified or finally held
invalid if such event is caused directly or indirectly by an Improvement
initially developed by Buyer or its affiliates, successors or assigns after the
Closing Date or by the failure of Buyer to pay required fees or expenses, or to
take any other ministerial actions required to maintain such Valid Patent Claim.
(D) "Prime Rate" means the rate of interest reported as the "prime rate" in
the money rates section of the Wall Street Journal on the date an Earn-Out
Payment is due and owing.
11.3. Earn-Out Payments. (A) Patent Revenues. Notwithstanding anything in
this Agreement to the contrary, no payment of any kind shall be due or payable
by Buyer under this Section 11 for the first 550 Eligible Products (such
cumulative amount, the "Patent Threshold"). Commencing with the Earn-Out Year
during which the Patent Threshold is exceeded, and thereafter at the end of each
subsequent Earn-Out Year, Buyer shall, subject to the other provisions of this
Section 11, make a payment to Seller (individually, an "Earn-Out Payment", and,
collectively, the "Earn-Out Payments") for each Eligible Product subsequent to
Buyer's reaching the Patent Threshold as follows:
(1) Buyer shall pay to Seller an amount equal to the sum of (i) $1,000 for
each Eligible Product for non-medical applications (other than Portable Products
(defined below)) ("Industrial Products"), (ii) $375 for each Eligible Product
for medical applications ("Medical Products") plus (iii) $650 for each Eligible
Product that is portable, special-purpose mass spectrometer with an average
selling price of no greater than $12,500 ("Portable Products"), until the
aggregate amount of the Earn-Out Payments made for all Earn-Out Years by Buyer
to Seller hereunder equals $1 million;
(2) thereafter, Buyer shall pay to Seller an amount equal to the sum of (i)
$300 for each Industrial Product, (ii) $100 for each Medical Product plus (iii)
$225 for each Portable Product until the aggregate amount of all Earn-Out
Payments made by Buyer to Seller under Sections 11.3(A)(1) and 11.3(A)(2) equals
$2.5 million; and
(3) thereafter, Buyer shall pay to Seller an amount equal to the sum of (i)
$150 for each Industrial Product, (ii) $50 for each Medical Product and (iii)
$100 for each Portable Product until there ceases to be an Earn-Out Year.
For the avoidance of doubt, the parties agree that under no circumstances
will any Earn-Out Payments be due or owing with respect to the first 550
Eligible Products.
11.4. Earn-Out Statement. (A) Within 60 days after the end of each Earn-Out
Year, Buyer shall prepare and deliver to Seller (i) a statement (an "Earn-Out
Statement"), certified by its Chief Financial Officer, attesting to the
conformity of the principles used in calculating the Earn-Out Payment to the
provisions of Section 11 hereof, which statement shall include reasonable
supporting documentation with respect to such calculation; and (ii) pay Seller
the Earn-Out Payment which Buyer has calculated to be due.
(B) The Earn-Out Statement shall, at Seller's option, be subject to review
and verification by an independent public accounting firm or other
representative of Seller's choice. If Seller chooses to conduct such a review,
it shall also have the right to review the Earn-Out Statement from the Earn-Out
Year ended immediately prior to the most recently ended Earn-Out Year (the
"Prior Earn-Out Statement"), provided that Seller did not previously conduct
such a review of the Prior Earn-Out Statement. Such review will be at Seller's
expense, unless such accounting firm shall discover a discrepancy (as finally
determined pursuant to the procedures of this Section 11.4) of at least fifteen
percent of the Earn-Out Payment (or Earn-Out Payments, as the case may be) in
question, in which case the fees of such accounting firm shall be paid by Buyer
both with respect to the review which uncovered the discrepancy and to a review
of the Prior Earn-Out Statement. Buyer shall permit Seller and its
representatives to have reasonable access to the data and information on which
the Earn-Out Statement (or Earn-Out Statements, as the case may be) was prepared
and to Buyer's employees and/or representatives who assisted in its preparation
to the extent necessary to verify such information.
