Exhibit 2.1
September 30, 2003
Confidential
STOCK PURCHASE AGREEMENT
among
3M Company,
3M Innovative Properties Company,
▇▇▇▇▇ Corporation
and
▇▇▇▇▇▇ Corporation
regarding the acquisition of stock in
▇▇▇▇▇ Corporation
This STOCK PURCHASE AGREEMENT (the "Agreement") is made this 30th day
of September, 2003, by and among 3M Company, a Delaware corporation, with its
principal offices at ▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("3M"), 3M Innovative
Properties Company, a Delaware corporation, with its principal offices at ▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("3M IPC") (3M and 3M IPC are referred to
jointly and severally as "Seller"), ▇▇▇▇▇ Corporation, a Delaware corporation
with its principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Joint Venture Company"), and ▇▇▇▇▇▇ Corporation, a Massachusetts
corporation, with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
The Purchaser, the Joint Venture Company, and the Seller are each referred to as
a "Party" and, collectively, as the "Parties."
1. BACKGROUND
(a) Purchaser and Seller's predecessor, Minnesota Mining and
Manufacturing Company, and the Joint Venture Company
originally entered into a Joint Venture Agreement on May 30,
1988, subsequently amended from time to time, ("JVA") for the
purpose of creating a business enterprise for developing,
manufacturing, and selling certain electroluminescent
products.
(b) Seller owns fifty percent (50%) of the issued and outstanding
shares of the Joint Venture Company, Seller's ownership
consisting of 1000 such shares, each share having a par value
of $0.01 (each a "Share" and, collectively, the "Shares"), and
Purchaser owns the remaining fifty percent (50%) of the Joint
Venture Company's shares.
(c) Purchaser has expressed an interest to become the sole owner
of the Joint Venture Company and Seller has expressed an
interest to sell to Purchaser all of its Shares in the Joint
Venture Company.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, each of the Parties agree to this Stock Purchase Agreement as
follows.
2. DEFINITIONS
In this Agreement, the following terms and expressions shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of each of the terms and expressions defined):
"Act" shall mean the Securities Act of 1933, as amended.
"Acquired Business" shall have the meaning set forth in Section 7.1(b)
hereof.
"Affiliate" shall mean any person or entity directly or indirectly
controlling, controlled by or under common control with another person or
entity. For purposes of this definition the term "control" (including the terms
"controlling" and "controlled") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person or entity, whether through the ownership of voting
securities, by contract, or otherwise.
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"Agreement" shall mean this Stock Purchase Agreement among the
Purchaser, the Joint Venture Company, and the Seller, as may be amended from
time to time as provided herein.
"Ancillary R&D" shall have the meaning set forth in Section 7.1(a).
"Applicable Books and Records" shall have the meaning set forth in
Section 7.6 hereof.
"Closing" shall mean the closing of the sale and the purchase of the
Shares in accordance with Section 4.1 hereof.
"Closing Date" shall have the meaning set forth in Section 4.1 hereof.
"Dispute" shall have the meaning set forth in Section 10.1 hereof.
"Environmental Laws" means any Laws relating to pollution or protection
of the environment, including regulations relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
(including without limitation ambient air, surface water, groundwater, or land),
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
"Governmental Authority" shall mean any local, regional, national or
supranational governmental authority or agency.
"Indemnitee" shall have the meaning set forth in Section 9.4 hereof.
"Indemnitor" shall have the meaning set forth in Section 9.4 hereof.
"Joint Venture Company " shall have the meaning set forth in the
introductory section hereof.
"Joint Venture Product Line" shall mean: (i) inverters, for use with
inorganic electroluminescent phosphors, which are semiconductors or discrete
component devices that convert DC power into AC power and increase peak-to-peak
voltage to at least 50 volts; and/or (ii) products based on inorganic
electroluminescent phosphors including coated inorganic phosphors, compositions
such as dispersions containing such phosphors, and light sources or lamps made
with such phosphors, a commercialized example of such electroluminescent
phosphors being zinc sulfide-based phosphors. The term inorganic
electroluminescent phosphors means inorganic phosphors which, in their intended
use, will be excited by a capacitively coupled AC electric field to give off
light. The term "electroluminescent phosphors" does not include, for example,
materials used in light emitting diodes (LEDs), including organic light emitting
diodes (OLEDs), or photoluminescent materials. The Joint Venture Product Line
does not include products into which the electroluminescent lamps, inverters or
compositions like those sold by the Joint Venture Company are incorporated, such
as time pieces, cellular phones, and automobile instrument panels.
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"JVA" shall have the meaning set forth in Section 1(a) hereof.
"Laws" means any federal, state, local, and foreign law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree, arbitration
award, agency requirement, license or permit.
"Losses" or "Claims" shall have the meaning set forth in Section 9.2
hereof.
"Party" and "Parties" shall have the meanings set forth in the second
introductory paragraph hereof.
"Patent License" shall have the meaning set forth in Section 7.3
hereof.
"Person" shall mean any individual, corporation, general or limited
partnership, limited liability joint venture company, joint venture company,
organization or other entity or governmental body.
"PLA" shall have the meaning set forth in Section 7.4 hereof.
