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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 8, 1998
SI DIAMOND TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
Texas
(State or Other Jurisdiction of Incorporation)
1-11602 76-0273345
(Commission File No.) (I.R.S. Employer Identification No.)
12100 Technology Boulevard
Austin, Texas 78727
(Address of Principal Executive Offices)
(512) 331-6200
(Registrant's Telephone Number, Including Area Code)
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Item 2. Acquisition or Disposition of Assets
On May 8, 1998, SI Diamond Technology, Inc. (the "Company") consummated
an agreement to sell the majority of the operating assets of Diamond Tech One,
Inc. ("DTO") to Focus Interconnect Technology Corporation ("Focus") for
approximately $2.2 million, of which $1.8 million was payable at closing and the
remaining $400,000 was deposited in escrow until the resolution of certain
related litigation. Focus has assumed the building lease on the DTO facility.
The Company retained all cash, accounts receivable, certain equipment identified
as excess, certain intangibles, and all liabilities. In connection with this
transaction, all loans secured by the assets of DTO were paid from the proceeds
of the sale and the liens were released by the note holders.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
(10) Asset Purchase Agreement, dated May 8, 1998, between Focus
Interconnect Technology Corporation, Diamond Tech One, Inc., SI
Diamond Technology, Inc. and Field Emission Picture Element
Technology, Inc.
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, thereunto duly authorized.
SI DIAMOND TECHNOLOGY, INC.
By /s/ Douglas P. Baker
--------------------------------------
Douglas P. Baker
Vice President and
Chief Financial Officer
Dated: May 29, 1998
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EXHIBIT 10
ASSET PURCHASE AND SALE AGREEMENT
BETWEEN
FOCUS INTERCONNECT TECHNOLOGY CORPORATION
AS BUYER
AND
DIAMOND TECH ONE, INC.
AS SELLER
MAY 8, 1998
THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement") is made as of the
8th day of May, 1998 by and between FOCUS INTERCONNECT TECHNOLOGY CORPORATION, a
Delaware corporation, or its assigns ("Buyer"), and DIAMOND TECH ONE, INC., a
Delaware corporation ("Seller"), SI DIAMOND TECHNOLOGY, INC., a Texas
corporation ("Parent") and FIELD EMISSION PICTURE ELEMENT TECHNOLOGY, INC., a
Delaware corporation ("FEPET").
R E C I T A L S:
A. Seller is engaged in the business of semi-conductor thin film and
wafer bumping services with its sole business office and primary operations
located in the metropolitan area of Austin, Texas under the trade name "Diamond
Tech One".
B. Seller is the wholly owned subsidiary of Parent.
C. Seller, Parent and various other Affiliates of each operate
businesses out of the same offices in Austin, Texas and the assets, equipment,
and inventory utilized in the business of Seller may be owned by Seller, Parent
and/or one or more of their Affiliates.
D. Buyer desires to purchase, and Seller and Parent desire to sell, all
the assets and rights of the Business (as hereinafter defined), save and except
only the Excluded Assets (as here inafter defined) and assuming only specified
liabilities, if any, on the terms and subject to the conditions contained in
this Agreement, whether owned by Seller, Parent or any of their Affiliates.
In consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Seller, Parent and Buyer,
intending to be legally bound, agree as follows:
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ARTICLE I
DEFINITIONS
For purposes of this Agreement, certain terms used in this Agreement
and not otherwise defined herein shall have the meanings designated below:
"AFFILIATE" means (a) with respect to any person whose is a natural
person, (i) each entity that such person Controls, and (ii) each member of such
person's immediate family; and (b) with respect to any person that is an entity,
(i) each entity that such person Controls, (ii) each person that Controls such
person, (iii) each entity that is under common Control with such person.
"AGREEMENT" means all or any part of this Agreement, including
schedules, exhibits, and appendices, as any of the foregoing may be amended,
modified or supplemented in writing from time to time.
"APPROVED CLAIM" means a claim by Buyer against the Holdback Amount
that constitutes an approved claim pursuant to Section 9.2.B.
"ASSUMED LIABILITIES" means those liabilities of Seller to be assumed
by Buyer, only as specifically set forth and described in Section 2.2.C.
"BILL OF SALE" means a bill of sale in the form attached hereto as
Exhibit "A".
"BUSINESS" means the semi-conductor thin film and wafer bumping
services business conducted by or for the benefit of Seller from the business
offices located at 12100-A Technology Boulevard in Austin, Texas under the trade
name "Diamond Tech One".
"BUYER INDEMNIFICATION EVENT" means a matter or event for which Buyer
shall have a right of offset against the Holdback Amount pursuant to Section
9.2.A., without any limitation to the Holdback Amount, or a claim for
indemnification pursuant to Article XI.
"CLAIM" means, for purposes of Section 9.2 and Article XI, any and all
claims, demands, causes of action, suits, proceedings, administrative
proceedings and actions, losses, penalties, judgments, decrees, debts, damages,
liabilities, court costs, attorneys' fees, expert fees, and any other cost or
expenses.
"CLOSING" means the occasion upon which all of the transactions
contemplated by this Agreement are carried out by the delivery of documents,
payment of funds and other actions con templated herein, as described in Article
VIII.
"CLOSING DATE" shall be May 8, 1998, or such other date as the parties
may agree.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
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"CONTROL" means the possession, directly or indirectly, through one or
more intermediaries, of the following: (a) in the case of a corporation, more
than 50% of the outstanding voting securities thereof; (b) in the case of a
limited liability company, partnership, limited partnership or venture, the
right to more than 50% of the distributions therefrom (including liquidating
distributions); (c) in the case of a trust or estate, more than 50% of the
beneficial interest therein; (d) in the case of any other entity, more than 50%
of the economic or beneficial interest therein; or (e) in the case of any
entity, the power or authority, through ownership of voting securities, by
contract or otherwise, to direct the management activities or policies of the
entity.
"DAMAGES" means all demands, claims, actions, or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including,
without limitation, interest, penalties, attorneys' fees, expert fees, and costs
and expenses resulting from, related to, or arising out of a particular act or
omission by one party hereunder.
"EARNEST MONEY" is defined in Section 2.5.
"EFFECTIVE DATE" means May 6, 1998.
"EFFECTIVE TIME" means 5:00 p.m. in Austin, Texas on the Closing Date.
"ESCROW AGENT" means Heritage Title Company of Austin, Inc., or other
escrow agent mutually agreed upon by Buyer and Seller.
"ENCUMBRANCES" means any and all encumbrances, mortgages, security
interests, liens, Taxes, claims, liabilities, options, commitments, charges,
restrictions or other obligations of whatsoever kind, quantity or nature,
whether accrued, absolute, contingent or otherwise, which affect title to or use
of the Subject Assets.
"EXCLUDED ASSETS" means (i) Seller's cash, cash equivalents and
accounts receivable for completed work on purchaser orders, (ii) insurance
policies, (iv) employee benefit plans, and (v) those items listed in Schedule
1.B.
"GAAP" means generally accepted accounting principals and procedures
applied on a basis consistent with prior periods.
"HAZARDOUS MATERIALS" means materials defined as "hazardous
substances," "hazardous wastes," or "solid waste" in (i) CERCLA, (ii) ACRA, or
(iii) any similar or comparable federal, state, or local environmental statute,
regulation, ordinance, or decree.
"HOLDBACK AMOUNT" means the payment delivered to Escrow Agent pursuant
to Section 2.2.B.(ii), subject to adjustment under Section 2.2.D. and reduced by
the aggregate amount of Approved Claims and Permitted Indemnification Claims.
"INITIAL PAYMENT" means the payment delivered to Seller on the Closing
Date pursuant to Section 2.2.A.
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"INTERESTS" means all intangible property owned by either Seller or
Parent and used in the Business including, without limitation, rights,
privileges, benefits and interests under all contracts, agreements, consents,
licenses and files and correspondence related thereto; customer and supplier
lists; computer software used or useful in the Business; operating permits and
certificates of occupancy; all licenses, permits and authorizations issued by
any governmental authority relating to the Business or the Subject Assets;
agreements, leases and arrangements with respect to intangible or tangible
property or interests therein; all security deposits; prepaid expenses and
deposits; loans and advances to employees; confidentiality and non-competition
agreements with employees and others, whether oral or written; consents;
agreements with suppliers and customers; claims under insurance policies and
other third party claims relating to or arising out of the Business; accounts
receivable for work in progress; the right to all telephone numbers, e-mail
addresses, and Internet websites; Seller's rights, if any, in and to the trade
name "Diamond Tech One"; all financial and operating records related to the
Business; and any sales agent or sales affiliate agreements used in connection
with the Business.
"KEY EMPLOYEES" means those individuals listed in Schedule 1.C.
"KNOWLEDGE" or the phrases "to the knowledge of " or "to the best of
Seller's or Parent's knowledge", when used in reference to Seller and Parent,
means matters actually known by any manager, officer, director or shareholder
after reasonable investigation of Seller's and Parent's records and reasonable
inquiry of the Seller Group's employees.
"LEASED PREMISES" means the building located at 12100 Technology Blvd.,
Austin, Texas 78759 (the "Building"), which is currently leased by Seller
pursuant to a lease dated on or about April 21, 1995 (the "Lease") in which Hill
Partners, L.P. (the "Landlord") is currently the landlord.
"PERMITS" means all permits, licenses, accreditations, certifications
(including certification under ISO 9000) approvals and authorizations that are
required by any governmental authority or issued by any regulatory or certifying
body to allow Seller to conduct the business, or enhance such business, as now
conducted and as contemplated in the future.
"RCRA" means the Resource Conservation and Recovery Act, (42 U.S.C.
ss.ss. 6901-6987, and any amendments thereto).
"SUBJECT ASSETS" means all of the assets and properties of whatever
kind, character and description, and whether tangible, intangible, personal or
mixed, and wherever located, whether owned by Seller, Parent or any of their
Affiliates (collectively the "Seller Group") used in the Business, except only
the Excluded Assets. The Subject Assets, which assets constitute all the assets,
property and equipment owned by Seller Group and regularly used in the Business
(other than the Excluded Assets), including, without limitation, the Tangible
Assets, the Interests and all of the items listed on Schedule 1.A.
"TANGIBLE ASSETS" means all tangible personal property owned by Seller
and used in the Business (other than the Excluded Assets), such as inventory,
clean room furniture, fixtures and equipment; chip bumping and processing
equipment and peripherals; machinery, including all raw
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materials, work in progress, finished products, goods in transit, office and
manufacturing supplies and packaging and shipping materials; computers, computer
peripherals and maintenance manuals; word processors; scanners; typewriters and
other business machines; the telephone system and local area network used by the
Business; automobiles, trucks and other vehicles; file cabinets, storage units
and shelving; furniture, furnishings, fixtures and office equipment; and
supplies.
"TAXES" means any and all taxes, sums or amounts assessed or
assessable, levied and due by any federal, state or county or other local
governmental authority or agency, including without limitation, real and
personal property taxes, income taxes, whether measured by gross or net income
or profit, franchise, excise, sales and use taxes, employee withholding, social
security, unemployment taxes and any other taxes required to be paid by Seller,
including interest and penalties in respect thereof whether disputed or not, and
whether accrued, contingent, due, absolute, deferred, unknown or other,
together with any and all penalties, interests and additions to all such taxes,
sums or amounts.
ARTICLE II
SALE AND PURCHASE OF SUBJECT ASSETS
Section 2.1 SALE AND TRANSFER.
A. The Sale. Subject to the terms and conditions set forth in this
Agreement, and in reliance upon the representations, warranties and covenants
contained hereby on the Closing Date, the Seller Group shall sell, convey,
transfer, assign and deliver to Buyer, and Buyer shall purchase and receive from
the Seller Group, free and clear of all Encumbrances, indefeasible title and
full possession of all of the Subject Assets.
B. Transfer of Title. On the Closing Date, the Seller, Parent and any
applicable Affiliate shall execute and deliver to Buyer or its assigns, a bill
of sale substantially in the form attached hereto as Exhibit "A" and such other
deeds, endorsements, assignments and other good and sufficient instruments of
sale, transfer, delivery and conveyance, in form and substance reasonably
satisfactory to Buyer and its counsel, and as shall be requested by Buyer to
fully vest in Buyer or its assigns, all rights, titles and interests in and to
the Subject Assets in conformity with the representations, warranties and
covenants of Seller and Parent.
