ASSET PURCHASE AGREEMENT
Exhibit
10.1
THIS
ASSET PURCHASE AGREEMENT (this “Agreement”)
is
effective as of June 22, 2006 (the “Effective
Date”),
by
and among ELECTRONIC
BILLBOARD TECHNOLOGY, INC.,
a
Delaware corporation (the “Seller”),
NANO-PROPRIETARY,
INC.,
a Texas
corporation (the “Stockholder”),
NOVUS
DISPLAYS, LLC,
an Ohio
limited liability company (the “Purchaser”),
and
NOVUS
COMMUNICATION TECHNOLOGIES, INC.,
an Ohio
corporation, the sole Member of Purchaser (the “Member”).
Background
Seller,
Stockholder and Member have entered into that certain Patent Purchase Agreement
dated as of the Effective Date regarding substantially all of the system
and
method patents and patent applications related thereto of Seller related
to
digital billboard networks and advertising therewith (the “Patent
Purchase Agreement”).
Seller
desires to sell and Purchaser desires to purchase substantially all of the
remaining assets of Seller, not otherwise included in the Patent Purchase
Agreement, including those related to the digital or electronic display business
of Seller (the “Business”),
all
as more particularly described in this Agreement.
NOW
THEREFORE,
in
consideration of the representations, warranties and covenants contained
in this
Agreement and other consideration, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. CLOSING.
The
closing of this Agreement (the “Closing”)
will
take place within five business days following the date on which the conditions
set forth in this Agreement have been satisfied or duly waived or on such
other
date as the parties mutually agree, but in no event later than June 22, 2006
(the “Closing
Date”).
2. ASSETS
TO BE PURCHASED.
On
the
Closing Date and subject to the terms and conditions of this Agreement, Seller
shall sell, convey, transfer, assign, set over and deliver to Purchaser all
of
Seller’s right, title and interest in and to those of following assets which
Purchaser owns on the Closing Date (collectively, the “Purchased
Assets”):
2.1 all
Intellectual Property used in the Business or otherwise owned by Seller,
including, but not limited to, the items listed and described on Exhibit
A;
as used
herein, “Intellectual
Property”
includes:
(a) registered
and unregistered trademarks, service marks, trade dress, brands, logos, symbols,
emblems and slogans, together with the goodwill associated with the foregoing
and any applications to register the foregoing;
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(b) copyrights
(including any registrations therefor), works of authorship, maskworks,
schematics, proprietary information, know-how, trade secrets, computer software,
technology, ideas, algorithms, methods, processes, and inventions;
(c) patents
and patent applications (and all patents issuing therefrom), including, but
not
limited to, those listed in Exhibit
A,
and all
continuations, continuations-in-part, divisionals, reexaminations, reissues,
extensions, and foreign counterparts, as well as all patents or patent
applications claiming priority from any of the foregoing, and the right to
claim
priority to any of the foregoing (the assets described in this section 2.5(c)
are referred to herein as the “Patent
Assets”);
(d) all
documents and documentation (whether in written or electronic form), owned,
possessed, in the custody of or under the control of Seller, which are related
to the Intellectual Property, including, but not limited to, research
documentation, inventors’ notebooks, prototypes, designs, software and similar
materials, invention disclosure documents, and file histories for any patents
and patent applications; and
(e) the
right
to all causes of action (either in law or in equity) and the right to xxx,
counterclaim, cross-claim, and recover for past, present or future infringement,
misappropriation or violation of the Intellectual Property (or any portion
thereof) in the United States and throughout the world.
2.2 all
competitor data, mailing lists and all sales, pricing, prototypes, samples,
drawings, research notes, writings, experimental results, product development,
business plans, market appraisals and information and other data, files,
records
and reports relating to the Purchased Assets or the Business;
2.3 any
existing customer and supplier lists;
2.4 all
software and computer hardware owned by Seller (whether or not listed on
Exhibit
A)
and
used in the Business or otherwise owned by Seller; and
2.5 all
other
miscellaneous assets of Seller that are used in Business.
3. EXCLUDED
ASSETS.
Notwithstanding
any other provision of this Agreement, Seller shall retain and shall not
transfer to Purchaser the following assets (the “Excluded
Assets”):
3.1 all
of
Seller’s cash on hand as of the Closing Date;
3.2 all
accounts receivable of Seller in existence at the time of Closing;
3.3 all
system and method patents or patent applications (foreign or domestic) related
thereto, owned or licensed by Seller, which are the subject of the Patent
Purchase Agreement;
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3.4 the
organizational documents, including corporate minute books and stock books,
having to do solely with the organization of Seller;
3.5 financial
and accounting records of the Seller;
3.6 the
corporate and trade name of Seller; and
3.7 other
items of excluded assets as described in Exhibit
B.
4. PURCHASE
PRICE; CASH TO CLOSE; DOCUMENTS TO BE DELIVERED AT CLOSING; CLOSING
PROCEDURE.
4.1 Purchase
Price.
The
total purchase price for the Purchased Assets payable hereunder shall be
$500,000.00 (the “Purchase
Price”)
which
shall be payable as follows: (i) $498,000.00 in cash at the Closing (the
“Cash
to Close”),
(ii)
$1,000.00 to each of Seller and Stockholder pursuant to the terms and conditions
of the non-compete agreements between Purchaser and each of Seller and
Stockholder in the form set forth on Exhibit
C
(the
“Noncompete
Agreements”);
and
(iii) a twenty-five percent (25%) membership interest in the Purchaser. All
of
the Cash to Close shall be paid in immediately available funds to Seller
in the
manner set forth on a closing statement that Purchaser prepares and delivers
to
Seller prior to the Closing (the “Closing
Statement”).
The
parties hereby agree that the Closing Statement shall reflect an adjustment
in
favor of Purchaser in the amount of $200,000, which reflects the amount
Purchaser has previously paid to Seller towards the Purchase Price.
4.2 Documents
to be Delivered at Closing.
The Noncompete
Agreements, the Xxxx of Sale and Assignment and Assumption Agreement (as
defined
below), the
Intellectual Property Assignment and Assumption Agreements (as defined below),
the Operating Agreement of Purchaser (as defined below) and
any
other agreements, documents, or instruments that this Agreement contemplates
are
collectively referred to in this Agreement as the “Collateral
Agreements.”
4.2.1 At
the
Closing, Seller shall deliver to Purchaser:
(a) (i)
documents in form and substance satisfactory to counsel for Purchaser evidencing
releases of any liens, claims, pledges, security interests or other encumbrances
(collectively, the “Liens”)
on any
of the Purchased Assets, (ii) such other instruments of conveyance, assignment
and transfer, in form and substance satisfactory to Purchaser and its counsel,
as shall be effective to convey, transfer and assign to Purchaser good and
marketable title to the Purchased Assets, free of all Liens;
(b) a
copy of
the text of the resolutions adopted by the board of directors of Seller and
the
Stockholder authorizing the execution, delivery and performance of this
Agreement and the consummation of all of the transactions contemplated in
this
Agreement, duly certified by Seller’s secretary or assistant secretary to the
effect that such copies are true, correct and complete copies of such
resolutions and that such resolutions were duly adopted and have not been
amended or rescinded;
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(c) a
certificate of good standing of Seller from the secretary of state of the
state
where Seller is incorporated and in each other jurisdiction in which Seller
conducts business;
(d) an
incumbency certificate executed on behalf of Seller by its secretary certifying
the signature and office of each officer executing this Agreement and the
other
documents and instruments contemplated in this Agreement;
(e) a
certificate that an officer of Seller executes, dated as of the Closing Date,
certifying as to the fulfillment of the conditions set forth in Sections
10.1
and
10.2;
and
(f) a
receipt
for the Cash to Close.