"Principals" shall have the meaning set forth in Section 10.1 hereof.
"Purchase Price" shall have the meaning set forth in Section 3.2
hereof.
"Purchaser" shall have the meaning set forth in the introductory
section hereof.
"Seller" shall have the meaning set forth in the introductory section
hereof.
"Shares" shall have the meaning set forth in Section 1(b) hereof.
"Third Party Claim" shall have the meaning set forth in Section 9.4
hereof.
3. PURCHASE AND SALE OF SHARES
3.1. Sale and Purchase of Shares. On the date hereof ("Closing Date"),
Seller has sold, assigned, transferred and delivered to Purchaser and Purchaser
has purchased and accepted from Seller, all of Seller's right, title and
interest in and to the Shares, representing all of Seller's equity interest in
the Joint Venture Company. Seller has not been able to locate the original
certificate representing the Shares, and therefore in connection with the
consummation of this transaction, Seller has executed and delivered to Purchaser
an Affidavit of Loss and Indemnity.
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3.2. Purchase Price. In consideration for the aforementioned transfer
and delivery to Purchaser of all of Seller's right, title, and interest in and
to the Shares, Purchaser has paid to Seller the Purchase Price of Twenty-Six
Million United States Dollars ($26,000,000.00) ("Purchase Price") in immediately
available funds.
4. CLOSING
4.1. Closing. The sale and transfer of the Shares by Seller to
Purchaser (the "Closing") is made effective as of 12:01 a.m. eastern time on the
date hereof ("Closing Date").
4.2. Seller's Deliveries. At the Closing, Seller:
(a) transferred all of its right, title and interest in and to
the Shares to Purchaser; and
(b) delivered to Purchaser statements of resignations of each
director of the Joint Venture Company who represented Seller
on the board of directors of the Joint Venture Company
effective as of the Closing Date; and
(c) delivered to Purchaser and the Joint Venture Company such
other documents as were required to be delivered pursuant
hereto.
4.3. Purchaser Deliveries. At the Closing, Purchaser:
(a) transferred to Seller the Purchase Price by wire transfer in
immediately available funds into the accounts designated by
Seller prior to the Closing; and
(b) delivered to Seller such other documents as were required to
be delivered pursuant hereto.
5. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby makes and agrees to the following representations and
warranties to and for the benefit of Purchaser, each of which is made as of the
Closing Date, and acknowledges that Purchaser has relied upon such
representations and warranties in connection with the purchase of the Shares
hereunder.
5.1. Organization. Seller is a corporation duly organized and validly
existing under the laws of Delaware and has all power and authority to carry on
its business as presently being conducted.
5.2. Capitalization. The Shares constitute all issued and outstanding
shares of Seller in the Joint Venture Company owned by Seller. Seller owns and
has title to the Shares, free and clear of all liens, claims, options, warrants,
pre-emption rights, charges and other encumbrances.
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5.3. Authorization, Execution and Delivery.
(a) Seller has all requisite corporate power and authority to
enter into, execute and deliver this Agreement and each
other document delivered in connection herewith and to
perform all of its obligations hereunder.
(b) The execution of this Agreement and each other document
delivered in connection herewith by Seller and the
performance by Seller of the transactions contemplated
herein have been duly authorized and executed by all
necessary corporate action on the part of Seller.
(c) This Agreement and each other document delivered in
connection herewith by Seller constitute the legal, valid
and binding obligations of Seller, enforceable against
Seller in accordance with their respective terms.
5.4. No conflict, consents. The execution of this Agreement by Seller
and each other document delivered in connection herewith by Seller does not and
the consummation of the transactions contemplated hereby will not:
(a) violate any law, regulation, order or judgment applicable to
the Seller;
(b) conflict with or result in any breach of any provision of
the charter documents of Seller; or
(c) require the Seller to obtain the approval or consent of any
Person, firm or other entity.
5.5. Insolvency, Liquidation. Seller has not ceased payments of its
debts or had an administrator or reorganizer appointed or is otherwise subject
to, party to or otherwise affected by any action, request, decision or other
measure under any law or statute relating to bankruptcy, receivership,
liquidation or any event or procedure analogous thereto.
5.6. Litigation and Investigations.
(a) There is no suit, administrative, arbitration or other legal
proceedings or investigations by any Person pending or
threatened against Seller that will affect the transaction
contemplated by this Agreement, and there are no such suits
or proceedings pending or threatened by Seller against any
Person and, to Seller's knowledge, there are no
circumstances likely to give rise to the same.
(b) Seller is not or has not been subject to or is in default
with respect to any court, administrative or arbitration
order, judgment, injunction, decree or other award made by
any Governmental Authority that will materially affect the
transaction contemplated by this Agreement.
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5.7 Brokerage. There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Seller.
5.8 Claims. Seller has no knowledge of any claim arising from or
related to a material breach of the JVA or any document executed in connection
with the JVA by either it, the Joint Venture Company, or the Purchaser.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes and agrees to the following representations and
warranties to and for the benefit of Seller, each of which is made as of the
Closing Date, and acknowledges that Seller has relied upon such representations
and warranties in connection with the sale of the Shares hereunder.
