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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
November 11, 1997
-----------------
Date of Report(date of earliest event reported)
Commission File Number 0-22472
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ADAPTIVE SOLUTIONS, INC.
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Oregon 93-0981962
_______________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 N.W. COMPTON DRIVE, SUITE 340, BEAVERTON, OR 97006
_______________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(503) 690-1236
_______________________________________________________________________________
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OF ASSETS
On October 30, 1997, Adaptive Solutions, Inc., an Oregon corporation (the
"Registrant"), purchased Eastman Kodak Company's optical character recognition
business, including certain inventory of finished goods and work-in-process,
certain ancillary equipment used in the business, all of Seller's rights in and
documentation relating to the business, certain service contracts, all of
Seller's customer lists and records related to the business, Seller's
intelligent character recognition technology and rights, and Seller's optical
character recognition technology, patents, and rights. The consideration paid
for the assets to Eastman Kodak Company was $950,000, composed of $400,000 cash
at closing, 274,443 shares of Registrants Common Stock, and a promissory note in
the amount of $250,000 secured by the assets purchased. The source of funds for
the cash payment was Registrant's working capital. Registrant has agreed to
register the shares of Common Stock and has guaranteed that Eastman Kodak
Company will obtain net proceeds from the sale of such stock of $333,000. The
promissory note will bear no interest and is payable in monthly installments of
$50,000 commencing October 1, 1998 and continuing monthly thereafter until paid
in full.
EXHIBITS
28.1 Press Release dated October 28 1997, relating to the Event.
28.2 Asset Purchase Agreement between Adaptive Solutions, Inc.
and Eastman Kodak Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 19, 1996 ADAPTIVE SOLUTIONS, INC.
By: /s/ Richard L. Boonstra
-------------------------
Richard L. Boonstra
Controller
(Principal Financial and
Accounting Officer)
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ADAPTIVE SOLUTIONS, INC.
EXHIBIT INDEX
Sequentially
Numbered
Document Page
- -------- ------------
28.1 Press Release dated November 25, 1996, relating to the Event 6
28.2 Asset Purchase Agreement between Registrant and Eastman
Kodak Company 8
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SECURITIES AND EXCHANGE COMMISIION
Washington, D.C. 20549
EXHIBITS
TO
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
5
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Media contact (Adaptive): Media contact (Kodak):
Daniel Meub Engelina Jaspers
Phone: 503-690-1236 Phone: 716-724-3527
Fax: 503-690-1249 Fax: 716-724-3561
e-mail: [email protected] e-mail: [email protected]
ADAPTIVE SOLUTIONS TO PURCHASE KODAK OCR BUSINESS
BEAVERTON, Ore. and ROCHESTER, N.Y., Oct. 29, 1997 -- In a major step
toward its goal of becoming a leading provider of complete Computer Assisted
Data Entry solutions, Adaptive Solutions Inc. (NASDAQ:ADSO) today announced that
it has agreed to purchase Eastman Kodak Company's optical character recognition
(OCR) business.
The purchase includes ownership of Kodak's Imagelink-branded OCR
subsystems, technology and related patents, as well as the OCR service business.
In addition, Adaptive is acquiring next-generation intelligent character
recognition (ICR) technology and patents developed by Kodak that have been field
tested but not yet commercialized.
Under the terms of the agreement, Adaptive will pay approximately $1
million in stock and cash in addition to future royalties.
The OCR subsystem is a self-contained, modular subsystem that can be
installed in new or existing Kodak scanners and microimagers. The optional
subsystem enables companies to accurately recognize and capture information
contained on forms and other data sources, converting the information into
computer processable codes and automatically entering it into company-wide
database.
As part of the agreement, Kodak will continue to provide on-site
maintenance and repair to current and new OCR customers under contract as a
third-party maintenance
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Adaptive to Buy Kodak OCR Business / page 2
provider for Adaptive Solutions, Inc. In addition, Adaptive will become an
authorized imaging reseller for the Kodak line of scanners and microimagers
and other Kodak imaging products. As a result, Adaptive will be able to
service and support current Kodak OCR customers, while developing OCR and
forms processing enhancements and upgrades that are expected to be available
in the near future.
"This agreement is the perfect opportunity to jump-start our strategic
shift from a component and technology supplier to a provider of complete
Automated Data Entry solutions," said Daniel J. Meub, president and CEO of
Adaptive Solutions. "We will be able to build on our years of experience in
providing imaging technology for such companies as Siemens, Mitsubishi and
Motorola by adding the proven Kodak product line, installed base and worldwide
service capability. Using the strength of the Kodak OCR product line as an
initial base, Adaptive will continue to make the necessary development,
marketing and sales investments to grow the business in the long term. Few
vendors in this market will be able to match our combination of innovation,
reliability and service capability."
Current Kodak OCR installations process an estimated 300 million forms per
year for major corporations and government entities worldwide in such industries
as health care and transportation.
"We are pleased to have found such a knowledgeable, dedicated organization
as Adaptive Solutions to carry this product line forward," said Candy Obourn,
president of Kodak's Business Imaging Systems division. "Adaptive brings
excellent technology and industry expertise that will benefit our current OCR
customers now, along with a dedication to growing this business which will
benefit customers in the years to come."
Adaptive Solutions was founded in 1988 and pioneered data parallel
processing for advanced pattern recognition, image processing and OCR/ICR
applications. The company currently designs and markets advanced solutions for
Computer Assisted
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Adaptive to Buy Kodak OCR Business / page 3
Data Entry to corporate-wide data management systems. Additional information
is available on the company's web site at www.asi.com.
Kodak Business Imaging Systems, with its Eastman Software subsidiary,
manufactures and markets integrated systems, hardware, software and media for a
range of document, image and work management applications that require
micrographics, digital or hybrid solutions. For more information, visit the
Kodak web site at www.kodak.com.
#
(Note: Kodak and Imagelink are trademarks.)
10/29/97
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of October 30, 1997 between EASTMAN KODAK
COMPANY, a New Jersey corporation with its principal office located at 343 State
Street, Rochester, New York 14650 ("Seller") and Adaptive Solutions, Inc., an
Oregon corporation with its principal office located at 1400 NW Compton Drive,
Suite 340, Beaverton, Oregon 97006 ("Buyer").
R E C I T A L S:
I. Seller is engaged in the U.S. and other foreign locations in the
business of designing, manufacturing, selling and servicing a proprietary
integrated system of hardware and software products utilizing patents and
technology that capture images and convert selected fields using optical
character recognition into computer data which can be then be stored in
databases for various customer applications (the "OCR Business");
II. Seller has heretofore developed certain technology relating to the
electronic recognition of hand printed characters (the "ICR Technology");
III. Seller desires to sell certain assets and rights now owned by it and
used or useable in connection with the operation of the OCR Business and the ICR
Technology; and
IV. Buyer desires to purchase such assets and rights of Seller upon the
terms and conditions hereinafter set forth and to continue the operation of the
OCR Business;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter contained, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 PURCHASE OF ASSETS. Seller agrees to sell, transfer and assign to
Buyer, and Buyer agrees to purchase and accept, on the date described in ARTICLE
V hereof (the "Closing" or the "Closing Date") and subject to the further terms
and conditions of this Agreement, certain assets and rights of Seller as follows
(the "Assets"):
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A. Seller's inventory of finished goods and work-in-process relating
to the OCR Business (the "OCR Inventory") as set forth in SCHEDULE 1.01A, but
excluding service repair parts retained for purposes of satisfying Seller's
future service and maintenance obligations. Five (5) partially completed OCR
subsystems as specified in SCHEDULE 1.01A shall be retained by Seller for
service repair parts only and Buyer will acquire any such units remaining in
Seller's inventory on or after October 1, 1998 for $1.00.
