ASSET PURCHASE AGREEMENT

Exhibit 10(a)

 

ASSET PURCHASE AGREEMENT

 

DATED AS OF

 

JUNE 20, 2005

 

BY AND AMONG

 

TOUCHSENSOR TECHNOLOGIES, LLC,

 

MATERIAL SCIENCES CORPORATION

 

AND

 

MATERIAL SCIENCES CORPORATION,

ELECTRONIC MATERIALS AND DEVICES GROUP, INC.

TABLE OF CONTENTS

 

 

i

TABLE OF CONTENTS

 

 

 

ii

EXHIBITS:

 

The registrant hereby agrees to furnish supplementary the above Exhibits and Schedules to the Securities and Exchange Commission upon request.

 

iii

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of June 20, 2005 by and among TouchSensor Technologies, LLC, a Delaware limited liability company (“ Buyer ”), Material Sciences Corporation, a Delaware corporation (“ MSC ”), and Material Sciences Corporation, Electronic Materials and Devices Group, Inc., a Delaware corporation and wholly-owned subsidiary of MSC (“ EMD ” and together with MSC, “ Sellers ” and each of MSC and EMD a “ Seller ”). Buyer, MSC and EMD are sometimes referred to in this Agreement each as a “ Party ” and together as the “ Parties. ” Each Seller is jointly and severally liable for the liabilities and obligations of either Seller hereunder.

 

WHEREAS, EMD (as assignee of MSC) and Buyer are parties to that certain License Agreement dated January 31, 2002, under which Buyer granted certain license rights under certain of Buyer’s patents and technology to MSC (together with all amendments, supplements, and addenda, including that certain Addendum Agreement dated August 12, 2003 between EMD and Buyer and that certain Supplemental Addendum Agreement dated August 12, 2003 between EMD and Buyer, collectively, the “ 2002 License Agreement ”);

 

WHEREAS, the Parties desire to terminate the 2002 License Agreement and certain other agreements among them, as more fully set forth herein; and

 

WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to acquire from Sellers, certain of Sellers’ assets used in connection with their business of the design, development, manufacture, license, sale or distribution of products involving or relating to capacitive technology or field-effect technology relating to the 2002 License Agreement (the “ EMD Business ”), and the Parties desire for Buyer to assume certain of Sellers’ future performance obligations as specifically set forth in Section 2.4 below, all upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the value, receipt and sufficiency of which are acknowledged, the Parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Definitions. For purposes of this Agreement, the following terms have the meanings set forth below:

 

“ 2002 License Agreement ” has the meaning set forth in the Recitals.

 

“ Accounts Receivable ” means any trade or accounts receivable of Sellers for the EMD Business in existence as of the Closing Date and that are set forth in Schedule 1.1 , as such schedule may be updated by notice from Sellers to Buyer within three business days after the Closing Date.

 

“ Affiliate ” has the meaning set forth in Rule l2b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended.

“ Agreement ” has the meaning set forth in the Preamble.

 

“ Ancillary Documents ” means the Bill of Sale, the Assumption of Liabilities, the Assignment of Patents, the Assignment of Trademarks and each certificate and other document to be delivered pursuant to Article VII .

 

“ Asset Records ” has the meaning set forth in Section 2.2(a)(v) .

 

“ Assets ” has the meaning set forth in Section 2.2(a) .

 

“ Assignment of Patents ” has the meaning set forth in Section 7.1(c) .

 

“ Assignment of Trademarks ” has the meaning set forth in Section 7.1(d) .

 

“ Assumed Contracts ” has the meaning set forth in Section 2.2(a)(iv) .

 

“ Assumed Obligations ” has the meaning set forth in Section 2.4 .

 

“ Assumption of Liabilities ” has the meaning set forth in Section 7.1(b) .

 

“ Basket Amount ” has the meaning set forth in Section 8.2(b) .

 

“ Bill of Sale ” has the meaning set forth in Section 7.1(a) .