6.1. Organization. Purchaser is a corporation duly organized and
validly existing under the laws of Massachusetts and has all power and authority
to carry on its business as presently being conducted.
6.2. Authorization, Execution and Delivery.
(a) Purchaser has all requisite corporate power and authority to
enter into, execute and deliver this Agreement and each
other document delivered in connection herewith and to
perform all of its obligations hereunder.
(b) The execution of this Agreement and each other document
delivered in connection herewith by Purchaser and the
performance by Purchaser of the transactions contemplated
herein have been duly authorized and executed by all
necessary corporate action on the part of Purchaser.
(c) This Agreement and each other document delivered in
connection herewith by Purchaser constitute the legal, valid
and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms.
6.3. No Conflict, Consents. The execution of this Agreement by
Purchaser and each other document delivered in connection herewith by Purchaser
does not and the consummation of the transactions contemplated hereby will not:
(a) violate any law, regulation, order or judgment applicable to
Purchaser;
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(b) conflict with or result in any breach of any provision of
the charter documents of Purchaser; or
(c) require Purchaser to obtain the approval or consent of any
Person, firm or other entity which has not been received.
6.4 Insolvency, Liquidation. Purchaser has not ceased payments of its
debts or had an administrator or reorganizer appointed or is otherwise subject
to, party to or otherwise affected by any action, request, decision or other
measure under any law or statute relating to bankruptcy, receivership,
liquidation or any event or procedure analogous thereto.
6.5 Litigation and Investigations.
(a) There is no suit, administrative, arbitration or other legal
proceedings or investigations by any Person pending or
threatened against the Purchaser that will affect the
transaction contemplated by this Agreement, and there are no
such suits or proceedings pending or threatened by the
Purchaser against any Person and, to the Purchaser's
knowledge, there are no circumstances likely to give rise to
the same.
(b) The Purchaser is not or has not been subject to or is in
default with respect to any court, administrative or
arbitration order, judgment, injunction, decree or other
award made by any Governmental Authority that will
materially affect the transaction contemplated by this
Agreement.
6.6 Claims. Purchaser has no knowledge of any claim arising from or
related to a material breach of the JVA or any document executed in connection
with the JVA by either it, the Joint Venture Company, or the Seller.
6.7 Investment Intent. Purchaser is purchasing the Shares for its own
account and not with a view to resell or otherwise distribute the Shares in
contravention of the provisions of state or federal securities laws.
6.8 Receipt of Information. Purchaser is fifty percent (50%) owner of
the Joint Venture Company and has access to and has been furnished access to the
business records of the Joint Venture Company and such additional information
and documents as Purchaser has requested. Purchaser has been afforded an
opportunity to ask questions of and receive answers from Seller concerning the
terms and conditions of this Agreement.
6.9 Restricted Securities. Purchaser understands that the Shares may
not be sold, transferred, or otherwise disposed of without registration under
the Act, or an exemption therefrom, and that in the absence of an effective
registration statement covering the Shares or an available exemption from
registration under the Act, the Shares must be held indefinitely. Purchaser will
not sell, transfer, or otherwise dispose of the Shares except pursuant to an
effective registration statement or pursuant to an available exemption from
registration.
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6.10 Experience. Purchaser is a sophisticated investor possessing such
knowledge and experience in financial and business matters and in making
investments of this type. Purchaser is capable of evaluating the merits and
risks of purchasing the Shares. Purchaser is able to bear the economic risk of
purchasing the Shares.
6.11 Brokerage. There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Purchaser.
7. Post-Closing Covenants
7.1. Non-Competition/Confidentiality.
(a) For a period of four (4) years from the Closing Date, Seller
shall not, and shall cause its Affiliates not to, engage in
the manufacture, distribution or sale of products within the
Joint Venture Product Line. During said four (4) year period
Seller further shall not, and shall cause its Affiliates not
to, undertake preparations or research, or otherwise make
investments, with the primary intent of manufacturing,
distributing or selling products within the Joint Venture
Product Line at the conclusion of the four (4) year period.
The foregoing sentence is not intended to prevent research
and development that is not for the primary intent described
therein, and Seller remains free to conduct any such
permitted research and development, including research and
development activities within the Joint Venture Product Line
that is ancillary to Seller's permitted research and
development activities (hereafter "Ancillary R&D"). If a
product falling within the Joint Venture Product Line
results from Ancillary R&D, neither Seller nor any of its
Affiliates will sell or distribute such a product, or
license such Ancillary R&D for use within the Joint Venture
Product Line, until after five (5) years from the Closing
Date. Nothing in this paragraph is intended to prevent
Seller or its Affiliates from doing research and development
involving phosphors for intended uses in which they will not
be excited by a capacitively coupled AC electric field.
(b) Section 7.1(a) shall be deemed not breached as a result of
any of the following:
(i) The acquisition of any business or the assets of a
business ("Acquired Business") that, directly or
indirectly, manufactures, distributes or sells products
within the Joint Venture Product Line; provided that:
(a) the aggregate consolidated revenues of the Acquired
Business from sales in the Joint Venture Product Line
are less than both $5 million and ten percent (10%) of
total aggregate consolidated revenues of the Acquired
Business for the twelve-month period immediately before
the acquisition; or (b) if the aggregate consolidated
revenues of the Acquired Business from such activities
are more than the amounts permitted above for the
twelve month period immediately before the acquisition,
Seller shall, or shall cause its Affiliate(s) to,
effect the disposition of the part of the Acquired
Business engaged in such manufacture, distribution and
sales within one (1) year of the date of such
acquisition.
