<PAGE>
EXHIBIT 10.16
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED:
INFORMATION FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED IS OMITTED AND IS NOTED
WITH THREE ASTERICKS AS FOLLOWS "* *
*." AN UNREDACTED VERSION OF THIS DOCUMENT
HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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STOCK PURCHASE AGREEMENT
BY AND AMONG
ADVANCED TECHNOLOGY MATERIALS, INC., AS PURCHASER,
LENTE, LLC, AS SELLERS' REPRESENTATIVE,
AND THE PERSONS LISTED ON
THE SIGNATURE PAGES HERETO, AS SELLERS
DATED AS OF JULY 14, 2003
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<PAGE>
STOCK PURCHASE AGREEMENT, dated as of July 14, 2003, by and
among
Advanced Technology Materials, Inc., a
Delaware corporation (the "PURCHASER"),
LENTE, LLC, as the Sellers' Representative,
and the Persons listed as Sellers on
the signature pages hereto (the
"SELLERS").
PREAMBLE
WHEREAS, the Sellers collectively own all of the issued and
outstanding
capital stock of ESC, Inc., a Pennsylvania
corporation ("ESC"); and
WHEREAS, the Sellers desire to sell to the Purchaser, and the
Purchaser
desires to acquire, on the terms and
conditions set forth in this Agreement, all
of the issued and outstanding capital stock
of ESC.
NOW, THEREFORE, in consideration of the premises and the
respective
mutual covenants, representations and
warranties herein contained, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the
following
terms when used in this Agreement shall
have the meanings indicated below:
"AFFILIATE" of any specified Person, means any other Person
which,
directly or indirectly, is in control of,
is controlled by or is under common
control with such specified Person. For the
purposes of this definition,
"control," when used with respect to any
Person, means the power to direct the
management and policies of such Person,
directly or indirectly, whether through
the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" means this Stock Purchase Agreement together with
all
schedules referred to herein, as the same
may be amended, supplemented, restated
or otherwise modified from time to
time.
"ATMI MATERIALS" means the material(s) currently commercialized by
the
Purchaser identified on Schedule 1 hereto
under the heading "ATMI Materials."
"CERCLA" means the United States Comprehensive Environmental
Response,
Compensation, and Liability Act, 42 U.S.C.
Section 9601 et. seq., as amended.
"CLOSING DATE" means the date on which the Closing occurs, which is
the
date hereof.
"CODE" means the United States Internal Revenue Code of 1986,
as
amended from time to time, or any successor
statute.
"COMPANY" means ESC and the ESC Subsidiary, except where the
context
clearly dictates that such term refers only
to ESC.
<PAGE>
"CONTRACT" means any agreement, contract, obligation, promise,
commitment, arrangement or undertaking
(whether written or oral and whether
express or implied).
"CONTROLLING SELLERS" means each of Shahriar Naghshineh,
Yassaman
Hashemi and Shahla Hooshmand, who together
comprise the owners of 97.426% of
ESC's outstanding voting capital stock.
"EMPLOYMENT AGREEMENT" means the employment agreement between
Shahriar
Naghshineh and the Purchaser or an
Affiliate of the Purchaser, dated as of the
date hereof.
"ENCUMBRANCE" means any lien, hypothecation, levy, deed of
trust,
easement or other real estate declaration,
covenant, mortgage, charge, claim,
community property interest, condition,
equitable interest, option, pledge,
security interest, right of first refusal,
restriction, limitation or
encumbrance of any kind or nature,
including any restriction on use, voting,
transfer, receipt of income or exercise of
any other attribute of ownership or
any other limitation or restriction
whatsoever; and the verb "ENCUMBER" shall be
construed accordingly.
"ENVIRONMENTAL CLAIM" means any accusation, allegation, notice
of
violation, action, claim, Encumbrance,
demand, abatement, Order or direction
(conditional or otherwise) by any
Governmental Authority or any Person for
personal injury (including sickness,
disease or death), tangible or intangible
property damage, damage to the environment,
nuisance, pollution, contamination
or other adverse effects on the
environment, or for fines, penalties or
restrictions arising under any
Environmental Law.
"ENVIRONMENTAL LAW" means any Law concerning the environment,
or
activities that might threaten or result in
damage to the environment or human
health, or any Law that is concerned in
whole or in part with the environment
and with protecting or improving the
quality of the environment and human and
employee health and safety, as any such Law
has been amended or supplemented,
and the regulations promulgated pursuant
thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended from time to time, or any successor
statute.
"ESCROW AGREEMENT" means the escrow agreement among the
Purchaser,
LENTE, LLC, as Sellers' Representative, the
Sellers and U.S. Bank National
Association, as escrow agent, dated as of
the date hereof.
"ESCROW FUND" has the meaning assigned to such term in the
Escrow
Agreement.
"ESC SUBSIDIARY" means ESC Technologies, Inc., a Delaware
corporation
and wholly-owned direct subsidiary of
ESC.
"FACILITIES" means any real property, leaseholds or other
interests
currently or formerly owned, leased,
occupied or operated by the Company and any
buildings, plants, structures or equipment
(including motor vehicles) currently
or formerly owned or operated by the
Company.
"GAAP" means United States generally accepted accounting
principles,
consistently applied.
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"GOVERNMENTAL AUTHORITY" means any domestic, international,
national,
territorial, regional, state or local
governmental authority, quasi-governmental
authority, instrumentality, court,
commission or tribunal or any regulatory,
administrative or other agency, or any
political or other subdivision,
department or branch of any of the
foregoing or any arbitrator or mediator.
"GOVERNMENTAL PERMIT" means any license, franchise, permit or
other
authorization of any Governmental
Authority.