B. Certain ancillary equipment currently used by Seller including,
but not limited to, one IBM PS-2 file server, four (4) Kodak IMAGELINK-TM-
Microimager 70 units, four (4) OCR processors, workstations, training materials
and equipment, and manufacturing tooling and test equipment, including test
hardware and test software, all as set forth in SCHEDULE 1.01B.
C. All of Seller's rights in and documentation relating to computer
software (object and source code) for Seller's IMAGELINK-TM- OCR subsystems'
products as set forth in SCHEDULE 1.01C, except that Seller may retain copies of
and rights to such computer software as may be necessary to fulfill any
continuing service obligations it may have; e.g. foreign installations to which
this Agreement does not apply.
D. All training materials, customer documentation, marketing, sales
and advertising materials, service and maintenance records, field sales
proposals and related documents and information relating to the OCR Business,
except that Seller may retain copies of and rights to such materials as may be
necessary to fulfill any continuing service obligations it may have.
E. As hereafter provided, the right to provide ongoing maintenance
service for the hardware, software and related equipment and products
manufactured and sold by Seller for use by Seller's customers of the OCR
Business as set forth in SCHEDULE 1.01E(1) (the "OCR Equipment") pursuant to an
OCR Maintenance Agreement as set forth in SCHEDULE 1.01E(2). Buyer's right to
assume maintenance of OCR Equipment located in foreign countries and OCR
Equipment which is the subject of nonassignable state and federal maintenance
agreements shall be deferred as follows:
(i) Foreign OCR Equipment subject to nonassignable EMA's (as defined
in Paragraph 1.02) -- upon the expiration of the foreign EMA and Buyer's meeting
the requirements set forth in Paragraph 1.02;
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(ii) Foreign OCR Equipment subject to assignable EMA's (as defined in
Paragraph 1.02) -- upon Buyer's meeting the requirements of Paragraph 1.02;
(iii) State and federal government nonassignable EMA's (as defined
in Paragraph 1.02) -- upon expiration of the relevant EMA's.
Notwithstanding the foregoing, Seller shall retain all rights and
responsibilities to service and maintain OCR Equipment used by the Division of
Licensing Authorities in the United Kingdom (the "DVLA") and Ministry of Postal
and Finance in Tokyo, Japan ("MPF").
F. All designs, mechanical drawings, blueprints, and technical
documentation relating to the OCR Equipment and its manufacture as set forth in
SCHEDULE 1.01F, except that Seller may retain copies of such materials in order
to manufacture and supply OCR Equipment to Buyer as may hereafter be agreed.
G. All of Seller's customer lists, sales correspondence and records
related to Seller's OCR Business customers (the "OCR Customers") and a list of
the contact names, addresses, and telephone numbers of all of Seller's BIS
resellers, brokers and distributors; provided, however, that Seller is not
conveying or in any way relinquishing its goodwill or records with respect to,
or its right to provide products or services to, such OCR Customers that are not
related to the sale, lease or maintenance of OCR Equipment.
H. Seller's ICR Technology and rights in and documentation relating
to associated computer software (object and source codes) as defined and
provided in the ICR Technology Agreement set forth in SCHEDULE 6.06B.
I. Seller's OCR technology, patents and rights in and documentation
relating to associated computer software (object and source codes) as defined
and provided in the OCR Technology Agreement set forth in SCHEDULE 6.06C.
1.02 ASSIGNMENT OF CONTRACTS. Seller shall assign and Buyer shall assume
Seller's remaining obligations thereunder of the OCR Equipment maintenance
agreements referred to in SCHEDULE 1.02(1), to the extent such agreements relate
to OCR Equipment only, complete copies of which have been previously delivered
to and examined by Buyer (the "EMA's"). At such time on or after January 1,
1998 that Buyer shall demonstrate to Seller's reasonable satisfaction that it
possesses technical and administrative support capability to service OCR
Equipment in a foreign country to the same extent that it does in the U.S.,
Seller, will, assign all assignable foreign EMA's and upon the expiration of its
current, nonassignable service obligations to its OCR Customers in a foreign
country, will
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convey to Buyer its rights to provide any future service or maintenance with
respect to such foreign based OCR Equipment, except for that of the DVLA and
MPF. (The EMA's for customers of the OCR Business which are not being
assigned to Buyer at Closing are set forth in SCHEDULE 1.02(2).) Seller's
criteria for evaluating Buyer's foreign service capabilities shall include
Buyer's ability: (i) to invoice in the customer's language and currency; (ii)
to invoice in accordance with laws and customs of the customer's country;
(iii) to respond and provide assistance in the customer's language; (iv) to
respond to foreign customers during their business hours or as may be
required in their EMA's; and (v) to transition foreign requests for service
to the appropriate level of response and service. Seller's representative
for the purpose of such evaluations shall be its Business Imaging Systems
Manager of Business Development.
Nothing in this Agreement shall be deemed to constitute an assignment
or an attempt to assign any contract or any other agreement to which Seller is a
party if the attempted assignment without the consent of the other party to such
contract would constitute a breach or affect in any way the rights of Seller
thereunder. If the consent of any such other party shall not be obtained on or
prior to the Closing Date, or an attempted assignment at the Closing Date would
be ineffective and would affect the rights of Seller thereunder, Seller will
cooperate with Buyer in a reasonable arrangement designed to provide for Buyer
the economic benefits, to the extent of Buyer's performance of Seller's service
obligations, under any such contract or agreement, including permitting Buyer
to provide services to customers of the OCR Business under EMA's not assigned or
deferred hereunder.
1.03 LIABILITIES. Except as set forth in SCHEDULE 1.03, it is expressly
understood and agreed that Buyer does not, nor will it assume or become liable
for any of the liabilities of Seller of any kind or nature at any time existing
or asserted arising prior to the Closing Date; PROVIDED, however, that Buyer
shall perform all of obligations arising from and after the Closing Date with
respect to the EMA's, the OCR Maintenance Agreement set forth in SCHEDULE
1.01E(2), the OCR Business and the Assets.
1.04 PURCHASE PRICE AND PAYMENT. The purchase price to be paid by Buyer to
Seller for the Assets (the "Purchase Price") shall be $950,000.00. The Purchase
Price shall be paid to Seller at the Closing as follows:
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A. $400,000.00, less any adjustments required by Paragraph 1.05A, by
bank wire to Seller;
B. Execution and delivery of Buyer's secured promissory note in the
amount of $250,000.00 less any adjustments pursuant to Paragraph 1.05 (the
"Note"). The Note shall be in the form set forth in SCHEDULE 1.04B(1) and shall
be payable in monthly installments of principal in the amount of $50,000.00
commencing October 1, 1998 and continuing monthly thereafter until fully paid.
The Note shall bear no interest, except in the event of a default thereunder and
shall be secured by a pledge of assets pursuant to the terms of the security
agreement set forth in SCHEDULE 1.04B(2) (the "Security Agreement").
