EX-10.3
4
exh10-3_15366.htm
FORM OF
PURCHASE AND SALE AGREEMENT
EXHIBIT
10.3
——————————
FORM
OF
COCHLEAR
IMPLANT BUSINESS
PURCHASE
AND SALE AGREEMENT
——————————
among
BOSTON
SCIENTIFIC CORPORATION,
BOSTON
SCIENTIFIC SCIMED, INC.,
ADVANCED
BIONICS CORPORATION
and
ADVANCED
BIONICS HOLDING CORPORATION
Dated
as
of August 9, 2007
TABLE
OF CONTENTS
| | | Page |
| | | |
|
ARTICLE
I.
|
DEFINITIONS
|
2
|
| | | |
|
SECTION
1.01
|
Certain
Defined Terms
|
2
|
|
SECTION
1.02
|
Definitions
|
10
|
|
SECTION
1.03
|
Other
Interpretive Provisions
|
10
|
| | | |
| | | |
|
ARTICLE
II.
|
TRANSFER
OF THE TRANSFERRED BUSINESS FROM THE SELLER TO THE COMPANY
|
12
|
| | | |
|
SECTION
2.01
|
Formation
of the Company
|
12
|
|
SECTION
2.02
|
Transferred
Assets and Excluded Assets
|
12
|
|
SECTION
2.03
|
Assumed
Liabilities and Excluded Liabilities
|
14
|
|
SECTION
2.04
|
Transferred
Employees
|
16
|
|
SECTION
2.05
|
Third
Party Consents
|
16
|
|
SECTION
2.06
|
Disputed
Assets and Liabilities
|
17
|
|
SECTION
2.07
|
Company’s
Right to Enforce Transfer of Transferred Assets
|
18
|
| | | |
| | | |
|
ARTICLE
III.
|
THE
PURCHASE AND SALE OF THE CLASS A UNITS
|
18
|
| | | |
|
SECTION
3.01
|
Purchase
and Sale
|
18
|
|
SECTION
3.02
|
Operating
Income and Working Capital Amounts and Other Amounts
|
18
|
|
SECTION
3.03
|
Tax
Treatment; Purchase Price Allocation
|
20
|
|
SECTION
3.04
|
Closing
|
21
|
|
SECTION
3.05
|
Closing
Deliveries
|
21
|
| | | |
| | | |
|
ARTICLE
IV.
|
REPRESENTATIONS
AND WARRANTIES OF THE SELLER PARTIES
|
23
|
| | | |
|
SECTION
4.01
|
Organization
and Authority
|
23
|
|
SECTION
4.02
|
Organization
and Authority of the Company
|
23
|
|
SECTION
4.03
|
No
Conflict
|
23
|
|
SECTION
4.04
|
Capitalization;
Ownership of Membership Units
|
24
|
|
SECTION
4.05
|
Assets
and Liabilities of the Company
|
24
|
|
SECTION
4.06
|
Brokers
|
24
|
|
SECTION
4.07
|
Intellectual
Property
|
24
|
|
SECTION
4.08
|
Actions
of the Seller Parties
|
25
|
|
SECTION
4.09
|
No
Distributions of Assets
|
25
|
| | | |
| | | |
|
ARTICLE
V.
|
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
|
25
|
| | | |
|
SECTION
5.01
|
Organization
and Authority of the Purchaser
|
25
|
|
SECTION
5.02
|
No
Conflict
|
25
|
|
SECTION
5.03
|
Brokers
|
26
|
i
TABLE
OF CONTENTS (continued)
|
ARTICLE
VI.
|
[INTENTIONALLY
OMITTED]
|
26
|
| | | |
| | | |
|
ARTICLE
VII.
|
COVENANTS
AND ADDITIONAL AGREEMENTS
|
26
|
| | | |
|
SECTION
7.01
|
Limitations
on Activity of the Purchaser
|
26
|
|
SECTION
7.02
|
Notification
of Certain Matters
|
27
|
|
SECTION
7.03
|
Access
to Information
|
27
|
|
SECTION
7.04
|
Public
Announcements
|
29
|
|
SECTION
7.05
|
Further
Action; HSR Notification
|
30
|
|
SECTION
7.06
|
Non-Competition/Non-Solicitation
|
31
|
|
SECTION
7.07
|
Change
of Names
|
33
|
|
SECTION
7.08
|
Insurance
|
34
|
|
SECTION
7.09
|
Tax
Cooperation and Exchange of Information
|
34
|
|
SECTION
7.10
|
Conveyance
Taxes
|
34
|
|
SECTION
7.11
|
Bulk
Transfer Laws
|
34
|
|
SECTION
7.12
|
Use
of Information
|
34
|
|
SECTION
7.13
|
IP
Further Assurance
|
35
|
|
SECTION
7.14
|
Transition
of Drug Eluting Electrode Contracts
|
35
|
| | | |
| | | |
|
ARTICLE
VIII.
|
EMPLOYEE
MATTERS
|
35
|
| | | |
|
SECTION
8.01
|
Severance
Costs
|
35
|
|
SECTION
8.02
|
Phantom
Earn Out Recipients
|
35
|
|
SECTION
8.03
|
Treatment
of Options
|
36
|
|
SECTION
8.04
|
2007
Performance Incentive Plan Payments
|
36
|
|
SECTION
8.05
|
Employee
Plans
|
36
|
| | | |
| | | |
|
ARTICLE
IX.
|
CONDITIONS
TO CLOSING
|
37
|
| | | |
|
SECTION
9.01
|
Conditions
to Obligations of the Parties
|
37
|
|
SECTION
9.02
|
Conditions
to Obligations of the Seller Parties
|
37
|
|
SECTION
9.03
|
Conditions
to Obligations of the Purchaser
|
38
|
| | | |
| | | |
|
ARTICLE
X.
|
INDEMNIFICATION
|
38
|
| | | |
|
SECTION
10.01
|
Indemnification
by Parent and Scimed
|
38
|
|
SECTION
10.02
|
Indemnification
by the Purchaser or the Company
|
39
|
|
SECTION
10.03
|
Limits
on Indemnification
|
40
|
|
SECTION
10.04
|
Notice
of Loss; Third Party Claims
|
40
|
|
SECTION
10.05
|
Remedies
|
42
|
|
SECTION
10.06
|
Tax
Treatment
|
42
|
|
SECTION
10.07
|
Survival
of Representations and Warranties
|
42
|
|
SECTION
10.08
|
No
Loss of Remedies
|
43
|
| | | |
| | | |
|
ARTICLE
XI.
|
TERMINATION
|
43
|
| | | |
|
SECTION
11.01
|
Termination
|
43
|
|
SECTION
11.02
|
Effect
of Termination
|
43
|
ii
TABLE
OF
CONTENTS (continued)
| | | |
| | | |
|
ARTICLE
XII.
|
GENERAL
PROVISIONS
|
44
|
| | | |
|
SECTION
12.01
|
Fees
and Expenses
|
44
|
|
SECTION
12.02
|
Amendment
|
44
|
|
SECTION
12.03
|
Waiver
|
44
|
|
SECTION
12.04
|
Notices
|
44
|
|
SECTION
12.05
|
Severability
|
45
|
|
SECTION
12.06
|
Entire
Agreement; Assignment
|
45
|
|
SECTION
12.07
|
Parties
in Interest
|
46
|
|
SECTION
12.08
|
Specific
Performance
|
46
|
|
SECTION
12.09
|
Governing
Law
|
46
|
|
SECTION
12.10
|
Waiver
of Jury Trial
|
46
|
|
SECTION
12.11
|
Arbitration
|
46
|
|
SECTION
12.12
|
Counterparts
|
47
|
EXHIBITS
|
A
|
Assignment
of Leases
|
|
B
|
Assumption
Agreement
|
|
C
|
Xxxx
of Sale and Assignment Agreement
|
|
D
|
Cochlear
Patent Assignment
|
|
E
|
Cochlear
Trademark Assignment
|
|
F
|
Company-Seller
Auditory IP Cross License Agreement
|
|
G
|
LLC
Agreement
|
|
H
|
Calculation
of Operating Income Amount
|
|
I
|
Scimed
IP License Agreement
|
|
J
|
Press
Release
|
|
K
|
Answers
to Frequently Asked Questions
|
iii
TABLE
OF CONTENTS (continued)
SCHEDULES
|
1.01(a)
|
Assigned
Names and Marks
|
|
1.01(b)
|
Excluded
Xxxx Affiliates
|
|
1.01(c)
|
Leased
Real Property
|
|
1.01(d)
|
Parent
Designated Affiliates
|
|
1.01(e)(i)
|
Invention
Disclosures
|
|
1.01(e)(ii)
|
Patents
|
|
1.01(f)
|
Permits
|
|
1.01(g)
|
Personal
Property
|
|
1.01(h)
|
Transferred
Contracts
|
|
1.01(i)
|
Transferred
IP Agreements
|
|
1.01(j)
|
Transferred
Subsidiaries
|
|
2.02(a)(xi)
|
Insurance
Policy
|
|
2.02(a)(xviii)
|
Other
Assets
|
|
2.04
|
Transferred
Employees
|
|
4.06
|
Brokers—Parent,
Scimed or Affiliates
|
|
4.07
|
Intellectual
Property – Actions by Parent, Scimed or Certain
Affiliates
|
|
5.03
|
Brokers—Purchaser
|
|
7.06(b)
|
Parent
Neurostimulation Indications
|
iv
This
COCHLEAR IMPLANT BUSINESS
PURCHASE AND SALE AGREEMENT (this
“Agreement”), dated as of August 9, 2007, is entered into
by and among BOSTON SCIENTIFIC CORPORATION, a
Delaware corporation
(“Parent”), BOSTON SCIENTIFIC SCIMED, INC. (formerly known as
Scimed Life Systems, Inc.), a Minnesota corporation and a wholly owned
subsidiary of Parent (“Scimed”), ADVANCED BIONICS CORPORATION,
a
Delaware corporation and a wholly owned subsidiary of Scimed (the
“Seller”), and ADVANCED BIONICS HOLDING CORPORATION, a
California corporation (the “Purchaser”).