C. Further Actions and Assurances Regarding Transfer. From time to time
after the Closing Date, the Seller Group, at the request of Buyer, but without
any further consideration, shall execute and deliver such other and further
instruments of sale, assignment, transfer and conveyance, and take such other
and further actions as Buyer reasonably may request in order to fully vest in
Buyer or its assigns and put Buyer or its assigns in possession of the Subject
Assets and to transfer to Buyer or its assigns all contracts and rights included
in the Subject Assets.
Section 2.2 PURCHASE PRICE: LIMITED ASSUMPTION OF CERTAIN OBLIGATIONS.
A. Purchase Price. In full consideration for the purchase by Buyer of
the Subject Assets, and the agreements of the Seller Group under this Agreement
(the "Purchase Price"), the purchase
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price to be paid by Buyer shall be Two Million Two Hundred Twenty-Two Thousand
and No/100 Dollars ($2,222,000.00), subject to adjustment as provided in this
Agreement.
B. Payment of Purchase Price. The Purchase Price shall be payable to
Seller in two installments by wire transfer of immediately available United
States funds on the Closing Date to such account as Seller shall designate in
writing not less than two business days prior to the Closing Date.
(i) The first installment of the Purchase Price to be paid
and delivered pursuant to Section 8.3 on the Closing Date, shall consist of the
Earnest Money pursuant to Section 2.5 and an additional One Million Seven
Hundred Thousand and No/100 Dollars ($1,700,000.00) for a total payment equal to
One Million Eight Hundred Thousand and No/100 Dollars ($1,800,000.00) adjusted
for any adjustments described in Section 2.2.D. and 2.5.
(ii) The second installment of the Purchase Price to be paid
on the Closing Date to the Escrow Agent pursuant to Section 8.4 shall be equal
to Four Hundred Thousand and No/100 Dollars ($400,000.00), adjusted for any
adjustments described in Section 2.2.D. and offsets for Approved Claims pursuant
to Section 9.2 and Buyer Indemnification Events in Article IX. The Holdback
Amount shall be held by Escrow Agent subject to offsets and claims pursuant to
Section 9.2, Article IX and the Escrow Agreement with the then net Holdback
Amount distributable as follows:
1. If the Alpine Suit (as defined below) is settled after Closing
(but before 120 days after Closing) $200,000.00 out of the
Holdback Amount will be released upon delivery of settlement
documents to Buyer reflecting a dismissal of the Alpine Suit
with prejudice.
2. The balance of the Holdback Amount not released pursuant to
Item 2 above, shall be held until the 120th day after Closing
at which time (but subject to Section 2.2.B.(ii)(B) and other
provisions of this Agreement) the then net Holdback Amount
will be released to Seller.
3. Provided, however, if the Alpine Suit is not settled as
required under Section 2.2.B.(ii)(1) above, before the 120th
day after closing, $100,000.00 out of the then net Holdback
Amount shall be available for release on the 120th day after
Closing with the balance of the Holdback Amount continued to
be held after the 120th day after Closing and until the Alpine
Suit is so settled (not to exceed one year, except for pending
claims, and subject only to claims, Damages and indemnities
arising from pending claims or from or related to the Alpine
Suit).
C. Limited Assumption of Contracts and Obligations. Any other term or
provision contained in this Agreement to the contrary notwithstanding, Buyer
shall assume no obligations or liabilities of Seller other than as specifically
provided in this Section 2.2.C.; and, such assumption shall be limited to the
obligations and liabilities accruing subsequent to the Closing Date. Any other
term or provision contained in this Agreement notwithstanding, Buyer shall only
assume and
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perform the obligations of Seller arising or accruing after the Effective Time
in respect of Seller's contracts, agreements and arrangements listed in Schedule
2.2.C., if any, which Seller has entered in the ordinary course of business.
Except as expressly set forth in this Section 2.2.C., Buyer will not
assume nor be obligated to perform any liabilities of any nature, whether known,
unknown, absolute, accrued, contingent, inchoate, or otherwise, relating to the
Subject Assets, Business operations, property or assets of Seller or the Seller
Group prior to or after the Closing Date, including, but not limited to, federal
and state income tax and sales tax obligations. Buyer agrees to assume only the
liabilities specifically set forth on Schedule 2.2.C. ("Assumed Liabilities").
Buyer shall not assume and shall not be deemed to assume any liability or
obligation of Seller or the Seller Group not specifically set forth on Schedule
2.2.C. Liabilities and obligations which shall be excluded from the Assumed
Liabilities and which Buyer shall not assume include, without limitation, (a)
any liability or obligation for Taxes, accrued salaries, worker's compensation,
medical or sick pay, (b) worker's vacation days or sick days, (c) obligations
under any contracts with employees or consultants or customers, (d) pension or
profit sharing liabilities or severance liabilities or obligations, or (e) any
liability or obligation arising out of or resulting from any breach of contract
or other agreement, or from any violation of any federal, state, or local law,
regulation or ordinance.
D. Purchase Price Adjustments.
(i) Except as specifically provided herein, Seller shall be
responsible for and pay when due all costs and expenses of operating the
Business properly and customarily accrued or accruable in accordance with
generally accepted accounting principles ("GAAP") prior to the Effective Time;
and Buyer shall be responsible for and pay where due all costs and expenses of
operating the Business accrued or accruable commencing at the Effective Time and
thereafter.
(ii) With respect to ongoing expenses the billing period for
which extends across the Effective Time, Buyer and Seller shall make Effective
Time adjustments to the Purchase Price so that Seller bears the costs of
operating the Business properly accruable under GAAP in respect of the period
prior to the Effective Time and Buyer bears the cost thereof properly accruable
under GAAP in respect of the period commencing at the Effective Time and
thereafter.
(iii) Adjustment to the Purchase Price shall be made for all
Approved Claims and indemnification obligations of any of the Seller Group to
Buyer offset against the Holdback Amount or otherwise due to Buyer under this
Agreement.
Section 2.3 PURCHASE PRICE ALLOCATION. The Purchase Price shall be allocated
among the Subject Assets as set forth on Schedule 2.3, but in any event such
allocation shall be consistent with ss. 1060 of the Code, and the parties shall
report the transactions contemplated hereby to all governmental agencies in a
manner consistent with such allocation for tax purposes, including, without
limitation, Internal Revenue Service Form 8594.
Section 2.4 POST-CLOSING ADJUSTMENT DATE. Buyer and Seller shall make all
proration adjustments and payments arising under Sections 2.2.D., to the extent
known or then subject to calculation, on
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the Closing Date. On the date of payment of the second installment of the Pur
chase Price, Buyer and Seller, both acting reasonably, shall make any additional
net adjustment by payment of one to the other to effect a final adjustment in
the Purchase Price. If any adjustments are at that date not determined, and to
the extent not provided in this Agreement, Buyer and Seller, acting reasonably,
shall agree in a writing as to the date and method of settlement of such
undetermined amounts.
Section 2.5 EARNEST MONEY. In order to secure Buyer's performance of this
Agreement, Buyer shall, within ten (10) business days after the Effective Date
of this Agreement, deposit One Hundred Twenty-Two Thousand and No/100 Dollars
($122,000.00) by wire transfer of funds to Heritage Title Company of Austin,
Inc. ("Escrow Agent") at its offices at 98 San Jacinto Blvd., Suite 400, Austin,
Texas, 78701, Attention: Nancy Grasshoff. All amounts deposited at the Title
Company and all interest accrued thereon pursuant to the terms of this section
is referred to herein collectively as the "Earnest Money". The Earnest Money
shall be deposited and administered pursuant to an Escrow Agreement executed
and delivered contemporaneously with this Agreement by and between Seller, Buyer
and Escrow Agent. The Escrow Agent shall deposit the Earnest Money in an
interest bearing fully insured account. If the transaction contemplated hereby
is con summated in accordance with the terms and provisions hereof, the Earnest
Money shall be allocated and applied as a credit to the Purchase Price payable
under Section 2.2.B.(i) at Closing, or, at the sole discretion of Buyer,
refunded to Buyer. If the transaction is not so consummated, the Earnest Money
shall be held and delivered by the Escrow Agent as hereinafter provided.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER GROUP
The Seller and Parent, jointly and severally, represent and warrant to Buyer as
follows:
Section 3.1 ORGANIZATION AND GOOD STANDING.
A. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own, operate, sell and lease its properties and
to carry on its business as presently conducted. Seller has all requisite
corporate power and authority to execute and deliver, and perform its
obligations under, this Agreement. Seller is not required by the nature or
location of the Business or the Subject Assets to be qualified to do business as
a foreign corporation in any jurisdiction where failure to so qualify would have
a material adverse impact on the Business or the Subject Assets.
B. Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, and has all requisite corporate
power and authority to own, operate, sell and lease its properties and to carry
on its business as presently conducted. Seller has all requisite corporate power
and authority to execute and deliver, and perform its obligations under, this
Agreement. Seller is not required by the nature or location of the Business or
the Subject Assets to be qualified to do business as a foreign corporation in
any jurisdiction where failure to so qualify would have a material adverse
impact on the Business or the Subject Assets.
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C. FEPET is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own, operate, sell and lease its properties and
to carry on its business as presently conducted. Seller has all requisite
corporate power and authority to execute and deliver, and perform its
obligations under, this Agreement. Seller is not required by the nature or
location of the Business or the Subject Assets to be qualified to do business as
a foreign corporation in any jurisdiction where failure to so qualify would have
a material adverse impact on the Business or the Subject Assets.
Section 3.2 AUTHORIZATION. The execution and delivery of this Agreement and
performance by Seller and the Seller Group, of their respective obligations
hereunder, and all transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action. This Agreement has been, and the
other agreements and documents required to be delivered by Seller, Parent and
the Seller Group, in accordance with the provisions hereof (the "Seller's
Documents") will be, duly executed and delivered on behalf of Seller, Parent,
and the Seller Group, as applicable, by duly authorized officers of each; and
this Agreement constitutes, and the Seller's Documents when executed and
delivered will constitute, the valid and binding obligations of the Seller
Group, enforceable in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization
or similar laws from time to time in effect affecting creditors' rights
generally and by legal and equitable limitations on the avail ability of
specific remedies.
Section 3.3 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by Seller of this Agreement and the Seller's Documents, nor the
consummation by Seller of the transactions contemplated hereby and thereby,
will, with or without the giving of notice or passage of time, or both, be
contrary to or violate, breach, or constitute a default under, or permit the
termination or acceleration of maturity of, or result in the imposition of any
lien, claim or encumbrance upon the Subject Assets or any property or asset of
Seller pursuant to any provision of, any note, bond, indenture, mortgage, deed
of trust, evidence of indebtedness or lease agreement, other agreement or
instrument (except those requiring the consent of the parties thereto other than
Seller as provided in Section 3.4) or any judgment, order, injunction or decree
by which Seller, or any of the Seller Group, is bound, to which it is a party,
or to which the assets of Seller, or any of the Seller Group, are subject and
which will continue in force after the Closing; nor is the effective ness or
enforceability of this Agreement or such other documents adversely affected by
any pro vision of the corporate charter or by-laws of Seller, or any of the
Seller Group.
Section 3.4 NO GOVERNMENTAL OR OTHER AUTHORIZATION REQUIRED. No authorization or
approval of, or filing with, any governmental agency, authority or other body or
any other third persons will be required in connection with the Seller Group's
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby other than (i) as set forth in Schedule 3.4, and (ii) the
consents of the directors and stockholders of Seller and Parent (which have
previously been obtained).
Section 3.5 TITLE; JUDICIAL ORDERS: SUFFICIENCY. Seller has, or at Closing will
have, good and indefeasible title to all the Subject Assets, free and clear of
all Encumbrances except as set forth on Schedule 3.5, which Schedule identifies
leases for real and personal property including vehicles and
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equipment as well as Encumbrances. All Encumbrances shall be satisfied and
discharged at or before Closing. Seller is not a party to, nor are the Subject
Assets subject to, any judgment, judicial order, writ, injunction or decree that
materially adversely affects the Subject Assets or the use thereof by Seller.
The Subject Assets (together with the Excluded Assets) include all assets
regularly used by Seller or Parent in the operation of the Business.
