ASSET PURCHASE AGREEMENT

Exhibit 2.6

 

ASSET PURCHASE AGREEMENT

by and among

M/A-COM RFID INC.,

MICRONETICS, INC.,

SOLELY THE PURPOSES OF SECTION 5.10 AND ARTICLE VI

COBHAM DEFENSE ELECTRONIC SYSTEMS – M/A-COM INC.

AND

SOLELY FOR THE PURPOSES OF SECTION 5.3 AND SECTION 5.9

COBHAM DEFENSE ELECTRONIC SYSTEMS CORPORATION

DATED March 18, 2009

TABLE OF CONTENTS

 

 

2

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “ Agreement ”) is made and entered into this 18 ^th day of March, 2009 by and among M/A-COM RFID Inc. (“ Seller ”), a Delaware corporation, solely for the purposes of Section 5.3 and Section 5.9, Cobham Defense Electronic Systems Corporation, a Massachusetts corporation (“CDES”), solely for the purposes of Section 5.10 and Article VI, Cobham Defense Electronic Systems—M/A-COM Inc. (“ Shareholder ”) and Micronetics, Inc. a, Delaware corporation (“ Purchaser ”). Seller, CDES, Shareholder and Purchaser are herein referred to individually as a “ Party ” and collectively as the “ Parties .”

RECITALS:

The Seller is engaged in the development, design, manufacturing, marketing and sale of pedestal and forklift mounted radio frequency identification systems (the “ Business ”).

The Seller desires to sell and the Purchaser desires to purchase certain assets of the Business on the terms and conditions set forth in this Agreement. To induce the Purchaser to enter into this Agreement, the Seller, the Shareholder and CDES are willing to agree to certain covenants contained in this Agreement.

NOW THEREFORE, to effect the transactions contemplated hereby and in consideration of the mutual covenants, representations, warranties and agreements hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS AND TERMS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth below:

“ Acquired Person ” shall have the meaning set forth in Section 5.7(b)(iii).

“ Accounts Receivable ” shall have the meaning set forth in Section 2.3.

“ Affiliate ” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person; provided , that , for the purposes of this definition, “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreed Claims ” shall have the meaning set forth in Section 6.5(d).

“ Agreed Formula ” shall have the meaning set forth in Section 5.7(b)(iv).

 

3

“ Agreement ” shall have the meaning set forth in the preamble of this Agreement.

“ Assets ” shall have the meaning set forth in Section 2.3.

“ Assignment and Assumption Agreement ” shall have the meaning set forth in Section 2.10(a).

“ Assumed Liabilities ” shall have the meaning set forth in Section 2.7.

“ Benefit Plan ” shall mean each “employee benefit plan” as defined in Section 3(3) of ERISA and each other bonus, stock option, equity, severance, employment, change-in-control, fringe benefit, deferred compensation, perquisite, tuition reimbursement and incentive plan, agreement, program or policy, whether written or unwritten, contributed to or maintained with respect to Transferred Business Employees.

“ Bidder Representative ” shall mean any of Purchaser’s directors, officers, employees, advisors and agents to whom Evaluation Material (as defined in the Confidentiality Agreement) was disclosed under the Confidentiality Agreement.

“ Bill of Sale and Assignment ” shall have the meaning set forth in Section 2.10(b).

“ Business ” shall have the meaning set forth in the Recitals.

“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banks in New York City are authorized or obligated by Law or executive order to close.

“ Business Intellectual Property ” shall have the meaning set forth in Section 3.8.

“ CDES ” shall have the meaning set forth in the preamble of this Agreement.

“ Claim Certificate ” shall have the meaning set forth in Section 6.5(a).

“ Closing ” shall have the meaning set forth in Section 2.1.

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

“ COBRA ” shall have the meaning set forth in Section 5.1(b).

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“ Collateral Source ” shall have the meaning set forth in Section 6.7.

“ Confidentiality Agreement ” shall mean the Confidentiality Agreement dated as of October 3, 2008 between Seller and Purchaser.

“ Continuation Period ” shall have the meaning set forth in Section 5.1(a).

 

4

“ Contract Bids ” shall have the meaning set forth in Section 2.3(f).