WHEREAS,
Scimed owns all the issued and outstanding shares of common stock, par value
$0.01 per share, of the Seller as a result of the consummation of the
transactions contemplated by the Agreement and Plan of Merger, dated as of
May 28, 2004 (the “Merger Agreement”; capitalized terms
used herein but not defined herein have the meaning ascribed to such terms
in
the Merger Agreement), among Parent, Scimed, Xxxxxx Acquisition Corp., a
Delaware corporation and a formerly wholly owned subsidiary of Scimed, the
Seller, Bionics Trust (the “Trust”) and the Stockholders’
Representative as of the date thereof (the “Stockholders’
Representative”);
WHEREAS,
as promptly as reasonably practicable upon request of the Purchaser after the
date hereof, the Seller will form a wholly owned
Delaware limited liability
company with the name “Auditory Systems, LLC” (the “Company”)
in the manner described herein, which will be operated pursuant to the terms
of
the LLC Agreement (as defined herein) and the
Delaware Limited Liability Company
Act;
WHEREAS,
the Parties must undertake a substantial effort to separate the Transferred
Assets (as defined herein) and prepare them to be transferred to the Company
pursuant to this Agreement (including preparing for the transfer of the Seller’s
manufacturing operations for IPG Products from the Seller’s Sylmar facility to
the Seller’s new manufacturing facility in Valencia, California);
WHEREAS,
at or prior to the Closing, in the manner described herein, the Seller will
transfer the Transferred Assets to the Company and the Company will assume
the
Assumed Liabilities (as defined herein);
WHEREAS,
at the Closing, the Seller will sell to the Purchaser a number of Membership
Units in the Company representing 88% of the outstanding Membership Units of
the
Company (which 88% will represent 100% of the Class A Units, and the Purchaser
will become the sole managing member of the Company (as of the Closing Date))
in
exchange for $130,000,000 in cash. The Purchaser will have sole
authority to manage the business and affairs of the Company;
WHEREAS,
immediately after giving effect to the transactions contemplated by this
Agreement, the Purchaser will own 100% of the Class A Units, constituting 88%
of
the Membership Units of the Company, and the Seller will own 100% of the Class
B
Units, constituting 12% of the Membership Units of the Company; and
1
WHEREAS,
the Parties agree that no approval of the Executive Board is required to effect
the transactions contemplated hereby because, among other things, the Persons
who have the power to appoint the members of the Executive Board have approved
the execution, delivery and performance of this Agreement.
NOW,
THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, and intending to be legally bound, the
Parties hereby agree as follows:
ARTICLE
I.
DEFINITIONS
SECTION
1.01 Certain
Defined Terms. For
purposes of this Agreement:
“Accounts
Payable Amount” means the accounts payable relating to the Transferred
Businesses as of December 31, 2007 (calculated in a manner consistent with
the
calculation of accounts payable relating to the Transferred Businesses as
reflected on the June 30, 2007, balance sheet of the Seller in respect of the
Transferred Businesses), disregarding for purposes of this definition any
accounts payable relating to Separation Costs (as defined in the Separation
Agreement).
“Accounts
Payable Target” means (a) $8,000,000 multiplied by (b) a quotient
(i) the numerator of which is the amount of accounts payable of the
Transferred Businesses on December 31, 2007 as calculated by the Seller in
a
manner consistent with the calculation of accounts payable as reflected on
the
June 30, 2007, balance sheet of the Seller and (ii) the denominator of which
is
the amount of accounts payable of the Seller on December 31, 2007, (calculated
in the same manner).
“Action”
means any claim, action, suit, arbitration, inquiry, proceeding or investigation
by or before any Governmental Authority.
“Affiliate”
means, with respect to any specified Person, any other Person that, directly
or
indirectly through one or more intermediaries, controls, is controlled by,
or is
under common control with, such specified Person. Any reference to
the Affiliates of any of the Seller Parties will not include the
Company. Any reference to an Affiliate of the Purchaser or the
Company will not include the Excluded Xxxx Affiliates.
“Amendment
Agreement” means that certain Amendment Agreement among the Seller
Parties, the Trust and the Stockholders’ Representative, dated as of the date
hereof.
“Ancillary
Agreements” means the LLC Agreement, the Xxxx of Sale and Assignment
Agreement, the Assignment of Leases, the Cochlear Patent Assignment, the
Cochlear Trademark Assignment, the Assumption Agreement, the IP License
Agreements and the Separation Agreement.
2
“Assigned
Names and Marks” means all right, title and interest in and to the
names set forth on Schedule 1.01(a) hereto, and all trademarks and
similar marks owned by the Seller incorporating or associated with any of the
foregoing also as set forth on Schedule 1.01(a).
“Assignment
of Leases” means an Assignment of Leases to be executed by the Seller
and the Company at the Closing with respect to the Leased Real Property,
substantially in the form of Exhibit A.
“Assumption
Agreement” means the Assumption Agreement to be executed by the Seller
and the Company at the Closing, substantially in the form of Exhibit
B.
“Xxxx
of Sale and Assignment Agreement” means the Xxxx of Sale and Assignment
Agreement to be executed by the Seller, the Parent Designated Affiliates and
the
Company at the Closing, substantially in the form of
Exhibit C.
“Books
and Records” means books, records, ledgers, files, documents, or other
similar information (in any form or medium) including minute books, books of
account and general financial and personnel records, including all customer
lists, vendor lists, mailing lists, revenue records, advertising materials,
brochures, records of operation, standard forms of documents, manuals of
operations or business procedures, photographs, blueprints, research files
and
materials and plates, accounting records, books of account, general, financial
and personnel records, invoices, shipping records, supplier lists,
correspondence and other documents, records and files of any type whatsoever
(including those stored on computer disks or tapes or any other storage medium
to the extent in the applicable Person’s possession); provided that this
term shall not include any Tax records of the Seller (including any Tax Returns
of the Seller Parties or their Affiliates).
“Business
Day” means any weekday (i.e., Monday, Tuesday, Wednesday, Thursday or
Friday) on which banks in The City of New York, Boston or Los Angeles are not
required or authorized by Law to be closed.
“Claims”
means demands, causes of action, Actions, rights of recovery, and rights of
set-off, in each case, whether in law or equity based on any Law, private right
of action or otherwise, foreseen or unforeseen, matured or unmatured, known
or
unknown, accrued or not accrued.
“Class
A Units” means the Class A Membership Units of the Company, as defined
in the LLC Agreement.
“Class
B Units” means the Class B Membership Units of the Company, as defined
in the LLC Agreement.
“Closing
Statements” means the Operating Income Amount Statement and the Working
Capital Amounts Statement.
“Cochlear
Patent Assignment” means the Cochlear Patent Assignment to be executed
by the Seller and the Company at the Closing, substantially in the form of
Exhibit D.
3
“Cochlear
Trademark Assignment” means the Cochlear Trademark Assignment to be
executed by the Seller and the Company at the Closing, substantially in the
form
of Exhibit E.
“Code”
means the Internal Revenue Code of 1986, as amended through the date
hereof.
“Company-Seller
Auditory IP Cross License Agreement” means the license to be executed
between the Company and the Seller at the Closing, substantially in the form
of
Exhibit F.
“Company-Seller
Drug Pump IP Cross License” has the meaning given such term in the Drug
Pump Purchase Agreement.
“Contract”
means any binding written or oral contract, agreement, arrangement, commitment
or understanding.
“control”
(including the terms “controlled by” and “under common
control with”), with respect to the relationship between or among two
or more Persons, means the possession, directly or indirectly, of the power
to
direct or cause the direction of the affairs or management of a Person, whether
through the ownership of voting securities, as trustee, personal representative
or executor, by contract, credit arrangement or otherwise; provided that
any reference to a Person controlled by any of the Seller Parties will not
include the Company after the Closing Date. Any reference to a Person that
controls the Purchaser or the Company will not include the Excluded Xxxx
Affiliates.
“Conveyance
Taxes” means sales, use, value added, transfer, stamp, stock transfer,
real property transfer and similar Taxes (excluding any corporate income Taxes
imposed on the Seller in respect of the sale of the Transferred Assets pursuant
to this Agreement).
“Copyrights”
means the registered and unregistered copyrights in copyrightable works, and
all
other rights of authorship, renewal and revival, and all applications,
registrations and renewals in connection therewith owned by the Seller or the
Parent Designated Affiliates and Primarily used or held for use in the
Transferred Business.
“Days
of Sales Outstanding” means with respect to Trade Receivables the
following: (Trade Receivables divided by (2H 2007 Net Revenues
multiplied by 2)) multiplied by 365, where “2H 2007 Net Revenues” means net
revenues of the Transferred Businesses for the six month period ended on
December 31, 2007 (calculated in a manner consistent with past practice of
the
Seller in respect of the Transferred Businesses).
“Drug
Eluting Electrode Contracts” means (a) Research Development Agreement,
dated as of June 26, 2007, by and among Parent and The Washington University
on
behalf of Xxxx X. Salt, Ph.D., (b) Consulting Agreement, dated June 13, 2007,
between Xxxx X. Salt, Ph.D. and Parent, (c) Preclinical Laboratory Study
Agreement, dated as of June 29, 2007, by and between Parent, University of
Miami
Ear Institute and Xxxxxx Van De Water, Ph.D. and
4
(d)
Laboratory Services Agreement, dated as of April 10, 2007, by and among Parent
and Microbiology Research Associates, Inc.