Section 3.6 CONTRACTS AND OTHER INTERESTS. Solely with respect to the Business
and the Subject Assets, all contracts and agreements are in full force and
effect, valid and enforceable in accordance with their respective terms against
Seller and, to Seller's knowledge, against the other parties thereto; and there
are no existing defaults of Seller or, to Seller's knowledge, the other contract
party, or events of default that, with the giving of notice or lapse of time, or
both, would constitute defaults of Seller or, to Seller's knowledge, the other
contract party under any such contracts, nor are material amendments pending
with respect to any such contracts. Seller has delivered to Buyer a copy of its
written contract, or detailed written description of its arrangements if not
written, with each and every customer on Schedule 3.35. Seller has no oral
agreements with customers which require Seller to provide services or products
at no charge or at rates significantly below the average rates for such services
or products set forth in Seller's written customer contracts. Neither the Seller
nor Parent is a party or subject to any of the following: (i) any contracts,
commitments or agreements, the consummation or performance of which would,
either singly or in the aggregate, have a material adverse effect on the
properties and business being purchased by Buyer hereunder, (ii) any contract,
agreement, understanding or arrangement restricting the Seller from carrying on
its business anywhere in the world, (iii) any instrument or arrangement
evidencing or related to indebtedness which many affect such properties or
business, except indebtedness which shall be paid and satisfied on or before the
Closing hereunder and trade accounts payable, or (iv) any other contract or
agreement not in the ordinary course of business, which could have a material
adverse impact on such properties or Business.
Section 3.7 TAXES. Except as specifically set forth on Schedule 3.7, Seller has
properly completed and filed all federal, state and local income tax returns,
and Seller has properly completed and filed all excise or franchise tax returns,
real estate and personal property tax returns, sales and use tax returns and
other tax returns (including returns in respect of withholding and unemployment
tax), required to be filed by it and has timely paid all taxes shown as owing by
it pursuant to such returns, including any interest and penalties thereon,
except taxes which have not yet accrued or otherwise become due and delinquent
for which adequate provision has been made.
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Section 3.8 LITIGATION, CLAIMS, DEFAULTS.
A. Except as set forth in Schedule 3.8, neither Seller nor any of the
Seller Group has been served with any currently effective summons or complaint
and there is no action or suit, equitable or legal, to which Seller, or any of
the Seller Group, is a party, nor any administrative, arbitration or other
proceeding pending or, to Seller's knowledge, threatened against Seller, or any
of the Seller Group, in respect of the Subject Assets or the Business.
B. Except as set forth on Schedule 3.8, during the past twelve (12)
months Seller has not received any written assertions from customers of the
Business to the effect that services performed or products delivered by Seller
are defective, improper or otherwise non-conforming to the customer's
requirements or Seller's obligations, or that such customers have been or are
being billed inaccurately.
C. Neither Seller nor any of the Seller Group is in default with
respect to any currently effective judgment order, writ, injunction, decree,
demand or assessment issued by any court or of any federal, state, municipal or
other governmental agency, board, commission, bureau, instrumentality or
department and applicable to Seller, or any of the Seller Group. Neither Seller
nor any of the Seller Group is charged, or to Seller's or Parent's knowledge
threatened with, or under investigation with respect to, any violation of any
provision of any federal, state, municipal or other law or administrative rule
or regulation with respect to the Subject Assets or the Business.
Section 3.9 COMPLIANCE WITH LAWS. Seller and Parent have complied, and through
the Closing will continue to comply, in all material respects with federal,
state and local laws, rules and regulations applicable to the Business and the
Subject Assets. Seller possesses such licenses, certificates, authorities and
permits issued by the appropriate local, state or federal regulatory agencies or
bodies as are necessary to conduct the Business in all respects, all of which
are listed on Schedule 3.9; and Seller has not received any oral or written
notice of proceedings or investigations relating to the enforcement, revocation
or modification of any such license, certificate, authority or permit.
Section 3.10 CERTAIN ENVIRONMENTAL MATTERS. Seller, Parent and the Seller Group
are all operating and have operated in the Leased Premises in compliance with
all applicable local, state and federal environmental laws, regulations and
ordinances, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss.ss. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901 et
seq., the Clean Water Act, 33 U.S.C. ss.ss. 1251 et seq., and the environmental
laws and regulations of the State of Texas, Travis County and the City of Austin
(and any of their respective agencies and divisions) as each such statute,
regulation, ordinance, or guideline has been amended from time to time
("Environmental Laws and Regulations"). Seller and Parent have properly
completed and timely filed all periodic reports required under the Environmental
Laws and Regulations. Except as listed in Schedule 3.10.B, none of the Seller
Group has received any oral or written notice of violation of or investigation
or proceeding under any of the Environmental Laws and Regulations or any license
of permit issued thereunder. Except for the substances in the maximum quantities
itemized and listed on Schedule 3.10, Seller has not knowingly utilized,
accepted for storage, or stored, any hazardous substance or hazardous material
in or around the Leased Premises except for de minimis
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amounts of items such as cleaning supplies used in the ordinary course of
business and except for amounts not regulated by Environmental Laws and
Regulations. None of the Seller Group has ever knowingly caused the release from
the Leased Premises of an amount of any hazardous substance or hazardous
material into the environment which release would constitute a violation of any
Environmental Laws and Regulations. For purposes of this paragraph, "hazardous
substance", "release" and "environment" shall have the same meanings as such
terms are defined by Section 101 of CERCLA, 42 U.S.C. ss. 9601, and "hazardous
material" shall have the same meaning as such term is defined by Environmental
Laws and Regulations. Seller does not own, lease, rent or otherwise utilize any
underground storage tanks in connection with the Business, and, there are no
waste tanks, containers, cylinders, drums or cans buried, stored or deposited in
or at the Leased Premises. The Leased Premises do not contain (i) any asbestos,
(ii) any polychlorinated biphenyl (PCB) substances or (iii) any waste petroleum
products. Seller has delivered to Buyer copies of all environmental surveys in
Seller's possession related to the Leased Premises.
Section 3.11 NO INCONSISTENT AGREEMENTS. Neither Seller nor Parent has entered
into any written or oral letter of intent, preliminary agreement or other
agreement which has not terminated or expired, which would preclude or prevent
Seller and Parent from performing all of their obligations pursuant to this
Agreement.
Section 3.12 FINANCIAL STATEMENTS. Seller has previously delivered to Buyer
Seller's annual income and expense statement and balance sheet for the Business
for the year ended December 31, 1997 and the internally prepared income
statement for the three months ended March 31, 1998 (the "Financial
Statements"). The Financial Statements are true, correct and complete in all
material respects for the periods covered and fairly present the results of
operation of the Business for the periods covered, except as disclosed in
Schedule 3.12. The Financial Statements for the year ended December 31, 1997
were prepared pursuant to GAAP, except as disclosed in Schedule 3.12. The
Financial Statements for the three months ended March 31, 1998, were prepared on
a basis consistent with the Financial Statements for the year ended December 31,
1997, except for accruals normally performed at year-end, and other customary
year-end adjustments in accordance with GAAP.
Section 3.13 ERISA PLANS. Schedule 3.13 lists the Employee Pension Benefit Plans
or Employee Welfare Benefit Plans, as each term is defined in the Employee
Retirement Income Security Act of 1974, maintained by Seller for the employees
of the Business.
Section 3.14 CONDITION OF SUBJECT ASSETS. Except as set forth in Schedule 3.14,
all the material tangible Subject Assets are at present, and will be as of the
Closing Date, in good maintenance and operating condition, normal wear and tear
excepted, and Seller has not received written notice of any violation of the
Occupational Safety and Health Act, or rules and regulations issued thereunder,
with respect thereto, or with respect to any operation of the Business.
Section 3.15 ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 3.15,
since January 1, 1998, Seller has not (i) transferred or sold any of the Subject
Assets or entered into any material transaction or incurred any material
liability or obligation which affects such Subject Assets, other than in the
ordinary course of business; (ii) suffered any adverse change or event in the
Business, or in the operations or financial condition, or become aware of any
event which may result in any
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such adverse change; (iii) suffered any destruction, damage or loss relating to
the Subject Assets, whether or not covered by insurance; (iv) introduced any new
method of management, operation or accounting for the Business which would have
a material adverse effect on any of the properties or business being sold to
Buyer hereunder; (v) offered or extended to any customer, contractor or supplier
more favorable prices, discounts or other allowances than were offered or
extended regularly by Seller based on past practice; (vi) received any notice,
or has reason to believe, that any supplier, contractor or customer of the
Business has taken or contemplates any steps which could disrupt the business
relationship of Seller with such supplier, contractor or customer or could
result in the diminution in the value of the Business as a going concern; (vii)
received any notice of termination of any contracts; (viii) other than changes
made in the ordinary course o f business, made any change in the rates of
compensation, commission, bonus or other direct or indirect remuneration
payable, or paid or agreed to pay, conditionally or otherwise, any bonus, extra
compensation, pension or severance or vacation pay, to any of the Seller's
employees or contractors; (ix) made any purchase or sale commitments for
services, materials, or other products in excess of the normal, ordinary and
usual requirements of Seller's Business or at any price in significantly
different than the then market price or upon terms and conditions more onerous
to Seller than those usual and customary in the industry, or made any change in
the Seller's selling, pricing, advertising or personnel practices inconsistent
with its prior practices; or (x) entered into any agreement or made any
commitments to take any of the types of action described in (i) through (ix)
above.
Section 3.16 NO MATERIAL UNDISCLOSED LIABILITIES. Except as described in this
Agreement or reflected in the Financial Statements there are no liabilities or
obligations of Seller related to the operation of the Business or the Subject
Assets, whether accrued, absolute or contingent which individually or in the
aggregate are material to the Business or the Subject Assets, other than
liabilities and obligations that have been incurred in the ordinary course of
business consistent with past practice since January 1, 1998.
Section 3.17 PERSONNEL INFORMATION. Schedule 3.17 lists the name of all full and
part time employees of Seller (or leased employees utilized by Seller) who
perform services for the Business and sets forth a brief job description or
title and compensation for each such person. Schedule 3.17 also sets forth a
list of all written and oral employments, non-disclosure agreements, and
noncompetition agreements with Seller's and the Seller's Group's employees
employed in the Leased Premises or in the Business.
Section 3.18 PATENTS, TRADEMARKS, ETC. Except for the trade name "Diamond Tech
One" which is an unregistered trade name used by Seller, neither Seller nor
Parent has trade marks, service marks, tradenames, copyrights, computer programs
or programs rights, patents, licenses or other similar intangible property
rights and interests which is used in connection with the Business. Except as
set forth in Schedule 3.18, the continued operation of the Business by Buyer and
the continued use of the Subject Assets of the Business by Buyer, if continued
as operated and utilized in the past by Seller, shall not require any patent,
license or trademark held or owned by the Seller Group or any third party and
will not require Buyer to make any payment of any royalties, license fees or any
other monies for intellectual property rights.
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Section 3.19 LABOR RELATIONS. During the past three years there has not been,
and there is not now, any strike, labor dispute, slow down, stoppage, or other
material interference with or impairment by labor of the Business pending or, to
the knowledge of Seller, threatened or, con templated against or directly
affecting the Business. Seller's employees of the Business are not represented
by any labor or trade union, nor, to the knowledge of Seller, has there been any
attempt to organize Seller's employees of the Business during the three-year
period prior to the date hereof.
Section 3.20 INSURANCE. There is in force comprehensive general liability and
casualty insurance for the Subject Assets and the Business which. is appropriate
and adequate coverage for such assets and operations.
Section 3.21 TRADE SECRETS AND CUSTOMER LISTS. Except for the items set forth in
Schedule 3.21 Seller has received no written claims challenging its right to
use, any trade secrets, customer lists, intellectual property or operating
methods required for or incident to the operation of the Business. Seller is not
using or in any way making use of any intellectual property rights, confidential
information or trade secrets of any third party in the operation of the
Business, including without limitation, a former employer of any present or past
employee of Seller.
Section 3.22 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth on
Schedule 3.22, Seller is not an affiliate of any customer, competitor or
supplier of the Business, or any organization which has a material contract or
arrangement with the Business.
Section 3.23 RECORDS SERVICES AND STORAGE. Solely with respect to the Business
or the Subject Assets:
A. All items received, processed and/or stored by Seller on behalf of
each of Seller's customers are held by Seller and properly stored and secured
and can be located and accounted for readily through use of Seller's inventory
system except for items properly processed and returned to the customer.
B. All items received by Seller from customers have been logged into
Seller's inventory system.
C. Seller's invoices to customers are accurate in respect of services
provided except for matters which are immaterial as to each customer and in the
aggregate.