C. Delivery at Closing of $300,000.00 of its unregistered no par
value common shares, the number of such shares to be determined by using 90% of
the average daily closing price of ASI's publicly traded common shares for the
thirty (30) business days immediately preceding Buyer's first public
announcement of the transactions contemplated by this Agreement or the Closing
Date if no public announcement has occurred. Buyer shall file a registration
statement for such shares under the Securities Act of 1933 ("Securities Act")
within thirty (30) days after Closing and shall cause such registration to be
effective no later than March 31, 1998 for the public sale of such shares under
the Securities Act and under the "blue sky" laws of such states as Seller may
reasonably request. Seller shall be allowed to sell up to 25,000 shares of
Buyer's stock per week in the public market without restriction, except as may
be imposed by applicable federal and state securities laws and regulations. The
parties agree that if the number of shares of Buyer's stock receivable by Seller
pursuant to this Paragraph 1.04C would cause Seller and/or Aperture Associates,
LLP, collectively or singly, to beneficially own more than 9% of Buyer's shares,
then Seller may require Buyer to pay in cash at Closing, rather than Buyer's
shares, the amount by which any shares of Buyer receivable pursuant to this
Paragraph 1.04C would cause Seller and/or Aperture Associates, LLP to
beneficially own more than 9% of Buyer's common stock. In the event that Buyer
shall fail for any reason to cause a Securities Act registration to become
effective with respect to its shares conveyed to Buyer hereunder on or before
March 31, 1998, (except for Seller's material failure to provide the cooperation
necessary to effect such registration), then Seller may elect to tender the
shares received pursuant to this Paragraph to Buyer and receive a cash payment
from Buyer in the amount of
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$333,333.00 which shall be paid within five (5) days after Seller's written
demand to Buyer in accordance with Paragraph 9.08.
1.05 ADJUSTMENTS TO PURCHASE PRICE.
A. 78% of the amount of prepaid unearned revenue for EMA's covering
OCR Equipment located in the U.S., exclusive of EMA's paid in arrears, reflected
in Seller's books and records as of the first day of the month in which Closing
shall occur shall be applied to reduce the Purchase Price set forth in Paragraph
1.04. The first $50,000 of such amount shall be applied to reduce the cash
payment required by Paragraph 1.04A and the remainder shall be applied to the
principal balance of the Note (latest maturing installments) as of the Closing
Date.
B. Any prepaid unearned revenue to which Buyer shall be entitled
relating to foreign EMA's shall be determined as follows:
(i) On January 1, 1998, Buyer shall be credited with fifteen percent
(15%) of the amount of prepaid unearned revenue as of such date for foreign
EMA's exclusive of the DVLA, MPF and those foreign EMA's for which Buyer shall
assume no service responsibilities. Any such credit shall be applied to the
principal balance of the Note (latest maturing installments).
(ii) Upon assignment to and assumption by Buyer of any foreign EMA's,
for which Buyer shall assume service responsibilities under the OCR Maintenance
Agreement set forth in SCHEDULE 1.01E(2), Buyer shall be credited with sixty-
three percent (63%) of the amount of prepaid unearned revenue as of such date.
Any such credit(s) shall be applied to the principal balance of the Note (latest
maturing installments).
(iii) With respect to any foreign EMA's paid in arrears, assigned
to and assumed by Buyer, Buyer shall pay to Seller upon receipt of payment
therefor eighty-five percent (85%) of unearned service revenues to date of
assignment and twenty-two percent (22%) of such revenues earned after the date
of assignment in accordance with the terms of the OCR Maintenance Agreement.
C. In the event that Seller shall fail to realize at least
$333,333.00 in net cash proceeds from the sale of all of Buyer's stock (after
brokerage and investment bankers' fees and other ordinary and necessary expenses
of sale), then Seller shall be entitled to receive and Buyer shall pay the
difference in cash upon the later of one (1) year after Closing hereunder or
Seller's completing the sale of all of Buyer's stock received pursuant
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to Paragraph 1.04C. In order for Seller to qualify for payment of cash pursuant
to this Paragraph 1.05C, Seller must complete the sale of all stock of Buyer
received pursuant to Paragraph 1.04C within twelve (12) months after the
effective date of the registration of such stock.
1.06 PURCHASE PRICE ALLOCATION. The Purchase Price shall be allocated to
the various categories of the Assets as the parties shall agree in writing at
Closing. Such allocation shall be used by the parties for all tax purposes and
filings, including, without limitation, IRS Form 8594.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date of this Agreement
and as of the Closing Date as follows:
2.01 CORPORATE STANDING. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.
2.02 CORPORATE AUTHORITY. Seller has full corporate power and authority to
enter into this Agreement and to sell, transfer and deliver the Assets. Seller
has taken all such corporate action as may be necessary or advisable and proper
to authorize this Agreement, the execution and delivery thereof, the
consummation of the transactions contemplated hereby and the execution and
delivery of each of the documents required to be delivered hereunder, so that
Seller will have full right, power and authority to sell and deliver the Assets
to Buyer and to perform all of its obligations under this Agreement at the
Closing.
2.03 ABSENCE OF RESTRICTIONS. Seller has made no other agreement with any
other party with respect to the sale or encumbrance of the Assets. The
execution and delivery of this Agreement and the consummation of the
transactions provided hereunder, do not require any third party consent and do
not violate, conflict with, result in the breach of, or cause the acceleration
of or default under any provision of (a) Seller's Certificate of Incorporation
or By-Laws, as the same may have been amended from time to time or (b) any
obligation, mortgage, lien, lease, agreement, instrument, law, order,
arbitration award, judgment, decree or any other restriction to which Seller is
a party or by which Seller is
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subject or bound, except to the extent that the consent of customers may be
required with respect to the assignment of the Assigned Contracts.
2.04 TITLE TO ASSETS. Except as set forth in SCHEDULE 2.04 hereto, Seller
has good, marketable and indefeasible title to all of the Assets, free and clear
of all liabilities, mortgages, conditional sales agreements, security interests,
leases, liens, pledges, encumbrances, restrictions, charges, claims or
imperfections of title whatsoever.
2.05 CUSTOMERS AND CONTRACTS. SCHEDULE 2.05 contains a complete and
accurate listing of the names and addresses of the OCR Customers at whose
premises each item of OCR Equipment is, to the best of Seller's knowledge,
located.
2.06 LITIGATION AND CLAIMS. There is no litigation, proceeding, suit,
action, controversy or claim in law or in equity (including proceedings by or
before any governmental board or agency) existing, pending or, to Seller's
knowledge, threatened against Seller which may materially adversely affect the
Assets or the continuation by Buyer of the OCR Business as now conducted by
Seller. To Seller's knowledge, Seller has substantially complied in all
material respects with all material laws, regulations and orders applicable to
the continuation by Buyer of the OCR Business as now conducted by Seller. There
are no judgments, orders, laws or regulations existing, whether or not filed,
against Seller which may materially adversely affect the Assets or the
continuation by Buyer of the OCR Business as now conducted by Seller.
2.07 GOVERNMENTAL COMPLIANCE. To the extent that it may materially
adversely affect the continuation by Buyer of the OCR Business as now conducted
by Seller, (i) Seller has complied in all material respects with all material
laws, rules, regulations and orders of all federal, state and local authorities
with respect to the OCR Business and the Assets and (ii) Seller has not received
any notice that it is claimed to be in default with respect to any judgment,
order, injunction, decree, rule or regulation of any court, administrative
agency or other governmental agency with respect to the Business and assets.
2.08 CONDITION OF PROPERTY. All of the OCR Inventory is in good working
order so as to be fit for use in the ordinary course of the OCR Business.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date of this Agreement
and as of the Closing Date as follows:
3.01 CORPORATE STANDING. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oregon and is a
reporting company under Section 12(g) of the Exchange Act of 1934.
3.02 CORPORATE AUTHORITY. Buyer has full corporate power and authority to
own its properties, to carry on its business as currently conducted and enter
into and perform its obligations under this Agreement. Buyer has taken all such
corporate action as may be necessary or advisable and proper to authorize this
Agreement, the execution and delivery hereof, the consummation of the
transactions contemplated hereby and the execution and delivery of each of the
documents required to be delivered hereunder. This Agreement constitutes the
valid and binding obligation of Buyer and is enforceable against it, except to
the extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
and doctrines.