"HAZARDOUS MATERIALS" means any substance, material or waste
regulated
by Environmental Law, including, without
limitation, any material or substance
which is defined as a "hazardous waste,"
"hazardous material," "hazardous
substance," "extremely hazardous waste" or
"restricted hazardous waste,"
"subject waste," "contaminant," "toxic
waste" or "toxic substance" under any
provision of Environmental Law, including
but not limited to, petroleum,
petroleum products, asbestos,
asbestos-containing materials and polychlorinated
biphenyls, radon and radioactive
materials.
"KEY EMPLOYEES" means each of Shahla Hooshmand, Cuong Tran,
David
Stenger, Jeff Barnes, Tami Galarza, Beth
Walker, Georgea de Medina and Ewa
Oldak.
"LAW" means any federal, state, local or foreign law (including
common
law), statute, code, ordinance, rule,
regulation or other requirement or
guideline.
"NET REVENUES" means the gross invoice price of Product sales
(whether
by the Company, the Purchaser or an
Affiliate of the Purchaser), less trade and
sales allowances, rebates and discounts,
and returns in respect of the Products.
Each component of Net Revenues shall be
determined in accordance with GAAP
applied on a basis consistent with the
Company's past practices.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any legal or
governmental
requirement or obligation relating to safe
and healthful working conditions or
to reduce occupational safety and health
hazards, and any program, whether
governmental or private (including those
promulgated or sponsored by industry
associations and insurance companies),
designed to provide safe and healthful
working conditions.
"ORDER" means any order, consent, consent order, injunction,
judgment,
decree, consent decree, ruling, writ,
assessment or arbitration award.
"ORGANIZATIONAL DOCUMENTS" means (a) the articles, certificate
of
incorporation or similar formation document
and the by-laws, code of regulations
or similar governing document of a
corporation; and (b) any and all amendments
to any of the foregoing.
"PARENT" means ATMI, Inc., a Delaware corporation and the
ultimate
parent of the Purchaser.
"PERSON" whether or not capitalized, means any individual,
corporation
(including any non-profit corporation),
unincorporated organization,
partnership, limited liability company,
joint stock company, joint venture,
estate, trust, association, organization,
labor union or other entity or
governmental body or Governmental
Authority.
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<PAGE>
"PRODUCTS" mean (i) all products that have been or currently are
sold
or licensed by the Company, or are
currently under development by the Company,
in each case as identified on Schedule 1
hereto under the heading "Products and
Products under Development", together with
all improvements thereto made after
the Closing (whether made by the Company,
the Purchaser or an Affiliate of the
Purchaser); (ii) all products that are
directly within the scope of valid and
enforceable claims in the Company patents
and patent applications identified on
Schedule 1 hereto under the heading
"Certain Patents" (including originals,
divisions, continuations,
continuations-in-part, extensions or reissues of such
patents); and (iii) the ATMI Materials.
"PRO RATA SHARE AMONG ALL SELLERS" means each Seller's pro rata
share
among all of the Sellers, as identified on
Schedule 3.1 hereto, which is based
upon the Sellers' relative percentage
ownership of the Securities as of the date
hereof.
"RELEASE" means any release, spill, effluent, emission,
leaking,
pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or
migration into the indoor or outdoor
environment of any Hazardous Material
through or in the air, soil, surface water
or groundwater.
"REMEDIAL ACTION" means all actions, including, without limitation,
any
expenditures, required or voluntarily
undertaken to (i) clean up, remove, treat,
or in any other way address any Hazardous
Material or other substance in the
indoor or outdoor environment; (ii) prevent
the Release or threat of Release, or
minimize the further Release of any
Hazardous Material or other substance so it
does not migrate or endanger or threaten to
endanger public health or welfare of
the indoor or outdoor environment; (iii)
perform pre-remedial studies and
investigations or post-remedial monitoring
and care; or (iv) bring any Facility
into compliance with all Environmental Laws
and Governmental Permits issued
pursuant to Environmental Laws.
"SECURITIES" means all the issued and outstanding capital stock of
ESC
as of the date hereof, consisting of the
securities identified on Schedule 3.1
annexed hereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the
rules and regulations promulgated
thereunder, as the same may be amended from
time to time, and any successor law.
"SELLERS" shall have the meaning set forth in the preamble hereof
and
includes the Controlling Sellers unless
otherwise expressly specified.
"SUBSIDIARY" means with respect to any Person, any corporation,
joint
venture, limited liability company,
partnership, association or other business
entity of which more than 50% of the total
voting power of stock or other equity
entitled to vote generally in the election
of directors or managers or
equivalent persons thereof is owned or
controlled, directly or indirectly, by
such Person.
"TRANSACTION DOCUMENTS" means the Escrow Agreement, the
Employment
Agreement and the other agreements,
documents or instruments executed and
delivered by a party hereto as contemplated
under this Agreement.
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<PAGE>
ARTICLE II
PURCHASE OF SECURITIES; CONSIDERATION; CLOSING
2.1 Purchase
of Securities. Subject to the terms set forth herein,
on the date hereof, the Sellers shall each
sell, assign and transfer to the
Purchaser, and the Purchaser shall purchase
and assume from each of the Sellers,
all of the Sellers' respective right, title
and interest in and to the
Securities, free and clear of all
Encumbrances.
2.2
Consideration. (a) The aggregate purchase price for the
Securities (the "PURCHASE PRICE") shall be
the greatest of (1) $18,000,000.00;
(2) * * * (the "2003 CALCULATION AMOUNT");
(3) * * * (the "2004 CALCULATION
AMOUNT"); and (4) * * * (the "2005
CALCULATION AMOUNT"); provided that the
Purchase Price shall not exceed $ * * *.