“ Contracts ” shall have the meaning set forth in Section 2.3(e).

“ Divested Business ” shall have the meaning set forth in Section 5.9.

“ Dollars ” and “ $ ” shall each mean lawful money of the United States.

“ Due Diligence Materials ” shall mean any of the information made available to Purchaser, its Affiliates or the Bidder Representatives and set forth in materials contained in any “data room” (virtual or otherwise), in presentations by the management of the Company in “break-out” discussions with the management of the Company, in responses to questions submitted by or on behalf of Purchaser, its Affiliates or the Bidder Representatives, in materials prepared by or on behalf of Seller, or in any other written or oral form.

“ Environmental Law ” shall mean any Law, Order or other requirement of Law for the protection of the environment, or for the use, transport, treatment, storage, disposal, discharge, emission, release or threatened release of petroleum products, asbestos, urea formaldehyde insulation, polychlorinated biphenyls or any substance listed, classified or regulated as “hazardous” or “toxic” or any similar term under such Environmental Law (collectively, “Hazardous Substances”).

“ Excluded Liabilities ” shall have the meaning set forth in Section 2.9.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ GAAP ” shall mean generally accepted accounting principles in the United States in effect as of the date hereof.

“ Governmental Authority ” shall mean any transnational, domestic or foreign federal, state or local, governmental authority, department, court, agency or official, including any political subdivision thereof.

“ Hazardous Substance ” shall have the meaning set forth in the definition of Environmental Law.

“ Indemnified Party ” shall have the meaning set forth in Section 6.5(a).

“ Indemnifying Party ” shall have the meaning set forth in Section 6.5(a).

“ Intellectual Property ” shall have the meaning set forth in Section 2.3(b).

“ Intellectual Property Assignment ” shall have the meaning set forth in Section 2.10(c).

“ Inventory ” shall have the meaning set forth in Section 2.3(c).

“ IP License ” shall have the meaning set forth in Section 5.9.

 

5

“ IRS ” shall mean the Internal Revenue Service of the United States of America.

“ Knowledge of Seller ” shall have the meaning set forth in Section 1.4.

“ Law ” shall mean any federal, state, territorial, foreign or local law, common law, statute or ordinance or any rule, regulation or code of any Governmental Authority.

“ Liabilities ” shall mean any and all debts, liabilities and obligations, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured or determined or determinable.

“ Licensed Mark ” shall have the meaning set forth in Section 5.3.

“ Liens ” shall mean any lien, security interest, mortgage, encumbrance or charge of any kind.

“ Litigation ” shall have the meaning set forth in Section 3.5.

“ Loss ” or “ Losses ” shall mean any claims, actions, causes of action, judgments, awards, out-of-pocket losses and out-of-pocket costs or damages (including reasonable attorneys’ and consultants’ fees and expenses) but excluding incidental, consequential, punitive or exemplary damages and other similar damages and diminution in value.

“ Material Adverse Effect ” shall mean any circumstances, change or effect having a material adverse effect on the Company, its assets, or operations of its business; provided , however , that changes or effects relating to: (i) changes in economic or political conditions or the financing, banking, currency or capital markets in general; (ii) changes in Laws or Orders or interpretations thereof or changes in accounting requirements or principles (including GAAP); (iii) changes affecting industries, markets or geographical areas in which the Business operates; (iv) the announcement or pendency of the transactions contemplated by this Agreement or other communication by Purchaser or any of its Affiliates of its plans or intentions (including in respect of employees) with respect to the Assets or the Business or its operations, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Business or the Seller; (v) the consummation of the transactions contemplated by this Agreement or any actions by Purchaser or Seller taken pursuant to this Agreement or in connection with the transactions contemplated hereby; (vi) any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof, whether or not occurring or commenced before, on or after the date of this Agreement; or (vii) any failure by the Business to meet any internal projections or forecasts and seasonal changes in the results of operations of the Business, in each case, shall be deemed to not constitute a “Material Adverse Effect” and shall not be considered in determining whether a “Material Adverse Effect” has occurred. Notwithstanding the foregoing, it is understood that the underlying cause or causes of any failure described in (vii) above may constitute a Material Adverse Effect.