Section 3.24 BUSINESS IN ORDINARY COURSE. Except for deficiencies in inventory
described in Schedule 3.25, from January 1, 1998 until the date hereof, the
Business has been con ducted substantially in the ordinary course in accordance
with past practice. Without limiting the generality of the foregoing, Seller has
not in connection with the Business, since January 1, 1998:
(i) except for the secured debt described in Schedule 3.15
which debt is to be released at Closing mortgaged or pledged any of the Subject
Assets;
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(ii) sold, assigned, transferred or waived rights with
respect to any material part of the Subject Assets (except in the ordinary
course of business and as set forth in Schedule 3.15);
(iii) entered into or adopted any employee benefit plan or any
employment or severance agreement, or increased in any manner the compensation
or fringe benefits of its officers or employees (except in the ordinary course
of business and consistent with past practice or pursuant to pre-existing
agreements or as required by law);
(iv) changed its collections or other cash management
practices in any material respect;
(v) changed its billing practices;
(vi) changed its building machinery, equipment or vehicle
maintenance practices;
(vii) agreed to take any of the foregoing actions.
Section 3.25 NO MATERIAL ADVERSE CHANGE. Except as set forth in Schedule 3.25.A,
there has been no material adverse change in the Subject Assets (including,
without limitation, loss of or damage to a material amount or part of the
Subject Assets) or the results of operation of the Business (including operating
cash flow), between January 1, 1998 and the date hereof. Schedule 3.25.B
represents a true and accurate aged accounts payable report as of April 30,
1998.
Section 3.26 LEASES. Seller has delivered to Buyer true, correct and complete
copies of each real and personal property lease (except as included in the
Excluded Assets) to which Seller is a party and all modifications, amendments
and notices relating thereto (collectively "Leases"), which Leases are listed in
Schedule 5.26.
Section 3.27 INVESTMENTS. Seller does not own, directly or indirectly, any
capital stock or other equity, ownership or proprietary interest in any
corporation, partnership, limited liability company, association, trust, joint
venture, or other entity.
Section 3.28 RESTRICTIVE DOCUMENTS. Except for such liens against the Subject
Assets set forth on Schedule 3.5 as are required to be released at Closing,
neither Seller nor Parent are subject to or a party to, any charter, bylaw,
mortgage, lien, lease, license, permit, agreement, con tract, instrument, law,
rule, ordinance, regulation, order, judgment or decree, which materially and
adversely affects the Business or the operations of Seller or the condition of
the Subject Assets, which would prevent consummation by Seller or Parent of the
transactions contemplated by this Agreement.
Section 3.29 CONSENTS. Except as set forth in Schedule 3.29, no consent or
approval of any person is necessary for the consummation by Seller, or the
Seller Group, of the transactions contemplated hereby, including, without
limitation, (i) consents and approval from parties to loans, contracts, purchase
orders, leases, or other agreements, and (ii) consents and approvals from
governmental agencies, whether national, state, municipal, or of any other
political subdivision or agency thereof, and no party to any such agreement has
a right to terminate any such agreement as a result of the transactions
contemplated hereby.
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Section 3.30 BOOKS AND RECORDS. The articles of incorporation, bylaws, minute
books, and all other records of Seller and Parent, as previously made available
to Buyer and Buyer's representatives, contain (i) a true, correct and complete
copy of Seller's and Parent's charter documents, and (ii) accurate summaries of
all meetings of corporate actions (including actions taken by written consent)
taken by the shareholders and boards of directors of Seller and Parent. Seller
does not have any of its records, systems, controls, data or information which
are material to the operation of the Business recorded, stored, maintained,
operated or otherwise, wholly or partially dependent upon or held by any means
(including any electronic, mechanical or photo graphic process whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership or direct control of Seller and
deliverable in good useable form to Buyer under this Agreement.
Section 3.31 ABSENCE OF CERTAIN PAYMENTS. Neither Seller nor Parent, nor any
director, officer, agent, employee or any other person acting on behalf of
either, has used any corporate or other funds for unlawful or actionable
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or to any
other person or entity, or established or maintained any unlawful or unrecorded
funds, or to any other person or entity, or established or maintained any
unlawful or unrecorded funds that might (i) subject Seller to any damage or
penalty in any civil, criminal, or governmental litigation or proceedings; (ii)
if not given in the past, might have had an adverse effect on the Business or
the Subject Assets; or (iii) if not continued in the future might adversely
affect the Business or the Subject Assets or the prospects for either. With
respect to the Business and operations of Seller, neither Seller nor any
director, officer, agent, employee, or any other person acting on behalf of
Seller, has accepted or received any unlawful contributions, payments, gifts or
expenditures. With respect to the Business and operations of Seller, neither
Seller nor any director, officer, agent, employee, or any other person acting on
behalf of Seller, has accepted or received any unlawful contributions, payments,
gifts or expenditures.
Section 3.32 PRODUCT OR SERVICE LIABILITY. Except as set forth in Schedule 3.32
there is no action, suit, proceeding, inquiry, or investigation by or before any
court or governmental or any other regulatory or administrative agency or
commission pending, or to the best of Seller's and Parent's knowledge,
threatened against or involving Seller, relating to any services performed by
Seller and alleged to have been defective, improperly rendered, or negligently
performed, or any products, software or hardware delivered or sold by Seller
which are alleged to be defective or not in compliance with contractual
requirements.
Section 3.33 THIRD PARTY APPROVAL. The work completed by Seller prior to the
Closing Date with respect to Seller's contracts and agreements to provide
products or services (which will require third party approvals or acceptance but
which has not yet received the required customer or third party approvals or
acceptance) will meet all requirements and specifications of all such contracts
and agreements as modified through the Closing Date in all material respects.
Section 3.34 SECURITY MATTERS. Seller is in compliance with all confidentiality,
security and related requirements on its contracts requiring same.
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Section 3.35 OUTSTANDING PURCHASE ORDERS. Schedule 3.35 sets forth all of
Seller's outstanding unfulfilled purchase orders as of the Closing Date.
Section 3.36 DISCLOSURE. None of this Agreement, any financial statements, any
schedule, exhibit, agreement or certificate attached hereto or delivered in
accordance with the terms hereof, or any document or statement in writing which
has been supplied by or on behalf of Seller or any of the Seller Group in
connection with the transactions contemplated by this Agreement contains any
untrue statement or material fact, or omits any statement of a material fact
necessary to make the statements contained herein or thereon not misleading.
There is no fact known to Seller or any of the Seller Group which materially and
adversely affect the Business, the Subject Assets or the financial condition of
Seller or its properties or assets which is not been set forth in this
Agreement, any financial statement, any schedule, exhibit, agreement or
certificate attached hereto or delivered in accordance with the terms hereof, or
in any written document or statement in writing which has been supplied by or on
behalf of Seller, or the Seller Group, in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows.
Section 4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and at Closing will be qualified to do business in the State of Texas.
Buyer possesses all requisite corporate power and authority to own, operate and
lease its properties and carry on its business, and to execute and deliver, and
perform its obligations under, this Agreement.
Section 4.2 AUTHORIZATION. The execution and delivery of this Agreement and
performance by Buyer of its obligations hereunder, and all transactions
contemplated hereby, have been duly and validly authorized by all necessary
corporate action. This Agreement has been, and the other agreements and
documents required to be delivered by Buyer in accordance with the provisions
hereof (the "Buyer's Documents") will be, duly executed and delivered on behalf
of Buyer by duly authorized officers of Buyer; and this Agreement constitutes,
and Buyer's Documents when executed and delivered will constitute, the valid and
binding obligations of Buyer, enforce able in accordance with their respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws from time to time in effect affecting
creditor's rights generally and by legal and equitable limitations on the
availability of specific remedies.
Section 4.3 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the execution and
delivery by Buyer of this Agreement and the Buyer's Documents, nor the
consummation by Buyer of the transactions contemplated hereby and thereby, will,
with or without the giving of notice or passage of time, or both, be contrary to
or violate, breach, or constitute a default under, or permit the termination or
acceleration of maturity of, or result in the imposition of any lien, claim or
encumbrance on any property or asset of Buyer pursuant to any provision of, any
note, bond, indenture, mortgage, deed of trust, evidence of indebtedness or
lease agreement, other agreement or instrument or any
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judgment, order, injunction or decree by which Buyer is bound, to which Buyer is
a party, or to which the assets of Buyer are subject; nor is the effectiveness
or enforceability of this Agreement or such other documents adversely affected
by any provision of the certificate of incorporation or bylaws of Buyer.
Section 4.4 LITIGATION. There is no action, suit or proceeding pending or, to
the knowledge of Buyer, threatened against Buyer which might interfere with its
ability to consummate the transactions contemplated hereunder.
Section 4.5 NO GOVERNMENTAL OR OTHER AUTHORIZATION REQUIRED. Except as otherwise
set forth herein, no authorization or approval of, or filing with, any
governmental agency, authority or other body or any other third persons will be
required in connection with Buyer's execution and delivery of this Agreement and
Buyer's Documents or its consummation of the transactions contemplated hereby
and thereby.
ARTICLE V
PRE-CLOSING AGREEMENTS AND ADDITIONAL COVENANTS
Section 5.1 ACCESS TO INFORMATION AND FACILITIES. Seller and Parent shall afford
Buyer and its representatives full access to all facilities, properties, books,
accounts, records, contracts and documents of or relating to the Business in
Seller's or the Seller Group's possession or control, subject to reasonable
requirements that Buyer not interfere with the operations and activity of the
Business.
Section 5.2 CONFIDENTIALITY.
A. From the date hereof, until the Closing Date, Seller, the Seller
Group, and Buyer each agrees that it will not use or disclose to others, or
permit the use or disclosure of, any and all non-public information furnished by
one to the other (including confidential information transmitted by each to its
representatives, accountants, counsel, advisors or bankers) in the course of
negotiations relating to this Agreement and the business and financial reviews
and investigations referred to in this Agreement, except to their respective
officers, directors, employees and representatives who need to know such
information (and who will each be subject to confidentiality as provided herein)
in connection with this Agreement or except to the extent that any such
information may become generally available to the public other than through the
actions of the parties or any other person under a duty of confidentiality. Such
obligation of confidentiality extends to the additional financial statements
described in Section 5.3.
B. Notwithstanding the foregoing, (i) Buyer's parent, Advanpack
Solutions PTE LTD ("APS") and Parent, each shall have the right to include
disclosure regarding the transactions contemplated by this Agreement in any
registration statement, filing or other report which APS, Buyer or any of their
respective affiliates files with the securities exchange commission, securities
board or association of securities dealers, including in each case any financial
and other information concerning Seller and the transactions contemplated
hereby, required in connection therewith; (ii) disclosure of such information
may be made to the extent required by judicial or regulatory process,
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and reviews by financial institutions which are lenders to either party; and
(iii) such information may be used to the extent necessary as evidence in or in
connection with any pending or threatened litigation relating to this Agreement
or any transaction contemplated hereby.
C. In the event that the sale contemplated by this Agreement is not
consummated for any reason, each party agrees to return to the other party all
materials containing nonpublic information provided by the other immediately,
with or without request. Such materials include copies of, and excerpts from,
notes pertaining to any and all documents and other information, whether in
writing or in machine-readable form, related to Seller or the Business.
D. Each party agrees that the confidential information of the other
party is unique and that its release in contravention of the terms of this
Agreement may not be compensable in monetary damages and that the non-breaching
party shall be entitled to seek appropriate injunctive relief therefor. In
connection therewith the parties waive the claim or defense that an adequate
remedy exists at law or that a bond is necessary.
E. After the Closing, the parties may make public disclosure of the
transactions con templated hereby as and to the extent permitted by Section 9.1.
Section 5.3 ADDITIONAL FINANCIAL STATEMENTS. In the event that APS, Buyer or any
of their respective affiliates is required by any law (including securities
laws), statute or regulation to file or disclose financial information
(including filings related to the registration of securities of APS, Buyer or
any of their respective affiliates) related to the Business which is in addition
to information prepared by Seller and previously delivered to Buyer, Seller
shall make available to Buyer any relevant information related to the Business
or the Subject Assets not previously delivered to Buyer and otherwise cooperate
with Buyer, (at Buyer's expense for items and cooperation requested by Buyer),
in preparing such information. If requested by Buyer, Seller shall use
commercially reasonable efforts to obtain Seller's auditors' consent to Buyer's
use of financial statements which they have audited, or shall consent to
Seller's auditors' preparing required audits requested by Buyer (at Buyer's sole
expense); and Buyer shall have the right to file and disclose such information
as required by any such law, statute or regulation, including, with out
limitation, as contemplated by Section 5.2(B) hereof.