(C) If Seller agrees with the Earn-Out Statement for the most recently
ended Earn-Out Year (the "Current Earn-Out Statement") and the calculation of
the Earn-Out Payment therein (the "Current Earn-Out Payment"), Seller shall send
written notice of acceptance thereof to Buyer. Except in the case of fraud or
willful misconduct on the part of Buyer, Seller shall be deemed to have accepted
the Current Earn-Out Statement and the Current Earn-Out Payment indicated
therein, along with the Prior Year Earn-Out Statement, if applicable, unless
within 60 days after the date of delivery of the Current Earn-Out Statement,
Seller gives written notice to Buyer of an objection to any item thereon (the
"Objection Notice"), which Objection Notice shall specify in reasonable detail
the basis for such objection. The Objection Notice shall also specify any
objections Seller has with respect to the Prior Earn-Out Statement, if
applicable. If Seller gives such an Objection Notice, Buyer and Seller shall
attempt in good faith to resolve the dispute as promptly as possible.
(D) If Buyer and Seller have not been able to agree upon a resolution of
the dispute within 30 days after the date Seller gave such Objection Notice,
such dispute shall be resolved fully and finally in Pittsburgh, Pennsylvania by
an arbitration governed by the American Arbitration Association, provided that a
sole arbitrator shall be employed. The arbitration shall be governed by the
state equivalent of the Federal Arbitration Act, 9 U.S.C. 1016, and judgment
upon the award rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The parties shall have 10 days from the end of the
discussion between Buyer and Seller to agree upon a mutually acceptable person
to act as arbitrator. The arbitrator shall be a neutral person (i.e., a person
not affiliated with either of the parties) and shall have the capacity to make
the judgments required to calculate the applicable Earn-Out Payment. If no
arbitrator has been selected within such time, Buyer and Seller shall jointly
request the American Arbitration Association or another mutually agreed upon
organization to supply with 10 days of such request a list of potential
arbitrators with qualifications as specified by the parties in the joint
request. Within five days of receipt of the list, Buyer and Seller shall
independently rank the proposed candidates, shall simultaneously exchange
rankings, and shall be deemed to have selected as the arbitrator the individual
receiving the highest combined ranking who is available to serve. If there is a
tie, then the tie shall be broken by putting the names on slips of paper, mixing
them up and having one party draw one slip of paper. If Buyer or Seller shall
not cooperate in the selection of the arbitrator, the other may solely select
the arbitrator utilizing the procedures set forth herein. The costs of
arbitration shall be apportioned between Buyer and Seller as determined by the
arbitrator in such manner as the arbitrator deems reasonable taking into account
the circumstances of the case, the conduct of the parties during the proceeding,
and the result of the arbitration. Any arbitration proceeding shall be concluded
in a maximum of one month from the date of the Objection Notice. All
negotiations pursuant to this Section shall be treated as compromise and
settlement negotiations for purposes of Rule 408 of the Federal Rules of
Evidence and comparable state Rules of Evidence. All negotiation and arbitration
proceedings under this Section shall be treated as confidential information in
accordance with the provisions of Section 6 (C) (1) hereof. Any arbitrator shall
be bound by an agreement containing confidentiality provisions at least as
restrictive as those contained in such Section. Nothing herein shall preclude
Seller or Buyer from seeking equitable relief to prevent any immediate,
irreparable harm to its interest, including multiple breaches of this Agreement.
Otherwise, these procedures are exclusive and shall be fully exhausted prior to
the initiation of any litigation. Either party may seek specific enforcement of
any arbitrator's decision under this Section 11.4. The other party's only
defense to such a request for specific enforcement shall be fraud by or on the
arbitrator. Upon final determination of the appropriate amount of applicable
Earn-Out Payment in question, the unpaid portion of such amount shall be paid in
accordance with the provisions of Section 11.5.