“Drug
Pump Purchase Agreement” means the Drug Pump
Purchase and Sale
Agreement dated as of the date hereof among Parent, Scimed, the Seller and
the
Purchaser.
“Employee
Plan” means any “employee benefit plan” (as defined in
Section 3(3) of ERISA), whether or not subject to ERISA, and each other
employment, bonus, stock option, stock purchase or other equity-based, benefit,
incentive compensation, profit sharing, savings, retirement (including early
retirement and supplemental retirement), disability, insurance, vacation pay,
sick pay, incentive, deferred compensation, severance, termination, retention,
change of control and other fringe, welfare or other employee benefit plans,
programs, policies, agreements or arrangements (whether or not in writing)
sponsored, maintained or contributed to by the Seller Parties for the benefit
of
or relating to any current or former employee, director or independent
contractor of the Seller Parties.
“Encumbrance”
means any security interest, pledge, hypothecation, mortgage, lien or
encumbrance created by Parent, any of its Affiliates (other than the Seller
or
any of its Subsidiaries), or any employee of Parent or any of its Affiliates
(other than the Seller or any of its Subsidiaries) in such Person’s capacity as
an officer of the Seller, in each case, without the knowledge and approval
of
any officer of the Seller who was not appointed by Parent or any of its
Affiliates other than the Seller.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“Excluded
Xxxx Affiliates” means the Persons listed on
Schedule 1.01(b).
“Excluded
Taxes” means (a) net income or similar Taxes of the Seller and
(b) Taxes relating to the Excluded Assets or Excluded
Liabilities.
“FDA”
means U.S. Food and Drug Administration.
“Xxxxxxxx”
means Xxxxxxx X. Xxxxxxxx.
“Governmental
Authority” means (a) any federal, national, supranational (for
example, the European Community), state, provincial, local or other
governmental, regulatory or administrative authority, (b) any court,
tribunal or judicial body, or (c) any arbitral body whose decisions have similar
force as decisions of any of the foregoing.
“Governmental
Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award (whether temporary, preliminary or
permanent) entered by or with any Governmental Authority.
“Xxxxxxx”
means Xxxxxxx X. Xxxxxxx.
“HSR
Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
5
“Indemnified
Party” means a Purchaser Indemnified Party, a Company Indemnified Party
or a Seller Indemnified Party, as the case may be.
“Indemnifying
Party” means a party obligated to provide indemnification pursuant to
Article X.
“Inventory”
means all inventory, including raw and packing materials, work-in-progress,
finished goods, supplies, parts and similar items to the extent related to,
used
or held for use in connection with the Transferred Business.
“Inventory
Amount” means the value of the gross Inventory and the gross Inventory
of the Drug Pump Business (as such terms are defined in the Drug Pump Purchase
Agreement) as of December 31, 2007 (calculated in a manner consistent with
the
calculation of gross inventory as reflected on the June 30, 2007, balance sheet
of the Seller in respect of the Transferred Businesses).
“IP
License Agreements” means the Company-Seller Auditory IP Cross License
Agreement and the Scimed IP License Agreement.
“Law”
means any statute, law, ordinance, regulation, rule, code, order or requirement
(including judicial requirements) of any Governmental Authority.
“Leased
Real Property” means the real property leased to the Seller pursuant to
the leases set forth on Schedule 1.01(c), together with all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures, attached thereto, and all easements,
licenses, rights and appurtenances relating to the foregoing.
“Liabilities”
means all debts, liabilities and obligations, whether accrued or fixed, absolute
or contingent, matured or unmatured or determined or determinable, including
those arising under any Law, Action or Governmental Order and those arising
under any Contract.
“LLC
Agreement” means the Limited Liability Company Agreement of the Company
between the Seller and the Purchaser, substantially in the form attached hereto
as Exhibit G.
“Losses”
means losses, damages, claims, costs and expenses, interest, awards, judgments
and penalties (including reasonable attorneys’ and consultants’ fees and
expenses and other reasonable out-of-pocket expenses (including travel, meals,
and lodging of employees, stockholders, or directors) incurred in investigating,
preparing for, or defending the foregoing).
“Xxxx”
means Xxxxxx X. Xxxx.
“Xxxx-Controlled
Earn Out Recipients” means each Earn Out Recipient that is either
(a) a sibling of Xxxx, any child of Xxxx, or any spouse or child of any of
the foregoing or (b) Xxxx’x spouse, (c) a Person that is controlled by
Xxxx or (d) a Person controlled by anyone described in
clause (a) or (b).
6
“Member”
means a Person that has been admitted as a member of the Company.
“Membership
Unit” shall have the meaning ascribed to such term in the LLC
Agreement.
“Operating
Income Amount” means the amount of operating income of the Transferred
Businesses for the six month period ended December 31, 2007 (calculated in
a
manner consistent with the calculation of operating income of the Transferred
Businesses as set forth on Exhibit H); provided that any expenses
of the Transferred Businesses that are Separation Costs (as defined in the
Separation Agreement) allocated to the Company pursuant to the Separation
Agreement will be disregarded for purposes of calculating the Operating Income
Amount.
“Parent
Designated Affiliates” means the Affiliates of Parent listed on
Schedule 1.01(d).
“Party”
or “Parties” means the parties to this Agreement, which are
Parent, Scimed, the Seller and the Purchaser.
“Patents”
means the invention disclosures listed on Schedule 1.01(e)(i) and
the patents and patent applications listed on
Schedule 1.01(e)(ii), including continuations,
continuations-in-part, divisionals, re-examinations, corrections, extensions,
reissues and supplementary protection certificates thereof or issuing therefrom
and any foreign counterparts thereto.
“Per
Claim Threshold” means (a) $200,000 for Claims made before the
Aggregate Threshold has been satisfied and (b) $100,000 for Claims made
after the Aggregate Threshold has been satisfied.
“Permits”
means all permits, licenses, franchises, approvals, certificates, consents,
waivers, concessions, exemptions, orders, registrations, notices or other
authorizations issued to, or required to be obtained or maintained by, the
Seller Parties or their Affiliates by a Governmental Authority solely with
respect to the conduct or operation of the Transferred Business as currently
conducted or the ownership or use of the Transferred Assets, and all pending
applications therefor and amendments, modifications and renewals thereof,
including the permits set forth on Schedule 1.01(f).
“Person”
means any individual, partnership, firm, corporation, limited liability company,
association, trust, unincorporated organization or other entity, as well as
any
syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Securities Exchange Act of 1934.
“Personal
Property” means all tangible personal property owned or leased by the
Seller Parties or their Affiliates and Primarily related to, used or held for
use in connection with the Transferred Business, including all machinery,
equipment, furniture, furnishings, rolling stock, tools, office supplies,
vehicles and computer hardware on Schedule 1.01(g).
7
“Prepaid
Items” means all credits, cash reserves, prepaid expenses, advance
payments, security deposits, escrows and other prepaid items of the Seller
Parties or their Affiliates Primarily arising from or related to the Transferred
Business.
“Primarily”
means, with respect to an asset, property or right of any kind or of any nature,
deriving more than 50% of its use or providing more than 50% of its value to
the
Transferred Business; provided that, to the extent separable, only the
portion of such asset, property or right that relates to the Transferred
Business will be transferred or assigned hereunder, with the portion that does
not relate to the Transferred Businesses being retained by the
Seller.
“Receivables”
means all receivables (including accounts receivable, loans receivable, notes
and advances) and other amounts receivable from third parties, including
customers, to the extent arising from the conduct of the Transferred Business,
whether or not in the ordinary course, together with any unpaid financing
charges accrued thereon in respect of the collection of accounts receivables
as
of the date hereof.
“Representatives”
means, when used with respect to any Person, its directors, officers, employees,
advisors, auditors, consultants, accountants, legal counsel, investment bankers
and agents.
“Retained
Business” means the business of the Seller, other than the Transferred
Business.
“Scimed
IP License Agreement” means the license to be executed between Scimed
(as licensor) and the Company (as licensee) at the Closing, substantially in
the
form of Exhibit I.
“Seller
Parties” means Parent, Scimed and the Seller.
“Separation
Agreement” means the Separation and Transition Services Agreement among
Parent, Scimed, the Seller, the Purchaser, the Stockholders’ Representative, the
Trust, and once formed, the Company dated as of the date hereof.
“Software”
means all computer applications, operating programs, software, and databases
in
any form (including source and object code), including, Internet websites,
web
content and links, all versions, updates, corrections, enhancements, and
modifications thereof, in each case, together with all related documentation,
including, flow charts, diagrams, descriptive texts and programs, computer
print-outs, underlying tapes, and similar items that are owned by the Seller
or
a Parent Designated Affiliate and Primarily used in the Transferred
Business.
“Subsidiaries”
means, with respect to a Person, all corporations, partnerships, limited
liability companies, joint ventures, associations and other entities controlled
by such Person directly or indirectly through one or more
intermediaries.
“Tax”
or “Taxes” means all taxes of any kind (together with all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority.
8
“Tax
Returns” means all returns, reports and forms (including elections,
declarations, amendments, schedules, information returns or attachments thereto)
required to be filed with a Governmental Authority with respect to
Taxes.
“Third
Party Claim” means any Claim by any Person other than a Party or a
Subsidiary of a Party.