“ Order ” shall mean any judgment, order, injunction, decree, writ, permit or license of any Governmental Authority or any arbiter.

 

6

“ Parties ” shall have the meaning set forth in the preamble of this Agreement.

“ Party ” shall have the meaning set forth in the preamble of this Agreement.

“ Per-Claim Deductible ” shall have the meaning set forth in Section 6.4(a).

“ Permit ” shall mean each permit, certificate, license, consent, approval or authorization of any Governmental Authority.

“ Permitted Liens ” shall mean: (i) Liens for Taxes, assessments and other governmental charges that are not yet due and payable; (ii) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties; and (iii) Liens listed on Schedule 1.1(d) of the Seller Disclosure Letter.

“ Person ” shall mean an individual, a limited liability company, a joint venture, a corporation, a company, a partnership, an association, a trust, a division or operating group of any of the foregoing or any other entity or organization.

“ Predecessor Cafeteria Plan ” shall mean the cafeteria plans in which Transferred Business Employees are eligible to participate as of the Closing Date.

“ Predecessor Savings Plan ” shall mean the Tyco Electronics Retirement Savings and Investment Plan and if, by the relevant date, Seller has replaced such plan with another plan “Predecessor Savings Plan” shall also mean such other plan.

“ Proceeding ” shall have the meaning set forth in Section 7.8(b).

“ Purchase Price ” shall have the meaning set forth in Section 2.4.

“ Purchaser ” shall have the meaning set forth in the preamble of this Agreement.

“ Purchaser Indemnitees ” shall have the meaning set forth in Section 6.2.

“ Purchaser Savings Plan ” shall have the meaning set forth in Section 5.1(d).

“ Range Time Services Agreement ” shall have the meaning set forth in Section 5.10.

“ Representatives ” of any Person shall mean such Person’s directors, managers, members, officers, employees, agents, advisors and representatives (including attorneys, accountants, consultants, financial advisors, financing sources and any representatives of such advisors or financing sources).

“ Restricted Business ” shall have the meaning set forth is Section 5.7(a).

“ Seller ” shall have the meaning set forth in the preamble of this Agreement.

“ Seller Disclosure Letter ” shall have the meaning set forth in the preamble to Article III.

 

7

“ Seller Indemnitees ” shall have the meaning set forth in Section 6.3.

“ Shareholder ” shall have the meaning set forth in the preamble of this Agreement.

“ Solvent ” shall mean, with respect to any Person, that (i) the property of such Person, at a present fair saleable valuation, exceeds the sum of its Liabilities (including contingent and unliquidated Liabilities), (ii) the present fair saleable value of the property of such Person exceeds the amount that will be required to pay such Person’s probable Liabilities as they become absolute and matured, (iii) such Person has adequate capital to carry on its business and (iv) such Person does not intend to incur, or believe it will incur, Liabilities beyond its ability to pay as such Liabilities mature. In computing the amount of contingent or unliquidated Liabilities at any time, such Liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become actual or matured Liabilities.

“ Tangible Assets ” shall have the meaning set forth in Section 2.3(a).

“ Tax Return ” shall mean any report of Taxes due, any information return with respect to Taxes, or other similar report, statement, declaration or document required to be filed under the Code or other Laws in respect of Taxes, including the Foreign Investment in Real Property Tax Act, any amendment to any of the foregoing, any claim for refund of Taxes paid, and any attachments, amendments or supplements to any of the foregoing.

“ Taxes ” shall mean any federal, state, county, local, or foreign tax (including Transfer Taxes), charge, fee, levy, impost, duty, or other assessment, including income, gross receipts, excise, employment, sales, use, transfer, recording, license, payroll, franchise, severance, documentary, stamp, occupation, windfall profits, environmental, highway use, commercial rent, customs duty, capital stock, paid-up capital, profits, withholding, Social Security, single business, unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by any Governmental Authority, including any estimated payments relating thereto, any interest, penalties, and additions imposed thereon or with respect thereto.

“ Taxing Authority ” or “ Taxing Authorities ” shall mean any Governmental Authority or Authorities having jurisdiction over the assessment, determination, collection, or other imposition of any Taxes.