11.5. Payment. Buyer shall pay the unpaid portion (if any) of the Earn-Out
Payment for any Earn-Out Year no later than 5 days after the date the Earn-Out
Payment has been conclusively determined (whether pursuant to an agreement
between Buyer and Seller or pursuant to the arbitrator's decision in accordance
with Section 11.4) in cash or by check. Buyer shall pay to Seller interest at
two percent (2%) above the Prime Rate on any such unpaid portion of the Earn-Out
Payment owed for the period beginning 60 days after the end of the Earn-Out Year
to which an Earn-Out Payment relates until such Earn-Out Payment is paid in
full.
11.6. Buy-Out Provisions. (a) In the event that Buyer desires to sell or
transfer the Patent or an interest in the Patent (excluding, for the avoidance
of doubt, any non-exclusive license of the Patent), or to sell or otherwise
transfer all, or substantially all of its assets, including the Patent, whether
pursuant to a sale of stock or assets, a merger, or otherwise (each, a "Buy-Out
Event"), Buyer shall, prior to consummating any such Buy-Out Event, at its
option (i) provide for the transferee or merged, consolidated or combined entity
(as the case may be) to assume all of the remaining obligations of Buyer set
forth in this Section 11 (in which case Buyer shall be automatically released
from any further obligation to make any payments to Seller under this
Section 11) or (ii) if and only if Buyer is not an "affiliate" (under the
meaning with respect thereto as set forth in the Securities Exchange Act of
1934, as amended) of any of the other parties to the Buy-Out Event, irrevocably
agree to pay Seller the Buy-Out Payment (defined below) as finally determined
pursuant to the terms hereof. If Buyer pays Seller the Buy-Out Payment, all
further obligations of Buyer (or its successors and assigns) pursuant to this
Section 11 shall immediately cease, and no further payments shall be payable
hereunder to the Seller.
(b) "Buy-Out Payment" means (x) if the Buy-Out Event is consummated prior
to December 31, 2003, the sum of (i) the greater of (A) $1 million and (B) the
Present Value Payment (defined below) and (ii) the Earn-Out Payment that would
be owed to Seller if the then current Earn-Out Year ended on the effective date
of the Buy-Out Event or (y) if the Buy-Out Event is consummated on or after
December 31, 2003, the sum of (i) the Present Value Payment and (ii) the
Earn-Out Payment that would be owed to Seller if the then current Earn-Out Year
ended on the effective date of the Buy-Out Event.
(c) "Present Value Payment" means the aggregate Earn-Out Payments that
would be payable from the date of the Buy-Out Event through the final Earn-Out
Year if the highest Earn-Out Payment prior to the Buy-Out Event were duplicated
for each remaining Earn-Out Payment for each remaining Earn-Out Year (including
the portion of the Earn-Out Year from the date of the Buy-Out Event to December
31 of such Earn-Out Year), discounted to the date of the Buy-Out Event using a
10% discount factor. In the event that the Buy-Out Event occurs prior to
December 31, 2001, the highest Earn-Out Payment (for purposes of the first
sentence of this Section 11.6(c)) shall be determined by multiplying the
Earn-Out Payment for 2001 that would be due and owing if there were no
additional Eligible Products in 2001 after the Buy-Out Event by a fraction, the
numerator of which shall be 365 and the denominator of which shall be the number
of days that have expired in such Earn-Out Year upon the date of the Buy-Out
Event.
(d) Any dispute between Buyer and Seller with respect to the amount of any
Buy-Out Payment shall be resolved in accordance with the same procedures set
forth in Section 11.4(D); it being understood that so long as Buyer delivers to
Seller an irrevocable statement agreeing to pay the Buy-Out Payment in
accordance with procedures set forth in Section 11.4(D), Buyer may consummate
the Earn-Out Event without the consent of Seller.
12. Prorations and Allocations.
(A) The adjustments referred to in this Section 12(A) shall reflect, in
accordance with generally accepted accounting principles, the principle that all
expenses (other than those expenses which are a part of the liabilities to be
assumed or retained by Seller in accordance with this Agreement) and income
arising out of the Assets or the Acquired Business which are attributable to the
period after August 31, 2000 (the "Cut-Off Date") are for the account of Buyer,
and all expenses and income arising out of the Assets or the Acquired Business
which are attributable to the period on or before the Cut-Off Date are for the
account of Seller. To the extent possible at Closing, Seller shall pay to Buyer
or Buyer to Seller, as the case may be, the amount calculated as being due to
one party by the other after netting all of the adjustments necessary to reflect
the foregoing principle.