“Trade
Receivables” means gross trade receivables (without reduction for bad
debt or return allowances) on December 31, 2007, to the extent arising from
the
conduct of the Transferred Businesses (calculated in a manner consistent with
the calculation of such trade receivables as reflected on the June 30, 2007,
balance sheet of the Seller in respect of the Transferred
Business).
“Trade
Secrets” mean all confidential business and technical information that
has economic value by not being generally known, worldwide, including ideas,
research and development, know-how, show-how, formulas, technology,
compositions, manufacturing and production processes and techniques, technical
data, engineering, production and other designs, plans, drawings, engineering
and laboratory notebooks, industrial models, software, specifications,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information, in all
cases that are owned by the Seller or the Parent Designated Affiliates and
Primarily related to, used or held for use in connection with the Transferred
Business.
“Transferred
Business” means the worldwide business of the Seller and the Parent
Designated Affiliates consisting of researching, developing, manufacturing,
distributing, marketing, selling, otherwise disposing of, importing and
exporting neuromodulation products that are used or
intended for use in auditory applications and all related product hardware,
software, tools, accessories and services.
“Transferred
Businesses” means the Transferred Business and the Transferred Business
as defined in the Drug Pump Purchase Agreement.
“Transferred
Contracts” means (a) all Contracts that relate solely to the
Transferred Business, including the Contracts listed on
Schedule 1.01(h), (b) for all Contracts that do not relate
solely to the Transferred Business, that portion of those Contracts that relate
to the operation or conduct of the Transferred Business and (c) all bids,
quotations and proposals for Contracts referred to in clauses (a) and
(b).
“Transferred
Intellectual Property” means (a) Patents, (b) Copyrights, (c) Assigned
Names and Marks, (d) Transferred IP Agreements, (e) Trade Secrets and (f)
Software.
“Transferred
IP Agreements” means the licenses set forth on
Schedule 1.01(i).
“Transferred
Subsidiaries” means the Subsidiaries of Seller set forth on Schedule
1.01(j).
“Working
Capital Amounts” means (a) the Accounts Payable Amount, (b) the
Inventory Amount, and (c) the Trade Receivables.
9
SECTION
1.02 Definitions. The
following terms have the meanings set forth in the Sections set forth
below:
|
Definition
|
Location
|
| | |
|
“Accounting
Firm”
|
3.03(a)
|
|
“Aggregate
Threshold”
|
10.03(a)
|
|
“Agreement”
|
Preamble
|
|
“Allocation
Statement”
|
3.03(b)
|
|
“Assumed
Liabilities”
|
2.03(a)
|
|
“Auditory
Products”
|
7.06(a)
|
|
“BSC
401(k) Plan”
|
8.05(a)
|
|
“Cash
Bonus Plan”
|
8.02(a)
|
|
“Cash
Bonus Plan Recipients”
|
8.02(a)
|
|
“Closing”
|
3.04
|
|
“Closing
Date”
|
3.04
|
|
“Company”
|
Recitals
|
|
“Company
Indemnified Party”
|
10.01(b)
|
|
“Excluded
Assets”
|
2.02(b)
|
|
“Excluded
Liabilities”
|
2.03(b)
|
|
“FAQs”
|
7.04(a)
|
|
“Final
Operating Income Amount”
|
3.02(a)
|
|
“Final
Working Capital Amounts”
|
3.02(a)
|
|
“Inactive
Transferred Employee
|
2.04
|
|
“JAMS”
|
12.11(a)
|
|
“Merger
Agreement”
|
Recitals
|
|
“Operating
Income Amount Statement”
|
3.02(a)
|
|
“Parent”
|
Preamble
|
|
“Parent
Neurostimulation Indications”
|
7.06(b)
|
|
“Press
Release”
|
7.04(a)
|
|
“Purchase
Price”
|
3.01
|
|
“Purchaser”
|
Preamble
|
|
“Purchaser
Indemnified Party”
|
10.01(a)
|
|
“Scimed”
|
Preamble
|
|
“Seller”
|
Preamble
|
|
“Seller
Indemnified Party”
|
10.02(a)
|
|
“Stockholders
Representative”
|
Recitals
|
|
“Transferred
Assets”
|
2.02(a)
|
|
“Transferred
Employees”
|
2.04
|
|
“Trust”
|
Recitals
|
|
“Working
Capital Amounts Statement”
|
3.02(a)
|
| | |
SECTION
1.03 Other
Interpretive Provisions. Unless
the express context otherwise requires:
10
(a) the
words
“hereof,” “herein,” and “hereunder” and words of similar import, when used in
this Agreement, will refer to this Agreement as a whole and not to any
particular provision of this Agreement;
(b) the
terms
defined in the singular have a comparable meaning when used in the plural,
and
vice versa;
(c) the
terms
“Dollars” and “$” mean United States Dollars;
(d) references
herein to a specific Article, Section, Recital, Schedule or Exhibit will refer,
respectively, to Articles, Sections, Recitals, Schedules or Exhibits of this
Agreement;
(e) whenever
the word “include,” “includes,” or “including” is used in this Agreement, it
will be deemed to be followed by the words “without limitation”;
(f) references
herein to any gender include each other gender;
(g) references
herein to a Person in a particular capacity or capacities exclude such Person
in
any other capacity;
(h) references
herein to any Contract (including this Agreement) mean such contract or
agreement as amended, supplemented or modified from time to time in accordance
with the terms thereof;
(i) with
respect to the determination of any period of time, the word “from” means “from
and including” and the words “to” and “until” each means “to but
excluding”;
(j) references
herein to any Law or Permit mean such Law or Permit as amended, modified,
codified, reenacted, supplemented or superseded in whole or in part, and in
effect from time to time;
(k) references
herein to any Law will be deemed also to refer to all rules and regulations
promulgated thereunder;
(l) whenever
the words “transactions contemplated” are used in this Agreement, the word
“contemplated” will be deemed to be preceded by the word “expressly”;
and
(m) all
references to days or months will be deemed references to calendar days or
months.
11
ARTICLE
II.
TRANSFER
OF THE TRANSFERRED BUSINESS FROM THE SELLER TO THE COMPANY
In
connection with the Closing and as set forth below, the Seller will effect
the
following transactions:
SECTION
2.01 Formation
of the Company. As
promptly as reasonably practicable upon the request of the Purchaser, the Seller
will form the Company and will appoint Xxxx, Xxxxxxx and Xxxxxxxx as executive
officers of the Company subject to the condition that such Persons agree to
restrictions regarding the Company similar to those contained in Section
7.01 regarding the Purchaser. Upon formation of the Company, the
authorized securities of the Company will consist of 1,000 Membership Xxxxx,
000
of which will be Class A Units and 120 of which will be Class B Units, and
until
the Closing and at the Closing, the Company will not have any other class or
series of security authorized, issued or outstanding or reserved for
issuance. Upon formation of the Company and until the Closing,
(a) the Seller will be the sole record and beneficial owner of all the
Membership Units, (b) Parent and Parent’s Affiliates will cause the Company
not to incur or assume any Liabilities or conduct any operations unless
specifically requested by the Purchaser, and (c) there will be no options,
warrants, convertible securities or other rights or, except as specifically
requested by the Purchaser, Contracts to issue or sell to any Person other
than
the Purchaser any Membership Units, or to issue or sell to any Person other
than
the Purchaser any other interest in or to the Company (with the issuance of
any
such rights or interests being conditioned on the occurrence of the
Closing). Notwithstanding anything to the contrary in this Agreement,
none of the Seller Parties will have any liability in respect of actions taken,
or not taken by Xxxx, Xxxxxxx or Xxxxxxxx as officers of the
Company.
SECTION
2.02 Transferred
Assets and Excluded Assets.