“ Third-Party Claim ” shall have the meaning set forth in Section 6.6(a).

“ Transfer Taxes ” means all stamp, transfer, real property transfer, recordation, grantee/grantor, documentary, sales and use, value added, registration, occupation, privilege, or other such similar taxes, fees and costs (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement.

“ Transferred Business Employee ” shall mean and include, without limitation, each individual listed on Schedule 1.1(b) of the Seller Disclosure Letter.

 

8

“ Transition Period ” shall have the meaning set forth in Section 5.12.

“ Tyco ” shall mean Tyco Electronics Group S.A., a company organized under the laws of Luxembourg.

“ Warranty Costs ” shall have the meaning set forth in Section 5.8.

Section 1.2 Construction . In this Agreement, unless the context otherwise requires:

(a) any reference in this Agreement to “writing” or comparable expressions includes a reference to facsimile transmission or comparable means of communication (but excluding e-mail communications);

(b) the phrases “delivered” or “made available”, when used in this Agreement, shall mean that the information referred to has been physically or electronically delivered to the relevant parties including, in the case of “made available” to Purchaser, material that has been posted in the “data room” (virtual or otherwise) established by Seller;

(c) words expressed in the singular number shall include the plural and vice versa, and words expressed in the masculine shall include the feminine and neuter genders and vice versa;

(d) references to Articles, Sections, Exhibits, Schedules and Recitals are references to articles, sections, exhibits, schedules and recitals of this Agreement;

(e) references to “day” or “days” are to calendar days;

(f) references to “the date hereof” shall mean as of the date of this Agreement;

(g) unless expressly indicated otherwise, the words “hereof”, “herein”, “hereto” and “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any provision of this Agreement;

(h) references to this “Agreement” or any other agreement or document shall be construed as references to this Agreement or, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or supplemented; and

(i) “include”, “includes”, and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of similar import.

Section 1.3 Seller Disclosure Letter . The Seller Disclosure Letter is incorporated into and forms an integral part of this Agreement.

 

9

Section 1.4 Knowledge . References to the “ Knowledge of Seller ” or the “ Seller’s Knowledge ”, shall mean the actual knowledge of the individuals listed on Schedule 1.4 of the Seller Disclosure Letter after reasonable inquiry.

ARTICLE II

PURCHASE AND SALE OF ASSETS

Section 2.1 Closing . The consummation of the transactions contemplated hereby (the “ Closing ”) shall, unless the Parties agree to another date or place, take place at the offices of Jaeckle Fleischmann & Mugel, LLP in Buffalo, New York on March 18, 2009 or at such other time or place as the Parties may mutually agree (the “ Closing Date ”).

Section 2.2 Purchase and Sale . Subject to the terms and conditions of this Agreement, at the Closing the Seller shall sell and the Purchaser shall purchase the Assets (as defined in Section 2.3), free and clear of all liens, encumbrances and security interests, and the Purchaser shall pay to the Seller the consideration specified in Section 2.4.

Section 2.3 Assets to be Transferred . The following is an identification of the assets to be transferred to Purchaser at the Closing (the “ Assets ”):

(a) Tangible Assets . The tangible personal property of the Seller set forth on Schedule 2.3(a) of the Seller Disclosure Letter (the “ Tangible Assets ”);

(b) Intellectual Property . The intellectual property set forth on Schedule 2.3(b) of the Seller Disclosure Letter (the “ Intellectual Property ”);

(c) Inventory . The inventory including supplies, raw materials and work in process and finished goods set forth on Schedule 2.3(c) of the Seller Disclosure Letter (the “ Inventory ”);

(d) Accounts Receivable . The accounts receivable set forth on Schedule 2.3(d) of the Seller Disclosure Letter (the “ Accounts Receivable ”);

(e) Contracts . All right, title and interest of the Seller in, to and under the contracts and purchase and sales commitments and orders set forth on Schedule 2.3(e) of the Seller Disclosure Letter (the “ Contracts ”);

(f) Contract Bids . Pending contract bids and quotations of the Seller set forth on Schedule 2.3(f) of the Seller Disclosure Letter (the “ Contract Bids ”);

(g) Government Licenses, Permits and Authorizations . Subject to Section 3.3 and Section 3.4 , the licenses, permits, approvals and other governmental or non-governmental authorizations or consents, set forth on Schedule 2.3(g ) of the Seller Disclosure Letter (collectively the “ Licenses ” and each individually a “ License ”); and

 

10

(h) Leased Personal Property . The personal property leased by the Seller set forth on Schedule 2.3(h) attached hereto.