(B) Any of the foregoing adjustments which is not capable of calculation at
the Closing shall be finally adjusted and payable ninety (90) days following the
Closing Date.
(C) For purposes of this Agreement, any liability for any tax attributable
to a period which begins before and ends after the Cut-Off Date shall be
apportioned between the portion of such period ending on the Cut-Off Date and
the portion beginning on the day after the Cut-Off Date (x) in the case of real
and personal property taxes, by apportioning such taxes on a per diem basis and
(y) in the case of all other taxes, on the basis of the actual activities of the
Acquired Business, as determined from the books and records of the Acquired
Business for such partial period.
13. Costs and Expenses.
Seller shall pay all fees and expenses incurred by it in connection with
the transactions provided for hereunder including the fees and expenses of its
counsel and accountants; and Buyer shall pay all expenses incurred by it in
connection with the transactions provided for hereunder, including the fees and
expenses of its counsel and accountants.
14. Absence Broker or Finder.
Seller represents and warrants to Buyer that, except as set forth on
Schedule 14 hereto, no broker or finder acted or is acting for Seller in
connection with the transactions provided for in this Agreement, and Buyer
represents and warrants to Seller that no broker or finder acted or is acting
for it in connection therewith. Each party shall, without limitation, indemnify,
defend and hold the others harmless from and against any cost, expense
(including reasonable attorneys' fees) claim, loss or liability in connection
with a claim by any broker, consultant or finder claiming to have dealt with the
indemnifying party. The provisions of this Section 14 shall survive the Closing
indefinitely.
15. Instruments of Further Assurance.
Each of the parties hereto agrees, upon the request of any other party
hereto, from time to time to execute and deliver to such other party all such
instruments and documents of further assurance or otherwise as shall be
reasonable under the circumstances, and to do any and all such acts and things
as may reasonably be required to carry out the obligations of such requested
party hereunder and to consummate the transactions provided for herein,
including without limitation, all such instruments as may be necessary to vest
in Buyer all properties, rights and assets of every kind, character or
description which hereafter may become the property of Seller under the terms of
Seller's Employment Agreement with Anthony N. Duryea listed on Schedule 3.18
hereof.
16. Right of Buyer to Nominate Related Company.
Buyer shall have the right to nominate any company which is a direct or
indirect wholly-owned subsidiary of Buyer, to acquire all or any portion the
Acquired Business and the Assets in Buyer's stead. In the event that Buyer
nominates such subsidiary, Buyer may assign the Agreement and any and all of
Buyer's rights under this Agreement to such subsidiary. Upon any such
assignment, such subsidiary shall be entitled to the same rights, and shall be
subject to the same liabilities, that Buyer has hereunder, and Buyer covenants
and agrees that it will cause such subsidiary to perform in accordance with the
provisions hereof.
17. News Releases.
No notices to third parties or other publicity, including press releases,
concerning any of the transactions provided for herein shall be made unless
planned and coordinated jointly between Buyer and Seller, unless Seller is
advised by counsel that a news release or disclosure is required or appropriate
and Seller is unable to comply with the terms of this Article after making
reasonable efforts to do so. Notwithstanding the foregoing, the parties agree
that Seller may describe generally in press releases and periodic reports to the
Securities Exchange Commission the assets transferred hereunder, the purchase
price paid for such assets and the identity of the Buyer, provided that the
Buyer and Seller shall agree as to the text of the initial press release
describing the transaction contemplated by this Agreement.
18. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of the
respective successors and assigns of the parties hereto, but, except as provided
for in Sections 11.7(a) and 16 hereof, shall not be assigned by any party hereto
without the prior written consent of the other party.
19. Governing Law.
This Agreement shall be interpreted and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
20. Execution in Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute but
one and the same document.