The Purchase Price shall be payable as
follows:
(i) subject to
Section 2.3 hereof, at the
Closing, an aggregate amount of $18,000,000.00 shall be paid by
the
Purchaser to the Sellers' Representative and the Escrow Agent
(as
defined below) (the "CLOSING CASH PAYMENT") as more
particularly
described in Section 2.2(c) hereof;
(ii)
subject to Sections 2.2(b), 2.2(c), 5.4 and
5.5(c) hereof, if the Purchase Price (as calculated above) is
greater
than $18,000,000.00 (because the 2003 Calculation Amount
exceeds
$18,000,000.00), then on or before March 31, 2004, the amount by
which
the 2003 Calculation Amount exceeds $18,000,000.00 (such excess
amount,
the "2003 EARN OUT") shall be paid by the Purchaser to the
Sellers'
Representative and the Escrow Agent as more particularly described
in
Section 2.2(c) hereof;
(iii)
subject to Sections 2.2(b), 2.2(c), 5.4 and
5.5(c) hereof, if the Purchase Price (as calculated above) is
greater
than the sum of $18,000,000.00 plus the 2003 Earn Out (because the
2004
Calculation Amount exceeds the sum of $18,000,000.00 plus the 2003
Earn
Out), then on or before March 31, 2005, the amount by which the
Purchase Price exceeds the sum of $18,000,000.00 plus the 2003 Earn
Out
(such excess amount, the "2004 EARN OUT") shall be paid by the
Purchaser to the Sellers' Representative and the Escrow Agent as
more
particularly described in Section 2.2(c) hereof; and
(iv)
subject to Sections 2.2(b), 5.4 and 5.5(c)
hereof, if the Purchase Price (as calculated above) is greater than
the
sum of $18,000,000.00 plus the 2003 Earn Out and the 2004 Earn
Out
(because the 2005 Calculation Amount exceeds the sum of
$18,000,000.00
plus the 2003 Earn Out and the 2004 Earn Out), then on or before
March
31, 2006, the amount by which the Purchase Price exceeds the sum
of
$18,000,000.00 plus the 2003 Earn Out and the 2004 Earn Out
(such
excess amount, the "2005 EARN OUT") shall be paid by the Purchaser
to
the Sellers' Representative.
The 2003 Earn Out, the 2004 Earn Out and
2005 Earn Out shall be referred to
herein each as an "Earn Out Payment" and
collectively as "the Earn Out Payment",
as appropriate in the context used. The
calculation of the Earn Out Payment each
year shall be reviewed and confirmed by
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<PAGE>
the Sellers' Representative prior to
payment hereunder. If the calculation is
determined conclusively to be in error by *
* *% or more, the Purchaser shall
pay the reasonable out-of-pocket costs
(including, without limitation,
reasonable attorneys', accountants', expert
and other professional fees)
incurred by the Sellers' Representative in
resolving the difference.
Notwithstanding anything to the contrary in
clauses (ii) through (iv) above, in
the event that a payment under clauses (ii)
through (iv) above would make the
aggregate Purchase Price an amount in
excess of $* * *, then the applicable
payment (the 2003 Earn Out, the 2004 Earn
Out or the 2005 Earn Out, as
applicable) shall be reduced to the amount
necessary to make the aggregate
Purchase Price equal $* * *, and no further
Earn Out Payment shall be payable.
Each payment of the Purchase Price to the
Sellers' Representative pursuant to
clauses (i) through (iv) above shall be
made by wire transfer of immediately
available funds to an account specified by
the Sellers' Representative. After
deductions for any pre-closing expenses
allocable to the Sellers which the
Sellers agree to pay jointly including any
fees for Value Plus International,
Inc., accountants' and attorneys' fees
incurred solely with respect to the sale
of the Securities by the Sellers, the
Sellers' Representative shall distribute
to each Seller such Seller's Pro Rata Share
Among All Sellers of the Purchase
Price, promptly after receipt of any
payment from the Purchaser in respect of
the Purchase Price, subject to reduction
for any offsets made by the Purchaser
in respect of amounts allocable to one or
more Sellers in accordance with this
Agreement.
(b) Without
limiting any of the Purchaser's other rights
or remedies, including but not limited to
the Purchaser's rights and remedies
under Section 5.5(c) hereof, but subject to
the limitations set forth in
Sections 5.1(b), 5.4 and, with respect to
set offs against the Earn Out Payment,
5.5(c) hereof, the Purchaser shall have the
right to set off against any amounts
otherwise payable by the Purchaser to (or
for the benefit of) the Sellers under
this Agreement or any other Transaction
Document, including but not limited to
the Earn Out Payment and any amounts to or
from the Escrow Fund, any amounts due
or payable by the Sellers to the Purchaser
or any Purchaser Indemnitee (as
defined below), including but not limited
to indemnity obligations pursuant to
Article V. If the Purchaser sets off
amounts pursuant to this Section 2.2(b),
the Purchaser shall notify the Sellers'
Representative in writing within five
(5) days after such set off, including the
basis for the set off.
Notwithstanding any provision of this
Section 2.2(b) to the contrary, the
Purchaser may exercise its right to set off
pursuant to this Section 2.2(b) only
to the extent that the actual and/or
estimated amount payable by a particular
Seller or Sellers for indemnification or
reimbursement under Article V of this
Agreement exceeds such Seller's or Sellers'
allocable Sub-Account (as defined in
the Escrow Agreement) of the then-current
Escrow Fund.
(c) Escrow.
Notwithstanding any provision of this
Agreement to the contrary, in lieu of
delivering to the Sellers' Representative
wired funds in respect of the full dollar
amount of the Closing Cash Payment, at
Closing the Purchaser shall deliver or
cause to be delivered (A) to the Sellers'
Representative wired funds equal to 80% of
the aggregate dollar value of the
Closing Cash Payment (equal to an aggregate
$14,400,000.00); and (B) to U.S.