3.03 CONSENTS. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby requires the consent of any
third party or will conflict with or result in any violation, breach or
termination of, or default or loss of a material benefit under, or permit the
acceleration of any obligation under, or result in the creation of any lien,
charge or encumbrance on any of its property or assets under any provision of
Buyer's Certificate of Incorporation or Bylaws or any mortgage, indenture,
lease, agreement, loan, note or other instrument, permit, concession, grant,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Buyer or any of its properties or assets.
3.04 RESOURCES. Buyer has, or after the training of its personnel as
contemplated in Paragraph and Schedule 4.01B of this Agreement will have,
sufficient trained and experienced personnel to conduct the OCR Business after
the Closing as contemplated herein.
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3.05 RECEIPT OF DOCUMENTS. Buyer acknowledges the prior receipt of all
contracts and documents set forth in SCHEDULES 1.03 AND 2.05 and acknowledges
that it has had sufficient time and access to Seller's personnel to evaluate
same for its purposes.
3.06 CAPITALIZATION. As of the date hereof, the authorized capital stock
of Buyer consists of 30,000,000 shares of no par value common stock which, as of
_________, October 17, 1997, 6,987,864 shares were issued in outstanding. All
of the issued and outstanding shares of Buyer's stock have been and all of its
shares to be issued pursuant to Paragraph 1.04C are and will be duly and validly
authorized and issued and fully paid and non-assessable. Except as set forth in
SCHEDULE 3.06 as of October 17, 1997 Buyer does not have any outstanding
securities or rights convertible into or exchangeable for its common stock or
any commitments, contracts, understandings or arrangements by which it is or may
be bound to issue additional shares of its common stock.
3.07 FINANCIAL STATEMENTS. Buyer has heretofore delivered to Seller its
audited financial statements for the calendar year ended December 31, 1996 and
its interim financial statements dated March 31, 1997 and June 30, 1997. Such
financial statements: (i) are true and correct in all material respects; (ii)
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved; and (iii) fairly
present the financial position of Buyer as of the dates thereof and the results
of its operations, shareholders' equity, cash flows and changes in financial
position for the periods then ended.
3.08 FILINGS AND REPORTS. Buyer has previously made available, or will
make available to Seller prior to October 20, 1997, true and correct copies
of (i) proxy statements relating to all meetings of its stockholders during
the calendar years 1996 and 1997 and (ii) all other reports, as amended, or
filings, as amended, required to be filed under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") with the United States Securities
Exchange Commission ("SEC") since January 1, 1996, including without
limitation forms 10-k, 10-q, and 8-k. Each of these reports, forms, filings,
documents, including the financial statements, exhibits and schedules
thereto, complied in all material respects with all of the statutes, rules
and regulations enforced or promulgated by the SEC and did not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No federal, state
or local governmental agency, commission or other
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entity has initiated any proceeding or, to the best of knowledge of Buyer,
investigation into the business or operations of Buyer within the past two
years. There is no unresolved violation, criticism or exception by the SEC
or other agency, commission or entity with respect to any report or statement
referred to herein that is material to Buyer.
3.09 COMPLIANCE WITH LAWS. Buyer's business(s) are not being conducted in
violation of any law, ordinance or regulation of any governmental entity.
3.10 TAXES. Buyer has timely filed all tax and information returns
required by it to be filed and has paid or accrued on its books and provided
adequate reserves therefor for the payment of all taxes reflected on such
returns or required to be paid in the respective periods covered by such returns
through the date hereof. Buyer is not delinquent in the payment of any tax,
assessment or government charge. No deficiencies for any taxes have been
proposed, asserted or assessed against Buyer that have not been resolved or
settled and no request for waivers of the time to assess any such taxes are
pending or have been agreed to. Buyer is not currently subject to audit or
examination of any of its tax returns by the Internal Revenue Service or by any
state, municipal or other taxing authority. For purposes of this Agreement, the
term "tax" shall mean and include FICA, FUTA, Medicare and any federal, state,
local or foreign income, franchise, excise, gross receipts, sales, use,
employment, real property, ad valorem, payroll, tangible and intangible personal
property, payments in lieu of taxes, assessments, fees, charges and withholdings
of any nature together with any related penalties, fines, additions to tax or
interest thereon.
3.11 ENVIRONMENTAL LAWS. Buyer is in compliance with all federal, state
and local Environmental Laws and: (i) Buyer is not subject to any judicial or
administrative proceeding alleging a violation of any past or present
Environmental Law; (ii) Buyer is not subject to any federal, state or local
investigation regarding the violation of any Environmental Law or remedial
action related thereto. "Environmental Laws" means all laws, ordinances, rules,
regulations, guidelines and orders that regulate air, water, soil and solid
waste management including the generation, release, storage, handling,
transportation, disposition or management of any hazardous substance (as defined
in such laws), which laws are intended to protect the public health or the
environment; or (iii) establish liability for the investigation, removal or
clean-up of or damage caused by any hazardous substance.
3.12 UNDISCLOSED LIABILITIES. There are no obligations or liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) whether due
or to become due,
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and regardless of when asserted, arising out of Buyer's business prior to the
date of this Agreement which are required to be reflected in Buyer's
financial statements or SEC reports and which are not disclosed in such
financial statements or reports.
3.13 DEFAULTS. There has not been any uncured or unwaived default in any
material obligation to be performed by Buyer under any material contract or
commitment. No other party to any material contract with Buyer is in default in
any material obligation to be performed by such party.
3.14 LITIGATION AND CLAIMS. Except as set forth in Schedule 3.14: (i)
there is no litigation, proceeding, suit, action, controversy, investigation or
claim at law or in equity (including proceedings by or before a governmental
board or agency) existing, pending or threatened against Buyer; (ii) there are
no judgments, orders, writs, injunctions or decrees in any court or any federal,
state, municipal or other department, commission, board or agency, whether or
not filed, against the Buyer; (iii) Buyer has received no inquiry, written or
oral, from any federal, state or local agency concerning its business or
operations; and (iv) no litigation, proceeding, suit or action has been
instituted or threatened to restrain or prohibit the transactions contemplated
by this Agreement.
ARTICLE IV
FURTHER COVENANTS
4.01 COVENANTS OF SELLER. Seller further covenants and agrees as follows:
A. CONDUCT OF OCR BUSINESS. To conduct the OCR Business pending the
Closing in the normal and usual manner consistent with the continued operation
thereof and, without the prior approval of Buyer (which approval may not be
unreasonably withheld or delayed), not to make any material change in the
policies affecting the operation and conduct of the OCR Business.
B. TRANSITION OF OCR BUSINESS AND ICR TECHNOLOGY. After Closing and
in accordance with SCHEDULE 4.01B(1), to use reasonable business efforts to
instruct Buyer, through the authorized personnel and agents of Seller and Buyer,
concerning the OCR Business and its operations and the ICR Technology, including
such assistance and cooperation as may be reasonably requested or necessary to
assure the orderly transfer of the OCR Business and the ICR Technology and the
continuation of the OCR Business by
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Buyer subsequent to the Closing. Seller's personnel shall be made available
in accordance with the terms of its form of consulting agreement set forth as
an exhibit to SCHEDULE 4.01B(2). Notwithstanding Seller's due performance of
all of its covenants hereunder and the accuracy of its representations and
warranties, Buyer understands that the OCR Business may not be successful
after Closing and that OCR Customers may not elect to continue a relationship
with Buyer through no fault or action of Seller.
C. CHANGES. Between the date hereof and the Closing, to notify
Buyer of any unusual changes, problems or developments with respect to the OCR
Business and the ICR Technology and the status of Seller's relationship with the
OCR Customers and suppliers, to the end that an uninterrupted and efficient
transfer of the OCR Business may be made.