 

“ Buyer ” has the meaning set forth in the Preamble.

 

“ Buyer Claims ” has the meaning set forth in Section 8.2(a) .

 

“ Buyer Indemnified Party ” has the meaning set forth in Section 8.2(a) .

 

“ Cap ” has the meaning set forth in Section 8.2(b) .

 

“ Claims ” has the meaning set forth in Section 8.3(a) .

 

“ Closing ” has the meaning set forth in Section 2.1 .

 

“ Closing Date ” has the meaning set forth in Section 2.1 .

 

“ Collection Period ” has the meaning set forth in Section 6.4(a) .

 

“ Confidentiality Agreement ” means that certain Confidentiality Agreement dated May 18, 2005 between Buyer and Sellers.

 

“ Contract ” means any agreement, contract or other binding obligation (whether written or oral).

 

“ Disclosure Schedules ” means all of the disclosure schedules accompanying this Agreement.

 

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“ EMD ” has the meaning set forth in the Preamble.

 

“ EMD Business ” has the meaning set forth in the Recitals.

 

“ EMD Intellectual Property ” has the meaning set forth in Section 2.2(a)(i) .

 

“ Excluded Assets ” has the meaning set forth in Section 2.2(b) .

 

“ Holland Agreement ” has the meaning set forth in Section 3.1(c) .

 

“ Holland Payment ” has the meaning set forth in Section 3.1(c) .

 

“ Indemnified Party ” has the meaning set forth in Section 8.4(a) .

 

“ Indemnifying Party ” has the meaning set forth in Section 8.4(a) .

 

“ Intellectual Property ” means all of the following in any jurisdiction throughout the world: (i) patents, patent applications, patent disclosures and inventions; (ii) copyrights, and registrations and applications therefor; (iii) trademarks, trade names and service marks, and registrations and applications therefor; (iv) trade secrets, confidential information and know-how; (v) Software; (vi) web page content (including images, text, designs, and copyrights therein, but excluding associated domain names and trademarks, trade names and service marks that are not otherwise transferred herein) and (vii) all other legally cognizable intellectual property rights.

 

“ Intellectual Property Assets ” means all of the EMD Intellectual Property and all of the MSC Intellectual Property.

 

“ Inventory and Tooling ” has the meaning set forth in Section 2.3 .

 

“ Inventory and Tooling Payment Amount ” has the meaning set forth in Section 3.3(a) .

 

“ JDA ” means the Joint Development Agreement by and between Lear and EMD dated as of August 1, 2003.

 

“ Jointly-owned Assets ” has the meaning set forth in Section 2.2(a)(iii) .

 

“ Knowledge ” means (a) with respect to Buyer, the actual knowledge of Tom Schreiber, David Caldwell and Bob Erazmus, and the knowledge that such individuals should reasonably have after due inquiry of each manager, officer and key employee of Buyer who would reasonably be expected to have information concerning the matter in question, and (b) with respect to Sellers, the actual knowledge of Andrew Blake, John Glazier and James J. Waclawik Sr., and the knowledge that such individuals should reasonably have after reasonable inquiry of each manager, officer and key employee of EMD who would reasonably be expected to have information concerning the matter in question; provided that in each case such due inquiry shall not require any such inquiring person, manager, officer or key employee to conduct or to have conducted any public searches or to make or to have made inquiries of any third parties in connection with such inquiries.

 

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“ Lear ” means Lear Corporation.

 

“ Lear Agreements ” means: (i) the Bilateral Confidential Disclosure Agreement by and between Lear and MSC dated as of October 3, 2002; (ii) the JDA; (iii) the Non-Disclosure Agreement (NDA) Extension by and between Lear and MSC dated as of August 1, 2003; and (iv) the Patent and Technical Information License Agreement by and between Lear and Sellers dated as of March 19, 2004, together with all open issue lists, statements of work, open purchase orders and other related documentation.