Bank National Association as escrow agent
(the "ESCROW AGENT") for deposit into
the Escrow Fund provided for in the Escrow
Agreement, to secure in part the
indemnity obligations of the Sellers under
Article V, wired funds equal to 20%
of the aggregate dollar value of the
Closing Cash
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<PAGE>
Payment (equal to $3,600,000.00) (the
"INITIAL ESCROW AMOUNT"). Furthermore,
notwithstanding any provision of this
Agreement to the contrary, in lieu of
delivering to the Sellers' Representative
wired funds in respect of the full
dollar amount of the 2003 Earn Out and 2004
Earn Out, if any, when the 2003 Earn
Out and 2004 Earn Out are payable, subject
to Sections 2.2(b) and 5.5(c) hereof,
the Purchaser shall deliver or cause to be
delivered (A) to the Sellers'
Representative wired funds equal to 80% of
the aggregate dollar value of the
2003 Earn Out or 2004 Earn Out, as
applicable; and (B) to the Escrow Agent for
deposit into the Escrow Fund, to secure in
part the indemnity obligations of the
Sellers under Article V, wired funds equal
to 20% of the aggregate dollar value
of the 2003 Earn Out or the 2004 Earn Out,
as applicable (such wired funds,
together with the Initial Escrow Amount,
the "ESCROW AMOUNT"). The Escrow Amount
will be held as part of the Escrow Fund and
disposed of by the Escrow Agent in
accordance with the provisions of the
Escrow Agreement. Such Escrow Fund shall
be available to indemnify and reimburse the
Purchaser Indemnitees as provided in
Article V. The Escrow Agreement is
incorporated herein by reference and shall be
considered part of this Agreement.
2.3
Closing.
(a) The sale and purchase of the Securities will take place on
the date hereof at the offices of ATMI,
Inc., 6 Commerce Drive, Danbury, CT
06810, or at such other location as shall
be agreed to by the Sellers'
Representative and the Purchaser (the
"CLOSING").
(b) At the Closing, the Purchaser shall deliver to the
Sellers' Representative:
(i) the
portion of the Closing Cash Payment
payable to the Sellers' Representative (in
accordance with the provisions of Section
2.2(c));
(ii) an executed
counterpart to this Agreement;
(iii) an
executed counterpart to the Employment
Agreement;
(iv)
an executed counterpart to the Escrow
Agreement, together with the payment to the
Escrow Agent of the portion of the Initial
Escrow Amount allocable to the Escrow Agent
(in accordance with the provisions of
Section 2.2(c));
(v)
resolutions of the board of directors of the
Purchaser authorizing the transactions
contemplated hereby;
(vi)
a certificate dated the date hereof from the
Secretary of the Purchaser setting forth the
authorized resolutions adopted by the board
of directors of the Purchaser with respect
to the transactions contemplated hereby;
(vii)
resolutions of the board of directors of the
Parent authorizing the Purchaser to
consummate the transactions contemplated
hereby;
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<PAGE>
(viii) a
certificate dated the date hereof from the
Secretary of the Parent setting forth the
authorized resolutions adopted by the board
of directors of the Parent with respect to
the transactions contemplated hereby; and
(ix)
a certificate issued by the Secretary of
State of the State of Delaware, as to the
good standing of the Purchaser.
(c) At the Closing, the Sellers shall deliver to the
Purchaser:
(i) a
certificate or certificates representing
all of the Securities together with stock
powers separate from the certificates duly
executed by the Sellers in blank and
sufficient to convey to the Purchaser good
and marketable title to all of the
Securities, free and clear of any and all
Encumbrances;
(ii)
executed counterparts to this Agreement;
(iii) a
counterpart to the Employment Agreement,
executed by Shahriar Naghshineh;
(iv)
executed counterparts to the Escrow
Agreement;
(v) a
favorable opinion from Tallman, Hudders &
Sorrentino, P.C., legal counsel to ESC,
addressed to the Purchaser and dated the
date hereof, in the form set forth as
Exhibit A hereto (the "ESC'S COUNSEL
OPINION");
(vi)
certificates issued by the Secretary of the
Commonwealth of Pennsylvania and the
Secretary of State of the State of Delaware,
as to the good standing of ESC and the ESC
Subsidiary, respectively;
(vii)
copies of the Organizational Documents for
ESC, certified by the Secretary of State of
the Commonwealth of Pennsylvania and the
Secretary of ESC;
(viii) copies of
the Organizational Documents for
the ESC Subsidiary, certified by the
Secretary of State of the State of Delaware
and the Secretary of the ESC Subsidiary;
(ix)
a letter of resignation dated the date
hereof from each member of the board of
directors and each executive officer of ESC
and the ESC Subsidiary;
(x) a letter
from Shahriar Naghshineh to the
Purchaser relating to the property
settlement dated August 15, 2002;
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<PAGE>
(xi)
a certificate, meeting the requirements of
Sections 897 and 1445 of the Code, stating
that the Company has not been a United
States real property holding corporation at
any time during the five year period prior
to the Closing Date and that the stock of
the Company is not a United States real
property interest; and
(xii)
consents from the spouse of each individual
Seller who is
married, substantially in the
form of Exhibit B hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers each represent and warrant to the Purchaser as
follows:
3.1 Ownership
of Securities. Each Seller owns, of record and
beneficially, and has good, valid and
indefeasible title to and the right to
transfer the Securities set forth opposite
such Seller's name on Schedule 3.1,
free and clear of any and all Encumbrances
of any kind or nature whatsoever.
