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Asset Purchase Agreement

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Title:

Asset Purchase Agreement

Entities:

Comerica Bank; Isonics Corp.; Davis Wright Tremaine

Date:

2004

Size:

Preview shows 61KB of 152KB total

Price:

$44

ID:

#250188

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ASSET PURCHASE AGREEMENT

by and among

EnCompass Materials Group Limited as Seller

Lynn Brewer and Robert Swor, collectively as Equityholder

Isonics Corporation, as Isonics

and

Isonics Vancouver, Inc. as Buyer

Dated: June 7, 2004

TABLE OF CONTENTS

1.	Definitions and Usage		1
	1.1	Definitions	1
	1.2	Usage	8
2.	Sale and Transfer of Assets; Closing		8
	2.1	Assets to be Sold	8
	2.2	Excluded Assets	9
	2.3	Consideration	9
	2.4	Liabilities	9
	2.5	Allocation	9
	2.6	Closing	10
	2.7	Closing Obligations	10
	2.8	Consents	11
3.	Representations and Warranties of Seller and Equityholder		11
	3.1	Organization and Good Standing	11
	3.2	Enforceability; Authority; No Conflict	11
	3.3	Financial Statements	12
	3.4	Books and Records	12
	3.5	Sufficiency of Assets	13
	3.6	Description Of Owned Real Property	13
	3.7	Description Of Leased Real Property	13
	3.8	Title To Assets; Encumbrances	13
	3.9	Condition Of Facilities	13
	3.10	Inventories	13
	3.11	No Undisclosed Liabilities	13
	3.12	Taxes	13
	3.13	No Material Adverse Change; Continuation of Ordinary Course of Business	14
	3.14	Employee Benefits	14
	3.15	Compliance With Legal Requirements; Governmental Authorizations	14
	3.16	Certain Proceedings	15
	3.17	Absence Of Certain Changes And Events	15
	3.18	Contracts; No Defaults	16
	3.19	Insurance	18
	3.20	Environmental Matters	18
	3.21	Employees	19
	3.22	Labor Compliance	20
	3.23	Intellectual Property Assets	20
	3.24	Compliance With The Foreign Corrupt Practices Act And Export Control And Anti-boycott Laws	20
	3.25	Relationships With Related Persons	20
	3.26	Brokers or Finders	21
	3.27	Ownership of Seller	21
	3.28	Solvenc	21
	3.29	Investment Representations	21
	3.30	Disclosure	23

4.	Representations and Warranties of Buyer		23
	4.1	Organization And Good Standing	23
	4.2	Authority; No Conflict	23
	4.3	No Material Adverse Change	24
	4.4	Certain Proceedings	24
	4.5	SEC Documents	24
	4.6	Brokers or Finders	25
	4.7	Validity of the Shares	25
	4.8	Disclosure	25
5.	Covenants of Seller Prior to Closing		25
	5.1	Access; Investigation and Disclosure	25
	5.2	Operation of the Business of Seller	25
	5.3	Negative Covenants	26
	5.4	Required Approvals	26
	5.5	Notification	26
	5.6	No Negotiation	27
	5.7	Satisfaction of Conditions	27
	5.8	Interim Financial Statements	27
	5.9	Change of Name	27
6.	Covenants of Buyer Prior to Closing		27
	6.1	Required Approvals	27
	6.2	Satisfaction of Conditions	27
	6.3	Notification	27
	6.4	No Negotiation	28
	6.5	Accounting Fees	28
7.	Conditions Precedent to Buyer's Obligation to Close		28
	7.1	Accuracy of Representation	28
	7.2	Seller's Performance	28
	7.3	Consents	28
	7.4	Additional Documents	28
	7.5	Environmental Assessment	29
	7.6	No Injunction	29
	7.7	Availability of Audited Financial Statements	29
	7.8	Governmental Authorizations	29
	7.9	Ancillary Agreements	29
8.	Conditions Precedent to Seller's Obligation to Close		29
	8.1	Accuracy Of Representation	29
	8.2	Buyer's Performance	29
	8.3	Consents	30
	8.4	Additional Documents	30
	8.5	No Injunction	30
	8.6	Termination of Personal Guaranties	30
	8.7	Isonics' Financial Condition	30
9.	Termination		30
	9.1	Termination Events	30
	9.2	Effect Of Termination	31