Section 2.4 Purchase Price for the Assets . As consideration for the purchase of the Assets, the Purchaser shall pay to Seller Four Hundred Thousand and No/100 Dollars ($400,000.00) ( the “ Purchase Price ”) payable at the Closing.

Section 2.5 Manner of Payments . The payment of the Purchase Price required to be made hereunder shall be made by wire transfer to bank accounts designated by the Seller.

Section 2.6 Allocation of Purchase Price . The Purchase Price shall be allocated among the Assets, in a manner consistent with the requirements set forth in Section 1060 of the Code and the Treasury regulations promulgated thereunder, as mutually agreed by the Parties within sixty (60) days after the Closing. Notwithstanding the foregoing, cooperation shall be given to Seller to determine tentative allocations for purposes of any Transfer Taxes and relevant Tax Returns due prior to the sixty (60) days identified in the foregoing sentence. The Purchaser and the Seller will each report, on IRS Form 8594 (Asset Acquisition Statement) and any other corresponding state or local form, the federal, state and local income and other tax consequences of the purchase and sale contemplated hereby in a manner consistent with such allocation and neither the Purchaser nor the Seller shall take any position inconsistent with such allocation in any federal or state tax return, in any proceeding before any taxing authority or otherwise. In the event that the allocation is disputed by any Taxing Authority, the Party receiving notice of the dispute shall promptly notify the other Party hereto, and Seller and Purchaser agree to use their commercially reasonable efforts to defend such allocation in any audit or similar proceeding.

Section 2.7 Assumption of Liabilities . Except as hereinafter provided, the Purchaser is not assuming any liabilities of the Seller and the Purchaser shall not be obligated to pay for any obligations or liabilities of Seller unless such obligation or liability is listed below (the “Assumed Liabilities”):

(a) The Seller’s Liabilities which accrue after the Closing pursuant to any of the Contracts or Contract Bids included in the Assets (including but not limited to the personal property leases transferred pursuant to Section 2.3(h) and the Licenses which are transferred pursuant to 2.3(g));

(b) All Liabilities arising from or relating to claims relating to warranty obligations or services or claims of manufacturing or design defects with respect to any product shipped or service provided by Purchaser after the Closing; and

(c) All accounts payable relating to the Business set forth on Schedule 2.7(c) of the Seller Disclosure Letter.

Section 2.8 Excluded Assets . Expressly excluded from the purchase and sale contemplated hereby and from the definition of the term “Assets” are:

(a) The Seller’s cash and cash equivalents, including the Purchase Price;

 

11

(b) The corporate seal, minute books, charter documents, corporate stock record books and other records that pertain to the organization, existence or share capitalization of the Seller and duplicate copies of those records included in the Assets that are necessary to enable the Seller to file its tax returns and reports as well as any of the records or materials relating to the Seller generally and not involving or relating to the Assets;

(c) The Benefit Plans of the Seller;

(d) All Tax refunds, Tax credits and Tax reductions of the Seller or to which the Seller has any claims;

(e) All assets of the Seller which are used in the businesses of the Seller other than the Business as defined herein;

(f) Accounts receivable of Seller not set forth in Section 2.3(d) of the Seller Disclosure Letter; and

(g) Inventory of Seller not set forth in Section 2.3(c) of the Seller Disclosure Letter.

Section 2.9 Excluded Liabilities . Expressly excluded from the definition of “Assumed Liabilities” are the following (the “ Excluded Liabilities ”):

(a) Any of the Seller’s indebtedness for borrowed money;

(b) Any of Seller’s Liabilities for any employee bonuses, vacation pay, sick pay, or other paid time off accrued prior to the Closing;

(c) Any of the Seller’s or the Shareholder’s or CDES’ Liabilities for expenses or fees incident to or arising out of the negotiation, preparation, approval or authorization of this Agreement or the consummation (or preparation for the consummation) of the transactions contemplated hereby, including attorneys’, accountants’ and financial advisory fees;

(d) Any Liability of the Seller with respect to any Taxes, (it being understood that the Purchaser shall not be deemed to be the Seller’s transferee with respect to any tax liability); and

(e) Liabilities, if any, arising as a result of transactions entered into in violation of this Agreement.