D. ACCESS. To allow the authorized personnel and agents of Buyer to
have access to any and all of the records of Seller included among or reasonably
related to the Assets, at all reasonable times and with reasonable prior notice
between the date hereof and the Closing.
E. COOPERATION. To execute, acknowledge and deliver to Buyer on
demand, both prior and subsequent to the Closing, all such instruments,
consents, authorizations, certifications, books, records and data, and to take
all other action, as heretofore agreed or as may be reasonably necessary or
advisable in the reasonable opinion of Buyer to satisfy the Conditions to
Closing by Buyer contained in ARTICLE VI hereof, to effect the provisions and
intent of this Agreement, and to better assign, transfer and convey title and
possession of the Assets.
F. UPDATE OF REPRESENTATIONS AND WARRANTIES. To notify Buyer of any
event or condition occurring or existing prior to Closing which would change
materially any representation or warranty of Seller set forth in ARTICLE II
hereof.
G. PATENTS. Upon final payment of all sums due Seller pursuant to
the Note, this Agreement and any related or ancillary agreements, to assign to
Buyer the patents and Patent applications in the manner provided in the OCR and
ICR Technology Agreements set forth in SCHEDULES 6.06B AND 6.06C.
H. REIMBURSEMENT FOR EMPLOYEES. To reimburse Buyer up to $85,000
(plus taxes and administrative costs incurred by Buyer) in accordance with
SCHEDULE 4.01H for incentive plan and transition pay with respect to Christopher
Thrasher or Alexander
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Shustorovich, if they shall terminate their employment with Seller and become
employees of Buyer at Closing hereunder.
I. NON-SOLICITATION OF CERTAIN EMPLOYEES. Seller agrees for three
(3) years after Closing, not to directly or indirectly, employ, seek to
employ, encourage any third party to employ or otherwise attempt to obtain
the service of the persons set forth in SCHEDULE 4.02D if such persons shall
become employees at Closing of Buyer unless: (i) such person(s)' employment
shall have been terminated by Buyer; (ii) Seller shall not have solicited the
employment of such person(s) and Buyer shall consent thereto, which consent
shall not be unreasonably withheld; or (iii) such person(s) shall have been
out of the employ of Buyer for at least six (6) months provided, however, in
the event of any claimed breach of this covenant by Seller, Buyer shall give
written notice thereof to Seller and thereafter Seller shall have thirty (30)
days to reasonably cure such breach.
J. Upon termination of Seller's retained responsibilities for
service to customers of the OCR Business or Buyer or warranties with respect to
the OCR Equipment and upon Buyer's satisfaction of all of its obligations to
Seller pursuant to this Agreement, the Note and the OCR Maintenance Agreement
set forth as SCHEDULE 1.01E(2), Seller shall transfer to Buyer all remaining
materials or documents in its possession relating to the OCR Business.
4.02 COVENANTS OF BUYER. Buyer further covenants and agrees as follows:
A. TRANSITION OF OCR BUSINESS AND ICR TECHNOLOGY. To use and exert
reasonable business efforts between the date hereof and Closing and after
Closing as well, through appropriate authorized personnel and agents of Buyer,
to familiarize itself with the OCR Business and the ICR Technology and the other
Assets and obtain instruction, as contemplated in SCHEDULE 4.01B, concerning the
OCR Business and the ICR Technology and its operations in order to assure the
orderly transfer of the OCR Business and the ICR Technology to Buyer and the
continuation thereof by Buyer subsequent to Closing.
B. COOPERATION. To execute, acknowledge and deliver to Seller, on
demand, both prior and subsequent to the Closing, all such instruments,
consents, authorizations, certifications, books, records and data, and to take
all other action, as heretofore agreed or as may be reasonably necessary or
advisable in the opinion of Seller, to satisfy the Conditions to Closing by
Seller contained in ARTICLE VII hereof, to effect the
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provisions and intent of this Agreement, and to facilitate the assignment,
transfer and conveyance of title and possession of the Assets to Buyer.
C. REPORTING COMPANY. To retain its status as a reporting company
under Section 12(g) of the Exchange Act and to comply with all reporting and
proxy requirements of the Exchange Act, including SECTIONS 13 AND 14 thereof
until December 31, 1999. In addition, Buyer shall cause any registration under
the Securities Act with respect to its shares conveyed to Seller pursuant to
Paragraphs 1.04C and 4.02E to remain in effect for twelve (12) months after its
effective date.
D. NON-SOLICITATION OF EMPLOYEES. Except as set forth in SCHEDULE
4.02D, for three (3) years after Closing, not to directly or indirectly, employ,
seek to employ, encourage any third party to employ or otherwise attempt to
obtain the service of any person then employed by Seller's Business Imaging
Systems Division, unless Seller's Human Relations Department for Business
Imaging Systems shall consent to any such action.
E. REGISTRATION OF SHARES. To be responsible and pay for all of the
fees, costs and expenses associated with the preparation and filing of a
registration and applicable "blue sky" registrations in connection with the
issuance of its shares to Seller pursuant to Paragraph 1.04C. All information
included in any such registration statement will not at the time it is declared
effective contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
F. OPINION LETTER. To cause the delivery of an opinion of Buyer's
attorneys, Ater, Wynne, Hewitt, Dodson & Skerritt LLP, as of the effective date
of the Securities Act registration for Buyer's shares in the form annexed hereto
as 4.02F.
4.03 INDEMNIFICATION. Each party covenants and agrees, on the terms
hereinafter set forth in this Paragraph 4.03, to fully indemnify and hold
harmless the other party and its directors, officers, agents, employees,
successors and assigns, as applicable, from and against and in respect of any
and all liabilities, obligations, damages, losses and expenses, including claims
of every kind and nature, whether accrued, absolute, contingent or otherwise,
and including reasonable attorneys' fees and the costs of defense (collectively
"Losses"), incurred by any of them as a result, or by reason, of the breach,
falsity or failure
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of any of the indemnifying party's representations, warranties, covenants or
undertakings contained in this Agreement.
A. Amounts due to Buyer in respect of indemnification for Losses
hereunder shall be net of any insurance recovery and/or tax benefits available
to Buyer relating to such Losses and, in furtherance of this provision, Buyer,
on behalf of any insurer providing it coverage, hereby waives any right of
subrogation relating to any Losses.
B. Buyer's right to indemnification shall be applicable only if, and
to the extent that, the aggregate claims for indemnification for Losses giving
rise to Buyer's right to obtain indemnification shall equal or exceed $20,000.00
(the "Claim Minimum").
C. Seller's maximum aggregate liability to Buyer arising from or
relating to this Agreement and the transactions contemplated hereby, including,
without limitation, Seller's indemnification obligations under this Paragraph
4.03, shall not exceed the Purchase Price. Buyer's sole and exclusive remedy
for any claim for indemnification under this Agreement or the transactions
contemplated hereby, or for any breach, falsity, inaccuracy or failure of any of
Seller's representations, warranties, covenants or undertakings contained in
this Agreement, or for any other claim related to this Agreement, shall be
limited to Buyer's right to indemnification pursuant to this Paragraph 4.03.
D. Each party waives any claim it may have against the other for
compensation for damages to reputation, lost business opportunities, lost
profits, mental or emotional distress, incidental, special, exemplary, or
indirect or consequential damages (collectively, "Special Damages"). Such
waiver shall not affect either party's right to seek indemnification against the
other for third party claims made against it for Special Damages.