10.	Additional Covenants		31
	10.1	Employees And Employee Benefits	31
	10.2	Payment of All Taxes Resulting From Sale of Assets by Buyer	32
	10.3	Payment Of Other Retained Liabilities	32
	10.4	Removing Excluded Assets	32
	10.5	Reports and Returns	32
	10.6	Nonsolicitation and Nondisparagement	32
	10.7	Retention of and Access to Records	33
	10.8	Further Assurances	33
11.	Indemnification; Remedies		33
	11.1	Survival	33
	11.2	Indemnification And Reimbursement By Seller And Equityholder	33
	11.3	Indemnification And Reimbursement By Buyer and Isonics	34
	11.4	Limitations On AmountSeller And Equityholder	34
	11.5	Limitations On AmountBuyer	34
	11.6	Indemnification Matters	34
12.	Confidentiality		35
	12.1	Definition Of Confidential Information	35
	12.2	Restricted Use of Confidential Information	36
	12.3	Exceptions	37
	12.4	Legal Proceedings	37
	12.5	Return Or Destruction Of Confidential Information	37
13.	General Provisions		37
	13.1	Expenses	37
	13.2	Public Announcements	37
	13.3	Notices	37
	13.4	Jurisdiction; Service of Process	38
	13.5	Waiver; Remedies Cumulative	38
	13.6	Entire Agreement and Modification	38
	13.7	Assignments, Successors and No Third-Party Rights	38
	13.8	Severability	39
	13.9	Construction	39
	13.10	Time of the Essence	39
	13.11	Governing Law	39
	13.12	Execution of Agreement	39
	13.13	Equityholder Obligations	39
	13.14	Isonics Obligations	39

iii

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement ("Agreement") is dated June 7, 2004, by and among Isonics Vancouver, Inc., a Washington corporation ("Buyer"); Isonics Corporation, a California corporation ("Isonics"); EnCompass Materials Group Limited, a Washington corporation ("Seller"); and Lynn Brewer, an individual and Robert Swor, an individual, collectively beneficial owners of 100% of the outstanding capital stock of Seller (collectively and singly "Equityholder").

1.: Definitions and Usage.

1.1 Definitions. For purposes of this Agreement, the following terms and variations thereof have the meanings specified or referred to in this Section 1.1.

"Active Employees"as defined in Section 10.1.1.

"Assets"as set forth in Part 2.1.

"Assignment and Assumption Agreement"as defined in Section 2.7.1(ii).

"Assumed Contract"as defined in Section 2.1.

"Assumed Liabilities"as set forth in Part 2.4.1.

"Balance Sheet"as defined in Section 3.3.

"Bill of Sale"as defined in Section 2.7.1(i).

"BFI"BFI Business Finance, Inc.

"Breach"any breach of, or any inaccuracy in, any material representation or warranty or any breach of, or failure to perform or comply with, any material covenant or obligation, in or of this Agreement or any other Contract, or any event which with the passing of time or the giving of notice, or both, would constitute such a breach, inaccuracy or failure.

"Business Day"any day other than (a) Saturday or Sunday or (b) any other day on which banks in Seattle, Washington are permitted or required to be closed.

"Buyer"as defined in the first paragraph of this Agreement.

"Buyer Group"as defined in Section 5.1.1.

"Buyer Indemnified Persons"as defined in Section 11.2.

"Buyer's Closing Documents"as defined in Section 4.2.1.

"Buyer Contact"as defined in Section 12.2.1.

"Closing"as defined in Section 2.6.

"Closing Date"the date on which the Closing actually takes place.

"Closing Time"as defined in Section 2.6.

"COBRA"as defined in Section 3.14.3.

"Code"the Internal Revenue Code of 1986, as amended.

"Comerica"Comerica Bank California.

"Competing Business"as defined in Section 3.25.

"Confidential Information"as defined in Section 12.1.

"Consent"any approval, consent, ratification, waiver or other authorization.

"Contemplated Transactions"all of the transactions contemplated by this Agreement.

"Contract"any agreement, contract, Lease, consensual obligation, promise or undertaking (whether written or oral and whether express or implied), whether or not legally binding.

"Damages"as defined in Section 11.2.

"Disclosing Party"as defined in Section 12.1.

"Disclosure Letter"the disclosure letter delivered by Seller and Equityholder to Buyer concurrently with the execution and delivery of this Agreement.

"Employee Plans"as defined in Section 3.14.

"Encumbrance"any charge, claim, lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal or similar restriction, including any restriction on use, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.

"Environment"soil, land surface or subsurface strata, surface waters (including navigable waters and ocean waters), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life and any other environmental medium or natural resource.

"Environmental, Health and Safety Liabilities"any cost, damages, expense, liability, obligation or other responsibility arising from or under any Environmental Law or Occupational Safety and Health Law, including those consisting of or relating to:

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