(a) Immediately
prior to the Closing, the Seller and the Company will, and Parent will cause
the
Parent Designated Affiliates to, execute and deliver the Xxxx of Sale and
Assignment Agreement, the Assumption Agreement, the Assignment of Leases, the
Cochlear Patent Assignment and the Cochlear Trademark Assignment, pursuant
to
which the Seller will assign, convey, transfer and deliver, or cause to be
assigned, conveyed, transferred and delivered, to the Company, and the Company
will acquire and assume, all of the Seller’s and the Parent Designated
Affiliates’ right, title and interest, direct or indirect, in, to and under all
the Transferred Assets, in each case free and clear of any
Encumbrances. The “Transferred Assets” means (x)
whether or not listed in clause (y) of this Section 2.02(a), except for
Patents, Assigned Names and Marks and Transferred IP Agreements, any and all
assets, properties and rights of the Seller and the Parent Designated Affiliates
of every nature, kind and description, whether tangible or intangible, real,
personal or mixed, accrued or contingent (including goodwill), wherever located
and whether now existing or hereafter acquired prior to the Closing Date,
Primarily related to, or Primarily used or held for use in connection with
the
Transferred Business, whether or not carried or reflected on or specifically
referred to in the Seller’s books or financial statements, other than the
Excluded Assets plus (y) all of the Seller’s and the Parent Designated
Affiliates’ right, title and interest in, to and under the following, other than
the Excluded Assets:
12
(i) all
the
Transferred Contracts;
(ii) all
the
Transferred Intellectual Property;
(iii) all
the
Receivables;
(iv) originals
of all Books and Records that are associated with or employed by the Seller
or
the Parent Designated Affiliates solely in the conduct of the Transferred
Business and copies of all Books and Records of the Seller that are associated
with or employed by the Seller or the Parent Designated Affiliates in the
conduct of the Transferred Business, but not solely so;
(v) all
Personal Property;
(vi) all
rights in respect of the Leased Real Property;
(vii) all
sales
and promotional literature and other sales-related materials, in each case,
Primarily related to, used or held for use in the Transferred
Business;
(viii) to
the
extent transferable in accordance with applicable Law, all Permits;
(ix) all
goodwill, going concern value and other intangible assets of the Seller or
the
Parent Designated Affiliates to the extent related to the Transferred Business,
including any goodwill associated with any of the Assigned Names and
Marks;
(x) all
Claims against any Person to the extent related to the Transferred Business,
the
Transferred Assets or the Assumed Liabilities, pertaining to, arising out of
or
inuring to the benefit of any of the Seller or the Parent Designated Affiliates
including (A) all rights under any Transferred Contract, including all
rights to receive payment for products sold and services rendered thereunder,
to
receive goods and services thereunder, to assert Claims and to take other
rightful actions in respect of breaches, defaults and other violations thereof,
(B) all rights under the Transferred IP Agreements, including all rights to
xxx and recover damages for past, present and future infringement, dilution,
misappropriation, violation, unlawful imitation or breach thereof, and all
rights of priority and protection of interests therein under the laws of any
jurisdiction and (C) all rights under guarantees, warranties, indemnities
to the extent arising from or related to the Transferred Business, the
Transferred Assets or the Assumed Liabilities;
(xi) the
insurance policy of the Seller its Affiliates set forth on
Schedule 2.02(a)(xi) and all rights related to the Transferred
Business with respect thereto, including all insurance recoveries thereunder
and
rights to assert Claims with respect to any such insurance
recoveries;
(xii) all
Inventory;
(xiii) all
Prepaid Items;
13
(xiv) all
assets for personal use (e.g., cell phones, personal computers and Blackberrys)
Primarily used by the Transferred Employees;
(xv) all
equity interests in and to the Transferred Subsidiaries;
(xvi) all
assets, properties and rights that are acquired by the Seller between the date
hereof and the Closing for the Transferred Business in accordance with Section
1
of the Separation Agreement;
(xvii) the
Drug
Eluting Electrode Contracts; and
(xviii) all
assets, properties and rights listed on
Schedule 2.02(a)(xviii).
(b) Notwithstanding
anything set forth in Section 2.02(a) to the contrary, the
Transferred Assets will not include any of the following (the “Excluded
Assets”):
(i) cash
and
cash equivalents, securities, and negotiable instruments of the Seller on hand,
in lock boxes, in financial institutions or elsewhere, including all cash
residing in any collateral cash account securing any obligation or contingent
obligation of the Seller or any Affiliate; provided, that the Prepaid
Items will not be Excluded Assets;
(ii) any
rights to Tax refunds, credits or similar benefits (other than any Tax Refunds,
credits or similar benefits with respect to Taxes described in Section
2.03(a)(v);
(iii) the
original organizational documents, minute and stock record books, books of
account, general, financial, Tax and personnel records (including any Tax
Returns of the Seller or otherwise related to the Transferred Assets), invoices
and the corporate seals of the Seller; provided, that this clause will
not be interpreted to limit the Company’s right to copies of Books and Records
as provided in Section 2.02(a)(iv);
(iv) the
rights of the Seller or any of its Affiliates that is a Party under this
Agreement, any Ancillary Agreement, the Merger Agreement, the Amendment
Agreement, the Drug Pump Purchase Agreement, or any other agreement executed
in
connection with the transactions contemplated hereby and thereby;
provided, that all rights of the Company under the foregoing Contracts
will be enforceable by the Company or the Purchaser; and
(v) the
product warranty reserve attributable to the Transferred Business.
SECTION
2.03 Assumed
Liabilities and Excluded Liabilities. (a) At
the Closing, the Company will assume and agree to pay, perform and discharge
when due, all Liabilities whether arising prior to or after the Closing, of
the
Seller and the Parent Designated Affiliates to the extent relating to the
Transferred Business or the Transferred Assets, other than the Excluded
Liabilities set forth in Section 2.03(b) below (the “Assumed
Liabilities”), including the following:
(i) except
as
otherwise provided herein or as provided in the Separation Agreement, all
Liabilities in respect of the Transferred Employees including accrued vacation,
sick leave and worker’s compensation Claims (other than any Liabilities owed to
Xxxx, Xxxxxxx or any other employee of the Seller created by Parent without
the
knowledge and acquiescence of Xxxx, Xxxxxxx or Xxxxxxxx);
14
(ii) all
Liabilities arising from any Actions of the Seller or the Parent Designated
Affiliates to the extent such Actions arise from the conduct of the Transferred
Business;
(iii) all
Liabilities to the extent relating to the manufacturing, design and distribution
of products of the Transferred Business, including in respect of HiRes 90K
cochlear implants that contain the feedthrus made by Astro Seal;
(iv) all
accounts payable to the extent relating to the Transferred Business or the
Transferred Assets;
(v) all
Liabilities arising from any non-compliance with Law, including any Law
promulgated or enforced by the FDA or any equivalent non-US Governmental
Authority or notified body, to the extent such Liabilities arise from the
conduct of the Transferred Business, and any fines, penalties, or similar
consequences of enforcement by the FDA or such other equivalent Person to the
extent arising from the conduct of the Transferred Business; and
(vi) subject
to Section 7.10, all Taxes related to the Transferred Assets other
than Excluded Taxes.
(b) Notwithstanding
anything set forth in Section 2.03(a) or any other provision of this
Agreement or the Ancillary Agreements to the contrary, and regardless of any
disclosure to the Company or the Purchaser, the Seller will retain, and will
be
responsible for paying, performing and discharging when due, and the Company
will not assume, be obligated to pay, perform or otherwise discharge or have
any
responsibility for, the following Liabilities, whether arising prior to, at
or
after the Closing (the “Excluded Liabilities”):
(i) all
Excluded Taxes;
(ii) all
Liabilities to the extent relating to the Excluded Assets, the Retained Business
or any business of Parent or its Affiliates other than the Transferred
Business;
(iii) obligations
of the Seller or any of its Affiliates under this Agreement, any Ancillary
Agreement, the Merger Agreement, the Amendment Agreement, the Drug Pump Purchase
Agreement or any other agreement executed in connection with the transactions
contemplated hereby and thereby;
(iv) except
as
otherwise provided herein or as provided in the Separation Agreement,
Liabilities relating to Employee Plans, including (A) Liabilities for bonuses
to
Transferred Employees and other employees of the Seller Parties under the
Seller’s 2007 Performance Incentive Plan and (B) Liabilities owed to Xxxx,
Xxxxxxx or any other employee of the Seller by Parent or any of its Affiliates
other than the Seller and its Subsidiaries;
15
(v) any
Liability incurred by the Seller or any of its Affiliates arising out of or
relating to the negotiation and preparation of this Agreement and the Ancillary
Agreements and other agreements executed in connection with the transactions
contemplated hereby and thereby;
(vi) any
Liability arising out of any Contract entered into by Parent or its Affiliates
(other than the Seller or the Parent Designated Affiliates) in respect of the
Transferred Business and without the knowledge and approval of any officer
of
the Seller who was not appointed by Parent or any of its Affiliates (other
than
the Seller) except to the extent set forth on Schedule 4.08 or to
the extent that the Purchaser elects in writing to assume such Liability and
receive the benefit of the corresponding Contract; and
(vii) all
Liabilities described in Section 7.11.
SECTION
2.04 Transferred
Employees. At
or prior to the Closing, the Company will make offers to employ the
employees of the Seller Parties set forth on Schedule 2.04 (the
“Transferred Employees”) if they are active employees of the
Seller on the Closing Date, at the same base salary that they received from
the
Seller as of the Closing Date, and at the Closing, the Parties will cause the
employment of such Transferred Employees who accept such offer to be transferred
to the Company and the employment of such Transferred Employees with any Seller
Party will terminate at such time; provided that Schedule 2.04 will be
updated prior to the Closing to reflect any terminations of Transferred
Employees or hires of new employees for the Transferred Business following
the
date hereof. If a Transferred Employee who is not actively employed
with the Seller as of the Closing (each an “Inactive Transferred
Employee”) returns to active employment, the Company will have the
option to make an offer of employment to such individual. If the
Company exercises such option, the Parties will cause the employment of such
Inactive Transferred Employee to be transferred to the Company upon such
Inactive Transferred Employee’s return to active employment. If the
Company elects not to make an offer of employment to any Inactive Transferred
Employee upon his or her return, the Seller will cause the employment of such
Inactive Transferred Employee to be terminated, and the Company will reimburse
the Seller for the actual severance costs incurred by the Seller in terminating
such Inactive Transferred Employee, but only to the extent such costs are no
greater than the costs pursuant to the Seller’s severance plan in effect as of
the date hereof; if any such Inactive Transferred Employee commences an Action
such Action will be treated as a Third Party Claim indemnifiable under Section
10.02(b)(i) as an Assumed Liability under Section
2.03(b)(i). Transferred Employees who are not “actively employed with
the Seller” include Transferred Employees who are receiving payments under
Parent’s or the Seller’s short-term or long-term disability plans, as well as
Transferred Employees whose employment with the Seller has been terminated
between the date hereof and the Closing Date. This
Section 2.04 does not provide any rights whatsoever to any
Transferred Employee.