 

“ Licensed Marks ” means the names and marks “MSC-EMD,” “EMD,” “MSC Electronic Materials and Devices Group, Inc.,” and “Material Sciences Corporation-MSC Electronic Materials and Devices Group, Inc.”

 

“ Lien ” means any lien, pledge, security interest, charge, claim, license, ownership interest or other encumbrance.

 

“ Losses ” means any losses, damages, penalties and fines as finally determined by a court of competent jurisdiction, by settlement or by compromise in accordance with Section 8.4(b) and costs and expenses (including reasonable and documented attorneys’ and accountants’ fees and disbursements) associated with such losses, damages, penalties and fines, but excluding consequential, punitive, special, exemplary, economic or similar damages (other than consequential, economic or similar damages which a Party is required to pay to a third party).

 

“ MSC ” has the meaning set forth in the Preamble.

 

“ MSC Intellectual Property ” has the meaning set forth in Section 2.2(a)(ii) .

 

“ NDAs ” means the non-disclosure agreements identified as such on Schedule 2.2(a)(iv) .

 

“ Other Agreements ” has the meaning set forth in Section 3.1(d) .

 

“ Party ” has the meaning set forth in the Preamble.

 

“ Parties ” has the meaning set forth in the Preamble.

 

“ Person ” means an individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental entity.

 

“ Released Party ” has the meaning set forth in Section 3.2(a) .

 

“ Releasor ” has the meaning set forth in Section 3.2(a) .

 

“ Restricted Activity ” has the meaning set forth in Section 6.8 .

 

“ Retained Liabilities ” has the meaning set forth in Section 2.5 .

 

“ Schedule ” means a schedule to this Agreement that is contained in the Disclosure Schedules and incorporated herein pursuant to Section 9.12 .

 

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“ Seller ” has the meaning set forth in the Preamble.

 

“ Sellers ” has the meaning set forth in the Preamble.

 

“ Seller Claims ” has the meaning set forth in Section 8.3(a) .

 

“ Seller Indemnified Parties ” has the meaning set forth in Section 8.3(a) .

 

“ Software ” means computer software including source code, executable code, embedded software and related documentation.

 

“ Surviving Provisions ” has the meaning set forth in Section 3.1(a) .

 

“ Third Party Claim ” has the meaning set forth in Section 8.4(a) .

 

“ Use Period ” has the meaning set forth in Section 6.7 .

 

ARTICLE II

PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES

 

Section 2.1 Closing. The closing of the transactions contemplated hereby (the “ Closing ”) will take place simultaneously with the execution of this Agreement at 10:00 a.m. (Chicago time), on the date hereof (the “ Closing Date ”), at the offices of Jenner & Block LLP, One IBM Plaza, Chicago, IL 60611, unless another date, time or place is agreed to in writing by the Parties. The Closing will be deemed to be effective as of 5:00 p.m. (Chicago time) on the Closing Date, unless another date, time or place is agreed to in writing by the Parties.

 

Section 2.2 Purchased and Excluded Assets .

 

(a) Upon and subject to the terms and conditions of this Agreement, at the Closing, Buyer shall purchase from Sellers, and Sellers shall sell, transfer, convey and assign to Buyer, for the consideration specified below in Article III , all of Sellers’ right, title and interest in, to and under all of the following properties, assets and other claims, rights and interests (the “ Assets ”):

 

(i) all Intellectual Property owned by EMD, whether individually or jointly with another Person (including a Party), as to which Sellers are only assigning their interest in such jointly-owned Intellectual Property, including the Intellectual Property listed on Schedule 2.2(a)(i) , together with all goodwill associated therewith and together with the right to sue and collect for past, present and future infringement, misappropriation or other violations thereof (“ EMD Intellectual Property ”);

 

(ii) all Intellectual Property (other than the Licensed Marks) owned by MSC, whether individually or jointly with another Person (including a Party), as to which Sellers are only assigning their interest in such jointly-owned Intellectual Property, that relates to any of (1) capacitive technology, (2) Buyer’s field-effect technology, or (3) any other technology pertaining to sensing the presence of a