E. If a party shall claim indemnification pursuant to this Paragraph
4.03 (an "Indemnified Party"), it shall promptly notify the other party
("Indemnifying Party") in writing of such claim, setting forth the nature and
amount of the claim in detail. The right to indemnification pursuant to this
Paragraph 4.03 shall terminate at the expiration of one (1) year after the
Closing Date, unless notice of claim is given by the Indemnified Party prior
thereto. The failure of the Indemnified Party to promptly notify the
Indemnifying Party upon discovery of an indemnifiable claim shall not bar the
Indemnified Party's claim from indemnification hereunder; provided, that the
Indemnified Party shall be required to indemnify the Indemnifying Party,
pursuant to Paragraph 4.03, for any Losses arising from or related to such
failure to notify promptly.
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F. If the indemnification claim arises from the claim or demand of a
third party, the Indemnifying Party shall have the right to compromise or, if
appropriate, conduct and defend at its own cost and through counsel of its own
choosing, the third party claim or demand giving rise to such claim for
indemnification. The opportunity to compromise or defend, if applicable, shall
be conditions precedent to any asserted indemnification liability under
Paragraph 4.03. If the Indemnifying Party undertakes to compromise or defend
any such claim or demand, it shall promptly notify the Indemnified Party in
writing of its intention to do so. After the assumption of the defense by the
Indemnifying Party and so long as it shall diligently pursue such defense, the
Indemnifying Party shall not be liable for any legal expenses subsequently
incurred by the Indemnified Party in connection with such defense, but the
Indemnified Party may participate in such defense at its own expense. Each
party shall fully cooperate with the other party and its counsel in the defense
or compromise of such claim or demand. No settlement of a third party claim or
demand defended by the Indemnified Party shall be made without the written
consent of the Indemnifying Party; and the Indemnifying Party shall not, except
with the written consent of the Indemnified Party, consent to the entry of a
judgment or settlement which does not include, as an unconditional term thereof,
the unconditional release of the Indemnified Party from all liability in respect
of such third party claim or demand.
G. In the event that, prior to or after Closing, Buyer shall have a
claim that Seller has breached any of its representations, warranties, covenants
or undertakings set forth in this Agreement, Buyer shall promptly notify Seller
in writing, setting forth the details of such alleged breach, and Seller shall
have thirty (30) days from receipt of such notification in which to cure or
remedy such breach. In the event that the breach relates to the existence or
condition of any item of OCR Equipment or OCR Inventory, Seller shall have the
right to cure such breach by providing substitute equipment of equivalent or
greater value.
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ARTICLE V
CLOSING
Closing hereunder shall take place at the office of Seller, Rochester, New
York at ______ o'clock __.m. on October __, 1997, or at such other time and
place as the parties may hereafter agree.
ARTICLE VI
CONDITIONS OF CLOSING BY BUYER
The obligation of Buyer to consummate the transactions contemplated by this
Agreement shall be subject, at Buyer's sole option, to the satisfaction of the
following conditions precedent:
6.01 REPRESENTATIONS. All of the material representations and warranties
of Seller herein contained shall be true and correct, in all material respects,
as of the date of this Agreement, and as of the Closing Date as if made on and
as of the Closing Date, except to the extent that such representations and
warranties are updated pursuant to Paragraph 4.01C; and in that event, the
updated representations and warranties shall not reveal any material adverse
change in the Assets or OCR Business from that described pursuant to the
representations and warranties set forth in this Agreement.
6.02 PERFORMANCE OF COVENANTS. All of the covenants to be performed and
all of the conditions to be satisfied by Seller prior to the Closing Date shall
have been performed or satisfied, in all material respects, on or before the
Closing.
6.03 BOOKS AND RECORDS. Seller shall have delivered to Buyer on or before
the Closing Date all of Seller's operational books, records, data and materials
that are included among the Assets.
6.04 CONDITION OF PROPERTY. All of the OCR Equipment shall be in the same
condition on the Closing Date as the same are as of the date hereof, ordinary
wear and tear alone excepted, it being understood and agreed between the Parties
hereto that only destruction, loss or damage by fire or casualty prior to the
Closing which exceeds Ten Thousand Dollars ($10,000.00) in value, shall
constitute a failure of the condition precedent set forth herein.
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6.05 DELIVERY OF DOCUMENTS. Buyer shall have received all such documents,
certificates, opinions and papers required of Seller pursuant to the terms of
this Agreement, or which shall have been reasonably requested by Buyer in
connection therewith, in form and substance as approved prior to the Closing by
Ater, Wynne, Hewitt, Dodson & Skerritt, LLP, attorneys for Buyer, including
expressly, but not limited to, the following:
A. Duly executed Bills of Sale, assignments, licenses and
instruments of transfer and assignment of the Assets.
B. A certificate of Seller, dated as of the Closing Date, to the
effect that, as of the Closing Date, all of the representations and warranties
of Seller contained in this Agreement and the Schedules hereto are true and
correct in all material respects and that all of the covenants and conditions
contained in this Agreement to be performed or satisfied by Seller prior to the
Closing have been performed or satisfied, such certificate to be executed by an
appropriate representative of Seller.
6.06 RELATED AGREEMENTS AND DOCUMENTS. On or before the Closing Date,
Seller shall have duly executed and delivered to Buyer the following agreements:
A. OCR MAINTENANCE AGREEMENT. An OCR Maintenance Agreement, in the
form of SCHEDULE 1.01E(2), pursuant to which Buyer will retain Seller, and
Seller will agree, to provide maintenance services on all OCR Equipment owned or
leased by the OCR Customers, owned by Buyer at or after the Closing Date, or for
which Buyer has maintenance obligations at or after the Closing Date upon the
terms and conditions contained therein.
B. ICR TECHNOLOGY AGREEMENT. A license agreement permitting Buyer
to use and acquire the ICR Technology and the patents associated with it which
provides for the payment of certain royalties to Seller in the form set forth in
SCHEDULE 6.06B.
C. OCR TECHNOLOGY AGREEMENT. An agreement permitting Buyer to use
and acquire technology and patents associated with the OCR Business in the form
set forth in SCHEDULE 6.06C.
D. RESELLER AGREEMENT. A reseller agreement and attached
maintenance agreement for Seller's Microimager 70 and document scanners in the
form set forth in SCHEDULE 6.06D.
E. ALLOCATION AGREEMENT. A document setting forth the allocation of
the Purchase Price as provided in Paragraph 1.06.
F. LETTER OF INTENT. Seller shall have delivered to Buyer a
nonbinding letter of intent reasonably acceptable to Buyer and based on prior
negotiations regarding Seller's furnishing of maintenance for future products
developed by Buyer which are related to the OCR Business.
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ARTICLE VII
CONDITIONS OF CLOSING BY SELLER
The obligation of Seller to consummate the transactions contemplated by
this Agreement shall be subject, at Seller's sole option, to the satisfaction of
the following conditions precedent:
7.01 REPRESENTATIONS. All of the representations and warranties of Buyer
herein contained shall be true and correct as of the date of this Agreement and
as of the Closing Date as if made on and as of the Closing Date.
7.02 COVENANTS AND CONDITIONS. All of the covenants to be performed and
all of the conditions to be satisfied by Buyer prior to the Closing Date shall
have been performed or satisfied at or before the Closing.
7.03 DELIVERY OF DOCUMENTS. Seller shall have received all such documents,
certificates, opinions and papers required of Buyer pursuant to the terms of
this Agreement, or which shall have been reasonably requested by Seller in
connection therewith, in form and substance as approved prior to the Closing by
Underberg & Kessler LLP, attorneys for Seller, including expressly, but not
limited to, the following:
A. A certificate of resolutions adopted by Buyer's Board of
Directors authorizing the execution of this Agreement, the consummation of the
transactions contemplated hereby and the execution and delivery of the documents
required to be delivered hereunder, appropriately certified by Buyer's corporate
Secretary.