3.2 Legal
Proceedings Concerning Transactions. There is no pending
Proceeding against any of the Sellers or
the Company that challenges, or may
have the effect of preventing, delaying or
making illegal, or otherwise
interfering with, any of the transactions
contemplated hereby and by the
Transaction Documents and, to the knowledge
of the Sellers, no such Proceeding
has been threatened, and no event or
circumstance exists that may give rise to
or serve as a basis for the commencement of
any such Proceeding.
3.3 Knowledge
and Sophistication of the Sellers. Each Seller has
read this Agreement and fully understands
and agrees with the terms and
conditions under which the Securities are
being sold to the Purchaser and under
which the Purchase Price will be paid to
the Sellers including the valuation of
the Securities and determination of the
Purchase Price, the determination of the
Pro Rata Share Among All Sellers with
respect to such Seller and all Sellers on
an aggregate basis, the fact that the
amount of Earn Out Payment is uncertain
and may be zero, the terms and conditions
of the Escrow Agreement and the
Sellers' indemnification obligations and
the Purchaser's rights set forth in
this Agreement. Purchaser has not been
involved in the determination of the Pro
Rata Share Among All Sellers, and Purchaser
may rely upon Schedule 3.1 without
investigation. Each Seller has had the
opportunity to consult with counsel and
tax, accounting and other advisors
regarding this Agreement and the Transaction
Documents to which such Seller is a party
and the transactions contemplated
hereby and thereby and has undertaken such
consultations as such Seller deems
necessary or appropriate in connection
therewith.
3.4
Organization and Good Standing. ESC is a corporation duly
organized, validly existing and in good
standing under the Laws of the
Commonwealth of Pennsylvania, and the ESC
Subsidiary is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
Delaware, each with full corporate power
and authority to conduct its business
as it is now being conducted and to own or
use the assets and properties that it
purports to own or use. The Company is duly
qualified to do business as a
foreign corporation, and is in
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good standing under the Laws of, each state
or other jurisdiction in which
either the ownership or use of the assets
or properties owned or used by it, or
the nature of the activities conducted by
it, requires such qualification except
as provided in Schedule 3.4, which contains
a complete and accurate list of the
jurisdictions in which the Company is
authorized to do business.
3.5 Authority;
No Conflict.
(a) Each of the Sellers has the individual power, capacity and
authority to execute and deliver this
Agreement and the other Transaction
Documents to which such Seller is a party,
to consummate the transactions
contemplated hereby and thereby and to
perform its, his or her obligations under
this Agreement and the other Transaction
Documents to which such Seller is a
party. This Agreement and each other
Transaction Document to which such Seller
is a party has been duly authorized and
approved, executed and delivered by such
Seller and constitute the legal, valid and
binding obligations of such Seller,
enforceable against such Seller in
accordance with their respective terms,
except as enforcement thereof may be
limited by bankruptcy, insolvency,
moratorium or other similar laws affecting
the enforcement of creditors' rights
in general, or by general principles of
equity.
(b) Neither the execution and delivery of this Agreement or
any other Transaction Document by the
Sellers nor the consummation or
performance by the Sellers of the
transactions contemplated hereby or thereby,
directly or indirectly (with or without
notice or lapse of time or both):
(i)
contravenes, conflicts with or results in a
violation or breach of (A) any provision of the Organizational
Documents of such Seller (if applicable) or the Company, (B)
any
resolution adopted by the board of directors or the shareholders
of
such Seller (if applicable) or the Company, (C) any legal
requirement
or any Order, award, decision, settlement or process to which
such
Seller or the Company or any of the assets or properties owned or
used
by such Seller or the Company may be subject, or (D) any
Governmental
Permit which is held by such Seller or the Company or that
otherwise
relates to the business of, or any of the assets or properties
owned or
used by, such Seller or the Company;
(ii)
results in a breach of or constitutes a
default, gives rise to a right of termination, cancellation or
acceleration, creates any entitlement to any payment or benefit,
or
requires the consent, authorization or approval of or any notice to
or
filing with any third Person or requires the consent, authorization
or
approval of or any notice to or filing with any Governmental
Authority;
or
(iii)
results in the imposition or creation of any
Encumbrance upon or with respect to any of the assets or
properties
owned or used by such Seller or the Company, including, without
limitation, the Securities.
3.6
Capitalization; Other Matters.
(a) The authorized capital stock of ESC consists solely of the
Securities, as described on Schedule 3.1
hereto, and Schedule 3.1 is true,
complete and correct and accurately
reflects the Pro Rata Share Among All
Sellers.
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<PAGE>
(b) Except as specified in Section 3.6(a) of this Agreement,
there are no outstanding securities of ESC,
including, without limitation, debt
securities, common or preferred stock,
options, warrants, rights or other
securities convertible or exercisable into,
or exchangeable for, capital stock
or other securities. All of the Securities
of ESC have been duly authorized and
validly issued and are fully paid and
nonassessable. Upon consummation of the
transactions under this Agreement, the
Purchaser will have acquired all record
and beneficial ownership of and good, valid
and indefeasible title to and the
right to transfer all of the Securities,
free and clear of any and all
Encumbrances of any kind or nature
whatsoever.
(c) Except as set forth in Schedule 3.6(c): (i) there are no
voting trusts or other Contracts or
understandings to which the Sellers or the
Company is a party with respect to the
transfer, voting or registration of the
Securities; (ii) there are no Contracts
relating to the issuance, sale or
transfer of the Securities; (iii) the
Securities were not issued in violation of
the Securities Act or any other legal
requirement; (iv) the Company does not own
or have any Contract to acquire any equity
securities or other securities of any
Person or any, direct or indirect, equity
or ownership interest in any other
business; (v) the Company does not now have
or has never had any Subsidiaries
(other than, with respect to ESC, the ESC
Subsidiary) or equity interest in any
other Person; and (vi) no Person has any
pre-emptive rights with respect to the
Securities or the ESC Subsidiary
Securities.