 

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person or object, including the Intellectual Property listed on Schedule 2.2(a)(ii) , in each case, together with all goodwill associated therewith and together with the right to sue and collect for past, present and future infringement, misappropriation or other violations thereof (“ MSC Intellectual Property ”);

 

(iii) the assets listed on Schedule 2.2(a)(iii) , except for assets that are jointly owned by EMD and Buyer (“ Jointly-owned Assets ”), as to which Sellers are only transferring their interest in such Jointly-owned Assets;

 

(iv) to the extent assignable, the Contracts listed on Schedule 2.2(a)(iv) as such schedule may be updated (solely with respect to open purchase orders and open customer orders entered into by EMD in connection with the EMD Business in the ordinary course, under terms and conditions consistent with past practices, between June 16, 2005 and the Closing Date) by notice from Sellers to Buyer within three business days after the Closing Date (all of such Contracts, whether or not assignable, being collectively referred to as the “ Assumed Contracts ”); and

 

(v) all records relating specifically to the Assets or Inventory and Tooling, including files, documents, correspondence, lists, specifications, drawings, prints, data, databases, test or other data, quotations, bills of material, advertising and promotional materials, studies, reports, and other documentation (in whatever form or medium) (“ Asset Records ”).

 

(b) Notwithstanding the provisions of Section 2.2(a) , the Assets do not include any assets not specifically listed in Section 2.2(a) , including any of the following assets (collectively, the “ Excluded Assets ”):

 

(i) Licensed Marks;

 

(ii) Sellers’ human resources, financial, billing, invoicing and accounting Software (none of which is listed on Schedules 2.2(a)(i) - 2.2(a)(iii) ); and

 

(iii) the Contracts of EMD listed on Schedule 2.2(b)(iii) (provided that the Parties acknowledge and agree that this list contains only selected Contracts and is not intended to be a comprehensive list of Contracts included in the Excluded Assets, and that neither Party has any obligation to identify any Contracts on such list).

 

Section 2.3 Inventory and Tooling. Sellers hereby irrevocably consign to Buyer the inventory and tooling set forth on Schedule 2.3 , as such schedule may be reconciled as contemplated by Section 2.6 below (“ Inventory and Tooling” ). Buyer shall have the right to use, sell, lease, transfer or otherwise dispose of any Inventory and Tooling at any time. Sellers hereby sell, transfer, convey and assign to Buyer, for the consideration specified below in Article III , all of Sellers’ right, title and interest in, to and under each item of Inventory and Tooling, effective upon the earlier of (a) the date on which Buyer first uses, sells, leases, transfers or otherwise disposes of such item, or (b) March 1, 2006. Sellers hereby grant to Buyer a security interest in and to the Inventory and Tooling in order to secure Sellers’ obligations hereunder, and Buyer has the right to file UCC financing statements or take other steps necessary to perfect such security interest.

 

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Section 2.4 Assumed Obligations. Upon and subject to the terms and conditions of this Agreement, at the Closing, Buyer shall assume and agree to perform, pay and discharge, as and when due, all obligations for performance arising under the Assumed Contracts after the Closing Date (collectively, the “ Assumed Obligations ”).

 

Section 2.5 Retained Liabilities. Notwithstanding anything to the contrary contained herein, except for the Assumed Obligations, Buyer shall not assume or agree to perform, pay or discharge, and Sellers shall remain jointly and severally liable for: (i) all liabilities or obligations relating to or arising out of the Assets or the EMD Business on or before the Closing Date; (ii) all liabilities or obligations relating to or arising out of the Inventory and Tooling prior to the date on which Sellers assign title to Buyer pursuant to Section 2.3 ; (iii) all liabilities or obligations relating to or arising out of the Excluded Assets on or before, or after, the Closing Date, including those relating to or arising out of the Lear Agreements; (iv) all liabilities or obligations that arise from a breach of the Assumed Contracts by Sellers on or before the Closing Date or from products or services sold or performed by Sellers on or before the Closing Date; and (v) all other liabilities or obligations of Sellers or their Affiliates; in each case, whether in law or in equity, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and whether due or to become due (collectively, the “ Retained Liabilities ”).