Section 2.10 Related Agreements . Simultaneously with the execution hereof, the respective parties referred to below will take the following actions:

(a) Seller, CDES and Purchaser shall enter into an Assignment and Assumption Agreement (the “Assignment and Assumption Agreement”) providing for the assignment of the Assets by Seller and CDES and the assumption of the Assumed Liabilities by Purchaser;

 

12

(b) Seller and CDES will deliver to Purchaser a Bill of Sale and Assignment (the “Bill of Sale and Assignment”) relating to all items of tangible property and unregistered Intellectual Property included in the Assets; and

(c) Seller will deliver to Purchaser an Assignment of Intellectual Property from CDES which transfers the registered Intellectual Property set forth on Schedule 2.3(b) of the Seller Disclosure Letter (the “Intellectual Property Assignment”). Seller will hereafter cause CDES to execute and deliver to Purchaser such confirmatory documents as Purchaser may reasonably request for the purpose of perfecting Purchaser’s right in Intellectual Property transferred to Purchaser hereunder and/or the assignment and registration of registered Intellectual Property being acquired hereunder by Purchaser.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the letter (the “ Seller Disclosure Letter ”) delivered by Seller to Purchaser concurrently with the execution of this Agreement (it being understood that any matter disclosed on any Schedule of the Seller Disclosure Letter will be deemed to be disclosed on any other Schedule of the Seller Disclosure Letter to the extent that it is reasonably apparent from such disclosure that such disclosure is applicable to such other Schedule or Schedules, but shall expressly not be deemed to constitute an admission by Seller, or to otherwise imply, that any such matter is material for the purposes of this Agreement), Seller hereby represents and warrants to Purchaser as follows:

Section 3.1 Organization; Qualification and Capitalization . (a) Organization and Qualification. Seller is a corporation duly organized and validly existing under the Laws of Delaware. CDES is a corporation duly organized and validly existing under the Laws of the State of Massachusetts. Shareholder is a corporation duly organized and validly existing under the Laws of Delaware. Except as would not reasonably be expected to have a Material Adverse Effect, each of Seller, CDES and Shareholder is duly qualified and in good standing as a foreign corporation and is duly authorized to transact business in each jurisdiction where the character of the properties owned or leased by it or the nature of the activities conducted by it make such qualification and good standing necessary.

(b) Capitalization . Seller is a wholly-owned subsidiary of Shareholder.

Section 3.2 Corporate Authority; Binding Effect .

(a) Seller, CDES and Shareholder each has all requisite corporate power and authority to execute and deliver this Agreement and to perform their obligations hereunder. The execution and delivery by Seller, CDES and Shareholder of this Agreement and each other document, agreement or instrument to be executed and delivered by Seller, CDES or the Shareholder pursuant to this Agreement, and the performance by Seller, CDES and the Shareholder of their obligations hereunder, have been, or will have been at the Closing, duly authorized by all requisite corporate action on the part of Seller, CDES or the Shareholder, as the case may be.

 

13

(b) This Agreement, assuming due execution and delivery hereof and thereof by Purchaser, constitutes a valid and binding obligation of each of Seller, CDES and Shareholder, enforceable against Seller, CDES and Shareholder in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar Laws affecting creditors’ rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(c) Except as described in Section 3.3, the execution, delivery and performance by Seller of this Agreement and each other document, agreement or instrument to be executed and delivered by Seller pursuant hereto, and the transactions contemplated hereby, does not require any consents, waivers, authorizations or approvals of, or filings with, any third Persons other than as set forth on Schedule 3.3 .