B. A certificate of Buyer, dated as of the Closing Date, to the
effect that, as of the Closing Date, all of the representations and warranties
of Buyer contained in this Agreement are true and correct and that all of the
covenants and conditions contained in this Agreement to be performed or met by
Buyer prior to Closing have been performed or met, such certificate to be
executed by Buyer's President and Secretary.
C. A favorable written opinion of Ater, Wynne, Hewitt, Dodson &
Skerritt, LLP, attorneys for Buyer, dated as of the Closing Date, in form and
substance as set forth in SCHEDULE 7.03C, to the effect that: (i) Buyer's
representations and warranties contained in Paragraphs 3.01 and 3.02, and, to
such counsel's knowledge, Paragraphs 3.03, 3.06, 3.12 and 3.13 hereof are true
and correct as of the Closing Date; (ii) this Agreement and all documents to be
executed or delivered by Buyer hereunder are valid and binding upon
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Buyer in accordance with the respective terms thereof; and (iii) Buyer's
stock when delivered to Buyer pursuant to Paragraph 1.04C will be validly
issued and outstanding, fully paid and nonassessable; and, (iv) such other
matters as may be further set forth in SCHEDULE 7.03C.
7.04 RELATED AGREEMENTS. On or before the Closing Date, Buyer shall have
duly executed and delivered to Seller the following agreements:
A. OCR MAINTENANCE AGREEMENT. An OCR Maintenance Agreement, in the
form set forth in SCHEDULE 1.01E(2), pursuant to which Buyer will retain Seller,
and Seller will agree, to provide certain maintenance services on all OCR
Equipment owned or leased by certain OCR Customers, owned by Buyer at or after
the Closing Date, or for which Buyer has maintenance obligations at or after the
Closing Date.
B. ICR TECHNOLOGY AGREEMENT. The ICR Technology Agreement in the
form set forth in SCHEDULE 6.06B.
C. OCR TECHNOLOGY AGREEMENT. The OCR Technology Agreement in the
form set forth in SCHEDULE 6.06C.
D. SECURITY AGREEMENT. A security agreement with respect to the
Note and Buyer's obligations set forth in Paragraphs 1.04C and 1.05B in the form
set forth in SCHEDULE 1.04B(2).
E. RESELLER AGREEMENT. A reseller agreement in the form set forth
in SCHEDULE 6.06D with respect to Seller's Microimager 70 and document scanners.
F. ALLOCATION AGREEMENT. A document setting forth the allocation of
the Purchase Price as provided in Paragraph 1.06.
7.05 PURCHASE PRICE. Buyer shall have made the payment and deliveries
contemplated by Paragraph 1.04.
ARTICLE VIII
CONTINGENT FINANCIAL MATTERS
8.01 TAX STATUS AND EFFECT. It is understood and agreed that neither
Seller nor Buyer has or have made any representations to each other as to the
tax status or tax effect of the transactions contemplated by this Agreement, and
each of the Parties hereto is therefore separately taking counsel as to such
matters and each is assuming, subject only
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to the express and specific provisions of this Agreement, the tax, if any,
which may be incurred by reason of the carrying out of the terms and
provisions hereof.
8.02 SALES OR USE TAX. In the event that any sales or use tax shall be due
to any state or local governmental authority by reason of the sale of the
Assets, such tax shall be borne by Buyer.
8.03 BROKERAGE COMMISSIONS. Seller and Buyer represent and warrant, each
to the other, that this Agreement, and the transactions contemplated hereunder,
were brought about without the assistance of any broker, person or firm, and
that no one is entitled to a brokerage or finders commission, fee or payment of
any kind relative to this Agreement or the transactions contemplated hereby.
8.04 RISK OF LOSS. All risk of loss to the Assets shall remain in Seller
until the transfer of the Assets on the Closing Date.
8.05 EXPENSES OF PARTIES. All expenses involved in the preparation,
authorization and consummation of this Agreement, including, without limitation,
all fees and expenses of agents, representatives, counsel and accountants, shall
be borne solely by the Party which shall have incurred the same, and the other
Party shall have no liability with respect thereto.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and covenants contained in this Agreement shall survive the execution
and delivery of this Agreement and the transfer of the Assets for a period of
one (1) year from the Closing Date, unless by their express terms a different
period of time is specified; provided, however, that Buyer's representations,
warranties and covenants set forth in Paragraphs 3.01, 3.02 and 3.03 shall
survive to the extent of the applicable legal statutes of limitations.
9.02 BENEFIT AND ASSIGNABILITY. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of Seller and
Buyer.
9.03 ASSIGNMENT. This Agreement may not be assigned, in whole or in part,
by either party hereto without the prior written consent of the other party.
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9.04 ENTIRE AGREEMENT. This Agreement, the schedules hereto and the
Disclosure Agreement between the parties dated as of November 1, 1996 and
amended as of May 1, 1997 (the "Disclosure Agreement") contain the entire
understanding between the parties hereto and supersedes any prior understanding,
memoranda or other written or oral agreements between them respecting the within
subject matter including, without limitation any prior proposals and
correspondence. There are no representations, agreements, arrangements or
understandings, oral or written, between the parties relating to the subject
matter of this Agreement which are not fully expressed herein.
9.05 MODIFICATIONS; WAIVER. No modification or waiver of this Agreement or
any part hereof shall be effective unless in writing and signed by the party
sought to be charged therewith. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature. No course of dealing between
the parties will be deemed effective to modify, amend or discharge any part of
this Agreement or the rights or obligations of either party hereunder.
9.06 NO THIRD PARTY BENEFICIARY. None of the provisions of this Agreement
shall be for the benefit of, or enforceable by, any person or entity not a
party hereto.
9.07 PARTIAL INVALIDITY. If any provision of this Agreement shall be held
invalid or unenforceable by competent authority, such provision shall be
construed so as to be limited or reduced to be enforceable to the maximum extent
compatible with the law as it shall then appear. The total invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision were omitted.
9.08 NOTICES. Any notice or other communication required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly
given (i) upon hand delivery, or (ii) on the third day following delivery to the
U.S. Postal Service as certified or registered mail, return receipt requested
and postage prepaid, or (iii) on the first day following delivery to a
nationally recognized United States overnight courier service, fee prepaid,
return receipt or other confirmation of delivery requested, or (iv) when
telecopied or sent by facsimile transmission if an additional notice is also
given under (i), (ii) or (iii) above within three days thereafter. Any such
notice or communication shall be delivered or directed to a party at its address
set forth below or at such other address as may be
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designated by such party in a notice given to the other party in accordance
with the provisions of this paragraph.
Notice to Buyer shall be sent to: Adaptive Solutions, Inc.
1400 NW Compton Drive
Suite 340
Beaverton, Oregon 97006
Attn: Daniel J. Meub, CEO
with a copy to: Byron Milstead, Esq.
Ater, Wynne, Hewitt, Dodson & Skerritt
222 SW Columbia, Suite 1800
Portland, Oregon 97201
Notice to Seller shall be sent to: Manager Business Development
Business Imaging Systems
Eastman Kodak Company
901 Elmgrove Road
Rochester, New York 14653-5424
with a copy to: Eastman Kodak Company
343 State Street
Rochester, New York 14650-0218
Attn: General Counsel
9.09 GOVERNING LAW. This Agreement and all rights of the parties with
respect to the transactions contemplated herein shall be governed by, and
construed in accordance with, the laws of the State of New York pertaining to
contracts made and to be wholly performed within such state, without taking into
account conflicts of laws principles.