(d) ESC owns, of record and beneficially, and has good, valid
and indefeasible title to and the right to
transfer all of the outstanding
capital stock of the ESC Subsidiary (the
"ESC SUBSIDIARY SECURITIES"), free and
clear of any and all Encumbrances of any
kind or nature whatsoever. There are no
outstanding securities of the ESC
Subsidiary, including, without limitation,
debt securities, common or preferred stock,
options, warrants, rights or other
securities convertible or exercisable into,
or exchangeable for, capital stock
or other securities. All of the ESC
Subsidiary Securities have been duly
authorized and validly issued and are fully
paid and nonassessable. There are no
voting trusts or other Contracts or
understandings to which the Company is a
party with respect to the transfer, voting
or registration of the ESC Subsidiary
Securities. There are no Contracts relating
to the issuance, sale or transfer of
the ESC Subsidiary Securities. The ESC
Subsidiary Securities were not issued in
violation of the Securities Act or any
other legal requirement.
3.7 Books and
Records. The books of account and other records of
the Company, all of which have been made
available to the Purchaser, are true,
complete and correct. The minute books of
the Company contain true, accurate and
complete records of all meetings held of,
and corporate action taken by, the
shareholders, the board of directors, and
committees of the board of directors
of the Company. The stock books or
equivalent records of the Company are true,
complete and correct. As of the date
hereof, all of such books and records are
in the possession of the Company.
3.8 Financial
Statements.
(a) For purposes of this Agreement, "FINANCIAL STATEMENTS"
shall mean the (i) unaudited consolidated
financial statements of the Company as
of and for the fiscal year ending December
31, 2001 and 2002 and (ii) the
unaudited consolidated balance sheet of the
Company as of June 30, 2003 and the
related income statement for the period
from January 1, 2003 until
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<PAGE>
June 30, 2003. The Controlling Sellers have
delivered to the Purchaser true and
complete copies of the Financial
Statements, all of which are attached as
Schedule 3.8.
(b) The Financial Statements (i) have been prepared from the
books and records of the Company on an
income tax basis, (ii) fully reflect all
liabilities of the Company required to be
reflected therein on such basis as at
the date thereof, and (iii) fairly present
the financial position of the Company
as of the date of the balance sheets
included in the Financial Statements and
the results of operations for the periods
indicated.
3.9 No
Undisclosed Liabilities. The Company does not have any
liabilities or obligations of any nature
(whether absolute, accrued, contingent,
or otherwise and whether due or to become
due), including, without limitation,
related to or arising from the Company's
business or the Products (except for
the ATMI Materials), except for liabilities
or obligations reflected or reserved
against in the Company's balance sheet
dated as of June 30, 2003, which is part
of the Financial Statements, liabilities
specifically set forth in Schedule 3.9
and current liabilities incurred in the
ordinary course of business since June
30, 2003 consistent with past
practices.
3.10
No Material Adverse Change. Except as set forth in Schedule
3.10, since December 31, 2002, there has
not been any material adverse change in
the business, operations, properties,
assets, prospects, liabilities, results of
operations or condition (financial or
otherwise) (a "MATERIAL ADVERSE EFFECT")
of the Company and no event has occurred
and no circumstance exists that could
reasonably be expected to have a Material
Adverse Effect on the Company.
3.11
Taxes.
(a) "TAXES" shall mean all taxes, charges, fees, Encumbrances,
customs, duties or other assessments,
however denominated, including any
interest, penalties, additions to tax or
additional taxes that may become
payable in respect thereof, imposed by the
United States government, any state,
local or foreign government, or any agency
or political subdivision of any such
government (a "TAX AUTHORITY"), which taxes
shall include, without limiting the
generality of the foregoing, all income
taxes (or taxes based on income),
payroll and employee withholding taxes,
unemployment insurance, social security,
sales and use taxes, excise taxes, capital
taxes, franchise taxes, gross receipt
taxes, occupation taxes, real and personal
property taxes, value added taxes,
stamp taxes, transfer taxes, workers'
compensation taxes, taxes relating to
benefit plans and other obligations of the
same or similar nature.
(b) (i) The Company has filed or caused to be filed with the
appropriate Tax Authority in a timely
manner all Tax returns, reports and forms
required to be filed by it including any
information return, claim for refund,
amended return or declaration or estimated
Tax ("RETURNS"); (ii) the information
on such Returns is complete and accurate;
(iii) the Company has paid in full on
a timely basis all Taxes or made adequate
provision in the Financial Statements
for all Taxes (whether or not shown on any
Return) required to be paid by it;
(iv) there are no Encumbrances for Taxes
upon the assets or properties of the
Company other than for Taxes not yet due
and payable; and (v) except as set
forth on Schedule 3.4 hereto, no
deficiencies for Taxes have been claimed,
proposed, or assessed by any Tax Authority
or other Governmental Authority with
respect to the Company, and there are no
pending or, to knowledge of the
Sellers,
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<PAGE>
threatened audits, investigations or claims
for or relating to any liability in
respect of Taxes of the Company.
(c) There are no outstanding Contracts or waivers with respect
to the Company extending the statutory
period of limitation applicable to any
Taxes and, except for Returns for fiscal
year 2002, the Company has not
requested any extension of time within
which to file any Return which has not
yet been filed.