Section 3.3 Non-Contravention . The execution, delivery and performance of this Agreement by Seller, and the consummation of the transactions contemplated hereby does not and will not: (i) violate any provision of the certificate of incorporation, bylaws or comparable organizational document of Seller; (ii) subject to obtaining the consents referred to in Schedule 3.3 of the Seller Disclosure Letter, conflict with, result in a breach of, constitute a default under, or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of the Seller under, or to a loss of any benefit to which the Seller is entitled under, any Contract or Permit, and (iii) assuming the accuracy of Section 4.3, violate or result in a breach of or constitute a default under any Law or other restriction of any Governmental Authority to which the Seller is subject.

Section 3.4 Permits . Except as set forth on Schedule 3.4 of the Seller Disclosure Letter, the execution and delivery by Seller of this Agreement and each other document, agreement or instrument to be executed and delivered by Seller pursuant to this Agreement and, to the Seller’s Knowledge the operation by Seller of the Business, do not require any Permits, except where the failure to obtain such Permits would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All Permits set forth on Schedule 3.4 of the Seller Disclosure Letter are valid and in full force and effect.

Section 3.5 No Litigation . Except as set forth on Schedule 3.5 of the Seller Disclosure Letter, there is no action, suit, litigation, legal proceeding or arbitration relating to the Business (collectively “ Litigation ”) pending, or to Seller’s Knowledge threatened against the Seller by or before any Governmental Authority or arbitrator.

Section 3.6 Compliance with Laws .

(a) Except as set forth on Schedule 3.6(a) of the Seller Disclosure Letter, to the Seller’s Knowledge the Business is in compliance with all Laws applicable to the Business; and

 

14

(b) To the Seller’s Knowledge the Seller possesses all Permits necessary for the conduct of the Business as it is currently conducted, except where the failure to possess any such Permit would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 3.7 [Intentionally Omitted].

Section 3.8 Intellectual Property . Seller will cause the Intellectual Property set forth on Schedule 2.3(b) to be transferred to Purchaser free and clear of any Liens on the Closing Date. Purchaser will be granted a license by CDES to use the Intellectual Property set forth on Schedule 5.9 of the Seller Disclosure Schedule. Collectively the Intellectual Property set forth on Schedule 2.3(b) of the Seller Disclosure Letter and Schedule 5.9 of the Seller Disclosure Letter are referred to as the “Business Intellectual Property”. No claim has been asserted in writing, or, to the Knowledge of Seller, threatened, by any person with respect to Seller’s use of the Business Intellectual Property or challenging or questioning the validity or effectiveness of any license or agreement with respect thereto, and, to Seller’s Knowledge, no basis for any such claim exists. To Seller’s Knowledge, the use of the Business Intellectual Property by Seller in the conduct of the Business does not infringe on any person’s intellectual property rights except for the rights of its Affiliate, CDES. To Seller’s Knowledge, the Business Intellectual Property has not been challenged in any judicial or administrative proceeding. To Seller’s Knowledge, no person or any such person’s business or products has infringed or misappropriated any Business Intellectual Property, or currently is infringing or misappropriating any Business Intellectual Property. CDES owns, free and clear of all Liens, all of the Business Intellectual Property and has the right to transfer the Intellectual Property set forth on Schedule 2.3(b) of the Seller Disclosure Letter to Purchaser and to license the Intellectual Property set forth on Schedule 5.9 of the Seller Disclosure Letter to Purchaser.

Section 3.9 Labor Matters . (a) To the Knowledge of Seller, except as set forth on Schedule 3.9(a) of the Seller Disclosure Letter, the Seller is in compliance with all Laws applicable to the operation of the Business respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practice.

(b) No unfair labor practice complaint against the Seller or any of its representatives or employees relating to the Business is pending or, to the Knowledge of Seller, has been threatened before the National Labor Relations Board.

(c) There is no labor strike, dispute, slowdown or stoppage actually pending, or to the Knowledge of Seller, threatened or reasonably anticipated, against the Seller relating to the Business.

(d) As of the date hereof, there are no collective bargaining and labor union agreements applicable to any Transferred Business Employee. No union is currently certified, and there is no union representation question and no union or other organizational activity that would be subject to the National Labor Relations Act (20 U.S.C. §151 et. seq.), or any similar law existing or, to the Knowledge of Seller, threatened with respect to the operations of the Business.

 

15

(e) To the Knowledg