Section 5.4 [INTENTIONALLY OMITTED].
Section 5.5 CONTINUED EFFORTS. Seller and Parent shall use commercially
reasonable efforts to (a) cause to be fulfilled and satisfied all of the
conditions to the Closing which are the responsibility of Seller or Parent; (b)
cause to be performed all of the matters required upon the Closing which are the
responsibility of Seller or Parent; and (c) take such steps and do such acts as
may be necessary to make all of its warranties and representations true and
correct as of the Closing Date with the same effect as if the same had been
made, and this Agreement had been dated, as of the Closing Date.
Section 5.6 NON-DISCLOSURE OF PROPRIETARY DATA AND INFORMATION. None of the
Seller Group or any of their respective directors, employees, agents, or
representatives shall make use of,
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communicate, divulge or otherwise disclose, or otherwise permit or enable the
use, communication, divulgence or disclosure of, at any time after the Closing,
directly or indirectly, any trade secrets or other proprietary data (including,
but not limited to, the customer list, cost, and manner of operations,
intellectual property, and any and all records or financial information
(concerning Seller or the Business). The Seller Group shall take such
precautions as shall be necessary to keep secret and confidential all trade
secrets and proprietary data and information relating to Seller and the Business
and to prevent the unauthorized disclosure of such trade secrets and proprietary
data and information by any of them and by any of their respective
representatives, contractors or agents. The Seller Group's obligations under
this Section shall survive the Closing of the transactions contemplated by this
Agreement and continue thereafter. The Seller Group recognizes and agrees that a
breach by any of them of any of the covenants set forth in this Section could
cause irreparable harm to Buyer, that Buyer's remedies of law under such breach
would be inadequate, and that, accordingly, in the event of such breach in
addition to any other rights and remedies which are available to Buyer, a
restricting order or injunction may be issued against any or all of the Seller
Group.
Section 5.7 PERSONNEL MATTERS. Buyer may, but shall not be obligated to, offer
employment to any current or former employee of Seller in connection with the
acquisition of the Subject Assets, and such acquisition shall not grant any
employee of Seller a right of continued employment with Buyer. Seller shall use
its best efforts to assist Buyer in hiring all persons to whom Buyer elects to
offer employment. The Seller Group shall not take any action, directly or
indirectly, to prevent or discourage any such employee from being employed by
Buyer as of the Closing Date and shall not solicit, invite, or induce or entice
any such employee to remain in the employ of the Seller or otherwise attempt to
retain the services of any such employee, except with the prior written consent
of Buyer. The Seller Group does hereby waive, for the benefit of Buyer and its
Affiliates, any and all restrictions in any oral or written agreement with any
of the employees of the Seller Group which Buyer hires, relating to (a)
non-competition with any of the Seller Group subsequent to the termination of
employment therewith; or (b) the maintenance of confidentiality of any
information for the benefit of the Seller Group, to the extent such information
is related to the Subject Assets, the Business or Seller, and Buyer's
unrestricted enjoyment of the benefits thereof and goodwill associated
therewith. For a period of two years after the Closing Date, the Seller Group
shall not solicit, or offer to employ or employ any person who accepts
employment or is employed with Buyer after the Closing Date, provided, however,
the Seller Group may hire and employ any such employee who voluntarily resigns
from Buyer without any solicitation, incentive or encouragement from any of the
Seller Group. Buyer and Seller shall mutually agree on the timing and content of
a program of communications to employees, contractors, and customers of the
Business in respect of the transactions contemplated hereby which communications
may occur prior to Closing; provided that Seller may elect to inform its
employees of the pending transaction.
Section 5.8 ASSIGNMENT OF CONTRACTS AND RIGHTS. After the Closing Date, and
promptly upon the request of Buyer the Seller Group and Buyer shall cooperate to
assign and transfer the benefits of all contracts which are described in the
Subject Assets to Buyer. The Seller Group will do all things reasonably
necessary to prepare all documents and certifications required for novation or
assignment of such contracts in a timely and accurate manner. If any such
contracts or rights cannot be assigned after a good faith effort by the parties
hereto, the Seller Group shall hold such rights in trust for
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benefit of Buyer and shall take all reasonable action as is necessary to
subcontract the work under such contract to Buyer, if Buyer so elects. Further,
the Seller Group shall cooperate and assign or license under a 6-month
non-exclusive license, to Buyer, without additional consideration, royalty or
license fees any and all rights of the Seller Group in the patents and licenses
necessary to continue the Business as operated by Seller except for those items
reflected in Schedule 3.18.
Section 5.9 CONDUCT OF SELLER'S BUSINESS PRIOR TO CLOSING. Except with the
express consent in writing of Buyer, and except as may be required to effect the
transactions contemplated by this Agreement, Seller and Parent covenant and
agree that, between the date of this Agreement and the Effective Time, Seller
and Parent will conduct the Business in the ordinary course and they will,
except as otherwise provided in this Agreement (i) use commercially reasonable
efforts to preserve the organization of Seller intact and to preserve the
goodwill of suppliers, contractors, customers, employees and others having
business relations with the Business; (ii) maintain the machinery, vehicles,
equipment and trade fixtures, including the Subject Assets, being sold to Buyer
hereunder in good condition and repair, normal wear and tear excepted as has
been customary for the Business; (iii) keep in force at no less than present
limits all existing or comparable policies of insurance insuring any of the
Subject Assets and all of Seller's liability insurance for the Business; (iv)
not enter into any contract, commitment, arrangement or transaction of the type
described in the last sentence of Section 3.6 hereof or suffer, permit or incur
any of the transactions or events described in Section 3.15 hereof to the extent
such events or transactions are within the control of Seller; and (v) promptly
advise Buyer in writing of any matters arising or discovered after the date of
this Agreement which, if existing or known at the date hereof, would be required
to be set forth or described in this Agreement or
Section 5.10 CONTINUING RELATIONSHIP WITH CONTRACTORS AND SUPPLIERS. The Seller
Group shall use their best efforts to cause entities with whom Seller has had a
purchasing, contracting or continuing supply arrangement to continue that
relationship with Buyer after the Closing.
Section 5.11 DELIVERY OF BOOKS AND RECORDS. At Closing, the Seller Group shall
deliver to Buyer all original contracts, books and records which relate to the
Subject Assets and the Business.
Section 5.12 STATUS OF SELLER. Seller is not currently in the process of
liquidating itself and has no current plan to liquidate or distribute all or
substantially all of its assets. If Buyer adopts a plan to liquidate and
distribute all or substantially all of its assets at any time during the one
hundred eighty (180) day period commencing on the Closing Date, Seller shall
provide Buyer with notice at least thirty (30) days prior to its implementation
of a liquidation or distribution of all or substantially all of its assets.
Section 5.13 TRANSFER TAXES. The Seller Group shall be responsible for and shall
pay all Taxes levied or to be levied with respect to the sale of the Subject
Assets and the Business and the other transactions contemplated by this
Agreement, and shall pay its portion, pro-rated as of the Closing Date, of state
and local real and personal property taxes of the Subject Assets being sold
hereunder. Buyer shall not be responsible for any business, occupation,
withholding, or similar tax, or for any Taxes of any kind related to the sale of
the Subject Assets or to any period before the Closing Date.
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Section 5.14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and agreements of the parties contained in this Agreement are
expressly incorporated herein by reference and shall (i) survive the Closing
hereunder and any investigation made by or on behalf of any party hereto, (ii)
begin to be made as of the date hereof and again as of the Closing Date, and
(iii) continue in full force after the Closing Date. Notwithstanding the
immediately preceding sentence, the representations and warranties contained in
Article III and Article IV shall survive Closing only for a period of two (2)
years after which no suit or claim may be brought based upon a breach thereof,
provided, however, such two (2) year limitation period shall not apply to (1)
any failure, breach, default or Damages relating to or arising from
representations or warranties cause by or involving fraud, deceit, malfeasance,
or intentional breach or (2) Taxes.
Section 5.15 STATEMENTS AS TO REPRESENTATIONS. All statements contained herein,
in the schedules, and any exhibit attached hereto and in any agreement,
certificate, or instrument executed or delivered pursuant to this Agreement
shall be deemed representation and warranties within the meaning of Section
5.14.
Section 5.16 INVENTORY REQUIRED AT CLOSING. At Closing, Seller shall have
inventory of the type and in the quantities listed on Schedule 5.16 attached to
this Agreement. All such inventory shall be in good and usable condition and
quality.
Section 5.17 COVENANT NOT TO COMPETE. Seller and Parent agree that for a period
of five (5) years after the Closing Date, none of the Seller Group shall
directly or indirectly compete with Buyer or the business in any way in the
Business. Further, none of the Seller Group shall, without the express written
consent of Buyer, acquire or own any interest in any business which is
competition with or in any way detrimental to the Business as operated by Buyer,
or have any interest in any such competitive or detrimental business whether as
a partner, stockholder, agent, consultant, or contractor. This non-competition
restriction shall apply to a geographical area consisting of the following:
United States of America (the "Restricted Area").
Section 5.18 CONVERSION OF PURCHASE ORDERS. Upon request of Buyer Seller and
Parent shall negotiate with customers of the Business listed on Schedule 3.35
and exert their best efforts to cause the outstanding and unfilled purchase
orders to be transferred and re-issued into the name of Buyer upon terms and
conditions acceptable to Buyer.
Section 5.19 REMOVAL OF EXCLUDED ASSETS. All parties acknowledge that Buyer may
utilize the Excluded Assets marked "F" in the last column on Schedule 1.B. upon
its initial operation of the business and that any such Excluded Assets shall
not be removed without the prior written approval of Buyer, at Buyer's sole
discretion for a period of 180 days after the Closing. If removal of the
Excluded Assets is approved in writing by Buyer (which approval is not required
after 180 days after the Closing), Seller may, upon reasonable advance written
notice to Buyer, have the Excluded Assets professionally removed at Seller's
sole risk and expense and at times convenient to Buyer. Further, upon written
request by Buyer to Seller and Parent delivered at any time on or after the
Closing Date, Seller and Parent shall have the obligation to remove any
designated Excluded Assets at the sole expense and risk of Seller and Parent and
on the reasonable time schedule set by Buyer. Any Damage suffered by Buyer or
the Leased Premises due to such removal of equipment shall be
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repaired at Seller's and Parent's expense. Buyer shall have no duty or risk with
respect to any of the Excluded Assets.
Section 5.20 TRANSITION PERIOD. For a period of ninety (90) days after the
Closing Date, Buyer and the Seller Group, without additional consideration, will
upon the request of Buyer make its employees available during normal business
hours and shall exert all reasonable efforts to provide and assist Buyer in the
smooth, efficient transition of the ownership, administration, and operation of
the Business and the Subject Assets, including efforts and assistance with
office policies and practices, filing systems, payroll practices, servicing of
accounts, payments of expenses, introductions and assistance with customers and
suppliers and similar assistance; provided, however, that any reasonable
out-of-pocket expenses incurred in response to a request of Buyer shall be for
the account of Buyer. Any accounts receivable included in the Excluded Assets
received by Buyer subsequent to Closing shall be promptly delivered to Seller,
by hand delivery or regular mail, provided, however, Buyer shall be entitled to
reimbursement with respect to its administration of such receivables. Buyer
shall have no duty or responsibility with respect to such receivable except as
provided in the immediately proceeding sentence. Any accounts receivable
included in the Excluded Assets received by Seller subsequent to Closing shall
be promptly delivered to Buyer, by hand delivery or regular mail, provided,
however, Seller shall be entitled to reimbursement with respect to its
administration of such receivables. Seller shall have no duty or responsibility
with respect to such receivable except as provided in the immediately proceeding
sentence. Buyer will make Greg Bogard and Tammy Sossner available to Seller 50%
of their time for a period of two weeks after the Closing and for 25% of their
time for an additional four weeks after the Closing to aid in the transition of
the Business, all without charge to Seller.
Section 5.21 ALPINE SUIT. The Seller and Parent shall exert best efforts to
obtain and cause the dismissal of the suit filed by Alpine Microsystems, Inc.
against Seller and Parent et al (the "Alpine Suit") with prejudice and obtain a
full and complete release from Alpine benefitting Buyer and APS. The Seller and
Parent shall keep Buyer informed of all actions and developments with respect to
the Alpine Suit and shall deliver copies of all filings, and orders related to,
or arising from, the Alpine Suit to Buyer within three (3) business days after
receipt or knowledge of same. The Seller and Parent shall indemnify, defend and
hold Buyer and APS harmless from any and all Damages incurred or threatened
against Buyer or APS which arise or relate in any way to the Alpine Suit.