 

Section 2.6 Delivery of Assets and Consignment of Inventory and Tooling.

 

(a) Sellers shall store all of the tangible assets included in the Assets at their facilities in the current location thereof (as set forth on Schedule 2.2(a)(iii) ) for up to 10 business days after the Closing Date in a manner consistent with Sellers’ past practice. Buyer shall remove the Assets from such storage space as soon as practicable, but no later than 10 business days after the Closing Date, and Sellers shall provide Buyer with reasonable access to such storage space to allow Buyer to remove such Assets. Sellers shall provide reasonable cooperation and assistance to Buyer with respect to such removal, but shall not be required to incur any out-of-pocket expenses in connection therewith. The Parties shall cooperate and use commercially reasonable efforts to minimize any disruptive effect on Sellers’ normal operations. Sellers shall retain risk of loss or damage for all tangible Assets until they are removed by Buyer, and Sellers shall pay Buyer for all losses or damages to the Assets up to Sellers’ net book value for the applicable Assets.

 

(b) Except for Inventory and Tooling that is located at vendors’ or bailee’s sites, as indicated on Schedule 2.3 , Sellers shall store all of the Inventory and Tooling at Sellers’ facilities in the current location thereof (as set forth on Schedule 2.3 ) for up to 10 business days after the Closing Date in a manner consistent with Sellers’ past practice. Buyer shall remove the Inventory and Tooling from such storage space as soon as practicable, but no later than 10 business days after the Closing Date, and Sellers shall provide Buyer with reasonable access to such storage space to allow Buyer to remove such Inventory and Tooling. Sellers shall provide reasonable cooperation and assistance to Buyer with respect to such removal, but shall not be required to incur any out-of-pocket expenses in connection therewith. Buyer shall conduct a

 

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physical inventory of all Inventory and Tooling that it removes from Sellers’ facilities, and the Parties shall reconcile Schedule 2.3 with such physical inventory, accounting for any Inventory and Tooling that is consumed by Buyer after the Closing Date. The Parties shall cooperate and use commercially reasonable efforts to minimize any disruptive effect of such physical inventory and removal on Sellers’ normal operations. From and after the date on which Buyer takes physical possession of the Inventory and Tooling, Buyer shall assume the risk of loss or damage for all such Inventory and Tooling, and Buyer shall pay Seller for all losses or damages to such Inventory and Tooling occurring on or before March 1, 2006, up to the Inventory and Tooling Payment Amounts for the items of Inventory and Tooling suffering such loss or damage.

 

(c) With respect to such Inventory and Tooling that is located at vendors’ or bailees’ sites, as soon as practicable, but no later than 10 business days after the Closing Date, Sellers shall provide written notice (in a form reasonably satisfactory to Buyer) to the applicable vendors and bailees that such Inventory and Tooling has been consigned to Buyer and instructing such vendors and bailees to follow Buyer’s instructions with respect thereto (including removal of the Inventory and Tooling from the vendors’ or bailees’ sites), and provide copies of such notices to Buyer. If, within 90 days after the Closing Date, Buyer determines that any such Inventory and Tooling is missing from a vendor’s or bailee’s site, then Buyer shall notify Sellers thereof and the Parties shall modify Schedule 2.3 to remove such Inventory and Tooling, and neither Party will have any liability for such Inventory and Tooling.

 

(d) As soon as practicable, but no later than 10 business days after the Closing Date, Sellers will deliver to Buyer all tangible or electronic copies or embodiments of the Intellectual Property Assets of which it is aware to be in Sellers’ possession or under Sellers’ control, after reasonable inquiry. As set forth in Section 6.3 , if either Seller discovers any such copies or embodiments in its possession or under its control, it shall promptly provide all such copies or embodiments to Buyer. Upon Buyer’s request, Sellers shall make reasonable efforts to locate copies or embodiments described by Buyer in such request that are in its possession or under its control.