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(ii) The manufacture and sale of products within the Joint
Venture Product Line, including the purchase of
products within the Joint Venture Product Line from
other suppliers for resale or use in Seller's own
products, provided that:
a) The manufacture or sale of the products is limited to the
fields of Commercial Graphic Materials, Traffic Control
Materials or Marine Markets (Excluded Fields) defined as:
i) Commercial Graphic Materials are graphic signs and
sheets for commercial uses and components of such signs
and sheets. Commercial Graphic Materials include flat
panel displays having a multiplicity of pixels for
forming images that can be changed (switched on or off)
over relatively short periods of time. A pixel is a
small image-forming unit on a display screen the
illumination of which can be controlled independently
of adjacent pixels.
ii) Traffic Control Materials are signs for marking
transportation arteries, such as navigational lanes for
maritime use, airport runways and taxiways for aviation
use, railroad and subway lines, roads, construction
work zones, crosswalks and the like, sheeting for such
signs and components of such sheeting and signs.
Traffic Control Materials include flat panel displays
having a multiplicity of pixels for forming images that
can be changed (switched on or off) over relatively
short periods of time.
iii) Marine Markets are lighting devices used on boats and
boat docking facilities, such as lamps lighting the
interior of a boat or lamps lighting a boat walkway.
b) Such manufacture or sale occurs either i) before April 13,
2005, or ii) if after April 13, 2005, but during the four
year period of Section 7.1(a), only in each of those
Excluded Fields in which Seller and its Affiliates have had
total worldwide sales of products within the Joint Venture
Product Line during a consecutive 12-month period of at
least Five Hundred Thousand Dollars ($500,000.00) by April
13, 2005; and
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c) The Joint Venture Company does not make the required
products or have the capability to manufacture them in the
quality or quantity required. If the Joint Venture Company
makes the required products or has the capability to
manufacture them in the quality and quantity required,
Seller or its Affiliates, as the case may be, will obtain
from the Joint Venture Company so much of their requirements
for such products as the Joint Venture Company is willing to
supply at prices competitive with prices offered by any
other qualified prospective supplier of such products.
However, a supplier which Seller or its Affiliates have a
reasonable basis to conclude is infringing any of the
patents exclusively licensed to the Joint Venture Company by
Seller, without a license from or the permission of the
Joint Venture Company, shall not be a qualified supplier.
(iii) The resale by Seller or its Affiliate(s) of any
product purchased, directly or indirectly, from the
Joint Venture Company, as such product is purchased, in
combination with other components, or in modified form.
(c) Confidentiality. The Parties have agreed to amend the
Confidentiality Agreement between the Parties dated May 18,
1990, in accordance with the Confidentiality Agreement
Amendment attached hereto as Exhibit A.
7.2 Non-Solicitation of Joint Venture Company Employees. For a period
of four (4) years from the Closing Date, Seller shall not, and shall cause its
Affiliates not to, solicit any Joint Venture Company employee without
Purchaser's prior written consent. As used in this section, "solicit" shall not
be interpreted to include general employment advertising or general employment
solicitations that are not specifically targeted or directed to Joint Venture
Company employees.
7.3 Intellectual Property. The Parties have agreed to a license of
certain patents from the Closing Date as set forth in the Patent License,
Exhibit B (the "Patent License").
7.4 Transition Assistance.
(a) After the Closing, the Joint Venture Company will be solely
responsible for designing, developing, manufacturing and
selling the Joint Venture Company Product Line for all
applications. Seller will provide reasonable cooperation and
support, without compensation, for a mutually agreed period
of time, not to exceed three (3) months after Closing, to
assist the Joint Venture Company in supporting automotive
applications for the Joint Venture Company Product Line.
Seller and Purchaser shall cooperate to ensure, and
Purchaser will use commercially reasonable efforts to cause
the Joint Venture Company to meet all outstanding
pre-Closing Date supply commitments to automotive customers
of Joint Venture Company products.
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(b) ▇▇▇▇ ▇▇▇▇▇▇▇, who is an employee of Seller currently
seconded to and serving as the President of the Joint
Venture Company under the terms of a Personnel Lease
Agreement (the "PLA") between the Joint Venture Company and
Minnesota Mining and Manufacturing Company, will remain as
an employee of Seller. A true and correct copy of the PLA is
attached hereto as Exhibit E. To assist with the transition
to a Purchaser-appointed successor, the PLA will remain in
effect for so long as Purchaser may desire, but no longer
than ninety (90) days following the Closing Date. The Joint
Venture Company's obligations under Sections 3, 5, 6, 9 and
10 of the PLA will survive its termination.
7.5 Notices. From and after the Closing, Seller shall promptly forward
to Purchaser any correspondence and notices received by Seller that relate to
the Joint Venture Company.