21. Miscellaneous.
21.1. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matters hereof and
supersedes all negotiations, preliminary agreements and all prior or
contemporaneous discussions and understandings of the parties hereto in
connection with the subject matters hereof.
21.2. Amendments. No amendment, change or modification of any of the terms,
provisions or conditions of this Agreement shall be effective unless made in
writing and signed or initialed on behalf of the parties hereto by their duly
authorized representatives.
21.3. Headings and Captions. The titles or captions of Articles and
Sections in this Agreement are provided for convenient reference only, and shall
not be considered a part hereof for purposes of interpreting or construing or
applying this Agreement, and such titles or captions shall not define, limit,
extend, explain or describe the scope or extent of this Agreement or any of its
terms or conditions.
21.4. Gender and Number. Words and phrases herein shall be construed in the
singular or plural number and as masculine, feminine or neuter gender, according
to the context.
21.5. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally, by registered or certified mail, by legible facsimile
transmission or by overnight courier (fare prepaid) addressed as follows:
If to Buyer, to:
Fred Allardyce
Monitor Acquisition Co. LLC
c/o Kelso & Company
320 Park Avenue
New York, NY 10022
Telecopy: (212) 223-2379
with a copy to:
Stephen R. Hertz, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Telecopy: (212) 909-6836
If to Seller, to:
Lee B. Foster, II
Chairman and Chief Executive Officer
L.B. Foster Company
Foster Plaza
P.O. Box 2806
Pittsburgh, PA 15230
Telecopy: (412) 928-7891
with a copy to:
David L. Voltz, Esq.
General Counsel
L.B. Foster Company
Foster Plaza
P.O. Box 2806
Pittsburgh, PA 15230
Telecopy: (412) 928-7891
or to such address as such party may indicate by a notice delivered to the
other parties hereto. Notice shall be deemed received the same day (when
delivered personally), five (5) days after mailing (when sent by registered or
certified mail), the same business day (when sent by facsimile) and the next
business day (when delivered by overnight courier). Any party to this Agreement
may change its address to which all communications and notices may be sent by
addressing notices of such change in the manner provided.
21.6. Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the provisions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated unless such invalidity, voidance
or unenforceability prevents the conveyance, transfer and assignment of the
Acquired Business and the Assets to Buyer as contemplated in this Agreement.
21.7. Bulk Sales. Buyer, on the one hand, and Seller, on the other hand,
each agree to waive compliance by the other with the bulk sales law of any
jurisdiction in connection with the transactions contemplated hereby. Seller
hereby does indemnify and hold Buyer harmless from and against, and shall pay
and reimburse Buyer for, any cost, expense (including reasonable attorneys'
fees) or liability resulting from the claims of creditors with respect to such
bulk sales laws. This Section 21.7 shall survive the Closing indefinitely.
21.8. No Third Party Beneficiaries. The parties hereto do not intend to
confer any benefit hereunder on any person (including any employees or former
employees of Seller or employees hired by Buyer), firm or corporation other than
the parties hereto and their respective successors and assigns.
21.9. No Waiver. No waiver of any breach of any agreement or provision
contained herein shall be deemed effective unless specifically set forth in
writing by the party so waiving and no such waiver shall be deemed a waiver of
any preceding or succeeding breach thereof or of any other agreement or
provision contained herein. No extension of time for performance of any
obligations or acts shall be deemed an extension of the time for performance of
any other obligations or acts.
21.10. Schedules and Exhibits. Each of the Schedules and Exhibits attached
hereto are incorporated herein by reference and made a part of this Agreement.
21.11. Knowledge. As used herein, Seller's knowledge shall be interpreted
to mean the actual knowledge of the executive officers of Seller.
===============================================================================
IN WITNESS WHEREOF, the parties hereto have caused this Agreement of Purchase
and Sale to be executed on the day and year first written above.
L.B. FOSTER COMPANY
/s/Lee B. Foster
By:Lee B. Foster II
Title: Chief Executive Officer
MONITOR ACQUISITION CO. LLC
/s/Fred A. Allardyce
By:Fred A. Allardyce
Title:
