Exhibit
2.1
ASSET PURCHASE AGREEMENT
Dated April 9, 2010
NUFERN
and
OPTELECOM-NKF, INC.
TABLE OF CONTENTS
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Page
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ARTICLE I THE ASSET PURCHASE
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4
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1.1
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Purchase and Sale of Assets
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4
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1.2
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Assumption of Liabilities
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4
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1.3
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Purchase Price
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4
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1.4
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Reserved
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5
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1.5
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The Closing
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5
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1.6
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Allocation
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5
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1.7
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Apportionment
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6
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1.8
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Further Assurances
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6
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ARTICLE II REPRESENTATIONS AND
WARRANTIES OF THE SELLER
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6
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2.1
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Organization, Qualification and Corporate Power
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6
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2.2
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Reserved
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7
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2.3
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Authorization of Transaction
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7
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2.4
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Noncontravention
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7
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2.5
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Reserved
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7
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2.6
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Financial Statements
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7
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2.7
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Absence of Certain Changes
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7
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2.8
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Undisclosed Liabilities
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8
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2.9
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Tax Matters
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8
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2.10
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Ownership and Condition of Assets
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9
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2.11
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Reserved
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9
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2.12
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Real Property Leases
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9
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2.13
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Intellectual Property
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10
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2.14
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Inventory
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11
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2.15
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Contracts
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12
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2.16
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Accounts Receivable
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12
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2.17
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Powers of Attorney
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12
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2.18
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Insurance
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12
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2.19
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Litigation
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12
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2.20
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Warranties
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12
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2.21
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Employees
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13
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2.22
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Employee Benefits
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13
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2.23
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Environmental Matters
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14
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2.24
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Legal Compliance
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14
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2.25
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Customers and Suppliers
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14
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2.26
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Permits
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15
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2.27
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Reserved
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15
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2.28
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Brokers’ Fees
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15
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2.29
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Books and Records
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15
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2.30
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Disclosure
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15
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2.31
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Reserved
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15
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1
2.32
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Projections
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15
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2.33
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Government Contracts
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15
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ARTICLE III REPRESENTATIONS AND
WARRANTIES OF THE BUYER
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16
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3.1
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Organization and Corporate Power
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16
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3.2
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Authorization of the Transaction
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16
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3.3
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Noncontravention
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16
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ARTICLE
IV PRE-CLOSING COVENANTS
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17
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4.1
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Closing Efforts
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17
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4.2
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Governmental and Third-Party Notices and Consents
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17
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4.3
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Approval
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18
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4.4
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Operation of Business
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18
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4.5
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Access to Information
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19
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4.6
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Notice of Breaches
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19
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4.7
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Exclusivity
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19
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4.8
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Bulk Transfers Law
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20
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ARTICLE V CONDITIONS TO CLOSING
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20
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5.1
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Conditions to Obligations of the Buyer
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20
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5.2
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Conditions to Obligations of the Seller
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21
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ARTICLE VI POST-CLOSING COVENANTS
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22
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6.1
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Proprietary Information
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22
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6.2
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Solicitation and Hiring
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22
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6.3
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Non-Competition
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22
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6.4
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Tax Matters
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23
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6.5
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Sharing of Data
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23
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6.6
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Use of Name
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24
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6.7
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Cooperation in Litigation
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24
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6.8
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Collection of Accounts Receivable
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24
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6.9
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Employees
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24
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6.10
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Sublease
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24
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6.11
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Technology Transfer
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25
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ARTICLE VII INDEMNIFICATION
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25
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7.1
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Indemnification by the Seller
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25
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7.2
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Indemnification by the Buyer
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26
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7.3
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Indemnification Claims
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26
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7.4
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Survival of Representations and Warranties
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28
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7.5
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Limitations
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28
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7.6
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Treatment of Indemnity Payments
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29
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ARTICLE VIII RESERVED
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29
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ARTICLE IX TERMINATION
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29
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9.1
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Termination of Agreement
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29
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2
9.2
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Effect of Termination
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30
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ARTICLE X DEFINITIONS
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30
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ARTICLE XI MISCELLANEOUS
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39
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11.1
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Press Releases and Announcements
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39
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11.2
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No Third Party Beneficiaries
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39
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11.3
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Entire Agreement
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39
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11.4
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Succession and Assignment
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39
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11.5
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Counterparts and Facsimile Signature
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40
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11.6
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Headings
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40
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11.7
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Notices
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40
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11.8
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Governing Law
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41
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11.9
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Amendments and Waivers
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41
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11.10
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Severability
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41
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11.11
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Expenses
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41
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11.12
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Submission to Jurisdiction
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41
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11.13
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Specific Performance
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41
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11.14
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Construction
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42
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Exhibits
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Exhibit A
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Sublease
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Exhibit B
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Bill
of Sale, Assignment, and Assumption Agreement
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Exhibit C
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Intellectual
Property Assignment
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Exhibit D
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Consulting
Agreement with Edmund Ludwig
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Exhibit E
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Employment
Agreements
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Exhibit F
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Escrow
Agreement
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Exhibit G
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Consulting
Agreement with Ron Smith
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Schedules
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Disclosure Schedule
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3
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into
as of April 9, 2010 by and between Nufern, a
Delaware corporation (the “Buyer”), and Optelecom-NKF, Inc.,
a Delaware corporation (the “Seller”).
This Agreement contemplates a transaction in
which the Buyer will purchase substantially all of the assets and assume
certain of the liabilities of the Seller’s Electro-Optics coil manufacturing
business (the “Business”).
Capitalized terms used in this Agreement
shall have the meanings ascribed to them in Article X or as elsewhere
defined in this Agreement.
In consideration of the representations,
warranties and covenants herein contained, the Parties agree as follows.
ARTICLE I
THE ASSET PURCHASE
1.1 Purchase and Sale of Assets.
(a) Upon and subject to the
terms and conditions of this Agreement, the Buyer shall purchase from the
Seller, and the Seller shall sell, transfer, convey, assign and deliver to the
Buyer, at the Closing, for the consideration specified below in this Article I,
all right, title and interest in, to and under the Acquired Assets.
(b) Notwithstanding the
provisions of Section 1.1(a), the Acquired Assets shall not include the
Excluded Assets.
1.2 Assumption of Liabilities.
(a) Upon and subject to the
terms and conditions of this Agreement, the Buyer shall assume and become
responsible for, from and after the Closing, the Assumed Liabilities.
(b) Notwithstanding the terms of
Section 1.2(a) or any other provision of this Agreement to the
contrary, the Buyer shall not assume or become responsible for, and the Seller
shall remain liable for, the Retained Liabilities.
1.3 Purchase Price. The Purchase Price to be paid by the Buyer
for the Acquired Assets at the Closing shall be $1,400,000, payable as follows:
at Closing, Buyer shall (a) pay the Seller $1,150,000 by wire transfer of
immediately available funds pursuant to wire transfer instructions to be
provided by the Seller; and (b) deposit with MANUFACTURERS AND TRADERS
TRUST COMPANY (the “Escrow Agent”) the amount of $250,000 (the “Escrow Amount”)
to be held in escrow and released from escrow subject to the conditions set
forth in Sections 1.4 and 6.11 (the “Escrow Amount”). The Escrow Amount shall be held and disbursed
in accordance with an escrow agreement substantially in the form set forth as Exhibit F
(the “Escrow Agreement”). The Seller
shall pay all fees and costs relating to the Escrow Agreement.
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1.4 Escrow Amount. The Escrow Amount shall be held and disbursed
in accordance with the terms and conditions of Section 6.11 and the Escrow
Agreement.
1.5 The Closing.
(a) The Closing shall take place
at the offices of Seller in Germantown, Maryland commencing at 10:00 a.m.
local time on the Closing Date. All transactions
at the Closing shall be deemed to take place simultaneously, and no transaction
shall be deemed to have been completed and no documents or certificates shall
be deemed to have been delivered until all other transactions are completed and
all other documents and certificates are delivered.
(b) At the Closing:
(i) the Seller shall deliver to
the Buyer the various certificates, instruments and documents referred to in Section 5.1;
(ii) the Buyer shall deliver to
the Seller the various certificates, instruments and documents referred to in Section 5.2;
(iii) the Seller shall execute and
deliver to the Buyer a bill of sale in substantially the form attached hereto
as Exhibit B, one or more intellectual property assignments in
substantially the form attached hereto as Exhibit C, and such other
instruments of conveyance (such as real estate deeds, assigned certificates or
documents of title, assigned negotiable instruments and stock transfer powers)
as the Buyer may reasonably request in order to effect the sale, transfer,
conveyance and assignment to the Buyer of valid ownership of the Acquired
Assets;
(iv) the Buyer shall pay to the
Seller, payable by wire transfer or other delivery of immediately available
funds to an account designated by the Seller, the Purchase Price set forth in Section 1.3
and shall execute and deliver to the Seller an assumption agreement in
substantially the form attached hereto as Exhibit B;
(v) the Seller shall deliver to
the Buyer, or otherwise put the Buyer in possession and control of, all of the
Acquired Assets of a tangible nature;
(vi) the Seller shall deliver to
the Buyer the executed Employment Agreements (Exhibit E) and the
Consulting Agreement (Exhibit D); and
(vii) the Buyer and the Seller
shall execute and deliver to each other a cross-receipt evidencing the
transactions referred to above.
1.6 Allocation. The Buyer and the Seller agree that the
Purchase Price (and all other capitalizable costs) among the Acquired Assets
and the non-solicitation and non-competition covenants set forth in Sections
6.2 and 6.3 shall be allocated for all purposes (including financial accounting
and tax purposes) in accordance with an allocation schedule to be agreed upon
by the Seller and the Buyer within sixty (60) days after the Closing.
5
1.7 Apportionment.
(a) The Purchase Price set forth
in Section 1.3 shall be subject to adjustment as set forth in this Section 1.7. In the event that any of the adjustments
provided for in this Section 1.7 cannot be calculated as of the Closing
Date, the appropriate payment shall be made by the Buyer or the Seller, as the
case may be, to the other Party as promptly following the Closing Date as is
practicable.
(b) A post-closing adjustment shall
be made for any and all Assigned Contracts that give the U.S. Government audit
rights that result in the recoupment from the Buyer of payments made to the
Seller.
(c) If the Purchase Price is
adjusted pursuant to this Section 1.7, the allocation of the Purchase
Price among the Acquired Assets shall be appropriately modified to reflect such
adjustment.
1.8 Further Assurances. At any time and from time to time after the
Closing, at the request of the Buyer and without further consideration, the
Seller shall execute and deliver such other instruments of sale, transfer,
conveyance and assignment and take such actions as the Buyer may reasonably
request to more effectively transfer, convey and assign to the Buyer, and to
confirm the Buyer’s rights to, title in and ownership of, the Acquired Assets
and to place the Buyer in actual possession and operating control thereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the
Buyer that, except as set forth in the Disclosure Schedule, the statements
contained in this Article II are true and correct as of the date of this
Agreement and will be true and correct as of the Closing as though made as of
the Closing, except to the extent such representations and warranties are
specifically made as of a particular date (in which case such representations
and warranties will be true and correct as of such date). The Disclosure Schedule shall be arranged in
sections and subsections corresponding to the numbered and lettered sections
and subsections contained in this Article II. The disclosures in any section or subsection
of the Disclosure Schedule shall qualify only the corresponding section or
subsection in this Article II, except where a cross-reference to another
section or subsection of the Disclosure Schedule is included. For purposes of this Article II, the
phrase “to the knowledge of the Seller” or any phrase of similar import shall
be deemed to refer to the actual knowledge of David Patterson, Steven Tamburo,
Edmund Ludwig, Greg Hall and Everett Torney, as well as any other knowledge
which such persons would have possessed had they made reasonable inquiry of
appropriate employees and agents of the Seller with respect to the matter in
question.
2.1 Organization, Qualification and Corporate Power. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Seller is duly qualified
to conduct business and is in good standing under the laws of each jurisdiction
listed in Section 2.1 of the Disclosure Schedule, which jurisdictions
constitute the only jurisdictions in which the nature of the Seller’s
businesses or the ownership or leasing of its properties requires such
qualification, except where the failure to be so qualified would not have
6
a Seller Material Adverse Effect. The Seller has all requisite corporate power
and authority to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it.
The Seller has furnished to the Buyer complete and accurate copies of
its Certificate of Incorporation and by-laws.
The Seller is not in default under or in violation of any provision of
its Certificate of Incorporation or by-laws.
2.2 Reserved.
2.3 Authorization of Transaction. The Seller has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements
and to perform its obligations hereunder and thereunder. The execution and delivery by the Seller of
this Agreement and the performance by the Seller of this Agreement and the
Ancillary Agreements and the consummation by the Seller of the transactions
contemplated hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Seller.
This Agreement has been duly and validly executed and delivered by the
Seller and constitutes, and each of the Ancillary Agreements, upon its
execution and delivery by the Seller, will constitute, a valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms.
2.4 Noncontravention. Except as set forth on Section 2.4 of
the Disclosure Schedule, neither the execution and delivery by the Seller of
this Agreement or the Ancillary Agreements, nor the consummation by the Seller
of the transactions contemplated hereby or thereby, will (a) conflict with
or violate any provision of the Certificate of Incorporation or by-laws of the
Seller or the charter, by-laws or other organizational document of any
Subsidiary, (b) require on the part of the Seller or any Subsidiary any
notice to or filing with, or any permit, authorization, consent or approval of,
any Governmental Entity, (c) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default under, result
in the acceleration of obligations under, create in any party the right to
terminate, modify or cancel, or require any notice, consent or waiver under,
any contract or instrument to which the Seller or any Subsidiary is a party or
by which the Seller or any Subsidiary is bound or to which any of the Acquired
Assets is subject, (d) result in the imposition of any Security Interest
upon any of the Acquired Assets or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Seller,
any Subsidiary or any of the Acquired Assets.
2.5 Reserved.
2.6 Financial Statements. The Seller has provided to the Buyer the
Financial Statements relating to the Business.
The Financial Statements (i) comply as to form in all respects with
applicable accounting requirements and fairly present the consolidated
financial position of the Business as of the dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, consistent
with the books and records of the Seller, except that the Financial Statements
are subject to normal and recurring year-end adjustments which will not be
material in amount or effect and do not include footnotes.
2.7 Absence of Certain Changes. Since the Most Recent Balance Sheet Date, (a) there
has occurred no event or development which, individually or in the aggregate,
has had, or could reasonably be expected to have in the future, a Seller Material
Adverse Effect, and
7
(b) except as set forth on Section 2.7 of
the Disclosure Schedule, the Seller has not taken any of the actions set forth
in paragraphs (a) through (l) of Section 4.4.
2.8 Undisclosed Liabilities. The Seller has no liability (whether known or
unknown, whether absolute or contingent, whether liquidated or unliquidated and
whether due or to become due), relating to the Business or which has or may
have any effect upon the Business, except for (a) liabilities shown on the
Most Recent Balance Sheet, (b) liabilities which have arisen since the
Most Recent Balance Sheet Date in the Ordinary Course of Business and which
have been reported to Buyer and (c) contractual and other liabilities
incurred in the Ordinary Course of Business which are not required by GAAP to
be reflected on a balance sheet.
2.9 Tax Matters.
(a) The Seller has properly
filed on a timely basis all Tax Returns relating to the Business in any way,
that it was required to file, and all such Tax Returns were true, correct and
complete. The Seller has paid on a
timely basis all Taxes relating to the Business that were due and payable. The unpaid Taxes of the Seller relating to
the Business for Tax periods through the Most Recent Balance Sheet Date do not
exceed the accruals and reserves for Taxes (excluding accruals and reserves for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the Most Recent Balance Sheet and all unpaid Taxes of the
Seller relating to the Business for all Tax periods commencing after the Most
Recent Balance Sheet Date arose in the Ordinary Course of Business and are of a
type and amount commensurate with Taxes relating to the Business attributable to
prior similar periods. All Taxes
relating to the Business that the Seller was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been properly paid to the appropriate Governmental Entity.
(b) No examination or audit of
any Tax Return of the Seller relating to the Business by any Governmental
Entity is currently in progress or, to the knowledge of the Seller, threatened
or contemplated. Neither the Seller nor
any Subsidiary has been informed by any jurisdiction that the jurisdiction
believes that the Seller or any Subsidiary was required to file any Tax Return
relating to the Business that was not filed.
Neither the Seller nor any Subsidiary has (x) waived any statute of
limitations with respect to Taxes relating to the Business or agreed to extend
the period for assessment or collection of any Taxes relating to the Business, (y) requested
any extension of time within which to file any Tax Return relating to the
Business, which Tax Return has not yet been filed, or (z) executed or
filed any power of attorney with any taxing authority.
(c) Section 2.9(c) of
the Disclosure Schedule sets forth each jurisdiction (other than United States
federal) in which the Seller or any Subsidiary files, is required to file or
has been required to file a Tax Return relating to the Business or is or has
been liable for any Taxes relating to the Business on a “nexus” basis and each
jurisdiction that has sent notices or communications of any kind requesting
information relating to the Seller’s or any Subsidiary’s nexus with such
jurisdiction.
8
2.10 Ownership and Condition of Assets.
(a) The Seller is the true and
lawful owner, and has good title to, all of the Acquired Assets, free and clear
of all Security Interests, except as set forth in Section 2.10(a)(i) of
the Disclosure Schedule. Upon execution
and delivery by the Seller to the Buyer of the instruments of conveyance
referred to in Section 1.5(b)(iii), the Buyer will become the true and
lawful owner of, and will receive good title to, the Acquired Assets, free and
clear of all Security Interests other than those set forth in Section 2.10(a)(ii) of
the Disclosure Schedule.
(b) The Acquired Assets are
sufficient for the conduct of the Seller’s Business as presently conducted and
as presently proposed to be conducted and constitute all assets used by the
Seller in the Business. Each tangible
Acquired Asset is free from material defects, has been maintained in accordance
with normal industry practice, is in good operating condition and repair
(subject to normal wear and tear) and is suitable for the purposes for which it
presently is used.
(c) Section 2.10(c) of
the Disclosure Schedule lists individually (i) all Acquired Assets which
are fixed assets (within the meaning of GAAP), indicating the cost, accumulated
book depreciation (if any) and the net book value of each such fixed asset as
of the Most Recent Balance Sheet Date, and (ii) all other Acquired Assets
of a tangible nature whose book value exceeds $1,500.
(d) Each item of equipment and
other asset that is being transferred to the Buyer as part of the Acquired
Assets and that the Seller has possession of pursuant to a lease agreement or
other contractual arrangement is in such condition that, upon its return to its
lessor or owner under the applicable lease or contract, the obligations of the
Seller or such Subsidiary to such lessor or owner will have been discharged in
full.
2.11 Reserved.
2.12 Real Property Leases. Section 2.12 of the Disclosure Schedule
lists all Leases and lists the term of such Lease, any extension and expansion
options, and the rent payable thereunder.
The Seller has delivered to the Buyer complete and accurate copies of
the Leases. With respect to each Lease:
(a) such Lease is legal, valid,
binding, enforceable and in full force and effect;
(b) such Lease will continue to
be legal, valid, binding, enforceable and in full force and effect immediately
following the Closing in accordance with the terms thereof as in effect
immediately prior to the Closing;
(c) neither the Seller nor, to
the knowledge of the Seller, any other party, is in breach or violation of, or
default under, any such Lease, and no event has occurred, is pending or, to the
knowledge of the Seller, is threatened, which, after the giving of notice, with
lapse of time, or otherwise, would constitute a breach or default by the Seller
or, to the knowledge of the Seller, any other party under such Lease;
(d) there are no disputes, oral
agreements or forbearance programs in effect as to such Lease;
9
2.13 Intellectual Property.
(a) Purchased
Registrations and Unregistered Purchased Intellectual Property. Section 2.13(a) of the Disclosure
Schedule lists all Purchased Registrations, in each case enumerating
specifically the applicable filing or registration number, title, jurisdiction
in which filing was made or from which registration issued, date of filing or
issuance, names of all current applicant(s) and registered owners(s), as
applicable. Section 2.13(a) of
the Disclosure Schedule lists all unregistered Purchased Intellectual Property,
including but not limited to trade secrets, which are material to the operation
of the Business. All assignments of
Purchased Registrations to the Seller or any Subsidiary have been properly
executed and recorded. To the knowledge
of the Seller, all Purchased Registrations are valid and enforceable and all
issuance, renewal, maintenance and other payments that are or have become due
with respect thereto have been timely paid by or on behalf of the Seller.
(b) Prosecution
Matters. There are no inventorship
challenges, opposition or nullity proceedings or interferences declared,
commenced or provoked, or to the knowledge of the Seller threatened, with
respect to any Patent Rights included in the Purchased Registrations. The Seller and the Subsidiaries have complied
with their duty of candor and disclosure to the United States Patent and Trademark
Office and any relevant foreign patent office with respect to all patent and
trademark applications filed by or on behalf of the Seller and have made no
material misrepresentation in such applications. The Seller has no knowledge of any information
that would preclude the Seller from having clear title to the Purchased
Registrations or affecting the patentability or enforceability of any Purchased
Registrations.
(c) Ownership;
Sufficiency. Each item
of Purchased Intellectual Property will be owned or available for use by the
Buyer immediately following the Closing on substantially identical terms and
conditions as it was owned or available for use by the Seller immediately prior
to the Closing. The Seller is the sole
and exclusive owner of all Purchased Intellectual Property, free and clear of
any Security Interests, except as set forth on Section 2.13(c) of the
Disclosure Schedule and all joint owners of the Purchased Intellectual Property
are listed in Section 2.13(c) of the Disclosure Schedule. The Purchased Intellectual Property
constitutes all Intellectual Property necessary to conduct the Business in all
material respects in the manner currently conducted and contemplated to be
conducted in the future by the Seller.
(d) Protection
Measures. The Seller
has taken reasonable measures to protect the proprietary nature of each item of
Purchased Intellectual Property, and to maintain in confidence all trade
secrets and confidential information comprising a part thereof. The Seller has complied with all applicable
contractual and legal requirements pertaining to information privacy and
security in connection with the conduct of the Business. No complaint relating to an improper use or
disclosure of, or a breach in the security of, any such information used in the
conduct of the Business has been made or, to the knowledge of the Seller,
threatened against the Seller. To the
knowledge of the Seller, there has been no: (i) unauthorized disclosure of
any third party proprietary or confidential information in the possession,
custody or control of the Seller that is used in the conduct of the Business or
(ii) breach of the Seller’s security procedures wherein confidential
information used in the conduct of the Business has been disclosed to a third
person.
10
(e) Infringement
by Seller. The use of
the Purchased Intellectual Property in the conduct of the Business as currently
conducted and contemplated to be conducted in the future by the Seller does not
infringe or violate, or constitutes a misappropriation of, any Intellectual
Property rights of any third party. Section 2.13(e) of
the Disclosure Schedule lists any complaint, claim or notice, or threat of any
of the foregoing (including any notification that a license under any patent is
or may be required), received by the Seller alleging any such infringement,
violation or misappropriation and any request or demand for indemnification or
defense received by the Seller from any reseller, distributor, customer, user
or any other third party; and the Seller has provided to the Buyer copies of
all such complaints, claims, notices, requests, demands or threats, as well as
any legal opinions, studies, market surveys and analyses relating to any
alleged or potential infringement, violation or misappropriation.
(f) Infringement
of Rights. To the
knowledge of the Seller, no person (including, without limitation, any current
or former employee or consultant of Seller) is infringing, violating or
misappropriating any of the Purchased Intellectual Property. The Seller has provided to the Buyer copies
of all correspondence, analyses, legal opinions, complaints, claims, notices or
threats concerning the infringement, violation or misappropriation of any
Purchased Intellectual Property.
(g) Outbound
IP Agreements. Section 2.13(g) of
the Disclosure Schedule identifies each license, covenant or other agreement
pursuant to which the Seller has assigned, transferred, licensed, distributed
or otherwise granted any right or access to any person, or covenanted not to
assert any right, with respect to any past, existing or future Purchased
Intellectual Property. The Seller has
not agreed to indemnify any person against any infringement, violation or
misappropriation of any Intellectual Property rights with respect to the
conduct of the Business. The Seller is
not a member of or party to any patent pool, industry standards body, trade
association or other organization pursuant to the rules of which it is
obligated to license any existing or future Purchased Intellectual Property to
any person.
(h) Inbound IP
Agreements. Section 2.13(h) of
the Disclosure Schedule identifies, with respect to the Business each
agreement, contract, assignment or other instrument pursuant to which the
Seller has obtained any joint or sole ownership interest in or to each item of
Purchased Intellectual Property or Intellectual Property of a third party
relating to the Business.
(i) Employee
and Contractor Assignments. Each employee of the Seller and each
independent contractor of the Seller who has contributed to the creation or
development of the Purchased Intellectual Property has executed a valid and
binding written agreement expressly assigning to the Seller all right, title
and interest in any inventions and works of authorship, whether or not
patentable, invented, created, developed, conceived and/or reduced to practice
during the term of such employee’s employment or such independent contractor’s
work for the Seller, and all Intellectual Property rights therein, and has
waived all moral rights therein to the extent legally permissible.
2.14 Reserved.
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2.15 Contracts.
(a) The Assigned Contracts
constitute all of the agreements (written or oral) relating to the Business to
which the Seller is a party as of the date of this Agreement.
(b) The Seller has delivered to
the Buyer a complete and accurate copy of each of the Assigned Contracts. With respect to each Assigned Contract: (i) such Assigned Contract is legal,
valid, binding and enforceable and in full force and effect; (ii) such
Assigned Contract is assignable by the Seller to the Buyer without the consent
or approval of any party (except as set forth in Section 2.4 of the
Disclosure Schedule) and will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the
Closing; and (iii) neither the Seller nor, to the knowledge of the Seller,
any other party, is in breach or violation of, or default under, such Assigned
Contract, and no event has occurred, is pending or, to the knowledge of the
Seller, is threatened, which, after the giving of notice, with lapse of time,
or otherwise, would constitute a breach or default by the Seller or, to the
knowledge of the Seller, any other party under such Assigned Contract.
2.16 Accounts Receivable. The Seller has not received any written
notice from an account debtor stating that any Purchased Account Receivable in
an amount in excess of $1,000 is subject to any contest, claim or setoff by
such account debtor.
2.17 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Seller relating to the Business.
2.18 Insurance. Section 2.18 of the Disclosure Schedule
lists each insurance policy (including fire, theft, casualty, comprehensive
general liability, workers compensation, business interruption, environmental,
product liability and automobile insurance policies and bond and surety
arrangements) relating to the Business to which the Seller is a party, all of
which are in full force and effect. Such
insurance policies are of the type and in amounts customarily carried by
organizations conducting businesses or owning assets similar to those of the
Seller. There is no material claim
relating to the Business pending under any such policy as to which coverage has
been questioned, denied or disputed by the underwriter of such policy. All premiums due and payable under all such
policies have been paid. The Seller has
no knowledge of any threatened termination of any such policy. Seller’s insurance is adequate to cover any
claims relating to the operation of the Business by Seller prior to Closing.
2.19 Litigation. There is no Legal Proceeding relating to the
Business which is pending or has been threatened in writing against the Seller
which (a) seeks either damages in excess of $1,000 or equitable relief or (b) in
any manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement.
There are no judgments, orders or decrees relating to the Business
outstanding against the Seller.
2.20 Warranties. No product or service manufactured, sold,
leased, licensed or delivered by the Seller relating to the Business is subject
to any guaranty, warranty, right of return, right of credit or other indemnity
other than (i) the applicable standard terms and conditions of sale or
lease of the Seller, which are set forth in Section 2.20 of the Disclosure
Schedule, and (ii) manufacturers’ warranties for which the Seller has no
liability.
12
2.21 Transferred Employees.
(a) Section 2.21 of the
Disclosure Schedule contains a list of all Transferred Employees, along with
the position and the annual rate of compensation of each such person. Each current or past employee of the Business
has entered into a confidentiality agreement with the Seller, a copy or form of
which has previously been delivered to the Buyer. Section 2.21 of the Disclosure Schedule
contains a list of all Transferred Employees who are a party to a
non-competition agreement with the Seller; copies of such agreements have
previously been delivered to the Buyer. Each such agreement referenced in the
two preceding sentences to which the Seller is a party is assignable by the
Seller to the Buyer without the consent or approval of any party and will
continue to be legal, valid, binding and enforceable and in full force and
effect immediately following the Closing in accordance with the terms thereof
as in effect immediately prior to the Closing. To the knowledge of the Seller, none of the
Transferred Employees has any plans to terminate employment with the Seller
(other than for the purpose of accepting employment with the Buyer following
the Closing) or not to accept employment with the Buyer. The Seller is in compliance with all
applicable laws relating to the hiring and employment of the Transferred Employees.
(b) The Seller is not a party to
nor is Seller bound by any collective bargaining agreement that covers the
Transferred Employees, nor has Seller experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining disputes. The Seller has no knowledge of any
organizational effort made or threatened, either currently or within the past
two years, by or on behalf of any labor union with respect to the Transferred
Employees.
2.22 Employee Benefits.
(a) Each Seller Plan has been
administered in all material respects in accordance with its terms and each of
the Seller and the ERISA Affiliates has in all material respects met its
obligations with respect to each Seller Plan and has made all required
contributions thereto. The Seller, each
ERISA Affiliate and each Seller Plan are in compliance in all material respects
with the currently applicable provisions of ERISA and the Code and the
regulations thereunder (including Section 4980 B of the Code, Subtitle K,
Chapter 100 of the Code and Sections 601 through 608 and Section 701 et
seq. of ERISA). All filings and reports
as to each Seller Plan required to have been submitted to the Internal Revenue
Service or to the United States Department of Labor have been duly submitted.
(b) There are no Legal
Proceedings (except claims for benefits payable in the normal operation of the
Seller Plans and proceedings with respect to qualified domestic relations
orders) against or involving any Seller Plan or asserting any rights or claims
to benefits under any Seller Plan that could give rise to any material
liability.
(c) No act or omission has
occurred and no condition exists with respect to any Seller Plan that would
subject the Seller or any ERISA Affiliate to (i) any material fine,
penalty, tax or liability of any kind imposed under ERISA or the Code or (ii) any
contractual indemnification or contribution obligation protecting any
fiduciary, insurer or service provider with respect to any Seller Plan.
13
(d) Section 2.22(d) of
the Disclosure Schedule sets forth the policy of the Seller applicable to the
Transferred Employees with respect to accrued vacation, accrued sick time and
earned time off.
2.23 Environmental Matters.
(a) The Seller has complied in
all material respects with all applicable Environmental Laws. There is no pending or, to the knowledge of
the Seller, threatened civil or criminal litigation, written notice of
violation, formal administrative proceeding, or investigation, inquiry or information
request by any Governmental Entity, relating to any Environmental Law involving
the Seller. The Seller is not aware of
any requirement under the Environmental Laws, including but not limited to
filings, consents and surveys, which may impact the carrying out of the
purposes of this Agreement.
(b) The Seller has no
liabilities or obligations arising from the release of any Materials of
Environmental Concern into the environment.
(c) The Seller is not a party to
or bound by any court order, administrative order, consent order or other
agreement with any Governmental Entity entered into in connection with any
legal obligation or liability arising under any Environmental Law.
(d) Set forth in Section 2.23(d) of
the Disclosure Schedule is a list of all documents (whether in hard copy or
electronic form) that contain any environmental reports, investigations and
audits relating to premises currently operated by the Seller for purposes of
conducting the Business (whether conducted by or on behalf of the Seller, and
whether done at the initiative of the Seller or directed by a Governmental
Entity or other third party) which the Seller has possession of or access
to. A complete and accurate copy of each
such document has been provided to the Buyer.
(e) The Seller is not aware of
any material environmental liability of any solid or hazardous waste
transporter or treatment, storage or disposal facility that has been used by
the Seller. To the Knowledge of the
Seller, there are no requirements under the laws of Maryland or any local
jurisdiction in Maryland relating to environmental compliance in connection
with the sale of the Business to the Buyer.
2.24 Legal Compliance. The Seller is currently conducting, and has
conducted, the Business in compliance with each applicable law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity, except for any violations or defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Seller Material Adverse Effect. The Seller has not received any notice or
communication from any Governmental Entity alleging noncompliance with any
applicable law, rule or regulation relating to the conduct of the
Business.
2.25 Customers and Suppliers. Section 2.25 of the Disclosure Schedule
sets forth a list of (a) each customer that accounted for more than 5% of
the consolidated revenues of the Business during the last full fiscal year and
the amount of revenues accounted for by such customer during each such period
and (b) each supplier that is the sole supplier of any significant product
or service to the Seller for the conduct of the Business. No such customer or supplier
14
has indicated within the past year that it will
stop, or decrease the rate of, buying products or services relating to the
Business or supplying products or services relating to the Business, as
applicable, to the Seller. No unfilled
customer order or commitment obligating the Seller to process, manufacture or
deliver products or perform services relating to the Business will result in a
loss to the Seller upon completion of performance. No purchase order or commitment of the Seller
relating to the Business is in excess of normal requirements, nor are prices
provided therein in excess of current market prices for the products or
services to be provided thereunder.
2.26 Permits. Section 2.26 of the Disclosure Schedule
sets forth a list of all Permits issued to or held by the Seller to operate the
Business. Such listed Permits are the
only Permits that are required for the Seller to conduct the Business as
presently conducted or as proposed to be conducted by the Seller. Each such Permit is in full force and effect;
the Seller is in compliance with the terms of each such Permit; and, to the
knowledge of the Seller, no suspension or cancellation of such Permit is
threatened and there is no basis for believing that such Permit will not be
renewable upon expiration. Each such
Permit is assignable by the Seller to the Buyer without the consent or approval
of any party and will continue in full force and effect immediately following
the Closing.
2.27 Reserved.
2.28 Brokers’ Fees. The Seller has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
2.29 Books and Records. The books and records of the Seller
accurately reflect the assets, liabilities, business, financial condition and
results of the Business and have been maintained in accordance with good
business and bookkeeping practices
2.30 Disclosure. No representation or warranty by the Seller
contained in this Agreement, and no statement contained in the Disclosure
Schedule or any other document, certificate or other instrument delivered or to
be delivered by or on behalf of the Seller pursuant to this Agreement, contains
or will contain any untrue statement of a material fact or omits or will omit
to state any material fact necessary, in light of the circumstances under which
it was or will be made, in order to make the statements herein or therein not
misleading. .
2.31 Reserved.
2.32 Projections. The Seller makes no representation or warranty
regarding the accuracy of the projections dated January 13, 2010 provided
by the Seller to the Buyer or as to whether such projections will be achieved,
except that the Seller represents and warrants that such projections were
prepared by the Seller in good faith and are based on assumptions believed by
the Seller to be reasonable as of the date of this Agreement.
2.33 Government Contracts.
(a) The Seller has not been
suspended or debarred from bidding on contracts or subcontracts with any Governmental
Entity; no such suspension or debarment has been threatened or initiated; and
the consummation of the transactions contemplated by this Agreement
15
will not result in any such suspension or
debarment of the Seller or the Buyer (assuming that no such suspension or
debarment will result solely from the identity of the Buyer). The Seller has not been or is not now being
audited or investigated by the United States Government Accounting Office, the
United States Department of Defense or any of its agencies, the Defense
Contract Audit Agency, the contracting or auditing function of any Governmental
Entity with which it is contracting, the United States Department of Justice,
the Inspector General of the United States Governmental Entity, or any prime
contractor with a Governmental Entity; nor, to the knowledge of the Seller, has
any such audit or investigation been threatened. To the knowledge of the Seller, there is no
valid basis for (i) the suspension or debarment of the Seller from bidding
on contracts or subcontracts with any Governmental Entity or (ii) any
claim (including any claim for return of funds to the Government) pursuant to
an audit or investigation by any of the entities named in the foregoing
sentence. The Seller has no agreements,
contracts or commitments which require it to obtain or maintain a security
clearance with any Governmental Entity in connection with the conduct of the
Business.
(b) To the knowledge of the
Seller, no basis exists for any of the following with respect to any of the
Assigned Contracts with any Governmental Entity: (i) a Termination for Default (as
provided in 48 C.F.R. Ch.1 §52.249-8, 52.249-9 or similar sections), (ii) a
Termination for Convenience (as provided in 48 C.F.R. Ch.1 §52.241-1, 52.249-2
or similar sections), or a Stop Work Order (as provided in 48 C.F.R. Ch.1
§52.212-13 or similar sections); and the Seller has no reason to believe that
funding may not be provided under any contract or subcontract with any
Governmental Entity in the upcoming federal fiscal year.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the
Seller that the statements contained in this Article III are true and
correct as of the date of this Agreement and will be true and correct as of the
Closing as though made as of the Closing.
3.1 Organization and Corporate Power. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. The Buyer has all requisite corporate power
and authority to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it.
3.2 Authorization of the Transaction. The Buyer has all requisite power and authority
to execute and deliver this Agreement and the Ancillary Agreements and to
perform its obligations hereunder and thereunder. The execution and delivery by the Buyer of
this Agreement and the Ancillary Agreements and the consummation by the Buyer
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Buyer. This Agreement has been duly and validly
executed and delivered by the Buyer and constitutes a valid and binding
obligation of the Buyer, enforceable against it in accordance with its terms.
3.3 Noncontravention. Neither the execution and delivery by the
Buyer of this Agreement or the Ancillary Agreements, nor the consummation by
the Buyer of the transactions
16
contemplated hereby or thereby, will (a) conflict
with or violate any provision of the Certificate of Incorporation or by-laws of
the Buyer, (b) require on the part of the Buyer any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (c) conflict
with, result in breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of obligations under,
create in any party any right to terminate, modify or cancel, or require any
notice, consent or waiver under, any contract or instrument to which the Buyer
is a party or by which it is bound or to which any of its assets is subject,
except for (i) any conflict, breach, default, acceleration, termination,
modification or cancellation which would not adversely affect the consummation
of the transactions contemplated hereby or (ii) any notice, consent or
waiver the absence of which would not adversely affect the consummation of the
transactions contemplated hereby, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer.
3.4 Brokers’ Fees. The Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Closing Efforts. Each of the Parties shall use its Reasonable
Best Efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement, including using
its Reasonable Best Efforts to cause (i) its representations and
warranties to remain true and correct in all material respects through the
Closing Date and (ii) the conditions to the obligations of the other Party
to consummate the transactions contemplated by this Agreement to be satisfied.
4.2 Governmental and Third-Party Notices and Consents.
(a) Each Party shall use its
Reasonable Best Efforts to obtain, at its expense, all waivers, permits,
consents, approvals or other authorizations from Governmental Entities, and to
effect all registrations, filings and notices with or to Governmental Entities,
as may be required for such Party to consummate the transactions contemplated
by this Agreement and to otherwise comply with all applicable laws and
regulations in connection with the consummation of the transactions
contemplated by this Agreement
(b) The Seller shall use its
Reasonable Best Efforts to obtain, at its expense, all such consents, waivers
or approvals from third parties, and to give all such notices to third parties,
as listed or are required to be listed in the Disclosure Schedule.
(c) If (i) any of the
Assigned Contracts or other assets or rights constituting Acquired Assets may
not be assigned and transferred by the Seller to the Buyer (as a result of
either the provisions thereof or applicable law) without the consent or
approval of a third party, (ii) the Seller, after using its Reasonable
Best Efforts, is unable to obtain such consent or approval
17
prior to the Closing and (iii) the
Closing occurs nevertheless, then (A) such Assigned Contracts and/or other
assets or rights shall not be assigned and transferred by the Seller to the
Buyer at the Closing and the Buyer shall not assume the Seller’s liabilities or
obligations with respect thereto at the Closing, (B) the Seller shall
continue to use its Reasonable Best Efforts to obtain the necessary consent or
approval as soon as practicable after the Closing, and (C) upon the
obtaining of such consent or approval, the Buyer and the Seller shall execute
such further instruments of conveyance (in substantially the form executed at
the Closing) as may be necessary to assign and transfer such Assigned Contracts
and/or other assets or rights (and the associated liabilities and obligations
of the Seller) to the Buyer.
4.3 Reserved.
4.4 Operation of Business. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing, the Seller
shall conduct the operations of the Business in the Ordinary Course of Business
and in compliance with all applicable laws and regulations and, to the extent
consistent therewith, use its Reasonable Best Efforts to preserve intact the
current Business organization, keep the Acquired Assets in good working
condition, keep available the services of the Transferred Employees or
contractors/consultants of the Business and preserve its relationships with
customers of the Business, suppliers of the Business and others having business
dealings with the Business to the end that the goodwill of the Business shall
not be impaired in any material respect.
Without limiting the generality of the foregoing, prior to the Closing,
the Seller shall not, solely with respect to the Business and without the prior
written consent of the Buyer, except as set forth on Section 4.4 of the
Disclosure Schedule:
(a) create, incur or assume any
indebtedness (including obligations in respect of capital leases); assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person or entity;
or make any loans, advances or capital contributions to, or investments in, any
other person or entity;
(b) enter into, adopt or amend
any employment or severance agreement or increase in any manner the
compensation or fringe benefits of, or materially modify the employment terms
of, the Transferred Employees, generally or individually, or pay any bonus or
other benefit to the Transferred Employees (except for existing payment
obligations listed in the Disclosure Schedule) or hire any new employees of the
Business;
(c) acquire, sell, lease,
license or dispose of any assets or property other than in the Ordinary Course
of Business;
(d) mortgage or pledge any of
the Acquired Assets or subject any such Acquired Assets to any Security
Interest;
(e) discharge or satisfy any
Security Interest or pay any obligation or liability other than in the Ordinary
Course of Business or as required under this Agreement with respect to any
Security Interest on the Acquired Assets;
(f) amend its charter, by-laws
or other organizational documents in a manner that could have an adverse effect
on the transactions contemplated by this Agreement;
18
(g) enter into, amend,
terminate, take or omit to take any action that would constitute a violation of
or default under, or waive any rights under, any Assigned Contract;
(h) make or commit to make any
capital expenditure relating solely to the Business in excess of $5,000 per
item or $20,000 in the aggregate;
(i) institute or settle any
Legal Proceeding relating to the Business;
(j) take any action or fail to
take any action permitted by this Agreement with the knowledge that such action
or failure to take action would result in (i) any of the representations
and warranties of the Seller set forth in this Agreement not being true and correct
at the Closing or (ii) any of the conditions to the Closing set forth in Article V
not being satisfied;
(k) accelerate production and
the sale of products or services to levels above the Ordinary Course of
Business; or
(l) agree in writing or otherwise
to take any of the foregoing actions.
4.5 Access to Information. The Seller shall permit representatives of
the Buyer to have full access (at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Seller) to all
premises, properties, financial, manufacturing and accounting records,
contracts, other records and documents, and personnel, of or pertaining to the
Business for the purpose of performing such inspections and tests as the Buyer
deems necessary or appropriate.
4.6 Notice of Breaches.
(a) From the date of this
Agreement until the Closing, the Seller shall promptly deliver to the Buyer
supplemental information concerning events or circumstances occurring
subsequent to the date hereof which would render any representation, warranty
or statement in this Agreement or the Disclosure Schedule inaccurate or
incomplete at any time after the date of this Agreement until the Closing. No such supplemental information shall be
deemed to avoid or cure any misrepresentation or breach of warranty or
constitute an amendment of any representation, warranty or statement in this
Agreement or the Disclosure Schedule.
(b) From the date of this
Agreement until the Closing, the Buyer shall promptly deliver to the Seller
supplemental information concerning events or circumstances occurring
subsequent to the date hereof which would render any representation or warranty
in this Agreement inaccurate or incomplete at any time after the date of this
Agreement until the Closing. No such
supplemental information shall be deemed to avoid or cure any misrepresentation
or breach of warranty or constitute an amendment of any representation or
warranty in this Agreement.
4.7 Exclusivity.
(a) The Seller shall not, and
the Seller shall require each of its officers, directors, employees,
representatives and agents not to, directly or indirectly, (i) initiate,
solicit, encourage or otherwise facilitate any inquiry, proposal, offer or
discussion with any party (other
19
than the Buyer) concerning any merger,
reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale of material
assets or similar business transaction involving the Business, (ii) furnish
any non-public information concerning the business, properties or assets of the
Business to any party (other than the Buyer), (iii) engage in discussions
or negotiations with any party (other than the Buyer) concerning any such
transaction, or (iv) enter in any agreement with any party (other than the
Buyer) concerning any such transaction.
(b) The Seller shall immediately
notify any party with which discussions or negotiations of the nature described
in paragraph (a) above were pending that the Seller is terminating
such discussions or negotiations. If the
Seller receives any inquiry, proposal or offer of the nature described in
paragraph (a) above, the Seller shall, within one business day after
such receipt, notify the Buyer of such inquiry, proposal or offer, including
the identity of the other party and the terms of such inquiry, proposal or
offer.
4.8 Bulk Transfers Law. The Buyer and the Seller each hereby waive
compliance with the provisions of the Maryland bulk transfers statute (subject
to the indemnity provided for in Article VII).
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Obligations of the Buyer. The obligation of the Buyer to consummate the
transactions contemplated by this Agreement to be consummated at the Closing is
subject to the satisfaction of the following additional conditions:
(a) the Seller and the
Subsidiaries shall have obtained at their own expense (and shall have provided
copies thereof to the Buyer) all of the waivers, permits, consents, approvals
or other authorizations, and effected all of the registrations, filings and
notices, referred to in Section 4.2 or listed in Schedule 5.1(a),
(b) the representations and
warranties of the Seller set forth in the first sentence of Section 2.1
and in Section 2.3 and any representations and warranties of the Seller
set forth in this Agreement that are qualified as to materiality shall be true
and correct in all respects, and all other representations and warranties of
the Seller set forth in this Agreement shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing as though made as of the Closing, except to the extent such
representations and warranties are specifically made as of a particular date
(in which case such representations and warranties shall be true and correct as
of such date);
(c) the Seller shall have
performed or complied with its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the Closing;
(d) no Legal Proceeding shall be
pending or threatened wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of
20
the transactions contemplated by this
Agreement, (ii) cause the transactions contemplated by this Agreement to
be rescinded following consummation or (iii) affect adversely the right of
the Buyer to own, operate or control any of the Acquired Assets, or to conduct
the Business as currently conducted, following the Closing, and no such
judgment, order, decree, stipulation or injunction shall be in effect;
(e) the Seller shall have
delivered to the Buyer the Seller Certificate;
(f) the Seller shall have delivered
to the Buyer an update, as of the day prior to the Closing Date, of each list
contained in the Disclosure Schedule;
(g) the Seller shall have
delivered to the Buyer documents evidencing the release or termination of all
Security Interests on the Acquired Assets, and copies of filed UCC termination
statements with respect to all UCC financing statements evidencing Security
Interests;
(h) the Seller and the Escrow
Agent shall have executed and delivered to the Buyer the Escrow Agreement;
(i) [reserved;]
(j) the Buyer shall have
received executed employment and non-competition agreements between Buyer and
all employees of the Business, substantially in the form attached hereto as Exhibit E,
effective as of the Closing as well as an executed Consulting Agreement between
Edmund Ludwig and Buyer, substantially in the form attached hereto as Exhibit D;
and
(k) the Buyer shall have
received such other certificates and instruments (including certificates of
good standing of the Seller in their jurisdiction of organization and the
various foreign jurisdictions in which they are qualified, certified charter
documents, certificates as to the incumbency of officers and the adoption of
authorizing resolutions) as it shall reasonably request in connection with the
Closing.
5.2 Conditions to Obligations of the Seller. The obligation of the Seller to consummate
the transactions contemplated by this Agreement to be consummated at the
Closing is subject to the satisfaction of the following additional conditions:
(a) the representations and
warranties of the Buyer set forth in the first sentence of Section 3.1 and
in Section 3.2 and any representations and warranties of the Buyer set
forth in this Agreement that are qualified as to materiality shall be true and
correct in all respects, and all other representations and warranties of the
Buyer set forth in this Agreement shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Closing
as though made as of the Closing, except to the extent such representations and
warranties are specifically made as of a particular date (in which case such
representations and warranties shall be true and correct as of such date);
(b) the Buyer shall have
performed or complied with, in all material respects, its agreements and
covenants required to be performed or complied with under this Agreement as of
or prior to the Closing;
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(c) no Legal Proceeding shall be
pending or threatened wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of the
transactions contemplated by this Agreement or (ii) cause the transactions
contemplated by this Agreement to be rescinded following consummation, and no
such judgment, order, decree, stipulation or injunction shall be in effect;
(d) the Buyer shall have
delivered to the Seller the Buyer Certificate;
(e) the Seller shall have
received such other certificates and instruments (including certificates of
good standing of the Buyer in its jurisdiction of organization, certificates as
to the incumbency of officers) as it shall reasonably request in connection
with the Closing;
(f) the Buyer and the Escrow Agent shall have
executed and delivered to the Seller the Escrow Agreement.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 Proprietary Information. From and after the Closing, the Seller shall
not disclose or make use of (except to pursue its rights, under this Agreement
or the Ancillary Agreements), and shall use its best efforts to cause all of
its Affiliates not to disclose or make use of, any knowledge, information or
documents of a confidential nature or not generally known to the public with
respect to Acquired Assets, the Business or the Buyer or its business, as well
as filings and testimony (if any) presented in the course of any Dispute
pursuant to Section 7.3, except to the extent that such knowledge,
information or documents shall have become public knowledge other than through
improper disclosure by the Seller or an Affiliate. The Seller shall enforce, for the benefit of
the Buyer, all confidentiality, invention assignments and similar agreements
between the Seller and any other party relating to the Acquired Assets or the
Business which are not Assigned Contracts.
6.2 Solicitation and Hiring. For a period of four years after the Closing
Date, the Seller shall not, either directly or indirectly (including through an
Affiliate), (a) solicit or attempt to induce any Restricted Employee to
terminate his employment with the Buyer or any subsidiary of the Buyer or (b) hire
or attempt to hire any Restricted Employee; provided, that this clause (b) shall
not apply to any individual whose employment with the Buyer or a subsidiary of
the Buyer has been terminated for a period of one year or longer. The Seller shall enforce, for the benefit of
the Buyer, all applicable confidentiality, non-solicitation and non-hiring
assignments and similar agreements between the Seller and any of Edmund Ludwig,
Ron Smith or William Ziegler, to the extent any such agreements are not
Assigned Contracts.
6.3 Non-Competition.
(a) For a period of six years
after the Closing Date, the Seller shall not, either directly or indirectly
through a consultant or as a stockholder, investor, partner, consultant or
otherwise, design, develop, manufacture, market, sell or license any product or
provide any service anywhere in the world which is competitive with any product
designed, developed (or under
22
development), manufactured, sold or licensed
or any service provided by the Seller solely in connection with the Business
within the four-year period prior to the Closing Date. The Seller shall enforce, for the benefit of
the Buyer, all non-competition and similar agreements between the Seller and
any other party relating to the Business which are not Assigned Contracts.
(b) The Seller agrees that the
duration and geographic scope of the non-competition provision set forth in
this Section 6.3 are reasonable. In
the event that any court determines that the duration or the geographic scope,
or both, are unreasonable and that such provision is to that extent
unenforceable, the Parties agree that the provision shall remain in full force
and effect for the greatest time period and in the greatest area that would not
render it unenforceable. The Parties
intend that this non-competition provision shall be deemed to be a series of
separate covenants, one for each and every county of each and every state of
the United States of America and each and every political subdivision of each
and every country outside the United States of America where this provision is
intended to be effective.
(c) The Seller shall, and shall
use its best efforts to cause its Affiliates to, refer all inquiries regarding
the business, products and services of the Business to the Buyer.
6.4 Tax Matters. All transfer taxes, deed excise stamps and
similar charges related to the sale of the Acquired Assets contemplated by this
Agreement shall be paid one-half by the Buyer and one-half by the Seller.
6.5 Sharing of Data.
(a) The Seller shall have the
right for a period of seven years following the Closing Date to have reasonable
access to such books, records and accounts, including financial and tax
information, correspondence, production records, employment records and other
records that are transferred to the Buyer pursuant to the terms of this
Agreement for the limited purposes of concluding its involvement in the business
conducted by the Seller prior to the Closing Date and for complying with its
obligations under applicable securities, tax, environmental, employment or
other laws and regulations. The Buyer
shall have the right for a period of seven years following the Closing Date to
have reasonable access to those books, records and accounts, including
financial and accounting records (including the work papers of the Seller’s
independent accountants), tax records, correspondence, production records,
employment records and other records that are retained by the Seller pursuant
to the terms of this Agreement solely to the extent that any of the foregoing
is needed by the Buyer for the purpose of conducting the business of the Seller
after the Closing and complying with its obligations under applicable
securities, tax, environmental, employment or other laws and regulations. Neither the Buyer nor the Seller shall
destroy any such books, records or accounts retained by it without first
providing the other Party with the opportunity to obtain or copy such books,
records, or accounts at such other Party’s expense.
(b) Promptly upon request by the
Buyer made at any time following the Closing Date, the Seller shall authorize
the release to the Buyer of all files pertaining solely to the Acquired Assets
or the Business held by any federal, state, county or local authorities,
agencies or instrumentalities.
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6.6 Use of Name. The Seller shall not use, and shall not
permit any Affiliate to use, the name “Optelecom Electro-Optics” or any name
reasonably similar thereto after the Closing Date in connection with any
business related to, competitive with, or an outgrowth of, the business
conducted by the Seller on the date of this Agreement. The Buyer shall not use, and shall not permit
any Affiliate to use, the name “Optelecom” or any name reasonably similar
thereto.
6.7 Cooperation in Litigation. From and after the Closing Date, if elected
by Buyer and in no way limiting Buyer’s rights under Article VII herein,
the Seller shall fully cooperate with the Buyer in the defense or prosecution
of any litigation or proceeding already instituted or which may be instituted
hereafter against or by the Buyer relating to or arising out of the conduct of
the Business by the Seller prior to the Closing Date (other than litigation
among the Parties and/or their Affiliates arising out the transactions
contemplated by this Agreement).
6.8 Collection of Accounts Receivable. The Seller agrees that it shall forward
promptly to the Buyer any monies, checks or instruments received by the Seller
after the Closing Date with respect to the accounts receivable owned by the
Buyer arising from Buyers’ operation of the Business after the Closing. The Seller hereby grants to the Buyer a power
of attorney to endorse and cash any checks or instruments payable or endorsed
to the Seller or its order which are received by the Buyer and which relate to
accounts receivable owned by the Buyer.
The Buyer agrees that it shall forward promptly to the Seller any
monies, checks or instruments received by the Buyer after the Closing Date with
respect to the accounts receivable owned by the Seller arising from the
Seller’s operation of the Business prior to the Closing.
6.9 Employees. Effective as of the Closing, the Seller shall
no longer continue the employment of each employee of the Business designated
on Schedule 6.9 attached hereto (which may be updated prior to the
Closing by the mutual agreement of the Buyer and the Seller) (the “Transferred
Employees”). The Buyer shall satisfy all
legal obligations it may have to the Transferred Employees as of the Closing
Date. The Buyer shall be permitted to offer employment to each such Transferred
Employee, terminable at the will of the Buyer and Seller shall use Reasonable
Best Efforts to encourage these employees to accept employment with Buyer as of
the Closing. The Seller hereby consents
to the hiring of the Transferred Employees by the Buyer as of the Closing and
waives, with respect to the employment by the Buyer of such Transferred
Employees as of and after the Closing, any claims or rights the Seller may have
against the Buyer or any such Transferred Employee under any non-competition,
confidentiality or employment agreement between the Seller and such Transferred
Employee with respect to the Business.
The Seller agrees that that Buyer has no obligation to hire Everett
Torney and that Buyer may elect, at Buyer’s sole discretion, that Everett
Torney shall not have any involvement whatsoever with the operation of the
Business by Buyer after the Closing or with the accomplishment of technology
transfer under Section 6.11.
6.10 Sublease.
Subject to obtaining the requisite approval of the lessor under the
Lease, the Seller as sublessor and the Buyer as sublessee shall enter into a
sublease of the area within Seller’s facility currently used to operate the
Business, substantially on the terms set forth in the sublease attached hereto
as Exhibit A (the “Sublease”). The
parties will use Reasonable Best Efforts to obtain the requisite consent of the
lessor to the Sublease.
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6.11. Technology Transfer. Promptly after Closing, the Seller shall
disclose and make available to Buyer all documentation of any kind possessed by
it relating to the Purchased Intellectual Property to enable Buyer to exercise
its rights and perform its obligations under this Agreement and to take full
ownership in and practice all of the Purchased Intellectual Property. In addition, during the three (3)-month
period after Closing, the Seller shall provide to a limited number of Buyer’s
personnel, physical access (by telephone, facsimile, email and through personal
visits) at reasonable times during regular business hours to a reasonable
number of the Seller’s personnel to assist in transfer of all Purchased
Intellectual Property. The Seller agrees
to retain the consulting services of Ronald Smith (or such other person as may
be reasonably acceptable to Buyer), at no cost to Buyer (except for
reimbursable travel expenses as provided below), to perform the following
services during the two (2) year period following the Closing Date: assist Buyer to manufacture coils for the
benefit of Buyer at the same or higher productivity and quality levels as
existed during the one-year period prior to the Closing Date; assist the Seller
and Buyer in the prompt and orderly transfer of the Purchased Intellectual
Property to Buyer; and assist the Seller and Buyer to accomplish the tasks
described in this Section 6.11. Any
reasonable and supportable travel costs incurred by Ronald Smith in providing
these consulting services shall be reimbursed by Buyer. Provided that the Seller (by providing the
services of Mr. Smith or by such other means as may be reasonably
acceptable to Buyer) has (a) assisted Buyer to establish a parallel coil
winding capability making Honeywell Trident program coils at Buyer’s East
Granby, CT plant, and (b) further provided that this condition is
accomplished prior to the first anniversary of the Closing Date and (c) further
provided that the Seller is not in material breach of this Agreement, then not
later than five (5) days after the date each of the conditions in clauses
(a), (b) and (c) are satisfied, Buyer and the Seller shall issue
joint instructions to the Escrow Agent to pay to the Seller one-half of the
Escrow Amount, including interest accrued on that amount. Provided that (i) the Seller has
satisfied the condition set forth in clause (a) above, and (ii) further
provided that such coil winding operation is manufacturing coils qualified
under the Honeywell Trident missile retrofit program, and (iii) further
provided that both of the conditions set forth in clauses (i) and (ii) above
are accomplished prior to the second anniversary of the Closing Date, and (iv) further
provided that the Seller is not in material breach of this Agreement, then not
later than five (5) days after the date each of the conditions in clauses
(i), (ii), (iii) and (iv) are satisfied, Buyer and the Seller shall
issue joint instructions to the Escrow Agent to pay to the Seller all of the
remaining Escrow Amount, including interest accrued on that amount. If the conditions in clauses (i), (ii), (iii) and
(iv) are not satisfied prior to the second anniversary of the Closing
Date, Buyer and the Seller shall issue joint instructions to the Escrow Agent
to pay to the Buyer all of the remaining Escrow Amount, including interest
accrued on that amount.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Seller. The Seller shall indemnify the Buyer in
respect of, and hold the Buyer harmless against, any and all Damages incurred
or suffered by the Buyer or any Affiliate thereof resulting from, relating to
or constituting:
(a) any breach, as of the date
of this Agreement or as of the Closing Date, of any representation or warranty
of the Seller contained in this Agreement, any Ancillary Agreement
25
or any other agreement or instrument
furnished by the Seller to the Buyer pursuant to this Agreement;
(b) any failure to perform any
covenant or agreement of the Seller contained in this Agreement, any Ancillary
Agreement or any agreement or instrument furnished by the Seller to the Buyer
pursuant to this Agreement;
(c) any Environmental Matters in
connection with the operation or ownership of the Acquired Assets, or the
business or operations of the Seller or the Subsidiaries, prior to the Closing
Date, including in connection with events occurring or circumstances existing
prior to the Closing Date and continuing after the Closing Date; or
(d) any Retained Liabilities.
For purposes of this Article VII, “Damages” shall include all
“costs of response” and “damages” to “natural resources,” as those terms are
defined under CERCLA, and shall include, without limitation, all costs to
correct or remedy any failure to comply with applicable Environmental Laws as of
the Closing Date.
7.2 Indemnification by the Buyer. The Buyer shall indemnify the Seller in
respect of, and hold it harmless against, any and all Damages incurred or
suffered by the Seller resulting from, relating to or constituting:
(a) any breach, as of the date
of this Agreement or as of the Closing Date, of any representation or warranty
of the Buyer contained in this Agreement, any Ancillary Agreement or any other
agreement or instrument furnished by the Buyer to the Seller pursuant to this
Agreement;
(b) any failure to perform any
covenant or agreement of the Buyer contained in this Agreement, any Ancillary
Agreement or any other agreement or instrument furnished by the Buyer to the
Seller pursuant to this Agreement; or
(c) any Assumed Liabilities.
7.3 Indemnification Claims.
(a) An Indemnified Party shall
give written notification to the Indemnifying Party of the commencement of any
Third Party Action. Such notification
shall be given within 20 days after receipt by the Indemnified Party of notice
of such Third Party Action, and shall describe in reasonable detail (to the
extent known by the Indemnified Party) the facts constituting the basis for
such Third Party Action and the amount of the claimed damages; provided,
however, that no delay or failure on the part of the Indemnified Party in so
notifying the Indemnifying Party shall relieve the Indemnifying Party of any
liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure. Within 20 days after delivery of such
notification, the Indemnifying Party may, upon written notice thereof to the
Indemnified Party, assume control of the defense of such Third Party Action
with counsel reasonably satisfactory to the Indemnified Party; provided that (i) the
Indemnifying Party may only assume control of such defense if (A) it
acknowledges in writing to the Indemnified Party that any damages, fines, costs
or
26
other liabilities that may be assessed
against the Indemnified Party in connection with such Third Party Action
constitute Damages for which the Indemnified Party shall be indemnified
pursuant to this Article VII and (B) the ad damnum
is less than or equal to the amount of Damages for which the Indemnifying Party
is liable under this Article VII and (ii) the Indemnifying Party may
not assume control of the defense of Third Party Action involving criminal
liability or in which equitable relief is sought against the Indemnified
Party. If the Indemnifying Party does
not, or is not permitted under the terms hereof to, so assume control of the
defense of a Third Party Action, the Indemnified Party shall control such
defense. The Non-controlling Party may participate
in such defense at its own expense. The
Controlling Party shall keep the Non-controlling Party advised of the status of
such Third Party Action and the defense thereof and shall consider in good
faith recommendations made by the Non-controlling Party with respect
thereto. The Non-controlling Party shall
furnish the Controlling Party with such information as it may have with respect
to such Third Party Action (including copies of any summons, complaint or other
pleading which may have been served on such party and any written claim, demand,
invoice, billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the Controlling Party in the defense of
such Third Party Action. The fees and
expenses of counsel to the Indemnified Party with respect to a Third Party
Action shall be considered Damages for purposes of this Agreement if the
Indemnifying Party assumes control of such defense and the Indemnified Party
reasonably concludes that the Indemnifying Party and the Indemnified Party have
conflicting interests or different defenses available with respect to such
Third Party Action. The Indemnifying
Party shall not agree to any settlement of, or the entry of any judgment
arising from, any Third Party Action without the prior written consent of the
Indemnified Party, which shall not be unreasonably withheld, conditioned or
delayed. The Indemnified Party shall not
agree to any settlement of, or the entry of any judgment arising from, any such
Third Party Action without the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld, conditioned or delayed.
(b) In order to seek
indemnification under this Article VII, an Indemnified Party shall deliver
a Claim Notice to the Indemnifying Party.
(c) Within 20 days after delivery
of a Claim Notice, the Indemnifying Party shall deliver to the Indemnified
Party a Response, in which the Indemnifying Party shall: (i) agree that the Indemnified Party is
entitled to receive all of the Claimed Amount (in which case the Response shall
be accompanied by a payment by the Indemnifying Party to the Indemnified Party
of the Claimed Amount, by check or by wire transfer;), (ii) agree that the
Indemnified Party is entitled to receive the Agreed Amount (in which case the
Response shall be accompanied by a payment by the Indemnifying Party to the
Indemnified Party of the Agreed Amount, by check or by wire transfer) or (iii) dispute
that the Indemnified Party is entitled to receive any of the Claimed Amount.
(d) During the 30-day period
following the delivery of a Response that reflects a Dispute, the Indemnifying
Party and the Indemnified Party shall use good faith efforts to resolve the
Dispute. If the Dispute is not resolved
within such 30-day period, the Indemnifying Party and the Indemnified Party
shall be free to pursue resolution of the Dispute in any manner not
inconsistent with the terms of this Agreement.
27
(e) Notwithstanding the other
provisions of this Section 7.3, if a third party asserts (other than by
means of a lawsuit) that an Indemnified Party is liable to such third party for
a monetary or other obligation which may constitute or result in Damages for
which such Indemnified Party may be entitled to indemnification pursuant to
this Article VII, and such Indemnified Party reasonably determines that it
has a valid business reason to fulfill such obligation, then (i) such
Indemnified Party shall be entitled to satisfy such obligation, without prior
notice to or consent from the Indemnifying Party, (ii) such Indemnified
Party may subsequently make a claim for indemnification in accordance with the
provisions of this Article VII, and (iii) such Indemnified Party
shall be reimbursed, in accordance with the provisions of this Article VII,
for any such Damages for which it is entitled to indemnification pursuant to
this Article VII (subject to the right of the Indemnifying Party to
dispute the Indemnified Party’s entitlement to indemnification, or the amount
for which it is entitled to indemnification, under the terms of this Article VII).
7.4 Survival of Representations and Warranties. All representations and warranties that are
covered by the indemnification agreements in Section 7.1(a) and Section 7.2(a) shall
(a) survive the Closing and (b) shall expire on the date two (2) years
following the Closing Date, except that (i) the representations and
warranties set forth in Sections 2.1, 2.3, 3.1 and 3.2 shall survive the
Closing without limitation and (ii) the representations and warranties set
forth in Sections 2.9, 2.13, 2.15, 2.22, 2.23 and 2.33 shall survive until
30 days following expiration of all statutes of limitation applicable to
the matters referred to therein. If an
Indemnified Party delivers to an Indemnifying Party, before expiration of a
representation or warranty, either a Claim Notice based upon a breach of such
representation or warranty, or an Expected Claim Notice based upon a breach of
such representation or warranty, then the applicable representation or warranty
shall survive until, but only for purposes of, the resolution of the matter
covered by such notice. If the legal
proceeding or written claim with respect to which an Expected Claim Notice has
been given is definitively withdrawn or resolved in favor of the Indemnified
Party, the Indemnified Party shall promptly so notify the Indemnifying
Party. The rights to indemnification set
forth in this Article VII shall not be affected by (i) any
investigation conducted by or on behalf of an Indemnified Party or any knowledge
acquired (or capable of being acquired) by an Indemnified Party, whether before
or after the date of this Agreement or the Closing Date (including through
supplements to the Disclosure Schedule permitted by Section 4.6), with
respect to the inaccuracy or noncompliance with any representation, warranty,
covenant or obligation which is the subject of indemnification hereunder or (ii) any
waiver by an Indemnified Party of any closing condition relating to the
accuracy of any representations and warranties or the performance of or
compliance with agreements and covenants.
7.5 Limitations.
(a) Notwithstanding anything to
the contrary herein, (i) the aggregate liability of the Seller for Damages
under this Article VII shall not exceed $1,400,000, and (ii) the
Seller shall not be liable under this Article VII unless and until the
aggregate Damages for which it would otherwise be liable under this Article VII
exceed $25,000 (at which point the Seller shall become liable for the aggregate
Damages under this Article VII, and not just amounts in excess of
$25,000); provided that the limitations set forth in this sentence shall not
apply to a claim pursuant to Section 7.1(a) relating to a breach of
the representations and warranties set forth in Sections 2.1, 2.3 or to a
breach of the covenants set forth in Article VI. For purposes solely of this Article VII,
28
all representations and warranties of the
Seller in Article II (other than Sections 2.7 and 2.30) shall be
construed as if the term “material” and any reference to “Seller Material
Adverse Effect” (and variations thereof) were omitted from such representations
and warranties.
(b) Notwithstanding anything to
the contrary herein, (i) the aggregate liability of the Buyer for Damages
under this Article VII shall not exceed $1,000,000, and (ii) the
Buyer shall not be liable under this Article VII unless and until the
aggregate Damages for which it would otherwise be liable under this Article VII
exceed $25,000 (at which point the Buyer shall become liable for the aggregate
Damages under this Article VII, and not just amounts in excess of
$25,000); provided that the limitation set forth in this sentence shall not
apply to a claim pursuant to Section 7.2(a) relating to a breach of
the representations and warranties set forth in Sections 3.1 or 3.2. For purposes solely of this Article VII,
all representations and warranties of the Buyer in Article III shall be
construed as if the term “material” were omitted from such representations and
warranties.
(c) The Seller’s obligations to
indemnify the Buyer shall not be affected by the Buyer’s notification to a
Governmental Entity (i) as required by law, (ii) as otherwise
reasonably made by the Buyer to minimize its liability, or (iii) for the
avoidance of environmental sanctions.
(d) Except with respect to
claims based on fraud, the rights of the Indemnified Parties under this Article VII
shall be the exclusive remedy of the Indemnified Parties with respect to claims
resulting from or relating to any misrepresentation, breach of warranty or
failure to perform any covenant or agreement contained in this Agreement or any
of the Ancillary Agreements.
7.6 Treatment of Indemnity Payments. Any payments made to an Indemnified Party
pursuant to this Article VII shall be treated as an adjustment to the
Purchase Price for tax purposes.
ARTICLE VIII
RESERVED
ARTICLE IX
TERMINATION
9.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Closing as provided below:
(a) the Parties may terminate
this Agreement by mutual written consent;
(b) the Buyer may terminate this
Agreement by giving written notice to the Seller in the event the Seller is in
breach of any representation, warranty or covenant contained in this Agreement,
and such breach (i) individually or in combination with any other
such breach,
29
would cause the conditions set forth in
clauses (b), (c) or (d) of Section 5.1 not to be satisfied and (ii) is
not cured within 20 days following delivery by the Buyer to the Seller of
written notice of such breach;
(c) the Seller may terminate
this Agreement by giving written notice to the Buyer in the event the Buyer is
in breach of any representation, warranty or covenant contained in this
Agreement, and such breach (i) individually or in combination with
any other such breach, would cause the conditions set forth in clauses (a) or
(b) of Section 5.2 not to be satisfied and (ii) is not cured within
20 days following delivery by the Seller to the Buyer of written notice of such
breach;
(d) the Buyer may terminate this
Agreement by giving written notice to the Seller if the Closing shall not have
occurred on or before April, 30, 2010 by reason of the failure of any condition
precedent under Section 5.1 (unless the failure results primarily from a
breach by the Buyer of any representation, warranty or covenant contained in
this Agreement); or
(e) the Seller may terminate
this Agreement by giving written notice to the Buyer if the Closing shall not
have occurred on or before April 30, 2010 by reason of the failure of any
condition precedent under Section 5.2 (unless the failure results
primarily from a breach by the Seller of any representation, warranty or
covenant contained in this Agreement).
9.2 Effect of Termination. If either Party terminates this Agreement
pursuant to Section 9.1, all obligations of the Parties hereunder shall
terminate without any liability of either Party to the other Party (except for
any liability of a Party for willful breaches of this Agreement).
ARTICLE X
DEFINITIONS
For purposes of this Agreement, each of the
following terms shall have the meaning set forth
“Acquired
Assets” shall mean the following
assets, properties and rights of the Seller existing as of the Closing relating
solely to the Business:
(a) all trade and other accounts receivable and notes
and loans receivable listed on Schedule 10(a) hereto that are
payable to the Seller and arising on or after the Closing, and all rights to
unbilled amounts for products delivered or services provided by the Buyer after
the Closing with respect to the Business, together with any security held by
the Seller for the payment thereof;
(b) [reserved;]
(c) all computers, machinery, equipment, tools and
tooling, furniture, fixtures, supplies and other tangible personal property
listed on Section 2.10(c) of the Disclosure Schedule;
30
(d) all rights under the contracts, agreements and
instruments listed on Schedule 10(d);
(e) (i) the Intellectual Property Registrations
listed on Schedule 10(e), (ii) inventions, invention disclosures,
statutory invention registrations, trade
secrets and confidential business information, know-how, manufacturing and
product processes and techniques, research and development information,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information, whether patentable
or nonpatentable, whether copyrightable or noncopyrightable and whether or not
reduced to practice, relating, in each instance, solely to the Business, and (iii) other
proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the
laws of all jurisdictions), relating, in each instance, solely to the Business.
(f) all claims, prepayments, deposits, refunds, causes
of action, chooses in action, rights of recovery, rights of setoff and rights
of recoupment relating, in each instance, solely to the Business;
(g) all Permits relating solely to the Business; and
(h) all books, records, accounts, ledgers, files,
documents, correspondence, lists (including customer and prospect lists),
employment records, manufacturing and procedural manuals, Intellectual Property
records, sales and promotional materials, studies, reports and other printed or
written materials relating, in each case, solely to the Business.
“Affiliate”
shall mean any affiliate, as defined in Rule 12b-2 under the Securities
Exchange Act of 1934.
“Agreed
Amount” shall mean part, but not all, of the Claimed Amount.
“Ancillary Agreements” shall mean the
Intellectual Property Assignment, Bill of Sale and other instruments of
conveyance referred to in Section 1.5(b)(iii), and the instrument of
assumption and other instruments referred to in Section 1.5(b)(iv).
“Assigned
Contracts” shall mean any contracts, agreements or instruments listed on Schedule
10(d).
“Assumed Liabilities” shall mean (i) any
and all liabilities, obligations, commitments and claims of any nature
whatsoever related to or arising out of the performance under the Assigned
Contracts by the Buyer after the Closing, and (ii) all liabilities,
obligations, commitments and claims of any nature whatsoever related to or
arising out of the Business as conducted by the Buyer arising after the
Closing.
“Business” shall have the meaning set
forth in the second paragraph of this Agreement.
“Buyer”
shall have the meaning set forth in the first paragraph of this Agreement.
31
“Buyer Certificate” shall mean a
certificate to the effect that each of the conditions specified in clauses (a) through
(c) (insofar as clause (c) relates to Legal Proceedings
involving the Buyer) of Section 5.2 is satisfied in all respects.
“CERCLA” shall mean the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended.
“Claim Notice” shall mean written
notification which contains (i) a description of the Damages incurred or
reasonably expected to be incurred by the Indemnified Party and the Claimed
Amount of such Damages, to the extent then known, (ii) a statement that
the Indemnified Party is entitled to indemnification under Article VII for
such Damages and a reasonable explanation of the basis therefor, and (iii) a
demand for payment in the amount of such Damages.
“Claimed Amount” shall mean the amount
of any Damages incurred or reasonably expected to be incurred by the
Indemnified Party.
“Closing” shall mean the closing of
the transactions contemplated by this Agreement.
“Closing Date” shall mean the date two
business days after the satisfaction or waiver of all of the conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(excluding the delivery at the Closing of any of the documents set forth in Article V),
or such other date as may be mutually agreeable to the Parties.
“Code” shall mean the Internal Revenue
Code of 1986, as amended.
“Consulting
Agreement” shall mean an agreement between Buyer and Edmund Ludwig
substantially in the form attached hereto as Exhibit D.
“Controlling
Party” shall mean the party controlling the defense of any Third Party
Action.
“Damages” shall mean any and all
debts, obligations and other liabilities (whether absolute, accrued,
contingent, fixed or otherwise, or whether known or unknown, or due or to
become due or otherwise), diminution in value, monetary damages, fines, fees,
penalties, interest obligations, deficiencies, losses and expenses (including
amounts paid in settlement, interest, court costs, costs of investigators, fees
and expenses of attorneys, accountants, financial advisors and other experts,
and other expenses of litigation), but shall exclude any incidental or
consequential damages suffered by the Buyer or the Seller.
“Disclosure
Schedule” shall mean the disclosure schedule provided by the Seller to the
Buyer on the date hereof and accepted in writing by the Buyer, as the same may
be supplemented pursuant to Section 4.6.
“Dispute”
shall mean the dispute resulting if the Indemnifying Party in a Response
disputes its liability for all or part of the Claimed Amount.
32
“Documentation” shall mean printed,
visual or electronic materials, reports, white papers, documentation,
specifications, designs, flow charts, code listings, instructions, user
manuals, frequently asked questions, release notes, recall notices, error logs,
diagnostic reports, marketing materials, packaging, labeling, service manuals
and other information describing the use, operation, installation,
configuration, features, functionality, pricing, marketing or correction of a
product, whether or not provided to end user.
“Employee
Benefit Plan” shall mean any “employee pension benefit plan” (as defined in
Section 3(2) of ERISA), any “employee welfare benefit plan” (as
defined in Section 3(1) of ERISA), and any other written or oral
plan, agreement or arrangement involving direct or indirect compensation,
including insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation.
“Employment Agreements” shall mean
agreements between Buyer and the Transferred Employees substantially in the
form attached hereto as Exhibit E.
“Environmental Law” shall mean any federal,
state or local law, statute, rule, order, directive, judgment, Permit or
regulation or the common law relating to the environment, occupational health
and safety, or exposure of persons or property to Materials of Environmental
Concern, including any statute, regulation, administrative decision or order
pertaining to: (i) the presence of
or the treatment, storage, disposal, generation, transportation, handling,
distribution, manufacture, processing, use, import, export, labeling,
recycling, registration, investigation or remediation of Materials of
Environmental Concern or documentation related to the foregoing; (ii) air,
water and noise pollution; (iii) groundwater and soil contamination; (iv) the
release, threatened release, or accidental release into the environment, the
workplace or other areas of Materials of Environmental Concern, including
emissions, discharges, injections, spills, escapes or dumping of Materials of
Environmental Concern; (v) transfer of interests in or control of real
property which may be contaminated; (vi) community or worker right-to-know
disclosures with respect to Materials of Environmental Concern; (vii) the
protection of wild life, marine life and wetlands, and endangered and
threatened species; (viii) storage tanks, vessels, containers, abandoned
or discarded barrels and other closed receptacles; and (ix) health and
safety of employees and other persons.
As used above, the term “release” shall have the meaning set forth in
CERCLA.
“Environmental Matters” shall mean any
liability or obligation arising under Environmental Law, whether arising under
theories of contract, tort, negligence, successor or enterprise liability,
strict liability or other legal or equitable theory, including (i) any
failure to comply with an applicable Environmental Law and (ii) any
liability or obligation arising from the presence of, release or threatened
release of, or exposure of persons or property to, Materials of Environmental
Concern at the Acquired Assets or elsewhere. As used above, the term “release”
shall have the meaning set forth in CERCLA.
“ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended.
33
“ERISA Affiliate” shall mean any
entity which is, or at any applicable time was, a member of (1) a
controlled group of corporations (as defined in Section 414(b) of the
Code), (2) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (3) an affiliated
service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes
or included the Seller or a Subsidiary.
“Excluded
Assets” shall mean all of the assets of the Seller other than the Acquired
Assets.
“Expected Claim Notice” shall mean a
notice that, as a result of a legal proceeding instituted by or written claim
made by a third party, an Indemnified Party reasonably expects to incur Damages
for which it is entitled to indemnification under Article VII.
“Exploit” shall mean develop, design,
test, modify, make, use, sell, have made, used and sold, import, reproduce,
market, distribute, commercialize, support, maintain, correct and create
derivative works of.
“Financial
Statements” shall mean:
(a) the unaudited consolidated statements of operations
of the Business as of the end of and for each of the years ended 2007, 2008,
2009.
“GAAP” shall mean United States
generally accepted accounting principles.
“Governmental Entity” shall mean any
court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency and in the case of contracts for
products or services funded by any of the foregoing, any intermediate
contractor that has contracted with such foregoing entity.
“Indemnified
Party” shall mean a party entitled, or seeking to assert rights, to
indemnification under Article VII of this Agreement.
“Indemnifying Party” shall mean the
party from whom indemnification is sought by the Indemnified Party.
“Intellectual Property” shall mean the
following subsisting throughout the world:
(a) Patent Rights;
(b) Trademarks and all goodwill in the Trademarks;
(c) copyrights, designs, data and database rights and
registrations and applications for registration thereof, including moral rights
of authors;
(d) mask works and registrations and applications for
registration thereof and any other rights in semiconductor topologies under the
laws of any jurisdiction;
34
(e) inventions, invention disclosures, statutory
invention registrations, trade secrets
and confidential business information, know-how, manufacturing and product
processes and techniques, research and development information, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information, whether
patentable or nonpatentable, whether copyrightable or noncopyrightable and
whether or not reduced to practice; and
(f) other proprietary rights relating to any of the
foregoing (including remedies against infringement thereof and rights of
protection of interest therein under the laws of all jurisdictions).
“Intellectual Property Registrations”
means Patent Rights, registered Trademarks, registered copyrights and designs,
mask work registrations and applications for each of the foregoing.
“Lease” shall mean any lease or
sublease pursuant to which the Seller leases or subleases from another party
any real property used in the conduct of the Business.
“Legal Proceeding” shall mean any
action, suit, proceeding, claim, arbitration or investigation before any
Governmental Entity or before any arbitrator.
“Materials of Environmental Concern”
shall mean any: pollutants, contaminants
or hazardous substances (as such terms are defined under CERCLA), pesticides
(as such term is defined under the Federal Insecticide, Fungicide and
Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined
under the Resource Conservation and Recovery Act), chemicals, other hazardous,
radioactive or toxic materials, oil, petroleum and petroleum products (and
fractions thereof), or any other material (or article containing such material)
listed or subject to regulation under any law, statute, rule, regulation,
order, Permit, or directive due to its potential, directly or indirectly, to
harm the environment or the health of humans or other living beings.
“Most Recent Balance Sheet” shall mean
the unaudited consolidated balance sheet of the Seller as of the Most Recent
Balance Sheet Date.
“Most Recent Balance Sheet Date” shall
mean as of March 31, 2010.
“Non-controlling Party” shall mean the
party not controlling the defense of any Third Party Action.
“Open
Source Materials” means all Software, Documentation or other material that
is distributed as “free software”, “open source software” or under a similar
licensing or distribution model, including, but not limited to, the GNU General
Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public
License (MPL), or any other license described by the Open Source Initiative as
set forth on www.opensource.org.