9.10 JURISDICTION AND VENUE. In the event that any legal proceedings are
commenced in any court with respect to any matter arising under this Agreement,
the parties specifically consent and agree that:
(i) the courts of the State of New York and/or the United States
Federal Courts located in the State of New York shall have exclusive
jurisdiction over each of the parties hereto and over the subject matter of any
such proceedings; and
(ii) the venue of any such action shall be within New York State.
9.11 HEADINGS. The headings contained in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
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9.12 FAIR MEANING. This Agreement shall be construed according to its fair
meaning, the language used shall be deemed the language chosen by the parties to
express their mutual intent, and no presumption or rule of strict construction
will be applied against any party.
9.13 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, and all of said counterparts together
shall constitute but one and the same instrument.
9.14 PUBLICITY AND CONFIDENTIALITY. No publicity shall be released by
either Party prior to the execution date of this Agreement concerning this
Agreement and the transactions contemplated hereunder, except with the consent
of the other Party, which consent may not be unreasonably withheld or delayed.
If for any reason the transactions provided for hereunder shall not be
consummated or this Agreement is terminated, each Party (a) shall return all
confidential information which it received from any other Party in the course of
investigating and negotiating the transactions provided for hereunder and (b)
shall not disclose to any third party any such confidential information;
PROVIDED, however, that this provision shall be applicable only with respect to
information which (a) was clearly identified as confidential by the furnishing
Party when originally submitted and (b) was not then known or subsequently
independently developed by the receiving party, nor subsequently rightfully
obtained from a third party, nor then or subsequently publicly known or
available. In the event that any terms, conditions or definitions set forth in
this Paragraph 9.13 shall conflict with those of the Disclosure Agreement and
the terms of the Disclosure Agreement shall control.
9.15 TERMINATION.
A. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any time prior to
the Closing Date by the mutual consent of Buyer and Seller.
B. TERMINATION BY EITHER BUYER OR SELLER. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned by action
of either Buyer or Seller if the transaction contemplated hereby shall not have
been consummated by November 28, 1997 for any reason other than (i) the failure
of the party seeking to terminate this Agreement to perform its obligations
hereunder, or (ii) because of a breach
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of such party's representations and warranties hereunder, or (iii) to permit
Seller to exercise its 30 day right to cure pursuant to PARAGRAPH 4.03.
C. TERMINATION BY BUYER. This Agreement may be terminated at any
time prior to the Closing Date by Buyer, if Seller shall have breached any of
its material representations or warranties contained herein and shall not have
cured such breach within thirty (30) days after receipt of a written demand by
Buyer.
D. TERMINATION BY SELLER. This Agreement may be terminated any time
prior to the Closing Date by Seller if Buyer shall have breached any of its
material representations or warranties contained herein, and shall not have
cured such breach within thirty (30) days after receipt of a written demand by
Seller.
E. EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement pursuant to this Paragraph 9.14 no party (nor any
of its directors or officers) shall have any liability or further obligation to
the other party to this Agreement, except that (i) nothing herein will relieve
any party from liability for any breach of any provision of this Agreement that,
pursuant to its terms, survives such termination, and (ii) the provisions of
Paragraphs 8.05 and 9.13 shall survive such termination.
9.16 INTELLECTUAL PROPERTY, TRADEMARKS AND TRADE NAMES.
A. By virtue of this Agreement Seller is not conveying to Buyer, the
term "Assets" does not include, and Buyer shall have no right, title or interest
in, or the right to use, any of Seller's Intellectual Property, except as
specifically set forth herein. As used in this Paragraph, the term
"Intellectual Property" shall mean all patents, trademarks, service marks, trade
names, registrations or any of the foregoing, patent applications, trademark and
service mark applications, specifications, processes and data and process data,
knowhow, blueprints, drawings, designs, patterns, copyrights, technology,
franchises and formulae, information and documents, software, proprietary
rights, trade secrets and licenses to use any of the foregoing.
B. In sales literature and other printed material that references
OCR Equipment acquired by Buyer from Seller, Buyer may use Seller's product
name(s), including the trademarks KODAK and IMAGELINK, in text to identify such
OCR Equipment. Buyer may not use any stylization or special fonts for these
trademarks, and Buyer may not use the Kodak corporate symbol or any elements of
Seller's trade dress, including but not
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limited to Seller's trade dress yellow color. Buyer shall submit to Seller
for its advance written approval any printed material that features
exclusively Kodak products.
C. For two (2) years after Closing, Buyer may use up the inventory
of OCR Equipment sales literature produced by Seller that exists as of Closing,
provided that Buyer add to each piece of literature (by sticker or otherwise)
Buyer's name and address and a statement that the OCR Equipment is now sold by
Buyer.
D. Buyer shall not remove, alter, or destroy any Seller nameplates,
logos or dataplates on OCR Equipment acquired by Buyer from Seller, enclosures
or cabinets or proprietary marking or legends placed by Seller upon or within
such OCR Equipment, supporting documentation or other materials that are the
subject of this Agreement. Buyer may not add Buyer markings (including, but not
limited to, trade marks or logos) without prior written approval of Seller.
E. Except as expressly provided in this paragraph, Buyer
acknowledges that no right, interest, ownership or privilege of use in or to any
of Seller's trade dress, trade name, trademark, service mark, logo,
identification or the name "EASTMAN KODAK COMPANY," "KODAK" or "IMAGELINK" is
accorded to Buyer by reason of this Agreement. Buyer agrees not to use or
attempt to register any trade dress, trade name, trademark or service mark
confusingly similar to any trade dress, trade name, trademark, service mark,
logo or identification of Seller.
9.17 SPECIFIC PERFORMANCE. The parties hereto declare that it is
impossible to measure in money the damages which will accrue to a party hereto,
its successors, assigns or legal or personal representatives, by reason of the
failure to perform any of the obligations under this Agreement. Therefore, if
any party, its successors, assigns or legal or personal representatives, shall
institute any action or proceeding, to enforce the provisions of this Agreement,
any person or entity against whom such action or proceeding is brought hereby
waives the claim or defense that money damages are an adequate remedy and that
therefore the party instituting the action or proceeding is not entitled to
specific performance of the terms of this Agreement.
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IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as
of the date previously set forth.
BUYER:
ADAPTIVE SOLUTIONS, INC.
By: /s/ [ILLEGIBLE SIGNATURE]
----------------------------
SELLER:
EASTMAN KODAK COMPANY
By:
----------------------------
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ASSET PURCHASE AGREEMENT
SCHEDULES INDEX
1.01A OCR Inventory
1.01B Ancillary Equipment
1.01C OCR Software
1.01E(1) OCR Equipment
1.01E(2) OCR Maintenance Agreement
1.01F OCR Designs, Drawings, Blueprints, etc.
1.02(1) Assigned Contracts
1.02(2) Nonassigned Contracts
1.03 Assumed Liabilities
1.04B(1) Promissory Note Form
1.04B(2) Security Agreement
2.04 Title Exceptions to Assets
2.05 OCR Customers
3.06 Stock Rights
4.01B(1) Transition Plan
4.01B(2) Consulting Agreement
4.01H Employee Reimbursements
4.02D Employees
4.02F Securities Opinion
6.06B ICR Technology Agreement
6.06C OCR Technology Agreement
6.06D Reseller Agreement
7.03C Buyer's Attorney's Opinion
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
ARTICLE PAGE
I Purchase and Sale
II Representations and Warranties of Seller
III Representations and Warranties of Buyer
IV Further Covenants
V Closing
VI Conditions of Closing by Buyer
VII Conditions of Closing by Seller
VIII Contingent Financial Matters
IX Miscellaneous Provisions
Schedules