Section 5.22 SUBCONTRACTING OF BUYER'S SERVICES. Buyer agrees to subcontract its
services to Seller, at Buyer's cost (determined in accordance with GAAP), to
assist Seller to perform necessary services under any warranty claims for gold
bumping and indium bumping services performed for customers by Seller prior to
the Closing, provided, however, that any such requirements shall be performed on
a reasonable "time available" basis. Seller and Parent agree to carry the Group
Health Insurance for the employees hired by Buyer through the end of the current
payment term.
Section 5.23 PAYMENT OF LITIGATION CLAIMS. Other than the Alpine suit, Seller
and Parent shall pay or settle all of the litigation items set forth on Schedule
3.8 on or before the ninetieth day after the Closing Date. Any claim remaining
unpaid or unsettled on such date shall be retained by Escrow Agent, for a period
not to exceed one year, as a credit against the Holdback Amount until such claim
is paid or settled.
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Section 5.24 INDEPENDENT COVENANTS: REMEDIES.
A. Independent Covenants. Each of the covenants and agreements set
forth in this Article Five are separate and independent covenants, each of which
have been separately bargained for and shall be enforceable to the fullest. The
Seller Group hereby acknowledges receipt of the full and adequate consideration
hereunder and agrees and stipulates that the provisions contained in such
sections are reasonable and necessary (i) to protect the Buyer from any unfair
competition, (ii) to protect the Buyer from any party taking advantage of any
relationships, information, technology or know-how, to the detriment of the
Business, and (iii) to allow Buyer to realize the benefit of its bargain under
this Agreement and to protect the Subject Assets and Business acquired by Buyer,
and will not be unduly burdensome to the Seller Group.
B. Remedies. Breach of the covenants contained in this Article by any
of the Seller Group will result in irreparable and continuing damage to the
Buyer and the Business for which the Buyer will have no adequate remedy at law.
The Seller Group hereby agrees and stipulates that the monetary damages which
would be suffered by Buyer in the event of a breach of any provision under this
Article would be difficult to measure and would not be an adequate to the Buyer
for a breach thereof, and for this reason and for other reasons, the Seller
Group hereby agrees that the Buyer shall have the right to seek, without
liability of the Buyer, to the Seller Group specific performance or injunctive
relief (both temporary and permanent) against the Seller Group in the event any
of the Seller Group breaches any of the provisions contained in this Agreement.
In the event such injunctive relief is sought, Buyer shall not be required to
post a bond or bonds in excess of $1,000 in the aggregate. Further, this right
shall be cumulative of all other rights and remedies the Buyer may have. And,
the Buyer's right to seek specific performance or injunctive relief under this
Agreement shall supersede and control over any agreement to mediate or arbitrate
disputes between the Buyer and the Seller Group whether now or hereafter
existing, notwithstanding any language or agreement to the contrary.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE
The obligation of Buyer to purchase the Subject Assets and carry out
the other transactions contemplated hereby are, unless waived in writing by
Buyer, subject to the satisfaction, on the Closing Date, of the following
conditions:
Section 6.1 ACCURACY OF REPRESENTATIONS AND PERFORMANCE OF SELLER. The
representations and warranties of Seller contained in this Agreement shall be
true and correct in all respects at and as of the Closing Date with the same
force and effect as though made on and as of such date; each and all of the
conditions and covenants to be performed or satisfied by Seller hereunder at or
prior to the Closing Date shall have been duly performed or satisfied in all
respects; and Seller shall have furnished Buyer with a certificate to that
effect.
Section 6.2 ABSENCE OF CERTAIN LITIGATION. On the Closing Date, no suit, action
or other proceeding, or injunction or final judgment relating thereto, shall be
pending before any court or
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governmental or regulatory official or agency, in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby (provided
that any such suit, action or other proceeding which would not have a material
effect on the transactions contemplated hereby or which is alleged to be caused
by or due to the fault of Buyer shall not constitute a failure to satisfy this
condition), and no investigation that might result in any such suit, action or
proceeding shall be actually pending.
Section 6.3 [INTENTIONALLY OMITTED.].
Section 6.4 LEASES. Buyer and the Landlord shall have executed a new lease for
the entire Building with extension and expansion options acceptable to Buyer,
which shall have a term of not less than ten (10) years (including Buyer's
unilateral right to extend), and with rent no more than current market rate and
terms no less favorable for Buyer than those in the Lease for the Leased
Premises dated April 21, 1995. Buyer shall have subleased to Seller the space in
the Leased Premises recently used by Seller for office and laboratory purposes
until June 1, 1998 at a rent of $10,558 payable at Closing, and the landlord
shall have consented to such sublease.
Section 6.5 INVENTORY REQUIREMENTS. Seller shall have on hand and deliver to
Buyer at Closing the inventory required and described in Section 5.16 and listed
on Schedule 5.16.
Section 6.6 TRANSFER OF LICENSES, PERMITS AND CERTIFICATIONS. All Permits,
licenses and certifications listed on Schedule 3.9 shall be transferred or
issued by the applicable governmental authorities to Buyer in Buyer's name at or
before Closing. And, all required third party consents, approval and
authorizations necessary or desirable for the transfer or issuance of the
Permits to Buyer, the transfer of the Subject Assets to Buyer, the consummation
of the transactions by this Agreement and Buyer's operation of the Business as
contemplated by Buyer shall be in writing in form acceptable to Buyer and
delivered to Buyer prior to Closing.
Section 6.7 EVIDENCE OF CORPORATE APPROVAL. The Seller Group shall deliver
certified copies of all resolutions of their respective Board of Directors and
stockholders pertaining to the authorization of this Agreement and the
consummation of the transactions contemplated hereby, and a certificate executed
by its secretary or assistant secretary as to the due election, qualification
and incumbency and valid signature of the person or persons authorized to sign
this Agreement or any document, instrument or certificate to be delivered
hereunder.
Section 6.8 ENCUMBRANCES. Seller shall have delivered a UCC Search Report dated
as of a date not more than three (3) days before Closing issued by the Texas
Secretary of State and copies of Form UCC-3 releases completely releasing the
Subject Assets from all liens reflected in such report and on Schedule 3.5.
Seller shall also have delivered to Buyer any other evidence reasonably
satisfactory to Buyer of the satisfaction and release of any Encumbrances
affecting, or security interests or liens encumbering the Subject Assets.
Section 6.9 NO MATERIAL ADVERSE CHANGE. Except as disclosed in a Schedule
attached to this Agreement, there shall have been no material adverse change in
the Subject Assets (including, without limitation, loss of or damage to a
material amount or part of the Subject Assets) or the
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results of operations of the Business (including operating cash flow) between
January 1, 1998 and the Closing Date.
Section 6.10 NO TAX DUE CERTIFICATE. The Comptroller of Public Accounts of Texas
shall have issued a Certificate of No Taxes Due for Seller with respect to all
franchise and sales and use taxes.
Section 6.11 OPINION OF SELLER'S COUNSEL. Seller shall have delivered the
opinion of Seller's counsel, Winstead Sechrest & Minick, P.C., substantially in
the form of Exhibit "B" hereto.
Section 6.12 FURTHER DOCUMENTS. Seller shall have executed and delivered to
Buyer such documents, instruments, agreements, and certificates as may
reasonably be needed to carry out the transactions contemplated by this
Agreement, including such documents, instruments and agreements as Buyer's
general counsel may reasonably request in connection therewith.
Section 6.13 ALPINE SUIT. The Seller and Parent shall have obtained and caused
the dismissal of the Alpine Suit with prejudice and obtain a release from Alpine
benefitting Buyer and APS in form and content reasonably acceptable to Buyer and
APS.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATION OF SELLER
The obligation of Seller to sell, assign, transfer and deliver the Subject
Assets to Buyer hereunder and to carry out the other transactions contemplated
hereby are, unless waived in writing by Seller, subject to the satisfaction at
or prior to the Closing Date of the following conditions:
Section 7.1 ACCURACY OF REPRESENTATIONS AND PERFORMANCE OF CONDITIONS. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date with the
same force and effect as though made on and as of such Date; each and all of the
conditions and covenants to be performed or satisfied by Buyer hereunder at or
prior to the Closing Date shall have been duly performed or satisfied in all
material respects; and Buyer shall have furnished Seller with Buyer's
certificate to that effect.
Section 7.2 APPROVAL. Buyer shall deliver certified copies of resolutions
adopted by Buyer's Board of Directors pertaining to the authorization of this
Agreement and the consummation of the transactions contemplated herein, and a
certificate executed by the secretary or assistant secretary of Buyer as to the
due election, qualification and incumbency and valid signatures of its officers
authorized to sign this Agreement or any document or certificates to be
delivered under it.
Section 7.3 ABSENCE OF CERTAIN LITIGATION. On the Closing Date, no suit, action
or other proceeding, or injunction or final judgment relating thereto other than
the Alpine Suit and the litigation listed on Schedule 3.8, shall be threatened
or pending before any court or governmental or regulatory official or agency, in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
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Section 7.4 LEASE. The Lease shall have been assigned to Buyer and amended and
restated by and between Buyer and Landlord for the Building and a sublease with
Seller as contemplated by Section 6.4.
Section 7.5 FURTHER DOCUMENTS. Buyer shall have executed and delivered to Seller
such documents, instruments, agreements, and certificates as may reasonably be
needed to carry out the transactions contemplated by this Agreement, including
such documents, instruments, agreements as Seller's counsel may reasonably
request in connection therewith.
Section 7.6 BUYER'S COUNSEL OPINION. Buyer's Counsel shall have delivered the
opinion in the form of Exhibit "D".
ARTICLE VIII
THE CLOSING
Section 8.1 CLOSING AND CLOSING PROVISIONS. The Closing shall be effected by
delivery of documents at the office of Armbrust Brown & Davis, L.L.P. ("Closing
Agent"), 100 Congress Avenue, Suite 1300, Austin, Texas 78701-4042, and payment
of the Purchase Price as provided herein or in such other manner and at such
other place as the parties may agree.
Section 8.2 DELIVERIES BY SELLER. At or prior to the Closing, Seller shall
execute and deliver to Buyer all of the items, matters, certificates and other
documents designated as conditions precedent and deliveries precedent to Buyer's
obligation to close under this Agreement and to carry out the transactions
contemplated hereby. Closing documents delivered hereunder, after verification
by Buyer, shall then be held by Closing Agent until the Purchase Price is
received by Seller at Closing pursuant to Section 8.3.
Section 8.3 DELIVERIES BY BUYER. At the Closing Buyer shall deliver the Purchase
Price to Seller at Closing (subject to Section 8.4 controlling the Holdback
Amount), subject to adjustments as permitted by this Agreement, by wire transfer
of funds, or delivery of certified or cashier's check, or other immediately
available funds, on the Closing Date and all the certificates and other
documents designated as conditions precedent and deliveries precedent to
Seller's obligation to close under this Agreement.
Section 8.4 DELIVERIES OF HOLDBACK AMOUNT INTO ESCROW. Buyer shall deliver the
Holdback Amount to Escrow Agent to be administered and distributed pursuant to
the Escrow Agreement executed by Seller and Buyer in the form attached hereto as
Exhibit "C" and consistent with this Agreement.
ARTICLE IX
POST-CLOSING MATTERS
Section 9.1 PUBLIC ANNOUNCEMENT. After the Closing, no party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that the parties may (i) make appropriate
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announcements to customers of the Business, and (ii) make a public announcement
to the effect that the transaction has occurred (without any financial
information), each after consultation with, and approval of, the other party;
and provided further that either party may make any public disclosure it
believes in good faith is required by applicable securities laws and regulations
and any listing or trading agreement concerning its publicly-traded securities.
Section 9.2 BUYER'S CLAIMS AGAINST HOLDBACK AMOUNT.
A. Right of Setoff Against Holdback Amount. Subject to the terms and
conditions of this Section 9.2, the portion of the Holdback Amount to be
delivered to Seller pursuant to Section 2.2.B.(ii) shall be reduced for any
Damages asserted against or imposed upon or incurred by Buyer or any Affiliate
of Buyer, or any of their respective directors, officers, employees, agents, or
representatives (collectively the "Indemnitees," and, each individually, as
"Indemnitee") resulting from or related to or arising out of:
(i) any breach of any representation, warranty or agreement
of Seller or Parent contained in or made pursuant to this Agreement or any
agreement, contract or instrument required to be executed by them pursuant to
this Agreement, or any facts or circumstances constituting a breach; or
(ii) any act or omission of Seller, or any of the Seller
Group, or any of their respective Affiliates, directors, officers, employees,
agents or representatives relating to the Subject Assets or the Business which
occurred, existed, or failed to occur or exist, prior to the Closing (including,
without limitation, such acts or omissions as are described or enumerated in any
schedule or exhibit accompanying this Agreement; or.