SECTION
2.05 Third
Party Consents. Nothing
in this Agreement or the Ancillary Agreements will be construed as an agreement
to assign any Transferred Contract or other Transferred Asset that by its terms
or pursuant to applicable Law is not capable of being sold, assigned or
transferred without the consent or waiver of a third party or Governmental
Authority or without the expiration or termination of any waiting period under
any non-U.S. Law applicable to the transactions contemplated by this Agreement
unless and until such consent or
16
waiver
is
given or such waiting period has expired or terminated. The Parties
will use their commercially reasonable efforts, and will cooperate reasonably
with each other, to obtain such consents and waivers, to cause such expiration
or termination of any such waiting period, if any, and to resolve the
impediments to the assignment or transfer contemplated by this Agreement or
the
Ancillary Agreements and to obtain any other consents and waivers or to cause
the expiration or termination of any other waiting periods, if any, that are
necessary to convey to the Company all of the Transferred Assets. In
the event such consents or waivers are not obtained or such waiting periods,
if
any, have not expired or terminated prior to the Closing Date, the Parties
will
continue to use their commercially reasonable efforts to obtain the relevant
consents or waivers or cause the expiration or termination of such waiting
periods until such consents or waivers are obtained or such waiting periods
have
expired or terminated. The Seller will cooperate with the Company in
any lawful, contractually permitted and economically feasible arrangement to
provide that the Company will receive the interest of the Seller in the benefits
under any such Transferred Contract or other Transferred Asset, including
performance by the Seller, if economically feasible, as agent; provided
that the Company will undertake to pay or satisfy the corresponding Liabilities
for the enjoyment of such benefit to the extent the Company would have been
responsible therefor if such consents or waivers had been obtained or such
waiting periods had expired or had been terminated.
SECTION
2.06 Disputed
Assets and Liabilities.
(a) Notwithstanding
anything contained in this Agreement or any Ancillary Agreement to the contrary,
to the extent the Parties discover prior to the first anniversary of the Closing
Date that any asset, property, interest or right was intended to be acquired
by
the Company pursuant to this Agreement, but was not transferred to the Company
immediately prior to the Closing, the Seller Parties will, or will cause their
Affiliates to, promptly assign and transfer to the Company all right, title
and
interest in, to and under such asset, property, interest or right, free and
clear of all Encumbrances for no additional consideration, and such asset,
property, interest or right will be deemed a Transferred Asset for all purposes
of this Agreement and the Ancillary Agreements. Notwithstanding
anything contained in this Agreement or the Ancillary Agreements to the
contrary, to the extent the Parties discover prior to the first anniversary
of
the Closing Date that any asset, property, interest or right was intended to
be
retained by the Seller pursuant to this Agreement, but was transferred to the
Company immediately prior to the Closing, the Purchaser and the Company will,
or
will cause their Affiliates to, promptly assign and transfer to the Seller
all
right, title and interest in such asset, free and clear of all encumbrances
(other than encumbrances that existed at the time such asset, property, interest
or right was transferred to the Company), and such asset, property, interest
or
right will not be deemed a Transferred Asset for any purpose of this Agreement
or the Ancillary Agreements.
(b) If,
based
on Section 2.06(a), the Seller believes that it is entitled to have
an asset, property, interest or right returned to it, or the
Purchaser believes that it is entitled to have an asset, property, or right
transferred to the Company, then the applicable Party will notify the other
Parties of that belief. If the Parties are unable to resolve the
matter within three Business Days of the date of that notice, then the matter
will be referred to Xxxxx Xxxxxxxx (or any other individual designated by
Parent) and Xxxx (or any other individual designated by
Purchaser). If Xxxxxxxx and Xxxx (or the Parties’ alternative
designees) do not resolve the matter within ten
17
Business
Days of the date of the original notice raising the matter, then any Party
may
immediately refer the matter to arbitration pursuant to Section
12.11.
SECTION
2.07 Company’s
Right to Enforce Transfer of Transferred Assets. The
Parties acknowledge and agree that the transfer of the Transferred Assets to
the
Company by the Seller and the Parent Designated Affiliates occurring immediately
prior to the Closing is being made in exchange for the Class A Units and Class
B
Units and that the Class A Units are being sold to the Purchaser at the Closing
in accordance with the terms of this Agreement. The Parties
acknowledge and agree that the Company has the right to enforce the Xxxx of
Sale
and Assignment Agreement against Scimed and Parent pursuant to Section
10.01(a)(ii) and as otherwise in accordance with the terms of this Agreement
and the Seller Parties irrevocably waive any right to contest the Company’s
enforcement of the Xxxx of Sale and Assignment on the grounds of a failure
of
consideration, on the grounds that the Company may not bring an Action against
the Person who formed it, on the grounds that the Company may not bring an
Action against its Member, or on other similar grounds. For the
avoidance of doubt, nothing in this Section 2.07 will prevent the
Seller Parties from asserting that a particular asset, property, or right should
not have been transferred to the Company because that particular asset,
property, or right was not intended to be transferred under this
Agreement.
ARTICLE
III.
THE
PURCHASE AND SALE OF THE CLASS A UNITS
SECTION
3.01 Purchase
and Sale. At
the Closing, the Seller will sell, assign, transfer, convey and deliver to
the
Purchaser the Class A Units and the Purchaser will purchase and accept the
Class
A Units for cash in the amount of $130,000,000 (the “Purchase
Price”).
SECTION
3.02 Operating
Income and Working Capital Amounts and Other
Amounts.
(a) Within
30
Business Days after the Closing, the Seller will calculate and prepare a
statement of the Operating Income Amount (the “Operating
IncomeAmount Statement”) and a statement of the
Working Capital Amounts (the “Working Capital Amounts
Statement”) and deliver such Closing Statements to the
Purchaser. During the 30 Business Days immediately following the
Closing, the Seller will be permitted to review the Books and Records of the
Company relating to the Operating Income Amount and the Working Capital Amounts
with respect to the period up to and including the Closing Date, and the Company
shall make reasonably available the individuals in its employ who are
responsible for and knowledgeable about the information relating to the
Operating Income Amount and the Working Capital Amounts. Following
completion of the Closing Statements, the Purchaser will have the right to
review the Closing Statements and the work papers pertaining
thereto. The calculation of the Operating Income Amount set forth in
the Operating Income Amount Statement and the calculation of the Working Capital
Amount set forth in the Working Capital Amount Statement will be final and
binding for purposes of determining the Operating Income Amount and the Working
Capital Amounts, respectively, unless the Purchaser provides written notice
of a
disagreement therewith to the Seller within 45 days after the delivery to the
Purchaser of the
18
Closing
Statements. Any disagreement with respect to the Closing Statements
will be resolved in accordance with Section 3.02(c). The
Operating Income Amount as finally resolved pursuant to this
Section 3.02 is referred to herein as the “Final Operating
IncomeAmount,” and the Working Capital Amounts as
finally resolved pursuant to this Section 3.02 are referred to
herein as the “Final Working Capital Amounts.”
(b)
(i)
If
the Final Operating Income Amount reflects a loss of more than $5,339,000,
the
Company will pay to the Seller the amount by which such loss exceeds $5,339,000,
and if the Final Operating Income Amount reflects a loss of less than
$5,339,000, the Seller will pay to the Purchaser the difference between
$5,339,000 and the amount of such loss. If the Final Operating Income
Amount reflects income, the Seller will pay to the Company $5,339,000 plus
the
amount of such income.
(ii) If
the
Accounts Payable Amount is less than 95% of the Accounts Payable Target, the
Company will pay the amount of such difference to the Seller, and if the
Accounts Payable Amount is greater than 105% of the Accounts Payable Target,
the
Seller will pay the amount of such excess to the Purchaser.
(iii) If
the
Inventory Amount is greater than $27,804,000, the Company will pay the amount
of
such excess to the Seller, and if the Inventory Amount is less than $25,156,000,
the Seller will pay the amount of such shortfall to the Company.
(iv) If
the
Trade Receivables are greater than the Trade Receivables that would exist as
of
December 31, 2007, if the Days of Sales Outstanding was 90, the Company will
pay
the amount of such difference to the Seller, and if the Trade Receivables are
less than the Trade Receivables that would exist as of December 31, 2007 if
the
Days of Sales Outstanding was 110, the Seller will pay the amount of such
difference to the Purchaser.
Payments
to be made pursuant to this Section 3.02(b) will be made within two
Business Days of the date of the determination of the Final Operating Income
Amount or the Final Working Capital Amounts, as applicable, by wire transfer
of
immediately available funds to an account designated by the Seller or the
Purchaser as applicable. The Parties will cooperate and assist each
other, in all reasonable respects, in the calculations and procedures described
in this Section 3.02(b).
(c) Any
notice of disagreement provided pursuant to Section 3.02(a) will
specify, in reasonable detail, the nature and extent of such disagreement,
and
the basis for such disagreement. If the Purchaser and the Seller are
unable to resolve any such disagreement within 30 calendar days after receipt
by
the Seller of the notice provided for in Section 3.02(a), then
either the Purchaser or the Seller may immediately refer the matter to
arbitration pursuant to Section 12.11.
(d) (i)
The
Company will promptly after (but in any event within two Business Days of)
the
Closing Date pay to the Seller the aggregate amount of any payments made by
Parent or any of its Affiliates in respect of Claims by third parties relating
to the manufacture, design and/or distribution of HiRes 90K cochlear implants
that contain the
19
feedthrus
made by Astro Seal to the extent that such aggregate amount exceeds the product
of the total number of such Claims paid by Parent or any of its Affiliates
multiplied by $45,000.
(ii) If,
prior to the Closing Date, Xxxx or Xxxxxxx approves the Seller’s payment of any
fines, monetary penalties or similar consequences of enforcement to the FDA
or
any equivalent non-U.S. Governmental Authority or notified body, the total
amount of such payment will be reflected as an operating expense in the Final
Operating Income Amount. Parent, the Seller and the Purchaser will
cooperate with each other in promptly resolving any Claim by the FDA (or such
equivalent Person), and will keep each other informed as to the status of
discussions between the FDA (or such equivalent Person) and such
Party.