(d) (i) The Company has withheld and paid all Taxes required
to have been withheld and paid in
connection with amounts paid or owing to any
employee, independent contractor, creditor,
shareholder or other third Person;
(ii) all material elections with respect to
Taxes made by the Company as of the
date hereof are set forth in Schedule
3.11(d); (iii) there are no private letter
rulings in respect of any Tax pending
between the Company and any Tax Authority;
(iv) the Company has not ever been a member
of an affiliated group within the
meaning of Section 1504 of the Code, or
filed or been included in a combined,
consolidated or unitary return of any
Person, other than with respect to the
Company; (v) the Company is not liable for
Taxes of any other Person except with
respect to sales taxes, and the Company is
not currently under any contractual
obligation to indemnify any Person with
respect to Taxes, or a party to any tax
sharing agreement or any other agreement
providing for payments by the Company
with respect to Taxes; (vi) the Company is
not a party to any joint venture,
partnership or other arrangement or
Contract which could be treated as a
partnership for federal income Tax
purposes; (vii) the Company has not agreed to
or is required, as a result of a change in
method of accounting or otherwise, to
include any adjustment under Section 481 of
the Code (or any corresponding
provision of state, local or foreign Law)
in taxable income; (viii) the Company
is not a party to any Contract, arrangement
or plan that could result (taking
into account the transactions contemplated
by this Agreement), separately or in
the aggregate, in the payment of any
"excess parachute payments" within the
meaning of Section 280G of the Code; (ix)
Schedule 3.11(d) contains a list of
all jurisdictions to which any Tax is
properly payable or in which any Return is
required to be filed by the Company, and no
written claim has ever been made by
any Tax Authority in any other jurisdiction
that the Company is subject to
taxation in such jurisdiction; and (x) a
list of all outstanding powers of
attorney enabling any party to represent
the Company with respect to Taxes is
set forth in Schedule 3.11(d).
3.12
Accounts Receivable. All accounts receivable of the Company
that are reflected on the Financial
Statements or on the accounts receivable
ledger of the Company as of the date hereof
(collectively, the "ACCOUNTS
RECEIVABLE") represent valid obligations
arising from sales actually made or
services actually performed in the ordinary
course of business. All of the
Accounts Receivable are collectible at the
full recorded amount thereof, in the
ordinary course of business without resort
to litigation.
3.13
Title to Properties; Encumbrances.
(a) Schedule 3.13 contains a complete and accurate list of all
real property, leaseholds or other
interests therein owned or held by the
Company. The Company does not own, and has
never owned, any real property other
than as specified in Schedule 3.13. For
each such property, Schedule 3.13 sets
forth the owner thereof, a brief
description thereof (including approximate
square footage), the date when purchased or
acquired and the approximate
purchase
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<PAGE>
price thereof, the use made of such
property and the approximate annual costs,
fees and taxes associated with such
property. The Sellers have delivered or made
available to the Purchaser true, correct
and complete copies of the real
property leases to which the Company is
party or pursuant to which it uses or
occupies any real property.
(b) Except as set forth in Schedule 3.13, the Company has good
title to all of the assets and properties,
real and personal, tangible and
intangible, it owns or purports to own, or
uses in its business, including those
reflected on its books and records and in
the Financial Statements (except for
accounts receivable collected and
inventories, materials and supplies disposed
of in the ordinary course of business
consistent with past practice after June
30, 2003). The Company has a valid
leasehold, license or other interest in all
of the other tangible assets or properties,
real or personal, which are used in
the operation of its business.
(c) Except as set forth in Schedule 3.13, all assets and
properties owned, leased or used by the
Company are free and clear of all
Encumbrances.
3.14
Products. Schedule 1 sets forth, under the heading "Products
and Products under Development", a complete
and accurate list of all Products
that have been or currently are sold or
licensed by the Company or are currently
under development by the Company. The
Products (other than the ATMI Materials)
conform in all respects to the properties,
composition and specifications set
forth in Schedule 1 adjacent to each such
Product.
3.15
Compliance with Laws; Governmental Authorizations.
(a) The Company is in compliance with all Laws, licenses and
Orders affecting the assets or properties
owned or used by the Company and the
business or operations of the Company. The
Company has not been charged with
violating, or, to the knowledge of the
Sellers, threatened with a charge of
violating, nor is the Company under
investigation with respect to a possible
violation of, any provision of any federal,
state, local or foreign Law, Order
or license relating to any of its assets or
properties or any aspect of its
business.
(b) Schedule 3.15 contains a complete and accurate list of
each Governmental Permit that is held by
the Company or that otherwise relates
to the business of, or to any of the assets
or properties owned or used by, the
Company. Each Governmental Permit listed or
required to be listed in Schedule
3.15 is valid and in full force and effect
and is not subject to any Proceedings
for suspension, modification or
revocation.
3.16
Legal Proceedings.
(a) Except as set forth in Schedule 3.16, there is no pending
claim, action, investigation, arbitration,
litigation or other proceeding
("PROCEEDING") that has been commenced by
or against any Seller (in relation to
the Company or the Securities) or the
Company or the Securities or that
otherwise relates to the business of, or
any of the assets, services or
properties owned or used by, the Company,
including any Proceeding relating to
infringement, interference, opposition,
misappropriation or other violation of
the Company's or any other Person's
(including any employee, former employee,
contractor or consultant of the Company)
Intellectual Property Assets.
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<PAGE>
(b) To the knowledge of the Sellers, no such Proceeding
(including relating to infringement,
interference, opposition, misappropriation
or other violation of the Company's or any
Person's Intellectual Property
Assets) has been threatened and no basis
exists for any such Proceeding. The
Sellers have made available to the
Purchaser true, correct and complete copies
of all pleadings, correspondence and other
documents relating to each Proceeding
listed in Schedule 3.16. The Proceedings
listed in Schedule 3.16 could not
reasonably be expected to have a Material
Adverse Effect on the Company.