4.2.2 At
the
Closing, Purchaser will deliver to Seller:
(a) the
Cash
to Close;
(b) the
Closing Statement;
(c) a
copy of
the text of the resolutions adopted by the sole member of Purchaser authorizing
the execution, delivery and performance of this Agreement and the consummation
of all of the transactions contemplated in this Agreement, duly certified
by
Purchaser’s secretary or assistant secretary to the effect that such copies are
true, correct and complete copies of such resolutions and that such resolutions
were duly adopted and have not been amended or rescinded;
(d) a
certificate of good standing of Purchaser from the secretary of state of
the
state where Purchaser is organized and in each other jurisdiction in which
Purchaser conducts business;
(e) an
incumbency certificate executed on behalf of Purchaser by its secretary
certifying the signature and office of each officer or representative executing
this Agreement and the other documents and instruments contemplated in this
Agreement; and
(f) a
certificate that an officer of Purchaser executes, dated as of the Closing
Date,
certifying as to the fulfillment of the conditions set forth in Sections
9.1
and
9.2.
4.2.3 At
the
Closing, the parties shall deliver to each other the following:
(a) the
Noncompete Agreement;
(b) the
operating agreement of Purchaser which reflects the ownership by Seller of
a 25%
membership interest and the ownership by Advanced Technology Incubator, Inc.
("ATI")
of a
5% membership, in a form satisfactory to Purchaser, Seller and Member (the
“Operating
Agreement”);
(c) a
xxxx of
sale and assignment and assumption agreement pursuant to which, as of the
Closing Date, Seller will assign to Purchaser all the Purchased Assets, and
Purchaser will assume the Assumed Liabilities (as defined below), substantially
in the form set forth on Exhibit
D
(“Xxxx
of Sale and Assignment and Assumption Agreement”);
and
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(d) individual
instruments of assignment or transfer by country and corporate owner, of
the
patents, trademarks and copyrights which constitute the Intellectual Property,
sufficient to convey and vest full legal and equitable title in the Intellectual
Property to the Purchaser, in recordable form, if not already registered
or
applied for in the name of the Purchaser (the “Intellectual
Property Assignment and Assumption Agreements”).
5. REPRESENTATIONS
AND WARRANTIES OF SELLER AND STOCKHOLDER.
Seller
and Stockholder, jointly and severally, represent and warrant to Purchaser
and
Member that, except as may be set forth in particularity and in detail on
the
disclosure schedules attached to this Agreement, which shall be arranged
in
paragraphs corresponding to the numbered paragraphs in this Section 5
(the
“Disclosure
Schedules”),
the
following statements are true and correct as of this date and will be true
and
correct as of the Closing Date:
5.1 Organization;
Good Standing; Ownership. Seller
is
a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware. Stockholder holds of record and owns beneficially
1,000 shares of Seller's common stock, constituting all of the issued and
outstanding shares of Seller's capital stock.
5.2 No
Violation. The
execution and delivery of this Agreement, the Collateral Agreements and any
documents and agreements that Seller or Stockholder are to execute and deliver
pursuant to this Agreement to consummate the transactions contemplated hereby
do
not and will not (i) to the knowledge of Seller and Stockholder, violate
any
provision of the terms of any applicable law, rule or regulation of any
governmental body having jurisdiction, the violation of which would have
a
material adverse effect on Seller or Stockholder, (ii) conflict with or result
in a breach of any provision of Seller’s articles of incorporation or bylaws or
result in a default under any of the terms, conditions or provisions of,
or
result in the breach of, conflict with, or accelerate or permit the acceleration
of the performance required by, any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation of any nature whatsoever, whether
written or oral, to which Seller or Stockholder is a party, or (iii) to Seller’s
or Stockholder’s knowledge, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller, Stockholder or any of their
respective properties or assets in a manner that would have a material adverse
effect on Seller or Stockholder.
5.3 Authorization
and Validity. The
execution, delivery, and performance of this Agreement and the Collateral
Agreements by Seller have been (or prior to the Closing will be) duly and
validly authorized and approved by all necessary action on the part of Seller,
and this Agreement and the Collateral Agreements are legally binding upon
and
enforceable against Seller and Stockholder in accordance with their respective
terms, except to the extent that such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relative to or affecting
the rights and remedies of creditors generally and by general principles
of
equity (regardless of whether in equity or at law).
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5.4 Marketable
Title; No Liens. Seller
has good and marketable title to the Purchased Assets, free and clear of
all
Liens, except for Liens set forth in Schedule
5.4
to be
satisfied at Closing. Purchaser shall transfer to Purchaser at Closing good
and
marketable title to the Purchased Assets, and the Purchased Assets shall
be free
from all Liens.
5.5 Condition
of Purchased Assets. The
Purchased Assets are all of the assets, except for those assets subject to
the
Patent Purchase Agreement, which Seller currently uses for the operation
of the
Business. To the extent applicable, the Purchased Assets are in a good state
of
repair, reasonable wear and tear only excepted and meet and fulfill the
requirements of all applicable safety, environment, building, zoning, fire,
health and other laws and ordinances and rules and regulations affecting
the
same.
5.6 Contracts.
Seller
has no existing contracts or licenses.
5.7 Real
Property/Environmental Matters.
Seller
does not, and has not, leased or owned any real property. Seller is unaware
of
any circumstance that would have created any obligation of Seller with regard
to
any environmental liabilities or obligations.
5.8 Labor
and Employment Matters. Seller
has had no employees since 2002.
Seller
has at all times been in compliance with all applicable laws respecting
employment and employment practices and the terms and conditions of employment
and wages and hours, including, without limitation, any such laws respecting
employment discrimination; equal employment opportunity; immigration; social
security; Medicare and other similar taxes; occupational safety and health;
the
Worker Adjustment and Retraining Notification Act (or other similar state
or
local statute or regulation ); and unfair labor practices. Seller
has never been a party to any pension, retirement, profit sharing, bonus
or
other benefit plan, arrangement or understanding applicable to any of its
employees.
5.9 Solvency.
Stockholder is the sole creditor of Seller. Seller and Stockholder shall
not
cause Seller to file for bankruptcy protection within ninety days from the
Closing Date.
5.10 Financial
Statements. The
annual and interim financial statements and other financial information related
to the Purchased Assets delivered to Purchaser prior to the date hereof,
(i)
present fairly in all material respects the financial position and results
of
operations of the Business as of the date of such financial statements, and
(ii)
are true and correct and in accordance with the books of account and records
of
the Business.
5.11 Litigation.
There
are
no claims, lawsuits, actions, arbitrations or other proceedings pending with
respect to this Agreement and the transactions contemplated hereby. Other
than
as set forth on Schedule
5.11,
there
are no claims, lawsuits, actions, arbitrations or other proceedings or
governmental investigations pending or, to the knowledge of Seller and
Stockholder, threatened against Seller or any of its officers, directors,
employees or affiliates involving, affecting or relating to Seller, Stockholder,
the Business or the Purchased Assets (collectively, the “Claims”).
The
information contained on each Claim set forth on Schedule
5.11,
includes: (i) the name of each party to the
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Claim;
(ii) the monetary amount being demanded by each party to the Claim; (iii)
if
there are demands for something other than monetary damages, a description
of
the relief being sought; (iv) a caption name and case number for the Claim;
(v)
the court or administrative agency where such Claim is pending; (vi) the
status
of the Claim, including if any settlement discussions have occurred; and
(vii)
if such Claim is covered by insurance and if so, the name of the insurance
carrier, and whether or not the insurance carrier has reserved any rights
with
respect to such Claim. There are no outstanding judgments, orders, injunctions,
decrees, stipulations or awards (whether rendered by a court or administrative
agency, or by arbitration) against Seller or the Business.
5.12 Intellectual
Property. With
respect to the Intellectual Property:
5.12.1 Seller
is
the owner of the Intellectual Property free and clear of any Liens, encumbrances
or defects in title, and Seller has the right to use the same in the conduct
of
the Business and to assign such rights to Purchaser;
5.12.2 Seller
has no licensed Intellectual Property;
5.12.3 Except
for patent prosecution activities, no proceedings or actions before any court
or
tribunal (including the USPTO or equivalent authority anywhere in the world)
have been instituted, are pending or, to the knowledge of Seller or Stockholder,
threatened which challenge any rights with respect to the validity or
enforceability of the Intellectual Property, or which in any way relate to
the
Intellectual Property;
5.12.4 No
issued
patent or pending patent application has been or is now involved in any
interference, reissue, reexamination or opposition proceeding, and, to the
knowledge of Seller or Stockholder, there is no potentially interfering patent
or patent application owned by any third party;
5.12.5 To
the
knowledge of Seller or Stockholder, all patents, patent applications, registered
trademarks and service marks, and copyrights included in the Intellectual
Property are valid, enforceable and subsisting;
5.12.6 To
the
knowledge of Seller or Stockholder, there are no defects in the prosecution
of
the Patent Assets and all duties of disclosure owed to the USPTO (or equivalent
patent authority anywhere in the world) have been fulfilled in the prosecution
of the Patent Assets;
5.12.7 To
the
knowledge of Seller or Stockholder, there has been no fraud or inequitable
conduct during the prosecution of the Patent Assets;
5.12.8 Except
as
set forth on Schedule 5.12.8,
to the
knowledge of Seller or Stockholder, there is no unauthorized use, disclosure,
infringement or misappropriation of the Intellectual Property;
5.12.9 To
the
knowledge of Seller or Stockholder, neither Seller nor the Intellectual Property
(including the practice of any claimed invention in the Patent Assets) is
infringing upon or otherwise violating the rights of others (including, but
not
limited to, the patent rights of any other party);
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5.12.10 Except
for patent prosecution activities, the validity, enforceability, scope, content
or title of any Intellectual Property has not been challenged, questioned
or
threatened by any third party, in any way (including, but not limited to,
the
patentability of any claimed invention in a patent application);
5.12.11 The
patents and patent applications identified in Exhibit
A
are
currently in compliance with all applicable legal requirements (including
payment of filing, examination and maintenance fees), and are not subject
to any
maintenance fees, taxes or actions falling due prior to within thirty (30)
days
after the Closing Date;
5.12.12 The
Intellectual Property is not subject to any outstanding order, decree, judgment,
stipulation or charge;
5.12.13 No
licenses, sublicenses or agreements granting rights in any of the Intellectual
Property have been granted or entered into by Seller, or will be granted
or
entered into by Seller other than to Purchaser or its designee;
5.12.14 To
the
extent necessary to effectuate the transaction contemplated hereby, Seller
has
secured valid written assignments from all consultants, employees and others
who
contributed to the creation or development of Intellectual Property of the
rights to such contributions that Seller does not already own by operation
of
law;
5.12.15 Seller
is
not obligated to pay any royalties or make similar payments in respect of
the
Intellectual Property; and
5.12.16 The
Intellectual Property is all of the intellectual property used in the Business
and that is needed to operate the Business, and Exhibit
A
is a
complete list of all issued patents and pending patent applications included
in
Intellectual Property.
5.13 Approvals.
There
are
no registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers required to be made, filed, given or obtained
by
Seller or Stockholder with, to or from any person or governmental authority
in
order to consummate the transactions contemplated herein.
5.14 Insurance.
Seller
has no insurance policies which cover the Business or any of Seller’s assets.
Neither Seller nor Stockholder has received any notice of a (a) cancellation
or
termination of any insurance policy covering Seller or its assets, or (b)
refusal of coverage or that a defense will be afforded with reservation of
rights.
5.15 No
Material Adverse Change. Since
March 8, 2006, (i) there has not been any material adverse change in the
business, assets, financial condition, or results of operations of Seller,
and
(ii) Seller has operated the Business consistent with past practices of the
Business in the last three years.
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5.16 Taxes.
Seller
has duly and timely filed (taking into account any extensions granted with
respect thereto) all Tax Returns (as defined below) required to have been
filed
by, or with respect to, Seller. All such Tax Returns are true, complete and
correct. All Taxes (as defined below) required to have been paid by (or
presently claimed by any governmental authority to be due from) Seller, or
with
respect to a period covered by a Tax Return of Seller, whether or not shown
on
any Tax Return of Seller, have been paid or are shown on the balance sheet
included in the financial statements of Seller that Seller has previously
delivered to Purchaser.“Tax
Returns”
means
any return, report, information return, schedule, certificate, statement
or
other document filed or required to be filed with a governmental authority
in
connection with any Tax. “Tax”
means:
(i) any income, alternative or add-on minimum tax, gross income, gross receipts,
franchise, profits, including estimated taxes relating to any of the foregoing,
or other similar tax or other like assessment or charge of similar kind
whatsoever, together with any interest and any penalty, or additional amount
imposed by any governmental authority responsible for the imposition of any
such
Tax (domestic or foreign); or (ii) any sales, use, ad valorem, business license,
withholding, payroll, employment, excise, stamp, transfer, recording,
occupation, premium, property, unclaimed property, value added, custom duty,
severance, windfall profit or license tax, governmental fee or other similar
assessment or charge, together with any interest and any penalty, or additional
amount imposed by any governmental authority responsible for the imposition
of
any such tax (domestic or foreign).
5.17 Disclosure.
All
information, schedules, documents and other materials delivered to the Purchaser
by or on behalf of the Seller are true, correct and complete in all material
respects. Seller
has provided Purchaser with all material information it possesses, whether
in
written or non-written form, related to the Purchased Assets. Seller
does not have knowledge of any fact that has specific application to Seller
or
the Purchased Assets (other than general economic or industry conditions)
and
that may materially adversely affect the Purchased Assets or the Business
that
has not been otherwise set forth in this Agreement. Seller
has not knowingly provided access to any non-public information associated
with
the Purchased Assets or the Seller’s Business to any third party other than its
authorized representatives.
5.18 Seller’s
and Stockholder’s representations and warranties contained in this Agreement
will survive the Closing Date for a period of two (2)
years; provided that the representations and warranties contained in Sections
5.12 and 5.11
will
survive the Closing for a period equal to the relevant statute of limitations
plus sixty days. Seller’s covenants will survive indefinitely unless otherwise
stated in the individual covenant. The limitations on the survival of
representations and warranties in this Agreement shall not limit any rights,
causes of action or other claims Purchaser may have against Seller under
common
law, equity, statute or regulation.
5.19 For
purposes of all of the Representations and Warranties made by the Seller
or
Stockholder herein, any reference to the word(s) “knowledge” or “to the best of
Seller’s or Stockholder’s knowledge” shall refer to the actual knowledge of Xxxx
Xxxxx, Xxx Xxxxx and Xxxxxxx Xxxxx, upon reasonable investigation or inquiry,
as
of the date of this Agreement.
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6. REPRESENTATIONS
AND WARRANTIES OF PURCHASER.
6.1 Good
Standing and Organization. Purchaser
is duly organized, validly existing and in good standing under the laws of
the
State of Ohio.
6.2 Authority
and Validity. The
execution, delivery, and performance of this Agreement and the Collateral
Agreements by Purchaser have been (or prior to the Closing will be) duly
and
validly authorized and approved by all necessary action on the part of
Purchaser, and this Agreement and the Collateral Agreements are legally binding
upon and enforceable against Purchaser in accordance with their terms, except
to
the extent that such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relative to or affecting the rights
and
remedies of creditors generally and by general principles of equity (regardless
of whether in equity or at law).
6.3 No
Violation. The
execution and delivery of this Agreement and the documents and agreements
to be
executed and delivered pursuant to this Agreement to consummate the transactions
contemplated hereby do not and will not (i) to the knowledge of Purchaser,
violate any provision of the terms of any applicable law, rule or regulation
of
any governmental body having jurisdiction, (ii) result in a default under
any of
the terms, conditions or provisions of, or result in the breach of, or
accelerate or permit the acceleration of the performance required by, any
note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
of any nature whatsoever to which Purchaser is a party, or (iii) violate
any
order, writ, injunction, decree, statute, rule or regulation applicable to
Purchaser or any of its property or assets, and are enforceable in accordance
with their terms.
6.4 Litigation.
There
are
no claims, lawsuits actions, arbitrations or other proceedings pending or,
to
the knowledge of Purchaser, threatened by or against Purchaser with respect
to
this Agreement, or which would materially affect the consummation of the
transactions contemplated hereunder or any of the representations and warranties
contained herein.
Purchaser’s
representations and warranties contained in this Agreement will survive the
Closing Date for a period of two (2) years. The limitations on the survival
of
representations and warranties in this Agreement shall not limit any rights,
causes of action or other claims Seller may have against Purchaser under
common
law, equity, statute or regulation. Purchaser’s covenants will survive
indefinitely unless otherwise stated in the individual covenant.
7. CERTAIN
PRE-CLOSING COVENANTS.
From
the
Effective Date through the Closing Date:
7.1 Conduct
of Business. Seller
shall carry on its business in the usual and normal course consistent with
its
past business practices and industry standards. Except with prior written
consent of Purchaser, Seller shall not purchase any asset, or enter into
any
contract or agreement involving more than $1,000.
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7.2 Access.
Seller
shall permit Purchaser and its representatives to have full access to Seller’s
auditors and legal counsel and to all books and records of Seller at reasonable
hours. Seller shall furnish Purchaser with such financial and operating data
and
other information with respect to any of the Purchased Assets as Purchaser
may
from time to time request.
7.3 Maintenance
of Purchased Assets. Seller
shall maintain the Purchased Assets in good state of repair, reasonable wear
and
tear only excepted, and meet the requirements of all applicable safety,
environment, building, zoning, fire, health and other laws, ordinances, rules
and regulations affecting same.
7.4 No
Indebtedness. Seller
will not create, incur, assume, guarantee or otherwise become liable with
respect to any indebtedness for any reason whatsoever, except in the ordinary
course of business.
7.5 Accounting
Practices. Seller
shall maintain its accounting books, records and accounts in accordance with
customary practices, consistently applied, and shall not make any change
in any
method of accounting or accounting principle, method, estimate or practice.
Seller shall maintain all other files and records consistent with past
practice.
7.6 Corporate
Existence. Seller
shall maintain its corporate existence and powers, shall not make any change
in
its articles of incorporation or bylaws and shall not dissolve or
liquidate.
7.7 No
Disposal of Purchased Assets. Except
pursuant to the terms of any contract executed on or before the Effective
Date
and made known to Purchaser, or upon the direction of Purchaser, Seller shall
not dispose of any of the Purchased Assets or enter into or assume any
obligation with respect thereto, or modify or amend in any material respect,
or
terminate, any contract, agreement, lease, license or commitment which is
part
of the Purchased Assets, except as expressly contemplated by this Agreement.
Seller shall not subject any of the Purchased Assets to any Liens, or suffer
any
Liens to exist.
7.8 No
Breach. Neither
Seller nor Stockholder shall knowingly do any act or omit to do any act that
will cause a breach of any contract, agreement, obligation, lease, license
or
commitment included in the Purchased Assets.
7.9 Notice
of Certain Events. Seller
and Stockholder shall promptly notify Purchaser in writing of any threatened
lawsuit, or claim against Seller or Stockholder relating to the business
of
Seller, or any adverse change or any projected or threatened adverse change
to
Seller or the Purchased Assets.
7.10 Maintenance
of Insurance. Seller
shall keep in full force and effect insurance (including casualty and public
liability policies) comparable in amount, scope and coverage maintained with
respect to the Business as of the Effective Date.
7.11 Obtaining
Consents. Seller
shall obtain any and all necessary consents and Approvals of creditors, whether
secured or unsecured, or other third parties with respect to the transactions
contemplated by this Agreement.
11
7.12 Representations
and Warranties. Seller,
Stockholder and Purchaser shall not take any action which would cause any
of the
representations or warranties made in this Agreement not to be true and correct
in all respects on and as of the Closing Date with the same force and effect
as
if such representation or warranty had been made on and as of the Closing
Date,
except for changes in any such representation or warranty approved in writing
by
Purchaser or Seller (as the case may be). Seller, Stockholder and Purchaser
shall not agree to take any actions prohibited by this Section 7.12.
7.13 Joint
Ventures. Seller
shall not enter into any joint venture or partnership.
7.14 Notice
of Damages. Seller
shall give prompt written notice to Purchaser of any damage to or destruction
or
loss of any Purchased Assets occurring prior to Closing which exceeds or
may
exceed an aggregate of $5,000.
7.15 Public
Statements. Seller,
Stockholder and Purchaser hereby agree to make the public statement or press
release set forth on Exhibit
E
at
Closing, and no other public statement or release with respect to this Agreement
and the transactions contemplated hereby shall be made by either Seller or
Purchaser before or after the Closing Date without the prior written consent
of
such other party.
7.16 Notice
Concerning Miscellaneous Contract and Licenses. Seller
shall give prompt written notice to Purchaser of any occurrence, condition
or
act of which Seller becomes aware indicating that any of the other parties
to
the Miscellaneous Contract or Licenses intend to or is considering termination,
non-renewal, a material reduction in the volume of, or refusal to consent
to
Seller’s assignment to Purchaser of any such contract prior to the end of its
stated term.
8. COVENANTS
WHICH INCLUDE POST CLOSING ACTIONS.
8.1 Taxes.
From
and
after the Effective Date, except for Taxes contested in good faith and by
appropriate proceedings diligently conducted, Seller shall pay all Taxes
levied
against Seller or Stockholder or upon their properties and the Business,
relating to events or time periods prior to the Closing Date, as they become
due, and shall timely file all returns relating to such Taxes.
8.2 Access
to Books and Records. Following
the Closing, Seller and Purchaser shall allow each other access to available
books and records of the Business as either shall reasonably
request.
8.3 Notice
to Customers. At
Purchaser’s written request, Seller shall deliver to Purchaser or directly to
any of Seller’s former customers or suppliers (i.e., those with which Seller has
carried on any business activity within the 24 month period prior to the
Effective Date), a letter prepared by Purchaser and executed by Seller, pursuant
to which Seller shall advise each addressee that the Purchased Assets have
been
sold to Purchaser.
8.4 Disclosure.
Except
as
required by law, neither Seller, Stockholder nor Purchaser will, without
the
prior consent of the other parties, disclose any of the terms of this Agreement
other than as set forth on Exhibit
E to
any
third party, other than a party’s
12
accountants,
attorneys and advisors. Notwithstanding
the foregoing, either party may file any documents it is legally required
to
file with the Securities and Exchange Commission upon timely notice to and
consultation with the other party, it being understood that it is the intent
of
the parties to limit the disclosure of confidential information to the extent
legally possible.
8.5 No
Solicitation. Seller
and Stockholder agree that neither they, nor any of their affiliates, nor
any of
their respective directors, executive officers, agents or representatives
will,
directly or indirectly, (i) solicit, initiate or encourage (including by
way of
furnishing information) any inquiries or the making of any proposal with
respect
to any merger, consolidation or other business combination involving Seller
or
the acquisition of all or any significant part of the assets or capital stock
(including, but not limited to, a control position voting interest) of Seller
(an “Acquisition
Transaction”),
(ii)
negotiate or otherwise engage in discussions with any person or entity with
respect to any Acquisition Transaction, or that may reasonably be expected
to
lead to a proposal for an Acquisition Transaction, or (iii) enter into any
agreement, arrangement or understanding (including any letter of intent,
agreement in principle or similar agreement) with respect to any such
Acquisition Transaction, in the case of each clauses (i), (ii) and (iii)
other
than in connection with the transactions with Purchaser contemplated by this
Agreement.
Seller
and Stockholder agree to promptly advise Purchaser of any inquiries or proposals
received by, any information requested from, or any negotiations or discussions
sought to be initiated or continued with, Seller, Stockholder, their affiliates,
or any of their respective directors, executive officers, agents or
representatives, in each case from a person or entity (other than Purchaser)
with respect to an Acquisition Transaction.
8.6 Consulting
Agreement.
After
the Closing Date, Purchaser and Stockholder shall enter into a consulting
agreement in substantially the form attached hereto as Exhibit
F
with
respect to certain employees of Stockholder the identity of which the parties
shall mutually agree upon.
9. CONDITIONS
TO SELLER’S AND STOCKHOLDER’S OBLIGATION TO CLOSE.
The
obligation of Seller and Stockholder to consummate this Agreement and the
Collateral Agreements is subject to the satisfaction of the following
conditions, unless waived by Seller and Stockholder:
9.1 Accuracy
of Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement shall
be
true and correct except where the failure to be true and correct would not
cause
a material adverse change on Purchaser taken as a whole (it being understood
that, notwithstanding anything to the contrary contained in this Agreement,
for
the sole purpose of determining whether there has been a material adverse
change
as a result of any inaccuracy of a representation or warranty of Purchaser,
such
representation or warranty shall be read as if it were not qualified by
“material” or “material adverse change” or other words of similar import), in
each case on the date hereof and on the Closing Date (unless the representations
and warranties address matters as of a particular date, in which case they
shall
remain true and correct in all respects as of such date).
13
9.2 Performance
of Obligations. Purchaser
shall have performed each obligation required to be performed by it under
this
Agreement prior to the Closing Date in all material respects.
9.3 Deliverables.
Seller
shall have received from Purchaser those items set forth in Sections
4.2.2
and
4.2.3.
9.4 No
Proceedings. No
action
or proceeding against Purchaser, Seller or Stockholder shall have been
instituted or, to the knowledge of the parties, threatened that, if successful,
could prohibit consummation or require substantial rescission of the
transactions contemplated by this Agreement and the Collateral Agreements
or
divestiture by Purchaser of any business purchased hereunder or any of the
Purchased Assets or impose material restrictions on the way Purchaser operates
the Purchased Assets following the Closing.
9.5 Contemporaneous
Closing. The
closing of the transactions contemplated by the Patent Purchase Agreement
shall
have occurred.
10. CONDITIONS
TO PURCHASER’S OBLIGATION TO CLOSE.
The
obligation of Purchaser to consummate this Agreement and the Collateral
Agreements is subject to the satisfaction of the following conditions, on
or
before the Closing Date unless waived by Purchaser:
10.1 Accuracy
of Representations and Warranties. The
representations and warranties of Seller and Stockholder contained in this
Agreement shall be true and correct except where the failure to be true and
correct would not cause a material adverse change on Seller taken as a whole
(it
being understood that, notwithstanding anything to the contrary contained
in
this Agreement, for the sole purpose of determining whether there has been
a
material adverse change as a result of any inaccuracy of a representation
or
warranty of Seller or Stockholder, such representation or warranty shall
be read
as if it were not qualified by “material” or “material adverse change” or other
words of similar import), in each case on the date hereof and on the Closing
Date (unless the representations and warranties address matters as of a
particular date, in which case they shall remain true and correct in all
respects as of such date).
10.2 Performance
of Obligations. Seller
and Stockholder shall have performed each obligation required to be performed
by
it under this Agreement prior to the Closing Date in all material
respects.
10.3 Deliverables.
Purchaser
shall have received from Seller and Stockholder those items set forth in
Sections 4.2.1
and
4.2.3.
10.4 No
Proceedings. No
action
or proceeding against Purchaser, Seller or Stockholder shall have been
instituted or, to the knowledge of the parties, threatened that, if successful,
could prohibit consummation or require substantial rescission of the
transactions contemplated by this Agreement and the Collateral Agreements
or
divestiture by Purchaser of any business purchased hereunder or any of the
Purchased Assets or impose material restrictions on the way Purchaser operates
the Purchased Assets following the Closing.
14
10.5 Satisfaction
of Creditors and Taxing Authorities. Seller
shall have notified Purchaser of, and paid or otherwise dealt to Purchaser’s
reasonable satisfaction with, any and all demands made by any creditor or
taxing
authority regarding obligations of Seller.
10.6 Release
of Liens. Seller
shall have obtained a release of any and all security interests and Liens
affecting the Purchased Assets and shall have delivered transfer documents
satisfactory in form and substance to counsel for Purchaser assigning and
conveying all such assets free and clear of any and all mortgages, Liens,
pledges, charges, adverse claims or encumbrances of any nature
whatsoever.
10.7 No
Material Adverse Change. There
shall not have occurred any material adverse change in the business, operations,
result of operations, projected contract revenue or financial condition of
Seller.
10.8 No
Damage. There
shall not have occurred a loss of or damage to the Purchased Assets in the
aggregate over $5,000.00, unless Seller has replaced the damaged, stolen
or lost
Purchased Assets to the reasonable satisfaction of Purchaser prior to
Closing.
10.9 Approvals.
Seller
shall have obtained all consents and approvals necessary to effectuate the
transactions contemplated by this Agreement and the Collateral
Agreements.
10.10
Contemporaneous
Closing. The
closing of the transactions contemplated by the Patent Purchase Agreement
by and
between Seller and Member shall have occurred.
10.11
Due
Diligence. Purchaser
shall be satisfied in its sole discretion with the results of its due diligence
investigation of the Business.
10.12
ATI
Contribution Agreement.
Purchaser shall have entered into a contribution agreement with ATI, in a
form
satisfactory to Purchaser and its counsel, in their sole discretion, for
the
technology under that certain patent assignment and royalty agreement, by
and
between Seller and ATI (the "Patent
Assignment Agreement").
Seller and ATI shall have terminated the Patent Assignment Agreement and
ATI
shall become party to the Operating Agreement of Purchaser.
11. TERMINATION.
11.1 Right
To Terminate. This
Agreement may be terminated and the transactions contemplated hereby may
be
abandoned at any time prior to the Closing Date:
11.1.1 Mutual
Consent.
By
mutual written consent of Purchaser and Seller;
15
11.1.2 By
Purchaser.
By
Purchaser, if any of the conditions set forth in Section 10
shall
have become incapable of fulfillment (other than as a result of a breach
of this
Agreement by Purchaser);
11.1.3 By
Seller.
By
Seller, if any of the conditions set forth in Section 9
shall
have become incapable of fulfillment (other than as a result of a breach
of this
Agreement by any of the Seller or Stockholder);
11.1.4 Termination
Date.
By
either Purchaser or the Seller, if the transactions contemplated hereby are
not
consummated on or before July 16, 2006; provided that, any such termination
shall not in any way prejudice Purchaser’s or Seller’s rights to seek specific
performance or other injunctive relief after such termination;
11.1.5 Breach
of Covenant.
By
either Purchaser or Seller, if the other party (or Stockholder, in case of
a
termination by Purchaser) shall be in material breach of any of its covenants
contained in this Agreement and such breach either is incapable of cure or
is
not cured within 30 days after notice from the party wishing to terminate;
provided, that the party seeking such termination (or Stockholder in the
case of
Seller) shall not also then be in material breach of this Agreement; and,
provided, further, that any material breach of the provisions of Section
8.5
shall
entitle Purchaser to an immediate right to termination without any notice
or
cure requirement;
11.1.6 Breach
of Representations and Warranties.
By
either Purchaser or Seller, if the other party (or Stockholder in the case
of
termination by Purchaser) shall be in breach of any of its representations
or
warranties contained in this Agreement, which breach, individually or together
with all other breaches, is reasonably expected to have a material adverse
change on such party, and such breach either is incapable of cure or is not
cured within 30 days after notice from the party wishing to terminate; provided,
that the party seeking such termination (or Stockholder in the case of Seller)
shall not also then be in material breach of this Agreement; or
11.1.7 Order
or Action by Governmental Entity.
By
either Purchaser or Seller, if a governmental entity shall have issued a
non-appealable final order or shall have taken any other action having the
effect of permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby.
11.2 Manner
and Effect of Termination. Termination
shall be effected by the giving of written notice to that effect by the party
seeking termination. If this Agreement is validly terminated and the
transactions contemplated hereby are not consummated, then this Agreement
shall
become null and void and of no further force and effect and no party shall
be
obligated to any other party hereunder; provided, however, that termination
shall not affect (a) the rights and remedies available to a party as a result
of
the breach by the other party or parties hereunder or (b) the provisions
of
Sections 7.15,
8.4
and
18.12
and any
provisions concerning indemnification for broker’s or similar fees, or this
Section 11.2.
16
12. INDEMNIFICATION.
12.1 Seller
Indemnification. Seller
and Stockholder, jointly and severally, agree to indemnify, defend, release,
and
hold Purchaser and Member and their affiliates, subsidiaries or related
companies, member and their directors, officers and employees harmless from
and
against any and all damages, losses, penalties, interest obligations,
liabilities (including tax liabilities), claims, judgments, causes of action,
deficiencies, costs, clean up costs, and expenses (including reasonable
attorneys’ fees and other costs) (“Damages”)
asserted against, incurred or required to be paid by Purchaser on account
of or
incident or pursuant to: (i) breach of any representation or warranty made
by
Seller or Stockholder in this Agreement, the Collateral Agreements or in
any
document delivered by Seller or Stockholder pursuant to or in connection
with
this Agreement; (ii) breach of any covenant or obligation made by Seller
or
Stockholder in this Agreement, the Collateral Agreements or any document
delivered by Seller or Stockholder pursuant to or in connection with this
Agreement; (iii) the business or operations of Seller or any conduct or failure
to act of Seller (or any of its employees or agents) before, at or after
the
Closing including any tax liability resulting therefrom; (iv) the ownership,
maintenance, use or operation of the Purchased Assets prior to or on the
Closing
Date; (v) releases, spills, discharges or leaks of oil, fuel, regulated,
hazardous, or toxic substances, or other pollutants of any kind in or on
any
real property owned, leased, operated or used by Seller that occurred on
or
before the Closing Date; (vi) the unauthorized disclosure of any terms of
this
Agreement or the transaction contemplated hereby; and (vii) any broker’s or
finders fees due and payable to any third party arising out of this Agreement
or
the transactions contemplated hereby where such party claims that it entered
into an agreement with Seller or Stockholder.
12.2 Purchaser
Indemnification. Purchaser
agrees to indemnify, defend, release, and hold Stockholder and Seller and
their
directors, officers and employees, as applicable, harmless from and against
any
and all Damages asserted against, incurred or required to be paid by Stockholder
or Seller on account of or incident to: (i) the breach of any representation
or
warranty made by Purchaser in this Agreement, the Collateral Agreements or
in
any document delivered pursuant to or in connection with this Agreement;
(ii)
the breach of any covenant or obligation made by Purchaser in this Agreement,
the Collateral Agreements or in any document delivered pursuant to or in
connection with this Agreement; (iii) the business or operations of Purchaser
before, at or after the date of this Agreement; (iv) the ownership, maintenance,
use, or operation of the Purchased Assets after the Closing Date; (v) the
unauthorized disclosure of any terms of this Agreement or the transaction
contemplated hereby; and (vi) any broker’s or finders fees due and payable to
any third party arising out of this Agreement or the transactions contemplated
hereby where such party claims that it entered into an agreement with
Purchaser.
17
13. INDEMNIFICATION
PROCEDURE.
13.1 With
respect to any matter for which indemnification is claimed by Purchaser,
Purchaser will promptly notify Seller and Stockholder in writing after Purchaser
becomes aware of it, and Seller and Stockholder will promptly and diligently
defend, contest, settle, compromise, or otherwise protect against any such
suit,
action, investigation, claim or proceeding at their own cost and expense;
provided, however, that Seller and Stockholder shall not, without the prior
written consent of Purchaser, consent to an entry of judgment or enter into
any
settlement (i) which does not include an unconditional release of Purchaser
from
all liability, or (ii) which requires action on the part of Purchaser or
otherwise subjects Purchaser to any obligation or restriction to which it
would
not otherwise be subject. Any delay or failure to so notify Seller or
Stockholder will only relieve Seller or Stockholder of their obligations
hereunder to the extent, if at all, that they or the proceedings are prejudiced
by reason of such delay or failure. Purchaser will have the right, but not
the
obligation, to participate, at its own expense, in the defense by counsel
of its
own choosing; however, Seller and/or Stockholder will be entitled to control
the
defense unless Purchaser has relieved Seller or Stockholder in writing from
liability with respect to the particular matter. If Seller and Stockholder
request that Purchaser participate in the defense and if Purchaser so elects,
at
Purchaser’s option, Seller and Stockholder will reimburse Purchaser for its
expenses and the cost of providing assistance at the request of Seller or
Stockholder, including, without limitation, reasonable attorneys’ fees and
investigation expenses. If Seller and Stockholder do not timely defend, contest
or otherwise protect against any suit, action, investigation, claim or
proceeding after receipt of the required notice from Purchaser, Purchaser
will
have the right, but not the obligation, to defend, contest or otherwise protect
against the same, make any compromise or settlement thereof, and recover
all
Damages as a result of such suit, action, investigation, claim, proceeding,
compromise, or settlement.
13.2 With
respect to any matter for which indemnification is claimed by Seller or
Stockholder, Seller or Stockholder will promptly notify Purchaser in writing
after Seller or Stockholder becomes aware of it, and Purchaser will promptly
and
diligently defend, contest, settle, compromise, or otherwise protect against
any
such suit, action, investigation, claim or proceeding at its own cost and
expense; provided, however, that Purchaser shall not, without the prior written
consent of Seller and Stockholder, consent to an entry of judgment or enter
into
any settlement (i) which does not include an unconditional release of Seller
and
Stockholder from all liability, or (ii) which requires action on the part
of
Seller and Stockholder or otherwise subjects Seller and Stockholder to any
obligation or restriction to which it would not otherwise be subject. Any
delay
or failure to so notify Purchaser will only relieve Purchaser of its obligations
hereunder to the extent, if at all, that it is prejudiced by reason of such
delay or failure. Seller or Stockholder will have the right, but not the
obligation, to participate, at their own expense, in the defense by counsel
of
their own choosing; however, Purchaser will be entitled to control the defense
unless Seller or Stockholder have relieved Purchaser in writing from liability
with respect to the particular matter. If Purchaser requests that Seller
or
Stockholder participate in the defense and if Seller or Stockholder so elect,
at
Seller’s or Stockholder’s option, Purchaser will reimburse Seller or Stockholder
for their expenses and the cost of providing assistance at the request of
Purchaser, including, without limitation, reasonable attorneys’ fees and
investigation expenses. If Purchaser does not timely defend, contest or
otherwise protect against any suit, action, investigation, claim or proceeding
after receipt of the required notice from Seller or Stockholder, Seller or
Stockholder will have the right, but not the obligation, to defend, contest
or
otherwise protect against the same, make any compromise or settlement thereof,
and recover all Damages from Purchaser as a result of such suit, action,
investigation, claim, proceeding, compromise, or settlement.
18
14. RIGHT
OF SET OFF; CAP.
14.1 The
Purchaser shall be entitled to offset any amount payable under the Non-Compete
Agreements or any claim for indemnity made pursuant to Section 12.1
against
(i) any payment of the Purchase Price hereunder or under the Non-Compete
Agreements or (ii) any distributions or other payments payable to Seller
pursuant to the Operating Agreement; provided, however, provided, however,
(i)
that Purchaser shall not withhold or set off any such amounts if Purchaser
elects to seek any other remedy available to Purchaser, at law or in equity
and
(ii) the Purchaser may only exercise such right of offset in respect of claims
relating to Damages actually incurred by Purchaser (in which case the amount
of
such offset shall be the amount of such actual Damages) or claims actually
asserted by a third party (in which case the amount of the offset shall not
exceed the Purchaser’s good faith estimate of the amount of indemnifiable
Damages that will ultimately be payable to the Purchaser in respect of such
claims). If any such claims for indemnity are resolved in favor of the Seller
by
mutual agreement or otherwise, or if the amount withheld exceeds the amount
ultimately payable to the Purchaser in respect of such claim, the Purchaser
shall pay to the Seller the excess amount withheld with respect to such claim,
together with interest thereon for the period such amount has been withheld
at a
rate equal to the published "prime rate" of interest for money center banks
as
published in The
Wall Street Journal
(Eastern
edition), in effect from time to time during the relevant period.
14.2 In
no
event shall the Seller’s indemnity obligations under Section
12.1
exceed
an amount equal to $1,000,000.00, which is equivalent to two times the Purchase
Price.
15. TAXES.
To
the
extent an obligation to pay any tax on the Purchased Assets arises under
applicable law, Seller agrees to pay any taxes duly imposed on the sale of
the
Purchased Assets.
16. DISCLAIMER
OF LIABILITIES.
Purchaser
does not assume and will not be responsible for any debts, obligations or
liabilities of Seller, accrued or unaccrued, fixed or contingent regardless
of
the character thereof and regardless of when asserted, including without
limitation: (i) any employee liabilities for unemployment compensation or
premiums, workers’ compensation claims or premiums; (ii) property or casualty
insurance premiums; (iii) accrued employee vacations, unfunded or under funded
employee benefit plans, whether multi employer or otherwise; (iv) any liability
of Seller arising from indebtedness for borrowed money or long-term debt
of
Seller; (v) any liability arising from, or in connection with the conduct
of
Seller’s business or the ownership of the Purchased Assets by Seller on or prior
to the Closing Date; (vi) any liability of Seller for Taxes owed to any taxing
authority; (vii) any liability or obligation of Seller under any contract
or
commitment; (viii) any accounts payable; (ix) any liability arising out of
the
employment or termination of employment of any person employed by Seller;
or (x)
any other liability of any nature (collectively, the “Retained
Liabilities”),
it
being understood that all of the Retained Liabilities shall remain the sole
responsibility of and shall be retained, paid, performed and/or discharged
solely by Seller.
19
17. TAX
ALLOCATION OF PURCHASE PRICE.
For
purposes of each party’s reporting of the transactions contemplated by this
Agreement to the United States Department of Internal Revenue Service, prior
to
the Closing, the parties shall agree as to a schedule allocating the Purchase
Price amongst the Purchased Assets which shall be set forth on Exhibit
G,
adjusted for additions and deletions of the Purchased Assets between the
Effective Date of this Agreement and the Closing. The Purchase Price allocation
as agreed upon by the parties shall be evidenced by the completion, by both
Seller and Purchaser, of Form 8594, Asset Acquisition Statement Under Section
1060 if the transactions contemplated hereby constitute the sale and purchase
of
a trade or business. Such Form is to be attached to both the Seller’s and
Purchaser's tax return in the tax year of the sale.
18. MISCELLANEOUS.
18.1 Headings.
The
headings in this Agreement are for convenience of reference only and do not
limit or otherwise affect any of the terms or provisions of this
Agreement.
18.2 Governing
Law.
The laws
of the State of Ohio govern all matters arising out of this Agreement and
the
rights and obligations of the parties under this Agreement without consideration
of Ohio’s conflicts of laws principles.