7.6 Access to and Retention of Records. The Parties agree that all
"Applicable Books and Records" (as defined below) retained by the Joint Venture
Company shall be open for inspection by representatives of the Seller at any
time during regular business hours for a period of three (3) years from the date
of preparation or compilation of such books, records, documents or materials and
that the Seller may during such period at its expense make such copies or
excerpts therefrom, in either case to comply with legal, audit or tax
obligations, as they may reasonably request. For a period of seven (7) years
following the Closing Date, the Joint Venture Company shall not destroy or give
up possession of any original or final copy of any of the Applicable Books and
Records reasonably required in the preparation of tax, regulatory and other
governmental compliance matters, without first offering Seller the opportunity
to obtain such original or final copy or a copy thereof. For purposes of this
Section, the term "Applicable Books and Records" shall mean all audited
financial statements, quarterly financial statements and tax statements of the
Joint Venture Company.
7.7 Tax Reporting. The Parties hereby agree to report or cause to be
reported, as applicable, the sale and purchase of the Seller's Shares in the
Joint Venture Company for all United States federal, state, and local tax
purposes in a manner consistent with such Purchase Price and such allocation
thereof, and not take or cause to be taken, as applicable, any position on any
tax return that is inconsistent with such Purchase Price or such allocation
thereof, except as may be required by applicable law, without obtaining the
prior written consent of the Parties.
7.8 Covenant Regarding Seller Know-How.
(a) "Seller Know-How" shall mean information in tangible or
intangible form, received by the Joint Venture Company from
Seller or its Affiliates before the Closing Date and related
to developing, making, using, testing, marketing or selling
the Joint Venture Product Line.
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(b) Seller, on behalf of itself, its Affiliates, and their
respective successors and assigns, covenants that neither it
nor any of its Affiliates, nor any of their successors and
assigns, will ▇▇▇ the Joint Venture Company, its Affiliates,
and successors in interest to the Joint Venture Company
business for their use of Seller Know-How; provided that
such use is for the purpose of developing, making, using,
testing, marketing, or selling products within the scope of
the Joint Venture Product Line. The covenant in this
Paragraph 7.8(b) shall extend to parties in privity with the
Joint Venture Company, its Affiliates, and successors in
interest with respect to this covenant. As used herein,
parties "in privity" are parties having a mutual or
successive relationship to the Seller Know-How and this
covenant and having a legal right to access to the Seller
Know-How and an obligation to hold the Seller Know-How
confidential to the same degree as the Joint Venture
Company. A party in privity, may include, for example, a
foreign company that has been licensed by the Joint Venture
Company to manufacture the Joint Venture Product Line. The
covenant in this Paragraph 7.8(b) cannot be assigned or
licensed by the Joint Venture Company except in connection
with a sale of either a controlling interest in the shares
in the Joint Venture Company, or all or substantially all of
the assets of the Joint Venture Company.
(c) Seller, on behalf of itself, its Affiliates, and their
respective successors and assigns, covenants not to ▇▇▇ the
Joint Venture Company and the other parties mentioned in
Paragraph 7.8(b) above under Seller's patents to the extent
that Seller's patents cover Seller Know-How because of the
Joint Venture Company's manufacture, use, sale, or offer for
sale of:
(i) products in the Joint Venture Product Line that are
made or sold by the Joint Venture Company on the
Closing Date or
(ii) products in the Joint Venture Product Line that are
within a category identified on Exhibit C attached
hereto and that are developed using Seller Know-How,
where such use of Seller Know-How would give rise to a
cause of action for patent infringement under Seller's
patents.
The covenant under this Paragraph 7.8(c) shall further
extend to the Joint Venture Company's direct and indirect
customers (including end users) to the extent that such
customers are using or reselling products in the Joint
Venture Product Line purchased from the Joint Venture
Company.
(d) Subject to the covenant of Paragraph 7.8(c) above, and
subject to any express licenses to the Joint Venture Company
under other agreement(s), Seller may separately license its
patents to or enforce its patents against the Joint Venture
Company or any other entity including the other parties
mentioned in Paragraph 7.8(b).
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(e) With respect to any covenants made herein, it is understood
that Seller Know-How includes only information received by
the Joint Venture Company from Seller or its Affiliates
before the Closing Date, and no covenant shall cover any
know-how, information, or Seller inventions conceived after
the Closing Date or any patents covering such know-how,
information or inventions.
(f) In the event that the Joint Venture Company enters into, or
has entered into, confidentiality agreements with its
employees relating to, among other things, Seller Know-How,
the Parties hereby express their intention that Seller shall
be a third-party beneficiary of such agreements to the
extent that such agreements apply to Seller Know-How,
thereby allowing Seller to enforce such agreements directly
so as to protect the confidentiality of Seller Know-How.
7.9 Research and Development Agreement. The Parties have agreed to an
extension of the termination of the Research and Development Agreement between
Seller and the Joint Venture Company (attached hereto as Exhibit D).
8. TERMINATION OF JVA
Termination of JVA. Except as provided herein, the JVA, including its
reciprocal manufacturing and sales restrictions, non-compete and confidentiality
provisions will terminate upon Closing. Notwithstanding the foregoing, and for
the avoidance of doubt, Sections 10.01 and 10.03 of the JVA shall be replaced in
their entirety by Section 7.1 of this Agreement and Exhibit A, respectively.