“Ordinary Course of Business” shall
mean the ordinary course of the Business consistent with past custom and
practice (including with respect to frequency and amount).
35
“Parties” shall mean the Buyer and the
Seller.
“Patent Rights” shall mean all patents,
patent applications, utility models, design registrations and certificates of
invention and other governmental grants for the protection of inventions or
industrial designs (including all related continuations, continuations-in-part,
divisionals, reissues and reexaminations).
“Permits” shall mean all permits,
licenses, registrations, certificates, orders, approvals, franchises, variances
and similar rights issued by or obtained from any Governmental Entity
(including those issued or required under Environmental Laws and those relating
to the occupancy or use of owned or leased real property).
“Purchase
Price” shall mean the purchase price to be paid by the Buyer for the
Acquired Assets at the Closing, as set forth in Section 1.3, as it may be
adjusted pursuant to Section 1.7.
“Purchased Accounts Receivable” shall
mean all trade and other accounts receivable and notes and loans receivable
listed on Schedule 10(a).
“Purchased Intellectual Property”
shall mean the Intellectual Property Registrations and other Intellectual
Property of the Business, including such as is described in the definition of
Acquired Assets above.
“Purchased
Registrations” shall mean the Intellectual Property Registrations listed on
Schedule 10(e).
“Reasonable Best Efforts” shall mean
best efforts, to the extent commercially reasonable.
“Response” shall mean a written
response containing the information provided for in Section 7.3(c).
“Restricted Employee” shall mean any
person who either (i) was an employee of the Buyer on either the date of
this Agreement or the Closing Date or (ii) is a Transferred Employee.
“Retained Liabilities” shall mean any
and all liabilities or obligations (whether known or unknown, absolute or
contingent, liquidated or unliquidated, due or to become due and accrued or
unaccrued, and whether claims with respect thereto are asserted before or after
the Closing) of the Seller which are not Assumed Liabilities. The Retained Liabilities shall include,
without limitation, all liabilities and obligations of the Seller:
(a) for income, transfer, sales, use or other Taxes
arising in connection with the consummation of the transactions contemplated by
this Agreement (including any income Taxes arising as a result of (i) the
transfer by the Seller to the Buyer of the Acquired Assets, (ii) any
deemed transfer by a Subsidiary of the Seller of its assets pursuant to an
election under Section 338(h)(10) of the Code, (iii) the Seller
having an “excess loss account” (within the meaning of Treasury Regulation
§1.1502-19) in the stock of any Subsidiary of the Seller, or (iv) the
Seller having deferred gain on any “deferred intercompany transaction” (within
the meaning of Treasury Regulation §1.1502-13));
36
(b) for costs and expenses incurred in connection with
this Agreement or the consummation of the transactions contemplated by this
Agreement;
(c) under this Agreement or the Ancillary Agreements;
(d) for any Taxes, including deferred taxes or taxes
measured by income of the Seller earned prior to the Closing, any liabilities
for federal or state income tax and FICA taxes of employees of the Seller which
the Seller is legally obligated to withhold, any liabilities of the Seller for
employer FICA and unemployment taxes incurred, and any liabilities of the
Seller for sales, use or excise taxes or customs and duties;
(e) under any agreements, contracts, leases or licenses
including but not limited to accounts payable of the Business, arising prior to
the Closing which are not specifically assumed by Buyer;
(f) arising prior to the Closing under the Assigned
Contracts, and all liabilities for any breach, act or omission by the Seller
prior to the Closing under any Assigned Contract;
(g) for repair, replacement or return of products
manufactured or sold prior to the Closing;
(h) arising out of events, conduct or conditions
existing or occurring prior to the Closing that constitute a violation of or
non-compliance with any law, rule or regulation (including Environmental
Laws), any judgment, decree or order of any Governmental Entity, or any Permit
or that give rise to liabilities or obligations with respect to Materials of
Environmental Concern;
(i) to pay severance benefits to any employee of the
Seller whose employment is terminated (or treated as terminated) in connection
with the consummation of the transactions contemplated by this Agreement, and
all liabilities resulting from the termination of employment of employees of
the Seller prior to the Closing that arose under any federal or state law or
under any Seller Plan;
(j) to indemnify any person or entity by reason of the
fact that such person or entity was a director, officer, employee, consultant,
or agent of the Seller or was serving at the request of the Seller as a
partner, trustee, director, officer, employee, or agent of another entity
(whether such indemnification is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and whether
such indemnification is pursuant to any statute, charter document, bylaw,
agreement, or otherwise);
(k) injury to or death of persons or damage to or
destruction of property occurring prior to the Closing (including any workers
compensation claim);
(l) for medical, dental and disability (both long-term
and short-term benefits), whether insured or self-insured, owed to employees or
former employees of the Seller based upon (A) exposure to conditions in
existence prior to the Closing or (B) disabilities existing prior to the
Closing (including any such disabilities which may have been aggravated
following the Closing); and
37
(m) any claim whenever asserted by Everett Torney
against Buyer, Seller and any of their officers, directors or employees,
arising out of the negotiations pertaining to Everett Torney’s possible
employment by Buyer after the Closing.
“Security Interest” shall mean any
mortgage, pledge, security interest, encumbrance, charge or other lien (whether
arising by contract or by operation of law), other than (i) mechanic’s,
materialmen’s, and similar liens, (ii) liens arising under worker’s
compensation, unemployment insurance, social security, retirement, and similar
legislation and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the Ordinary Course of
Business of the Seller with respect to the Acquired Assets and not material to
the Seller.
“Seller” shall have the meaning set
forth in the first paragraph of this Agreement.
“Seller Certificate” shall mean a
certificate to the effect that each of the conditions specified in clauses (a) through
(d) (insofar as clause (d) relates to Legal Proceedings
involving the Seller) of Section 5.1 is satisfied in all respects.
“Seller Material Adverse Effect” shall
mean any material adverse change, event, circumstance or development with
respect to, or material adverse effect on the Business or the Acquired Assets,
taken as a whole. For the avoidance of
doubt, the parties agree that the terms “material”, “materially” or
“materiality” as used in this Agreement with an initial lower case “m” shall
have their respective customary and ordinary meanings, without regard to the
meaning ascribed to Seller Material Adverse Effect.
“Seller Plan” shall mean any Employee
Benefit Plan in which any of the Transferred Employees participates that is
maintained, or contributed to, by the Seller, any Subsidiary or any ERISA
Affiliate.
“Seller Source Code” shall mean the
source code for any Software included in the Customer Offerings or Internal
Systems or other confidential information constituting, embodied in or
pertaining to such Software.
“Software” shall mean computer
software code, applications, utilities, development tools, diagnostics,
databases and embedded systems, whether in source code, interpreted code or
object code form.
“Sublease” shall mean a sublease,
substantially in the form set forth at Exhibit A, to be entered
into between the parties with Seller as sublessor and Buyer as sublessee for
that portion of Seller’s premises currently used to operate the Business.
“Subsidiary” shall mean any
corporation, partnership, trust, limited liability company or other
non-corporate business enterprise in which the Seller (or another Subsidiary)
holds stock or other ownership interests representing (a) more than 50% of
the voting power of all outstanding stock or ownership interests of such entity
or (b) the right to receive more than 50% of the net assets of such entity
available for distribution to the holders of outstanding stock or ownership
interests upon a liquidation or dissolution of such entity.
38
“Taxes” shall mean any and all taxes,
charges, fees, duties, contributions, levies or other similar assessments or
liabilities in the nature of a tax, including, without limitation, income,
gross receipts, corporation, ad valorem, premium, value-added, net worth,
capital stock, capital gains, documentary, recapture, alternative or add-on minimum,
disability, estimated, registration, recording, excise, real property, personal
property, sales, use, license, lease, service, service use, transfer,
withholding, employment, unemployment, insurance, social security, national
insurance, business license, business organization, environmental, workers
compensation, payroll, profits, severance, stamp, occupation, windfall profits,
customs duties, franchise and other taxes of any kind whatsoever imposed by the
United States of America or any state, local or foreign government, or any
agency or political subdivision thereof, and any interest, fines, penalties,
assessments or additions to tax imposed with respect to such items or any
contest or dispute thereof.
“Tax Returns” shall mean any and all
reports, returns, declarations, or statements relating to Taxes, including any
schedule or attachment thereto and any related or supporting work papers or
information with respect to any of the foregoing, including any amendment
thereof.
“Third Party Action” shall mean any
suit or proceeding by a person or entity other than a Party for which
indemnification may be sought by a Party under Article VII.
“Trademarks” shall mean all registered
trademarks and service marks, logos, Internet domain names, corporate names and
doing business designations and all registrations and applications for
registration of the foregoing, common law trademarks and service marks and
trade dress.
ARTICLE XI
MISCELLANEOUS
11.1 Press Releases and Announcements. Either Party may make any public disclosure
it believes in good faith is required by applicable law, regulation or stock
market rule (in which case the disclosing Party shall use reasonable
efforts to advise the other Party and provide it with a copy of the disclosure
prior to making the disclosure).
11.2 No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the Parties and their respective successors
and permitted assigns.
11.3 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, with respect to the subject matter
hereof; provided that the Non-Disclosure Agreement dated September 2, 2009
between the Buyer and the Seller shall remain in effect in accordance with its
terms.
11.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. Neither Party may assign either this
Agreement or any of its rights, interests, or obligations
39
hereunder without the prior written approval of the
other Party; provided that the Buyer may assign some or all of its rights,
interests and/or obligations hereunder to one or more Affiliates of the Buyer.
Any attempted assignment in contravention of this provision shall be void.
11.5 Counterparts and Facsimile Signature. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement may be executed by facsimile
signature.
11.6 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.7 Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly delivered four business days after
it is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent for next business day delivery
via a reputable nationwide overnight courier service, in each case to the
intended recipient as set forth below:
If
to the Seller:
Optelecom-NKF, Inc.
12920
Cloverleaf Center Drive
Germantown,
MD 20874
Attn:
President
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Copy
to:
Venable
LLP
8010
Towers Crescent Drive
Suite 300
Vienna,
VA 22182
Attn:
Thomas W. France, Esq.
|
If
to the Buyer:
Nufern
Attn:
President
7
Airport Park Road
East
Granby, CT 06026
|
Copy
to:
|
Either Party may give any notice, request,
demand, claim, or other communication hereunder using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless
and until it actually is received by the party for whom it is intended. Either Party may change the address to
40
which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
11.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware,
without giving effect to any choice or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of laws of any jurisdictions other than those of the State of
Delaware.
11.9 Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time prior to the Closing. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
of the Parties. No waiver by either
Party of any right or remedy hereunder shall be valid unless the same shall be
in writing and signed by the Party giving such waiver. No waiver by either Party with respect to any
default, misrepresentation, or breach of warranty or covenant hereunder shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
11.10 Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or unenforceable,
the Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to limit the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified.
11.11 Expenses. Except as set forth in Section 1.3
respecting the fees relating to the Escrow Agreement, Section 1.7 and Article VII,
each Party shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
11.12 Reserved.
11.13 Specific Performance. Each Party acknowledges and agrees that the
other Party would be damaged irreparably in the event any of the provisions of
this Agreement (including Sections 6.1, 6.2 and 6.3) are not performed in
accordance with their specific terms or otherwise are breached. Accordingly, each Party agrees that the other
Party shall be entitled to an injunction or other equitable relief to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
41
11.14 Construction.
(a) The language used in this
Agreement shall be deemed to be the language chosen by the Parties to express
their mutual intent, and no rule of strict construction shall be applied
against either Party.
(b) Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
(c) Any reference herein to
“including” shall be interpreted as “including without limitation”.
(d) Any reference to any
Article, Section or paragraph shall be deemed to refer to an Article, Section or
paragraph of this Agreement, unless the context clearly indicates otherwise.
42
IN WITNESS WHEREOF, the Parties have executed
this Agreement as of the date first above written.
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NUFERN
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By:
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Title:
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OPTELECOM-NKF,
INC.
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By:
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Title:
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