(iii) any event, state of facts, circumstances or conditions,
occurring or existing (or not occurring or existing as the result of the absence
of such fact, circumstance, or condition forms a basis for Damages) relating to
the Subject Assets, the Business or activities of Seller or Parent before the
Closing whether or not disclosed on a schedule attached to this Agreement and
whether or not Buyer or any Affiliate of Buyer has any knowledge or reason to
know of such event, state of facts, circumstances or conditions (including,
without limitation, such events, state of facts, circumstances or conditions
described or enumerated in any schedule or exhibit accompanying this Agreement;)
or
(iv) the assertion of a Claim against Buyer or the Subject
Assets or the payment by Buyer or any of its Affiliates, directors, officers,
employees, agents, or representatives of any Claim or liability relating to the
Business, as operated prior to the Closing Date, Seller or Parent, whether known
or unknown, whether accrued, absolute, contingent or otherwise, whether or not
disclosed on a schedule attached to this agreement or in any other oral or
written statement to Buyer, and whether due, or to become due, probable
assertion or not, except only as expressly assumed by Buyer as an Assumed
Liability pursuant to Section 2.2.C. above; or
(v) without limiting the generality of (i) through (iv)
above, (1) any Taxes payable by or on behalf of Seller or Parent for any taxable
period ending on or prior to the Closing
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Date; (2) any deficiencies in any tax payable by or on behalf of Seller or
Parent arising from any audit by any taxing agency or authority with respect to
any period ending on or prior to the Closing Date; (3) any Taxes of or from a
consolidated or combined tax group of which is, or was ever at any time, a
member for which Seller or Parent is jointly or severally liable as a result of
inclusion in such group; (4) any Claim or demand for reimbursement or
indemnification resulting from any transfer by Seller prior to the closing of
any tax benefits or credits to any other person; (5) any tax liabilities arising
out of the transfer of the Subject Assets; and (6) with respect to any Taxes due
for any tax periods beginning before but ending after the Closing Date, a
pro-rata share of such tax.
The matters and events set forth in Subparagraph A.(i) through A.(v) above are
referred to herein as the "Buyer Indemnification Events."
B. Procedure and Event of Claim Setoff. If Buyer asserts a claim for
setoff pursuant to Section 9.2.A. against the Holdback Amount, it promptly shall
give notice to Escrow Agent, Seller and Parent in accordance with the notice
delivery procedure set forth in Section 11.3 hereof (without consideration to
the time requirements therein) setting forth the nature of the claim and the
amount thereof Within twenty (20) days after such notice, Seller (by a written
notice to be signed by Seller and Parent) either shall approve the claim for
indemnification in the amount thereof ("Approved Claim") or shall disapprove the
claim or any amount thereof ("Rejected Claim") or both. If the Seller fails to
approve or disapprove a claim or the amount thereof within the requisite period,
the claim shall be deemed to be an Approved Claim. Buyer shall be entitled to
setoff and instruct the Escrow Agent to deliver to Buyer the amount of any
Approved Claim against the Holdback Amount payable to Seller. Buyer may also
request delivery to Buyer of a Rejected Claim from Escrow Agent. Buyer and
Seller shall resolve any disagreements with respect to any Rejected Claim in
accordance with the dispute resolution procedures set forth in Section 11.5.
Buyer shall be entitled to withhold, and instruct Escrow Agent to withhold, the
stated amount of the Rejected Claim from the Holdback Amount payable to the
Seller pending and until resolution of any such Claim. If, pursuant to the
procedures set forth in Section 11.5, it ultimately is determined that any
further portion of the Holdback Amount relating to such Rejected Claim is then
due to Seller, Buyer promptly shall pay Seller such additional portion of the
Holdback Amount.
ARTICLE X
TERMINATION
Section 10.1 TERMINATION OF AGREEMENT. The parties may terminate this Agreement
as provided below:
(i) Buyer may terminate this Agreement and receive delivery of
the Earnest Money by giving written notice to Seller at any time prior to the
Closing (A) in the event Seller has breached any representation, warranty, or
covenant contained in this Agreement in any material respect, Buyer has notified
Seller of the breach, and the breach has continued without cure for a period of
seven (7) days after the notice of breach or (B) if the Closing shall not have
occurred on or before May 8, 1998, by reason of the failure of any condition
precedent under Article VI hereof (unless the failure results primarily from
Buyer itself breaching any representation, warranty, or covenant contained in
this Agreement); and
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(ii) Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing (A) in the event Buyer has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, Seller has notified Buyer of the breach, and
the breach has continued without cure for a period of seven (7) days after the
notice of breach or (B) if the Closing shall not have occurred on or before May
8, 1998, by reason of the failure of any condition precedent under Article VII
hereof (unless the failure results primarily from Seller itself breaching any
representation, warranty, or covenant contained in this Agreement).
Section 10.2 EFFECT OF TERMINATION. If either party terminates this Agreement
pursuant to Section 10.1, all fights and obligations of the parties hereunder,
other than the confidentiality obligation set forth in Section 5.2, shall
terminate without any liability of any party to any other party (except for any
liability of any party then in breach).
Section 10.3 RISK OF LOSS. Prior to Closing the risk of loss, damage or
destruction with respect to the Subject Assets shall be borne by Seller. If at
the Closing Date the Subject Assets shall have suffered loss, damage or
destruction to an extent which materially affects the value thereof or the
Business, Buyer shall have the right at its election to terminate this
Agreement, or complete the transactions with such adjustment of the Purchase
Price as may be agreed in good faith between Buyer and Seller.
ARTICLE XI
INDEMNIFICATION
Section 11.1 INDEMNIFICATION BY SELLER AND PARENT. In addition to Buyer's right
to deduct the aggregate amount of Damages from the Holdback Amount pursuant to
Section 9.2, Seller and Parent (collectively "Indemnifying Parties," and
individually, an "Indemnifying Party") each jointly and severally hereby shall
indemnify, defend and hold harmless Buyer and any of its Affiliates, and any of
their respective directors, officers, employees, agents or representatives
(collectively, "Indemnitees," and each individually, an "Indemnitee) from and
against all Damages (but only to the extent Buyer has not previously reduced the
Holdback Amount pursuant to Section 9.2 above by the amount of such Damages)
asserted against, imposed upon or incurred by the Indemnitees or any Indemnitee,
resulting from, relating to or arising out of a Buyer Indemnification Event.
Section 11.2 INDEMNIFICATION BY BUYER. Subject to the provisions and conditions
of this Article XI Buyer hereby agrees to indemnify, defend and hold harmless
Seller, and any director, officer, employee, agent or representative of Seller
(collectively, "Indemnitees," and each individually, an "Indemnitee") from and
against all Damages asserted against, imposed upon or incurred by the
Indemnitees or any Indemnitee, resulting from, relating to or arising out of:
A. any breach of any representation, warranty or agreement of Buyer
contained in or made pursuant to this Agreement or any agreement, contract or
instrument required to be executed by Buyer pursuant to this Agreement, or any
facts or circumstances constituting such a breach;
B. any act or omission of Buyer or any of its respective affiliates,
trustees, officers, employees, agents or representatives relating to the
property, business, operations and activities of
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Buyer which occurred, existed or failed to occur or exist subsequent to the
Closing (unless such Damages are subject to setoff or indemnification by Seller
or Parent under Section 9.2;) and
C. any event, state of facts, circumstance or condition occurring or
existing (or not occurring or existing if the absence of such fact, circumstance
or condition forms a basis for Damages) relating to the property, business,
operations or activities of Buyer subsequent to the Closing (unless such Damages
are subject to setoff or indemnification by Seller or Parent under Section
9.2.).
Section 11.3 NOTICE OF CLAIMS. If either (i) a claim is made by a third party
against any Indemnitee (as defined in Section 11.1 or 11.2 hereof) and if such
Indemnitee believes that such claim, if successful, would give rise to a night
of setoff or indemnification under this Article XI (collectively, "Indemnifying
Parties" and each individually, an "Indemnifying Party"), or (ii) an Indemnitee
becomes aware of facts or circumstances establishing that an Indemnitee has
experienced or incurred Damages or will experience or incur Damages which will
give rise to a right of setoff or indemnification under this Article XI, then
such Indemnitee shall give written notice to the Indemnifying Party of such
claim ("Indemnification Notice") as soon as reasonably practicable but in no
event more than thirty (30) days after the Indemnitee has received written
notice of actual knowledge of such claims (provided that failure to give such
notice shall not limit the Indemnifying Party's indemnification obligation
hereunder except to the extent that the delay in giving, or failure to give, the
notice adversely affects the Indemnifying Party's ability to defend against the
claim). To the extent reasonably practicable, the Indemnification Notice will
describe the nature, basis and amount of the indemnification claim and include
any relevant supporting documentation. If the Indemnifying Party does not object
within thirty (30) days after receipt of the Indemnification Notice to the
propriety of (i) the indemnification claims described on the Indemnification
Notice as being subject to indemnification pursuant to Section 11.1 or 11.2 and
(ii) the amount of Damages specified in the Indemnification Notice, the
indemnification claims described in the Indemnification Notice shall be deemed
to be final and binding upon the Indemnifying Party(ies) (hereinafter,
"Permitted Indemnification Claim"). If the Indemnifying Party contests the
propriety of an indemnification claim described on the Indemnification Notice
and/or the amount of Damages alleged to be associated with such claim, then the
Indemnifying Party shall deliver to the Indemnitee an Indemnification Objection
Notice detailing all specific objections of the Indemnitee has with respect to
the indemnification claims contained in the Indemnification Notice. If the
Indemnifying Party and the Indemnitee are unable to resolve the disputed issues
concerning the indemnification claims within fifteen (15) business days after
the date the Indemnifying Party received the Indemnification Objection Notice,
the disputed issues will be resolved pursuant to the dispute resolution
procedures set forth in Section 11.15 hereof. Any undisputed indemnification
claims contained in the Indemnification Notice shall be deemed to be final and
binding upon the Indemnifying Party(ies) and shall constitute a Permitted
Indemnification Claim. If any disputed issues ultimately are resolved by an
arbitrator pursuant to Section 11.15, and if the arbitrator's determination of
the disputed issues results in all or any portion of an indemnification claim
properly being subject to indemnification pursuant to Section 11.1 or 11.2, such
indemnification claim or portion thereof shall be final and binding upon the
Indemnifying Party(ies) and shall constitute a Permitted Indemnification Claim.
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A. Defense of Third Party Claims. The Indemnitee against whom a third
party claim is made shall give the Indemnifying Party an opportunity to defend
such claim, at the Indemnifying Party's own expense and with counsel selected by
the Indemnifying Party and reasonably satisfactory to the Indemnitee, provided
that such Indemnitee at all times also shall have the right to participate fully
in the defense at its own expense. Failure of an Indemnifying Party to give the
Indemnitee written notice of its election to defend such claim within twenty
(20) days after receipt of notice thereof shall be deemed a waiver by such
Indemnifying Party of its right to defend such claim. If the Indemnifying Party
shall elect not to assume the defense of such claim (or if such Indemnifying
Party shall be deemed to have waived its right to defend such claim), the
Indemnitee against whom such claim is made shall have the right, but not the
obligation, to undertake the sole defense of, and to compromise or settle, the
claim on behalf, for the account, and at the risk and expense, of the
Indemnifying Party (including, without limitation, the payment by Indemnifying
Party of the attorneys' fees of the Indemnitees); provided, however, that if the
Indemnitee undertakes the sole defense of such claim on behalf of the account,
and at the risk and expense of the Indemnifying Party, it shall defend such
claim in good faith and shall apprise the Indemnifying Party from time to time
as the Indemnitee deems appropriate of the progress of such defense. If one or
more of the Indemnifying Parties assumes the defense of such claim, the
obligation of such Indemnifying Party hereunder as, to such claim, shall include
taking all steps necessary in the defense or settlement of such claim. The
Indemnifying Party, in the defense of such claim, shall not consent to the entry
of any judgment or enter into any settlement (except with the written consent of
the Indemnitee) which does not include as an unconditional term thereof the
giving by the claimant to the Indemnitee against whom such claim is made of a
release from all liability in respect of such claim (which release shall exclude
only any obligations incurred in connection with any such settlement). If the
claim is one that cannot by its nature be defended solely by the Indemnifying
Party, then the Indemnitee shall make available, at the Indemnifying Party's
expense, all information and assistance that the Indemnifying Party reasonably
may request.