9. INDEMNIFICATION
9.1 The representations and warranties set forth in this Agreement
shall survive for a period of twelve (12) months from the Closing Date. The
covenants and other agreements contained in this Agreement shall survive in
accordance with their terms.
9.2 Indemnification by Seller. Seller agrees to defend, indemnify and
hold harmless Purchaser, and its Affiliates, agents and any of its successors
and assigns, from and against any and all losses, damages, claims, suits,
proceedings, liabilities, costs and expenses (including settlement costs,
interest, penalties, reasonable attorney's fees and any reasonable legal or
other expenses for investigation or defense of any actions or threatened
actions) (collectively, "Losses" or "Claims," as the context requires) which may
be imposed, sustained, incurred or suffered or asserted as a result of, relating
to or arising out of any of the following: (i) the breach of any representation
or warranty of Seller contained in this Agreement; and (ii) any failure by
Seller or any of its Affiliates to perform any covenant, agreement or obligation
of Seller (including its Affiliates) contained in this Agreement.
13
9.3 Indemnification by Purchaser. Purchaser agrees to defend, indemnify
and hold harmless Seller and its Affiliates, agents and any of its successors
and assigns from and against any and all Losses and Claims which may be imposed,
sustained, incurred or suffered or asserted as a result of, relating to or
arising out of any of the following: (i) the breach of any representation or
warranty of Purchaser contained in this Agreement; (ii) any failure by Purchaser
to perform any covenant, agreement or obligation of Purchaser contained in this
Agreement; (iii) any failure by the Joint Venture Company to satisfy its
obligation or liabilities, including without limitation (a) for taxes, charges,
fees and periodic deposits (including interest and penalties) determined to be
due to any Governmental Authority; (b) Joint Venture Company employee
compensation, benefits, pensions (including the funding of the Joint Venture
Company pension fund), programs or taxes; (c) the Joint Venture Company's
employment of any current or former Joint Venture Company employee, or the
provision of services to the Joint Venture Company by any individual who was not
an employee of the Joint Venture Company, but who was, without limitation, an
independent contractor; (d) contractual undertakings of the Joint Venture
Company; (e) the design, development, manufacture, sale, advertising or
promotion of the products of the Joint Venture Company; (f) non-compliance with
Laws, including Environmental Laws; provided that the indemnification provided
by clause (iii) of this Section 9.3 shall not apply to Losses or Claims to the
extent (but only to the extent) attributable to any intentionally tortious or
criminally wrongful action taken by Seller or any of its Affiliates.
9.4 Procedure for Third Party Claims.
(a) If a Person entitled to assert a claim for indemnification
under this Agreement shall receive notice of the assertion
by any Person not a party to this Agreement of any claim or
of the commencement of any action or proceeding (a "Third
Party Claim") with respect to which Seller or Purchaser is
obligated to provide indemnification, the indemnified party
(the "Indemnitee") shall give the indemnifying party (the
"Indemnitor") prompt written notice after becoming aware of
such Third Party Claim. The failure of the Indemnitee to
give notice as provided in this Section shall not relieve
the Indemnitor of its obligations for indemnification under
this Agreement, except to the extent that the failure has
materially and adversely affected the rights of the
Indemnitor. The notice from the Indemnitee shall describe
the Third Party Claim in reasonable detail.
(b) An Indemnitor may elect to compromise or defend, at the
Indemnitor's own expense and by such Indemnitor's own
counsel, any Third Party Claim. If an Indemnitor elects to
compromise or defend a Third Party Claim, it shall, within
thirty (30) days (or sooner, if the nature of the Third
Party Claim so requires), notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate in the
compromise of, or defense against, the Third Party Claim.
The Indemnitor shall pay the Indemnitee's actual
out-of-pocket expenses incurred in connection with its
cooperation. After notice from an Indemnitor to an
Indemnitee of its election to assume the defense of a Third
Party Claim, the Indemnitor shall not be liable to the
Indemnitee under this Agreement for any legal expenses
subsequently incurred by the Indemnitee in connection with
the defense of the Third Party Claim, provided that
Indemnitee shall have the right to employ one counsel to
represent Indemnitee if, under applicable standards of
professional conduct, a conflict of interest between the
Indemnitee and the Indemnitor exists in respect of such
Third Party Claim, and in that event the fees and expenses
of such separate counsel shall be paid by the Indemnitor. If
an Indemnitor elects not to defend against a Third Party
Claim, or fails to notify an Indemnitee of its election as
provided in this Paragraph, the Indemnitee may pay,
compromise or defend such Third Party Claim on behalf of and
for the account and risk of the Indemnitor. No Indemnitor
shall consent to entry of any judgment or enter into any
settlement, except with the written consent of each related
Indemnitee (which consent shall not be unreasonably
withheld), which provides for anything other than money
damages or other money payments for which the Indemnitee is
entitled to indemnification under this Agreement or which
does not contain as an unconditional term thereof the giving
by the claimant or plaintiff to the Indemnitee of a release
from all liability in respect of the Third Party Claim.