18.3 Severability.
If any
provision of this Agreement is held to be illegal, invalid or unenforceable,
that provision will be fully severable, and this Agreement will be construed
and
enforced as if the illegal, invalid or unenforceable provision never comprised
a
part of this Agreement; and the remaining provisions of this Agreement will
remain in full force and effect. Furthermore, in lieu of the illegal, invalid
or
unenforceable provision, there will be added automatically as part of this
Agreement a provision as similar in its terms to the illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
18.4 Entire
Agreement.
This
Agreement and all documents and agreements referred to in this Agreement
supersede all prior or contemporaneous understandings, agreements, negotiations
and discussions, whether oral or written, between the parties concerning
this
subject matter and constitute the entire agreement between the parties with
regard to this subject matter; provided that the Mutual Non-Disclosure Agreement
executed by the parties on or about February 22, 2006, as the same has been
amended by that certain Summary of Principal Terms, shall survive the execution
of this Agreement and continue to bind the parties. The parties have not
relied
upon any promises, representations, warranties, agreements, covenants or
undertakings, other than those expressly set forth in this
Agreement.
20
18.5 Waiver.
Waiver
of the benefit of any provision of this Agreement must be in writing and
signed
by the party against whom enforcement is sought to be effective. The waiver
by
any party of a breach of any provision of this Agreement will not operate
or be
construed as a waiver of any subsequent breach. No action taken pursuant
to this
Agreement will be deemed to constitute a waiver by that party of compliance
by
the other party with any of the covenants or other obligations contained
in this
Agreement. A failure by a party to insist upon strict compliance with any
term
of this Agreement, enforce any right or seek any remedy upon any breach of
any
other party will not affect, or constitute a waiver of, that party’s right to
insist upon strict compliance, enforce that right or seek that remedy with
respect to that default or any prior, contemporaneous or subsequent
default.
18.6 Binding
on Successors.
This
Agreement applies to and binds the successors and permitted assigns of the
parties.
18.7 Amendments.
No
amendment of this Agreement is valid unless in writing and the party against
whom enforcement is sought signs it.
18.8 Notices.
The
parties shall give any notice or other communication required or permitted
in
this Agreement in writing and shall deliver any notice by personal delivery,
overnight delivery service, certified mail, return receipt requested, postage
prepaid, regular U.S. mail, postage prepaid or facsimile transmission. A
notice
is deemed given upon delivery of the notice in person, on the day after the
notice is deposited with an overnight delivery service, two days after the
notice is deposited with the United States Postal Service certified mail,
return
receipt requested, postage prepaid, two days after the notice is deposited
with
the United States Postal Service regular U.S. mail, postage prepaid, or
immediately when sent by facsimile transmission, and addressed or faxed as
follows:
If
to Seller or Stockholder:
|
Electronic
Billboard Technology, Inc.
|
c/o
Nano-Proprietary, Inc.
|
|
0000
Xxxxxxxx Xxxxxxxxx
|
|
Xxxxx
000
|
|
Xxxxxx,
Xxxxx 00000
|
|
Attn:
Xxxxxxx Xxxxx
|
|
With
a copy to:
|
Xxxxxx
Xxxx Xxxxxxx Xxxxxxx
|
0000
X Xxxxxx, XX
|
|
Xxxxx
000
|
|
Xxxxxxxxxx,
XX 00000
|
|
Attn:
Xxxxx Xxxxx, Esq.
|
21
If
to Purchaser:
|
NOVUS
Displays, LLC
|
0000
Xxxx Xxxxxx Xxxxx
|
|
Xxxxx
000
|
|
Xxxxxxxxxx,
Xxxx 00000
|
|
Attn:
President
|
|
with
a copy to:
|
Xxxxxxxx
& Shohl LLP
|
1900
Chemed Center
|
|
000
X. Xxxxx Xxxxxx
|
|
Xxxxxxxxxx,
Xxxx 00000
|
|
Attn:
Xxxxxx Xxxxxx, Esq.
|
From
time
to time, either party may designate another address for all purposes of this
Agreement if it gives to the other party not less than three days advance
notice
of the change of address in accordance with the provisions of this Agreement.
The failure or refusal of a party to accept receipt of a notice or other
communication under this Agreement shall not invalidate the notice.
18.9 Presumption. This
Agreement or any section of this Agreement will not be construed against
any
party due to the fact that the party drafted this Agreement or any section
of
this Agreement.
18.10
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will
be
deemed to be an original but all of which together will constitute one and
the
same instrument. Execution of this Agreement via facsimile will be effective,
and signatures received via facsimile will be binding upon the parties and
effective as originals. The parties expressly acknowledge that, notwithstanding
any statutory or decisional law to the contrary, the printed product of a
facsimile transmittal will be deemed to be “written” and a “writing” for all
purposes of this Agreement.
18.11
Third
Party Beneficiaries. The
terms
and provisions of this Agreement are intended solely for the benefit of each
party to this Agreement and their respective successors or permitted assigns,
and it is not the intention of the parties to confer third party beneficiary
rights, and this Agreement does not confer any such rights, upon any other
person or entity.
18.12
Expenses.
Seller,
Stockholder, Member and Purchaser shall each pay their own expenses incidental
to this Agreement, including, without limitation, fees and expenses of their
respective agents, representatives, counsel, accountants, and other
experts.
18.13
Attorneys’
Fees. If
any
party resorts to legal action to enforce any of its rights under this Agreement,
the prevailing party will be entitled to recover its costs and expenses
associated with such legal action, including, but not limited to court costs
and
reasonable attorneys’ fees at trial or appeal.
18.14
Further
Assurances.
Before
and after the Closing, either party shall promptly execute and deliver to
the
other party (upon the other party’s written request) such other instruments or
documents as the other party reasonably deems necessary or appropriate to
carry
out and effect the purpose and intent of this Agreement.
[Signature
Page To Follow]
22
IN
WITNESS WHEREOF, this Agreement has been executed by or on behalf of each
of the
parties as of the Effective Date.
SELLER:
|
PURCHASER:
|
ELECTRONIC
BILLBOARD TECHNOLOGY, INC.
|
NOVUS
DISPLAYS, LLC
|
By:
/s/ Xxxxxxx X. Xxxxx
|
By:
/s/ Xxxxx Xxxxxxx
|
Title:
Vice President and Corporate Secretary
|
Title:
Chief Executive Officer
|
STOCKHOLDER:
|
MEMBER:
|
NANO-PROPRIETARY,
INC.
|
NOVUS
COMMUNICATION TECHNOLOGIES, INC.
|
By:
/s/ Xxxxxxx X. Xxxxx
|
By:
/s/ Xxxxx Xxxxxxx
|
Title:
Vice President and Corporate Secretary
|
Title:
Chief Executive Officer
|
23
LIST
OF EXHIBITS
Exhibit
A
|
Intellectual
Property
|
Exhibit
B
|
Other
Excluded Assets
|
Exhibit
C
|
Form
of Noncompete Agreement
|
Exhibit
D
|
Xxxx
of Sale and Assignment and Assumption Agreement
|
Exhibit
E
|
Press
Release
|
Exhibit
F
|
Form
of Consulting Agreement
|
Exhibit
G
|
Tax
Allocation of Purchase Price
|
24