Section 11.4 PAYMENT OF PERMITTED INDEMNIFICATION CLAIMS. The Indemnifying Party
shall pay to the Indemnitee the entire amount of all Damages associated with any
Permitted Indemnification Claim within ten (10) days after such claim is
determined to be a Permitted Indemnification Claim pursuant to Section 11.3
above. Notwithstanding any other provision contained herein, an Indemnifying
Party shall not have any indemnification obligation under this Article XI until
aggregate claims under Section 11.1 or 11.2 equal or exceed $20,000.00,
provided, that if such threshold is reached, the Indemnifying Party shall be
responsible for all amounts claimed without regard to, or limitation by, the
threshold. The limitation provided herein shall not apply to any claim by Buyer
under Section 9.2 or this Article XI with respect to offsets against the
Holdback Amount. No claim for any amounts payable in respect of royalties,
license fees or any other intellectual property rights from Buyer's operations
of the Business under Section 3.18 for any period later than six months after
the Closing may be made by Buyer.
Section 11.5 DISPUTE RESOLUTION.
A. Negotiated Resolution. If any dispute or disagreement arises out of
or relating to, this Agreement or any alleged breach thereof and the deadlock
cannot be broken, any party desiring to resolve such dispute or disagreement (a
"Dispute") shall deliver a written notice of the Dispute
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including the specific facts of the Dispute ("Dispute Notice") to the other
parties of such Dispute. If any party delivers a Dispute Notice pursuant to this
Section 11.5 the parties involved in the Dispute shall meet at least twice
within the thirty (30) day period commencing with the date of the Dispute Notice
and in good faith shall attempt to resolve such Dispute.
B. Mediation. If any Dispute is not resolved or settled by the parties
as a result of negotiation pursuant to Section 11.5.A. above, the parties shall
submit the Dispute to non-binding mediation before a retired judge of a federal
District Court or Texas District Court, or some similarly qualified, mutually
agreeable individual. The parties shall bear the costs of such mediation
equally.
C. Arbitration. If the Dispute is not resolved by mediation pursuant to
Section II. 5.B. above, or if the parties fail to agree upon a mediator, within
ninety (90) days after the Dispute Notice, the Dispute shall be settled by
arbitration conducted in Austin, Texas which shall be in accordance with the
rules and procedures of the Commercial Arbitration Rules of the American
Arbitration Association, and, to the maximum extent applicable, the Federal
Arbitration Act (Title 9 of the United States Code) then in effect with respect
to commercial disputes. The arbitration of such issues, including the
determination of any amount of damages suffered by any party hereto by reason of
the acts or omissions of any party, shall be final and binding upon all parties.
The arbitrator shall be empowered to impose sanctions and to take such other
actions as the arbitrator deems necessary to the same extent a judge could
pursuant to the Federal or Texas Rules of Civil Procedure and applicable law.
Notwithstanding the foregoing, the arbitrator shall not be authorized to award
punitive damages with respect to any such claim or controversy, nor shall any
party seek punitive damages relating to any matter under, arising out of or
relating to this Agreement in any other forum. Except as otherwise set forth in
the Agreement, the cost of any arbitration hereunder, including the cost of the
record or transcripts thereof, if any, administrative fees, and all other fees
involved including reasonable attorneys' fees incurred by the party determined
by the arbitrator to be the prevailing party shall be paid by the party
determined by the arbitrator not to be the prevailing party, or otherwise
allocated in an equitable manner as determined by the arbitrator. The parties
shall instruct the arbitrator to render its decision no later than ninety (90)
days after the submission of the Dispute.
D. Confidentiality. Each party agrees to keep all Disputes and
mediation and arbitration proceedings strictly confidential, except for
disclosures of information in the ordinary course of business of the parties or
by applicable law or regulation.
Section 11.6 COMPLIANCE WITH BULK SALES LAW. Buyer and Seller hereby waive
compliance by Seller with the bulk sales law and any other similar laws in any
applicable jurisdiction in respect of the transactions contemplated by this
Agreement. Seller shall indemnify Buyer from, and hold it harmless against any
liabilities, damages, costs and expenses resulting from or arising out of (i)
the parties' failure to comply with any of such laws in respect of the
transactions contemplated by this Agreement, or (ii) any action brought or levy
made as a result thereof, other than those liabilities which have been expressly
assumed, on such terms as expressly assumed, by Buyer pursuant to this
Agreement.
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Section 11.7 OTHER RIGHTS AND REMEDIES. Except as otherwise specifically
provided, the indemnification rights of the parties under this Article XI are
not such parties' sole rights or remedies under this Agreement and with respect
to disputes arising under this Agreement, and are in addition to, all other
fights and remedies a party may otherwise have at law or in equity, including
but not limited to the rights of a party in the event of a breach of the
representations or warranties of the other party under this Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 COMMISSIONS. Except for Doug Ellis of Stanford & Keene, who was
retained and shall be compensated solely by Seller (without any obligation or
liability to Buyer), each party represents and warrants that it has dealt with
no broker or finder in connection with this Agreement and, insofar as it knows,
no broker or other person is entitled to any commission or finder's fee in
connection with the consummation of the transactions contemplated by this
Agreement. If either party has retained or been represented by a broker or
finder in this transaction except as set out above in this section, such party
shall indemnify the other from any claims for fees or commissions by such
person.
Section 12.2 EXPENSES. Except as otherwise provided herein, each of the parties
shall pay all costs and expenses incurred or to be incurred by it in the
negotiation and preparation of this Agreement and in closing and carrying out
the transactions contemplated by this Agreement.
Section 12.3 HEADINGS; SCHEDULES. The subject headings of the sections and
subsections of this Agreement are included only for purposes of convenience, and
shall not affect the construction or interpretation of any of its provisions.
Any disclosure made by Seller in a schedule hereto shall be deemed a disclosure
on all Schedules hereto.
Section 12.4 COUNTERPARTS. This Agreement may be executed in one or more counter
parts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. Signatures on this Agreement
delivered by fax or Telecopier shall be considered original signatures for
purposes of effectiveness of this Agreement.
Section 12.5 RIGHTS OF PARTIES. Nothing in this Agreement, whether express or
implied, is intended to confer any fights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action against any party to this Agreement.
Section 12.6 ASSIGNMENT. Except as provided otherwise in this Agreement, the
rights and obligations of the parties to this Agreement or any interest in this
Agreement shall not be assigned, transferred, hypothecated, pledged or otherwise
disposed of without the prior written consent of the non-assigning party which
consent may be withheld in such party's sole discretion. Buyer shall have the
right to assign its rights and obligations under this Agreement; provided that
such
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assignment shall not release Buyer from its obligations hereunder, and Buyer
shall remain fully liable for all of Buyer's obligations hereunder, including
without limitation the payment of the entire Purchase Price (including the
second installment thereof) and indemnification obligations.
Section 12.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and agreements contained in this Agreement shall survive the Closing
and shall not merge therein but shall be continuing.
Section 12.8 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if delivered by Telecopier (with notice of
receipt), or if served personally on the party to whom notice is to be given; or
if delivered by overnight private carrier, on the date of delivery; or on the
third day after mailing if mailed to the party to whom notice is to be given by
first class mail, certified, postage prepaid, and properly addressed as
following:
To Seller: To Parent:
Diamond Tech One, Inc. SI Diamond Technology, Inc.
Attn: Zvi Yaniv Attn: Zvi Yaniv
Chief Operating Officer Chief Operating Officer
12100 Technology Blvd. 12100 Technology Blvd.
Austin, Texas 78727 Austin, Texas 78727
Telecopier: (512) 250-3031 Telecopier: (512) 250-3031
With a copy (which shall not constitute notice but which is nonetheless required
for notice) to:
Cary Ferchill
Winstead Sechrest & Minick, P.C.
100 Congress Avenue, Suite 800
Austin, Texas 78701
Telecopier: (512) 370-3841
If to Buyer:
Focus Interconnect Technology Corporation
Attn: Dr. Charles W. Lin
c\o Wayne S. Hollingsworth
Armbrust Brown & Davis, L.L.P.
100 Congress Avenue, Ste. 1300
Austin, Texas, USA 78701-4042
Telecopier: (512) 435-2360
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With a copy (which shall not constitute notice but which is nonetheless required
for notice) to:
Wayne Hollingsworth
Armbrust Brown & Davis, L.L.P.
100 Congress Avenue, Suite 1300
Austin, Texas 78701-4042
Telecopier: (512) 435-2360
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set for above.
Section 12.9 APPLICABLE LAW AND REMEDIES. The terms, conditions and other
provisions of this Agreement and any documents or instruments delivered in
connection with it shall be governed and construed according to the internal
laws of the State of Texas (other than the choice of law rules thereof) except
as to matters of law concerning the internal corporate affairs of any corporate
entity which is a party to or the subject of this Agreement, and as to those
matters, the jurisdiction under which such entity derives its powers shall
govern. Subject to the provisions of Section 11.7, all remedies at law, in
equity, by statute or otherwise shall be cumulative and may be enforced
concurrently or from time to time and, the election of any remedy or remedies
shall not constitute a waiver of the right to pursue any other available
remedies. The parties agree that all disputes arising under this Agreement shall
be settled through arbitration procedures as described in Section 11.5.
Section 12.10 ADDITIONAL INSTRUMENTS AND ASSISTANCE. Each party hereto shall
from time to time execute and deliver such further instruments, provide
additional information and render such further assistance as the other party or
its counsel may reasonably request in order to complete and perfect the
transactions contemplated herein.
Section 12.11 SEVERABILITY. If any provision of this Agreement is held or deemed
to be invalid or unenforceable to any extent when applied to any person or
circumstance, such invalidity or unenforceability shall not affect the remaining
provisions of this Agreement; the remaining provisions hereof and the
enforcement of such provision with respect to other persons or circumstances, or
to another extent shall not be affected thereby and each provision hereof shall
be enforced to the fullest extent allowed by law. Moreover, the invalid or
inoperative provision shall be reformed and construed so that it shall be valid
and enforceable to the maximum extent permitted.
Section 12.12 PRONOUNS AND TERMS. In this Agreement, the singular shall include
the plural, the plural the singular, and the use of any gender shall include all
genders.
Section 12.13 TAXES. Seller shall bear the economic burden and shall pay any and
all Texas sales taxes imposed on the transactions contemplated by this
Agreement. Buyer and Seller shall each pay its portion prorated as of the
Effective Time of state and local ad valorem taxes on the Business or the
Subject Assets which, if not paid, first become delinquent in the year of
Closing.
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Seller's federal tax identification number is 74-2735274.
Parent's federal tax identification number is 76-0273345.
FEPET's federal tax identification number is 74-2848504.
Buyer's federal tax identification number is _______________.
Section 12.14 DISCLOSURE. No representation or warranty made by either party in
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statement of facts contained within
it not materially misleading.
Section 12.15 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement, together
with all Exhibits and Schedules hereto, constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties (including the letter of intent dated
March 24, 1998), and there are no representations, warranties or other
agreements among the parties in connection with the subject matter hereof except
as set forth specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound, thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
on the date first above written.
BUYER:
FOCUS INTERCONNECT TECHNOLOGY
CORPORATION, a Delaware corporation
By: /s/ Francisca Tung
-----------------------------------------
Printed Name: Francisca Tung
-------------------------------
Title: President
--------------------------------------
SELLER:
DIAMOND TECH ONE, INC.,
a Delaware corporation
By: /s/ Marc W. Eller
-----------------------------------------
Printed Name: Marc W. Eller
-------------------------------
Title: Chief Executive Officer
--------------------------------------
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PARENT:
SI DIAMOND TECHNOLOGY, INC.,
a Texas corporation
By: /s/ Marc W. Eller
-----------------------------------------
Printed Name: Marc W. Eller
-------------------------------
Title: Chief Executive Officer
--------------------------------------
FEPET:
FIELD EMISSION PICTURE ELEMENT
TECHNOLOGY, INC., a Delaware corporation
By: /s/ Marc W. Eller
-----------------------------------------
Printed Name: Marc W. Eller
-------------------------------
Title: Chief Executive Officer
--------------------------------------
38