3.17
Absence of Certain Changes and Events. Since December 31,
2002, the Company has conducted its
business only in the ordinary course,
consistent with past practice.
3.18
Contracts; No Defaults.
(a) Schedule 3.18(a) contains a complete and accurate list,
and the Sellers have delivered to the
Purchaser true, correct and complete
copies (if written), of:
(i) each
Contract involving payments to
or from the Company of at least $50,000;
(ii)
each lease, license and other
Contract affecting any leasehold or other interest in any real
or
personal property to which the Company is a party or by which any
of
its assets or properties is bound;
(iii) each
licensing agreement or other
Contract to which the Company is a party with respect to
confidential
or proprietary information, Intellectual Property Assets,
including,
without limitation, agreements with current or former
employees,
consultants or contractors;
(iv)
each Contract to which the Company
is a party containing covenants that in any way purport to restrict
the
business activity of the Company or any of the Controlling Sellers
or
Key Employees or limit the freedom of the Company or any of the
Controlling Sellers or Key Employees to engage in any line of
business
or activity or to compete with any Person or hire any Person;
(v)
each
employment, severance,
independent contractor or consulting agreement between the Company
and
its directors, officers, employees, leased employees and
consultants;
(vi)
each agreement of the Company under
which any money has been or may be borrowed or loaned, or any
evidence
of indebtedness of the Company, and each guaranty by the
Company;
(vii) each
agreement to which the Company
is a party containing a change of control provision; and
(viii) each
other material Contract to
which the Company is a party or which relates to the Company's
business
or assets.
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<PAGE>
(b) Each Contract identified or required to be identified in
Schedule 3.18(a) is in full force and
effect and is valid and enforceable
against the Company, except as enforcement
thereof may be limited by bankruptcy,
insolvency, moratorium or other similar
laws affecting the enforcement of
creditors' rights in general, or by general
principles of equity, and, to the
knowledge of the Sellers, against the other
parties thereto in accordance with
its terms.
(c) Except as set forth in Schedule 3.18(c):
(i) the
Company is in full compliance
with all applicable terms and requirements of each Contract under
which
the Company has any obligation or liability or by which the Company
or
any of the assets or properties owned or used by the Company is or
was
bound; and the Company has not assigned, delegated or otherwise
transferred any of its rights or obligations with respect to
any
Contract;
(ii)
to the knowledge of the Sellers,
each other Person that has or had any obligation or liability under
any
Contract under which the Company has any rights is in full
compliance
with all applicable terms and requirements of such Contract;
and
(iii) no
event has occurred and no
circumstance exists that (with or without notice or lapse of time
or
both) is likely to result in a violation or breach of any Contract
by
the Company or, to the knowledge of the Sellers, by any other
Person.
(d) The Sales Distribution Agreement between ESC and MACSUN
Co., Ltd. ("MACSUN"), dated December 6,
2002, the undated Sales Representative
and Distribution Agreement between ESC and
MACSUN and the Consulting Agreement
between ESC and Alcyon, Inc. ("ALCYON)",
dated June 20, 2003, have been
terminated in accordance with their terms,
without any further payment,
liability or obligation by or of the
Company or the Purchaser. In connection
with the termination of the Alcyon
Consulting Agreement, Alcyon exercised
options to purchase Securities in
accordance with the terms of such Consulting
Agreement and thereby became (and is) a
Seller under this Agreement.
3.19
Insurance. Schedule 3.19 sets forth the premium payments and
describes all the insurance policies of the
Company, including coverages,
deductibles, limits and premiums, which
policies are now in full force and
effect in accordance with their terms and
expire on the dates shown on Schedule
3.19. There has been no default in the
payment of premiums on any of such
policies and there is no ground for
cancellation or avoidance of any such
policies or any increase in the premiums
thereof, or for reduction of the
coverage provided thereby. Such policies
insure the Company in amounts and
against losses and risks customary and
sufficient for businesses similar to the
Company and such policies shall continue in
full force and effect up to the
expiration dates shown in Schedule 3.19.
True, correct and complete copies of
all insurance policies listed in Schedule
3.19 have been previously furnished to
the Purchaser by the Sellers. Since
December 31, 2002, the Company has not
altered the terms of any of its insurance
policies except in the ordinary course
of business consistent with past
practice.
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<PAGE>
3.20
Environmental Matters.
(a) The Company is in compliance with all applicable
Environmental Laws which compliance
includes, but is not limited to, the
possession by the Company of all
Governmental Permits (or applications therefor)
required under applicable Environmental
Laws, and compliance with the terms and
conditions thereof. The Company has not
received notice of, and the Company nor
any predecessor of any of them is not the
subject of, any Environmental Claim.
Except as provided in Schedule 3.20, there
are no circumstances or conditions
related to the Company or any operations of
the Company or the Company's
Facilities that are reasonably likely to
prevent or interfere with such
compliance or give rise to a future
Environmental Claim or Remedial Action.
(b) There are no Environmental Claims that are pending or, to
the knowledge of the Sellers, threatened
against the Company or against any
Person whose liability for any
Environmental Claim the Company has retained or
assumed by Contract or by other means.
(c) Neither the Company, nor any other Person acting on behalf
of the Company has generated, disposed of,
transported or arranged for the
disposal of any Hazardous Materials to, at
or upon: (i) any location other than
a site lawfully permitted to receive such
Hazardous Materials, (ii) any
Facilities or (iii) any site where an
Environmental Claim or Remedial Action has
occurred or is likely to occur.
(d) The Sellers have delivered to the Purchaser true and
complete copies of all environmental
audits, monitoring and investigation
results, assessments, or occupational
health studies undertaken by o