(e) On
March 6, 2009, the Seller will pay to the Company $7.1 million by wire transfer
of immediately available funds to a bank account designated by the
Company.
SECTION
3.03 Tax
Treatment; Purchase Price Allocation.
(a) The
Parties acknowledge and agree that, for U.S. federal income Tax purposes, they
will treat and report the transactions contemplated under this Agreement as
(i) a sale of a proportionate interest in each of the Transferred Assets to
the Purchaser, followed by a contribution of such proportionate interests in
the
Transferred Assets to the Company in exchange for the Class A Units, and
(ii) a contribution by the Seller of a proportionate interest in each of
the Transferred Assets to the Company in exchange for the Class B Units, in
each
case, in accordance with Revenue Ruling 99-5, 1999-1 C.B. 434 (and, to the
extent applicable, such treatment will govern for U.S. state and local and
non-U.S. Tax purposes).
(b) The
Parties will negotiate and cooperate in good faith after the Closing Date to
prepare an allocation statement (the “Allocation Statement”)
setting forth the allocation of the Purchase Price and the Assumed Liabilities
among the Transferred Assets in accordance with section 1060 of the
Code. Within 30 days after the Closing, the Purchaser will deliver to
the Seller a draft Allocation Statement, but such draft Allocation Statement
provided by the Purchaser will not be presumed to be correct. If the
Parties do not resolve any disputes with respect to the Allocation Statement
within 60 days after the Closing Date, then any Party may immediately refer
the
disputed items to arbitration pursuant to Section 12.11. Any
subsequent adjustments to the sum of the Purchase Price and the Assumed
Liabilities will be allocated among the Transferred Assets in a manner
consistent with the Allocation Statement. For all Tax purposes, the
Purchaser and the Seller agree that the transactions contemplated by this
Agreement will be reported in a manner consistent with the Allocation Statement
and the Purchase Price (as set forth in Section 3.01), and that
neither of them (nor any Affiliate thereof) will take any position inconsistent
therewith in any Tax Return, in any refund request, in any litigation, or
otherwise, except as otherwise required by a final determination (as defined
in
section 1313 of the Code or any comparable provision of state or local
law). Each of the Seller and the Purchaser agrees to cooperate with
the other in preparing IRS Form 8594 (or other forms required to be filed with
a
Governmental Authority), and to furnish the other with a copy of such form
prepared in draft form within a reasonable period before the relevant filing
due
date. The Purchaser and the Seller will promptly inform one another
in writing of any challenge by any Governmental Authority to any allocation
made
pursuant to this Section 3.03(b) or to the Purchase Price (as set
forth in Section 3.01) and agree to consult with and keep one
another
20
informed
with respect to the status of, and any discussion, proposal or submission with
respect to, such challenge; provided, that each Party will have the sole
right to control the conduct of a challenge to
any allocation made pursuant to this Section 3.03(b),
including the settlement or compromise thereof; provided, further,
that each Party shall have the right to control the conduct of a challenge
to
the Purchase Price but shall not settle or compromise such challenge without
the
consent of the other Party (such consent not to be unreasonably
withheld).
SECTION
3.04 Closing. Consummation
of the sale of the Class A Units to the Purchaser contemplated by this Agreement
will take place at a closing (the “Closing”) to be held at the
offices of Shearman & Sterling LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
and will be effective at 12:01 a.m. New York time on either
(a) January 3, 2008 or (b) the third Business Day following the
satisfaction or waiver of the conditions to the obligations of the Parties
set
forth in Article IX, whichever is later (the “Closing
Date”).
SECTION
3.05 Closing
Deliveries.
(a) The
Seller Parties. At the Closing, the Seller Parties will deliver,
or cause to be delivered, to the Purchaser the following:
(i) a
certificate evidencing the Class A Units, duly endorsed for transfer to the
Purchaser;
(ii) a
receipt
for the cash Purchase Price;
(iii) executed
counterparts of each Ancillary Agreement to which the Company or a Seller Party
is a party;
(iv) a
certificate as to the non-foreign status of the Seller pursuant to
Section 1.1445-2(b)(2) of the U.S. Treasury Regulations;
(v) certified
resolutions of the Board of Directors of each of the Seller Parties authorizing
the transactions contemplated by this Agreement and the Ancillary
Agreements;
(vi) a
duly
executed certificate of the secretary or assistant secretary of each of the
Seller Parties as to incumbency and specimen signatures of officers of the
Seller Parties executing this Agreement and to the Ancillary
Agreements;
(vii) all
original Books and Records (including organizational documents) of the
Company;
(viii) the
certificate required by Section 9.03;
(ix) certificates
of good standing of the Company and the Seller from the Secretary of State
of
the State of
Delaware, and comparable certificates, if available in the relevant
jurisdiction, of good standing from the jurisdictions applicable to the Parent
Designated Affiliates;
21
(x) certificates
representing the shares or other applicable securities of the Transferred
Subsidiaries duly endorsed in blank, or accompanied by stock powers duly
executed in blank;
(xi) certified
resolutions of the managing member of the Company authorizing the transactions
contemplated by this Agreement and the Ancillary Agreements, as applicable;
and
(xii) such
other bills of sale, assignments and other instruments of assignment, transfer
or conveyance, in form and substance reasonably satisfactory to the Purchaser
and the Seller Parties, as the Purchaser may reasonably request or as may be
otherwise necessary (A) to evidence and effect the sale, assignment,
transfer, conveyance and delivery of the Transferred Assets to the Company
and
the Class A Units to the Purchaser and (B) to put the Company in actual
ownership, possession or control of the Transferred Assets, in each case duly
executed by the Seller.
(b) The
Purchaser. At the Closing, the Purchaser will deliver
or will cause to be delivered to the Seller the following:
(i) cash,
payable in immediately available funds by wire transfer to an account designated
by the Seller (such account to be designated not fewer than two Business Days
prior to the anticipated Closing Date) equal to the amount of the Purchase
Price;
(ii) counterparts
of each Ancillary Agreement executed by the Purchaser;
(iii) certified
resolutions of the Board of Directors of the Purchaser authorizing the
transactions contemplated by this Agreement and the Ancillary
Agreements;
(iv) a
duly
executed certificate of the secretary of the Purchaser as to incumbency and
specimen signatures of officers or authorized Persons of the Purchaser executing
this Agreement and the Ancillary Agreements;
(v) the
certificate required by Section 9.02;
(vi) a
certificate of good standing of the Purchaser from the Secretary of State of
the
State of California; and
(vii) such
other documents, in form and substance reasonably satisfactory to the Purchaser
and the Seller Parties, as the Seller may reasonably request or as may be
otherwise necessary to evidence and effect the assignment and assumption by
the
Company of the Assumed Liabilities.
22
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES OF
THE SELLER PARTIES
Each
of
the Seller Parties hereby represents and warrants, jointly and severally, to
the
Purchaser, as follows:
SECTION
4.01 Organization
and Authority. Each
of the Seller Parties is a corporation duly organized, validly existing and
in
good standing under the laws of its jurisdiction of incorporation and has all
necessary corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements to which it is a party, to carry out its
obligations hereunder and thereunder, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and, as applicable, the Ancillary Agreements by each of the Seller
Parties, the performance by the Seller Parties of each of their obligations
hereunder and, as applicable, thereunder and the consummation by the Seller
Parties and their Affiliates of the transactions contemplated hereby and, as
applicable, thereby have been duly and validly authorized by all requisite
corporate action on the part of each of the Seller Parties and their Affiliates,
and no other corporate proceedings on the part of any of the Seller Parties
or
their Affiliates are necessary to authorize this Agreement, the Ancillary
Agreements or to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and, upon their execution the
Ancillary Agreements will have been, duly and validly executed and delivered
by
each of the Seller Parties, as applicable, and (assuming due authorization,
execution and delivery by the Purchaser) this Agreement constitutes, and, upon
their (and, as applicable, the Company’s) execution the Ancillary Agreements
will constitute, legal, valid and binding obligations of the Seller Parties,
enforceable against each of the Seller Parties in accordance with their
respective terms.
SECTION
4.02 Organization
and Authority of the Company. At
the Closing, the Company will be a limited liability company duly organized,
validly existing and in good standing under the laws of
Delaware and will have
all necessary power and authority to execute and deliver the Ancillary
Agreements to which it is a party, to carry out its obligations thereunder
and
to consummate the transactions contemplated hereby and thereby. The
execution and delivery by the Company of the Ancillary Agreements to which
it is
a party, the performance by the Company of its obligations thereunder and the
consummation by the Company of the transactions contemplated thereby will,
at
the Closing, have been duly authorized by all requisite action on the part
of
the Company and its Member, and no other proceedings on the part of the Company
and its Member will be necessary to authorize the Ancillary Agreements to which
it is a party or to consummate the transactions contemplated
thereby. Upon their execution the Ancillary Agreements to which it is
a party will have been duly and validly executed and delivered by the Company
and upon their execution the Ancillary Agreements will constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
SECTION
4.03 No
Conflict. Other
than all pre-merger filings and notifications required under the HSR Act or
any
other similar non-U.S. Law, and the expiration or termination of any applicable
waiting period thereunder and except as may result from any
23
facts
or
circumstances relating solely to the Purchaser, the execution, delivery and
performance by the Seller Parties or their Affiliates of this Agreement and,
as
applicable, the Ancillary Agreements to which it is a party and the execution,
delivery and performance by the Company of the Ancillary Agreements to which
it
is a party do not and will not (a) violate, conflict with or result in the
breach of any provision of the certificate of incorporation or bylaws of any
of
the Seller Parties or (b) conflict with or violate any Law applicable to
the Seller Parties or by which any property or asset of Parent or Scimed is
bound or affected, (c) result in any breach of, or constitute a default (or
an event which, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, modification, amendment,
acceleration or cancellation of, give rise to any increased, guaranteed,
accelerated or additional rights or entitlements of any Person, or result in
the
creation of a lien or other encumbrance on any property or asset of Parent
or
Scimed pursuant to, any Contract to which Parent or Scimed is a party or by
which Parent or Scimed or any property or asset of any of them is bound or
affected, or (d) require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, except, in the
case of clause (b), (c) or (d), for any such
conflicts, violations, breaches, defaults or other occurrences that would not,
individually or in the aggregate, prevent or materially delay consummation
of
any of the transactions contemplated by this Agreement, and as applicable,
the
Ancillary Agreements, or otherwise prevent any of the Seller Parties or their
Affiliates from performing its obligations hereunder and
thereunder.