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9.5 Procedure for Non-Third Party Claims. With respect to any claim for
indemnification hereunder which does not result from a Third Party Claim, the
Indemnitor shall have a period of thirty (30) days after receipt of notice from
the Indemnitee within which to respond to the Indemnitee. If the Indemnitor does
not respond within the thirty (30) days period or responds within such period
and rejects the claim in whole or in part, the Indemnitee shall be free to
pursue such remedies as may be available to the Indemnitee under applicable law.
9.6 Reduction of Claim or Loss. If the amount of any Claim or Loss
shall, at any time subsequent to payment pursuant to this Agreement, be reduced
by recovery, settlement or otherwise, the amount of such reduction, less any
expenses incurred in connection therewith, shall promptly be repaid by the
Indemnitee to the related Indemnitor.
9.7 Limitation. Notwithstanding anything to the contrary in Sections
9.2 (i) and 9.3(i), neither Party shall be entitled to seek indemnification from
the other Party for any Losses or Claims unless the Indemnitee's Losses or
Claims exceed Twenty-Five Thousand Dollars ($25,000.00), and then
indemnification will be available only for Losses and Claims in excess of
Twenty-Five Thousand Dollars ($25,000.00). Notwithstanding anything herein to
the contrary, the maximum aggregate liability of Seller or Purchaser under
Section 9.2(i) or 9.3(i) shall not exceed the Purchase Price, except in the case
of Claims or Losses arising with respect to either Section 5.8 or 6.6, in which
case the maximum aggregate liability of Seller or Purchaser under Section 9.2(i)
or 9.3(i) shall not exceed seventy-five percent (75%) of the Purchase Price. IN
NO EVENT SHALL ANY PARTY BE LIABLE FOR INCIDENTAL, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES TO THE OTHER PARTIES.
9.8 Remedies Cumulative and Non-Exclusive. The remedies provided in
this Section shall be cumulative and shall not preclude the assertion by any
Party to this Agreement of any other rights or the seeking of any other remedies
against any other Party to this Agreement.
15
9.9 Mutual Release of Claims and Defenses. Purchaser, Seller, and the
Joint Venture Company each expressly and irrevocably waives, releases and
forever discharges each other Party or Parties and its or their predecessors and
current or former Affiliates from and against any and all demands, claims,
actions, causes of action, defenses, or disputes of any kind whatsoever (whether
in law or equity and whether for damages, costs, attorneys' fees or expenses),
whether known or unknown, which it ever had, now has or hereinafter can, shall
or may claim to have against any of them, relating to, arising out of or based
on any matter, cause or thing whatsoever for acts, omissions or events occurring
through the date of this Agreement and relating to the Joint Venture Company,
the JVA, or the relationship of Seller and Purchaser created in connection
therewith, other than claims directly arising under the express terms of this
Agreement or any other agreement executed in connection therewith. This general
release specifically includes any and all claims, actions and causes of action
relating to the creation, funding, and operation of the Joint Venture Company or
any breach or alleged breach of the JVA. For the avoidance of doubt, this
Section 9.9 does not in any way limit the indemnity undertakings of Seller and
Purchaser under Sections 9.2 and 9.3, respectively.
10. DISPUTE RESOLUTION
10.1 Dispute Resolution. Any disagreement or dispute between the
Parties arising out of or related to this Agreement or the breach or making
hereof (a "Dispute") shall be resolved in the manner provided in this Section
10.1. Should there develop any Dispute, any Party may, by written notice to the
other Party, request that such Dispute be referred to the Executive Vice
President of the Transportation Business of 3M, the Chief Executive Officer of
the Purchaser, and, for so long as it remains a legal Person not part of
Purchaser, the General Manager of the Joint Venture Company (the "Principals"),
as applicable, who shall negotiate in good faith to attempt to resolve the
Dispute. No settlement reached under this Section 10.1 shall be binding on the
Parties until reduced to a writing signed on behalf of the Parties by the
Principals.
10.2 Mediation. Should the procedure outlined in Section 10.1 fail to
bring about a resolution of each outstanding Dispute within 30 days following
the giving of the notice referred to therein, then the parties shall promptly
initiate a voluntary, non-binding mediation conducted by a mutually-agreed
mediator. The Parties shall each bear a pro rata share of the costs and expenses
of the mediation and shall endeavor in good faith for a period of 120 days
following the giving of the notice referred to in Section 10.1 to resolve
through such mediation each outstanding Dispute. No settlement reached under
this Section 10 shall be binding on the Parties until reduced to a writing
signed on behalf of the Parties by the Principals.
10.3 Litigation. In the event the parties are unable to resolve any
outstanding Dispute as provided above, then such outstanding Dispute shall be
determined by litigation as provided in Section 10.6, below.
10.4 Injunctive Relief. Notwithstanding anything to the contrary
provided in this Section 10, and without prejudice to the above procedures, any
Party may at any time, in connection with any Dispute, apply to a court of
competent jurisdiction for temporary injunctive or other provisional judicial
relief if in such Party's sole judgment such action is necessary to avoid
irreparable damage or to preserve the status quo until such time as the Dispute
is otherwise resolved in accordance with this Section 10.