 

(e) As soon as practicable, but no later than 10 business days after the Closing Date, Sellers will deliver to Buyer the Asset Records and complete copies of the Assumed Contracts (to the extent not previously provided).

 

(f) If Buyer needs to obtain certain items of Intellectual Property Assets, Asset Records or copies of the Assumed Contracts before they are delivered by Seller pursuant to Sections 2.6(d) and (e) , then upon Buyer’s request, Sellers will use reasonable efforts to locate and deliver such items to Buyer on an expedited basis in order to meet Buyer’s needs.

 

ARTICLE III

CONSIDERATION

 

Section 3.1 Termination of Agreements .

 

(a) Effective on August 1, 2005, each Party hereby cancels and terminates the 2002 License Agreement; provided however , that the following provisions shall survive such termination only to the extent and in the manner set forth herein (the “ Surviving Provisions ”):

 

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(i) Article XII shall survive (as amended below in Section 3.1(b) with respect to Buyer’s obligations thereunder); (ii) Section 6.4 shall survive, except that (1) it shall only have the effect it had as of January 31, 2002, which means that the word “aware” in such provision refers to “awareness” as of January 31, 2002 and the word “received” in such provision refers to receipt on or before January 31, 2002, and (2) it shall not apply to patents, patent applications, know-how or other intellectual property owned or licensed by Nartron Corporation or to notices received from Nartron Corporation, or to claims or assertions made by Nartron Corporation; and (iii) Articles I, IX, XI and Sections 8.1, 8.2, 8.3, 8.4, 8.5, 8.7, 8.8, 8.9 and 8.17, in each case only to the extent applicable to the provisions set forth in (i) and (ii) above. Exhibit E attached hereto sets forth a copy of items (i) and (ii) of the Surviving Provisions for reference purposes only. The Surviving Provisions shall not be deemed or considered to be obligations under this Agreement and, accordingly, Article VIII shall not apply to the Surviving Provisions. At the time of such termination, all rights granted by Buyer to EMD under the 2002 License Agreement shall revert back to Buyer. Without limiting the generality or applicability of Section 3.2 , neither MSC nor EMD shall have any further obligation to pay the remaining license fee of $2,750,000 that would have otherwise been due under the 2002 License Agreement or any other license fees or other amounts payable thereunder.

 

(b) EMD hereby grants to Buyer a non-exclusive, worldwide, royalty-free, transferable sublicense (with the right to grant further sublicenses) (i) under the Licensed Patents (as defined in the 2002 License Agreement) to make, have made, use, sell, have sold, import and otherwise dispose of any products or services and (ii) to use the Licensed Know-How (as defined in the 2002 License Agreement) for any purpose; provided, however , (y) except as agreed to by Lear, the foregoing sublicense does not apply to “IFEST Products” (as defined in the Lear Agreements), and (z) to the extent the foregoing sublicense purports to grant rights greater than those granted to EMD under the 2002 License Agreement, such sublicense shall be limited to the rights actually granted to EMD thereunder. EMD and Buyer hereby amend the 2002 License Agreement as follows: (1) notwithstanding anything to the contrary in the 2002 License Agreement, as of the Closing Date, EMD shall have no right to grant sublicenses thereunder (including Sublicense (as defined therein)), except for the sublicense granted pursuant to this Section 3.1(b) ; and (2) only with respect to Buyer’s obligations thereunder, Article XII shall not apply to any “Confidential Information” (as defined therein) that is included in the Assets, and shall not apply to any other “Confidential Information” unless Buyer knew or reasonably should have known that such “Confidential Information” was not included in the Assets. Except for Surviving Provisions, EMD shall not exercise any of its rights under the 2002 License Agreement other than as necessary to fulfill its remaining obligations to Lear under the Lear Agreements, as such obligations exist as of the Closing Date or as requested by Buyer after the Closing Date. Except for obligations set forth in this Section 3.1(b) , Sellers have no liabilities or obligations to Buyer with respect to the sublicense granted in this Section 3.1(b) .