16
10.5 Governing Law; Waiver of Jury. Any questions, claims, disputes,
remedies, or litigation arising from or related to this Agreement, and any
relief or remedies sought by any parties hereunder, shall be governed
exclusively by the laws of the State of New York, without giving effect to the
conflicts of laws principles thereof. Each Party hereby irrevocably waives any
and all statutory or constitutional right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the actions of the parties in
the negotiation, administration, performance or enforcement thereof.
10.6 Litigation; Jurisdiction. In the event and to the extent that the
parties are unable to resolve any dispute in the manner provided above, and as a
last resort only, any party may commence litigation; provided that any lawsuit
must be filed and maintained in the state or federal courts (as jurisdictionally
appropriate) of the state in which one or more defendants is to receive notices
under Section 11.2.
11. GENERAL PROVISIONS
11.1 Expenses. All fees and expenses incurred in connection with this
Agreement, including all fees of counsel and accountants, shall be borne by the
Party incurring the same.
11.2 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and delivered by
hand or mailed, certified or registered mail with postage prepaid, or by
telecopier, or by overnight courier service:
(i) If to Seller, to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Executive Vice President
Transportation Business 3M Company 3M
Center, ▇▇▇▇. ▇▇▇-▇▇▇-▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ Fax No. ▇▇▇-▇▇▇-▇▇▇▇
17
with a copy to:
--------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President Legal Affairs and
General Counsel
3M Company
3M Center, ▇▇▇▇. ▇▇▇-▇▇▇-▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
or to such other person or address as Seller shall furnish in writing.
(ii) If to Purchaser, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Operating Officer
▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to:
--------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Secretary
▇▇▇▇▇▇ Corporation
One Technology Drive
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other person or address as Purchaser shall furnish in writing.
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(i) If to the Joint Venture Company, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Secretary
▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to:
--------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other person or address as the Joint Venture Company shall furnish in
writing.
11.3 Assignment. This Agreement and all of its provisions shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. Purchaser may assign its rights and benefits
under this Agreement (but not its obligations) to any Person which acquires
either the shares of the Joint Venture Company or all or substantially all the
assets of the Joint Venture Company. Except as set forth in the preceding
sentence, neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned by any of the Parties without the prior
written consent of the other Parties, except by operation of law.
11.4 Counterparts. This Agreement may be executed simultaneously in two
or more identical counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
11.5 Interpretation. The headings of the Sections and Subsections of
this Agreement are inserted for convenience only and shall not constitute a part
of or affect in any way the meaning or interpretation of this Agreement. The
words "include," "includes" and "including" when used in this Agreement shall be
deemed in each case to be followed by the words "without limitation."
19
11.6 Entire Agreement. This Agreement, including the Exhibits and
Schedules to this Agreement, and the other documents and certificates delivered
pursuant to the terms of this Agreement set forth the entire agreement and
understanding of the Parties with respect to the subject matter of this
Agreement and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any Party.
11.7 Amendment; Waiver. This Agreement may be amended only by a written
instrument executed by Seller, Purchaser and the Joint Venture Company. Any
failure of any Party to comply with any obligation, agreement or condition under
this Agreement may only be waived in writing by the other Parties, but such
waiver shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. No failure by any Party to take any action against
any breach of this Agreement or default by the other Parties shall constitute a
waiver of such Party's right to enforce any provision of this Agreement or to
take any such action.
11.8 Third Parties. Except as specifically set forth or referred to in
this Agreement nothing in this Agreement expressed or implied is intended, or
shall be construed, to confer upon or give to any person or entity other than
the Parties and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
11.9 Additional Documents and Acts. After the Closing, each Party
agrees to execute and deliver such additional documents, certificates and
instruments, and to perform such additional acts, as may be reasonably requested
and necessary or appropriate to carry out all of the provisions of this
Agreement, and to consummate all of the transactions contemplated by this
Agreement including, without limitation, such documents as may be required to
confirm the termination of any obligation Seller may have had prior to the
Closing to guaranty indebtedness of the Joint Venture Company.
11.10 Specific Performance. The Parties agree that irreparable damage
would occur in the event any provision of this Agreement were not performed in
accordance with the terms hereof and that the Parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or in equity.
11.11 No Causes of Action Against Individuals. No claims relating to
the subject matter of this Agreement may be brought by any Party against any
director, officer or employee of the other Party in his or her individual
capacity.
11.12 No Presumption Regarding Drafting. The Parties acknowledge that
they have reviewed this Agreement prior to its execution and that changes were
made to this Agreement based upon their comments. If any disputes arise with
respect to the interpretation of any provision of this Agreement, the provision
shall be deemed to have been drafted by all of the Parties to it and shall not
be construed against any Party on the basis that the Party was responsible for
drafting that provision.
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IN WITNESS WHEREOF, the Parties have executed this Agreement, acting by
their duly authorized agents, as of the date first above written.
SELLER: PURCHASER:
3M COMPANY ▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------- --------------------
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------ ----------------
Title: Executive Vice President Title: Vice President and Secretary
-------------------------- ----------------------------
3M INNOVATIVE PROPERTIES COMPANY JOINT VENTURE COMPANY:
▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------- -------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------- ------------------
Title: Secretary Title: Chief Financial Officer
--------- -----------------------
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