 

(c) Each Party hereby cancels and terminates that certain Holland Lab Cost Sharing Agreement by and among Buyer and EMD, dated as of October 1, 2002 (the “ Holland Agreement ”). At the Closing, Sellers shall pay to Buyer the amount of $36,076 by corporate check, which amount the Parties agree equals the accrued and unpaid amounts owed by EMD under the Holland Agreement (“ Holland Payment ”).

 

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(d) Each Party hereby cancels and terminates any other Contract between Buyer, on the one hand, and either or both of the Sellers, on the other hand, that is in effect as of the Closing Date, including the Confidentiality Agreement (other than with respect to confidential information of Lear provided to Buyer thereunder) and the agreements listed on Schedule 3.1(d) (“ Other Agreements ”).

 

Section 3.2 Releases .

 

(a) Each Party, on its own behalf and on behalf of its Affiliates and its and their predecessors, successors and assigns (each a “ Releasor ”), hereby releases and forever discharges, and covenants not to sue, the other Parties, their Affiliates, their respective directors, officers, employees, attorneys, agents, and representatives, and their respective predecessors, successors and assigns (each a “ Released Party ”), from any and all claims, demands, causes of action, obligations, damages and liabilities of any nature whatsoever arising on or before the Closing Date, whether in law or in equity, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and whether due or to become due, including those arising under the Holland Agreement, the 2002 License Agreement and the Other Agreements, but excluding those arising under or pursuant to this Agreement, any of the Ancillary Documents or the Surviving Provisions.

 

(b) On August 1, 2005 or promptly thereafter, the Parties shall execute a written release substantially in the form of Section 3.2(a) with respect to the 2002 License Agreement for the period from the Closing Date through and including July 31, 2005 (but excluding the Surviving Provisions).

 

Section 3.3 Payment for Inventory and Tooling .

 

(a) To the extent, if any, Buyer uses, sells, leases, transfers or otherwise disposes of any item of Inventory and Tooling before March 1, 2006, Buyer will pay to MSC in accordance with Section 3.3(b) the amount specified on Schedule 2.3 with respect to such item (the “ Inventory and Tooling Payment Amount ”); provided however , if Buyer sells, leases, transfers or otherwise disposes of such item, the amount paid by Buyer to MSC shall not exceed the amount actually received by Buyer for such sale, lease transfer or disposal. Buyer shall have no obligation to pay MSC for any Inventory and Tooling used, sold, leased, transferred or otherwise disposed of on or after March 1, 2006. For purposes of Section 2.3 and this Section 3.3 , “use” shall not include testing or evaluation by TST of Inventory and Tooling for the purpose of determining whether they meet TST’s requirements at the time of such testing or evaluation.

 

(b) Within five business days after the end of each calendar month through February 2006, Buyer shall provide notice to MSC of all Tooling and Inventory used, sold, leased, transferred or otherwise disposed of by Buyer during such month and the amount required to be paid by Buyer pursuant to Section 3.3(a) for such Tooling and Inventory. Concurrently with the provision of such notice, Buyer shall pay such amount to MSC in accordance with MSC’s reasonable instructions.

 

(c) Upon notice to Buyer by March 31, 2006, Sellers, at their sole cost and expense, shall have the right to conduct a single examination of the books and records of Buyer and all

 

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then-remaining Inventory and Tooling, in each case, for the purpose of verifying the amounts paid to MSC under this Section 3.3 . Such examination shall be conducted at Buyer’s facility during normal business hours by employees of Sellers. If such an examination reveals that Buyer has underpaid Sellers by more than 5%, Buyer shall immediately pay to Sellers the amount equal to such underpayment