SECTION
4.04 Capitalization;
Ownership of Membership Units. Upon
formation of the Company and until the Closing occurs, the authorized Membership
Units of the Company will consist of 1,000 Membership
Units. Immediately after giving effect to the Closing (a) 1,000
Membership Units will be issued and outstanding, all of which will be validly
issued, (b) 880 Class A Units will be owned of record and beneficially by
the Purchaser, free and clear of all encumbrances and (c) 120 Class B Units
will be owned of record and beneficially by the Seller. There are no
options, warrants, convertible securities or other Contracts relating to the
Membership Units or obligating either the Seller or the Company to issue or
sell
any Membership Units, or any other interest, in the Company.
SECTION
4.05 Assets
and Liabilities of the Company. As
of the Closing Date, except as otherwise specifically requested by the Purchaser
or its Representatives or directed by Xxxx, Xxxxxxx or Xxxxxxxx, the Company
(a) will not have conducted any business activities or operations
whatsoever other than to receive the Transferred Assets and assume the Assumed
Liabilities pursuant to the terms of this Agreement and (b) will have no
assets, liabilities or obligations whatsoever other than the Transferred Assets
and the Assumed Liabilities.
SECTION
4.06 Brokers. Except
as set forth in Schedule 4.06, no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or
on
behalf of Parent, Scimed or any of their Affiliates other than the Seller and
the Company.
SECTION
4.07 Intellectual
Property. Except
as set forth on Schedule 4.07, since the Effective Time (as defined
in the Merger Agreement), none of Parent, Scimed or any of their respective
Affiliates (other than the Seller or its Subsidiaries) has sold, transferred
or
licensed to a third party or encumbered any intellectual property that is or,
if
it had
24
not
been
so sold or transferred, would have been Transferred Intellectual Property that
substantively involves any Auditory Products (as defined in the Merger
Agreement) or agreed to do any of the foregoing.
SECTION
4.08 Actions
of the Seller Parties. Other
than the Drug Eluting Electrode Contracts, none of Parent or its Affiliates
(other than the Seller or the Parent Designated Affiliates) has entered into
any
Contract that is a Transferred Contract or incurred any Liability that is an
Assumed Liability (other than Liabilities under Transferred Contracts, if any)
on behalf of or in the name of the Seller or any Subsidiary of the Seller,
in
each case, without the knowledge and approval of any officer of the Seller
who
was not appointed by Parent or any of its Affiliates (other than the
Seller).
SECTION
4.09 No
Distributions of Assets. Since
the Effective Time (as defined in the Merger Agreement) none of Parent or any
of
its Affiliates (other than the Seller with the knowledge and approval of any
officer of the Seller who was not appointed by Parent or any of its Affiliates
(other than the Seller)) has caused the Seller to dividend or distribute any
asset (other than cash) that would be a Transferred Asset if owned by the Seller
on the date hereof.
ARTICLE
V.
REPRESENTATIONS
AND WARRANTIES OF
THE PURCHASER
The
Purchaser hereby represents and warrants to the Seller Parties, as of the date
hereof, as follows:
SECTION
5.01 Organization
and Authority of the Purchaser. The
Purchaser is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all necessary corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party by the Purchaser,
the performance by the Purchaser of its obligations hereunder and thereunder
and
the consummation by the Purchaser of the transactions contemplated hereby and
thereby have been duly and validly authorized by all requisite corporate
action. No other corporate proceedings on the part of the Purchaser
are necessary to authorize this Agreement and the Ancillary Agreements to which
it is a party or to consummate the transactions contemplated hereby or
thereby. This Agreement has been, and, as applicable, upon their
execution the Ancillary Agreements will have been, duly and validly executed
and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the other Parties) this Agreement constitutes, and, as applicable,
upon their execution the Ancillary Agreements will constitute, legal, valid
and
binding obligations of the Purchaser enforceable against it in
accordance with their respective terms.
SECTION
5.02 No
Conflict. Other
than all pre-merger filings and notifications required under the HSR Act or
any
other similar non-U.S. Law and the expiration or termination of any applicable
waiting period, and except as may result from any facts or
25
circumstances
relating solely to the Seller Parties or the Company, the execution, delivery
and performance by the Purchaser of this Agreement and the Ancillary Agreements
to which it is a party do not and will not (a) conflict with or violate any
Law
or Governmental Order applicable to the Purchaser or by which any property
or
assets of the Purchaser are bound or affected, (b) result in any breach of
or constitute a default (or an event which, with notice or lapse of time or
both, would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a
lien
or other encumbrance on any property or asset of the Purchaser pursuant to,
any
Contract to which the Purchaser is a party or by which the Purchaser or any
property or asset of the Purchaser is bound or affected, or (c) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, except, in the case of clause (b) or
(c), for any such conflicts, violations, breaches, defaults or
other
occurrences which would not, individually or in the aggregate, prevent or
materially delay consummation of any of the transactions contemplated by this
Agreement, and as applicable, the Ancillary Agreements, or otherwise prevent
the
Purchaser from performing its obligations hereunder.
SECTION
5.03 Brokers. Except
as set forth on Schedule 5.03, no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated expressly hereby based upon arrangements
made
by or on behalf of the Purchaser.
ARTICLE
VI.
[INTENTIONALLY
OMITTED]
ARTICLE
VII.
COVENANTS
AND ADDITIONAL AGREEMENTS
SECTION
7.01 Limitations
on Activity of the Purchaser. (a) From
the date hereof until the Closing, the Purchaser (i) will not take any action
or
engage in any activity except to cause the Company to prepare to accept the
Transferred Assets and assume the Assumed Liabilities, including applying for
Permits, soliciting the consent of any Person for the transfer of any
Transferred Asset, and securing financing, (ii) will otherwise not take any
other action or engage in any activity without the prior written consent of
Parent, and if such activity is reasonably contemplated by this Agreement and
the transactions contemplated hereby, then such consent will not be unreasonably
withheld, conditioned or delayed and (iii) will use commercially reasonable
efforts to avoid confusion on the part of any Person with respect to the
identity of the Seller and the Purchaser.
(b) If
the Purchaser or any of its Affiliates prepares and distributes an offering
memorandum or similar document in connection with any financing of the
transactions contemplated by this Agreement, such offering memorandum or similar
document will not contain any information regarding the Transferred Business,
any of the Seller Parties or their Affiliates or the Retained Business that
is
materially inconsistent with the information contained in the Information
Statement (as defined in the Amendment Agreement) (other than inconsistencies
attributable to changed circumstances from the date hereof to the date of
such
26
offering
memorandum or other document). Prior to the distribution of any
offering memorandum or similar document by the Purchaser, the Purchaser will
provide a draft of such document to Parent a reasonable time in advance of
such
distribution and will consider the reasonable comments of Parent to such
document with respect to information relating to Parent, any of its Affiliates
or the Transferred Business.
SECTION
7.02 Notification
of Certain Matters. (a)
The Seller will give prompt written notice to the Purchaser of (i) the
occurrence or non-occurrence of any change, condition or event the occurrence
or
non-occurrence of which would render any representation or warranty of a Seller
Party contained in this Agreement or any Ancillary Agreement, if made on or
immediately following the date of such event, untrue or inaccurate,
(ii) any failure of a Seller Party, or any Affiliate of a Seller Party to
comply with or satisfy any covenant or agreement to be complied with or
satisfied by it hereunder or any event or condition that would otherwise
reasonably be expected to result in the nonfulfillment of any of the conditions
to the Purchaser’s obligations hereunder, (iii) any notice or other
communication from any Person to Parent or any of its Affiliates (other than
the
Seller) alleging that the consent of such Person is or may be required in
connection with the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements or (iv) any Action pending or, to
Parent, Scimed or the Seller’s knowledge, threatened against a Party or the
Parties relating to the transactions contemplated by this Agreement or the
Ancillary Agreements.
(b) The
Purchaser will give prompt written notice to the Seller of (i) the
occurrence or non-occurrence of any change, condition or event the occurrence
or
non-occurrence of which would render any representation or warranty of the
Purchaser contained in this Agreement or any Ancillary Agreement, if made on
or
immediately following the date of such event, untrue or inaccurate,
(ii) any failure of the Purchaser to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it hereunder or any event or
condition that would otherwise reasonably be expected to result in the
nonfulfillment of any of the conditions to the Seller Parties’ obligations
hereunder, (iii) any notice or other communication from any Person to the
Purchaser or any of its Affiliates alleging that the consent of such Person
is
or may be required in connection with the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements or (iv) any
Action pending or, to the Purchaser’s knowledge, threatened against a Party or
the Parties relating to the transactions contemplated by this Agreement or
the
Ancillary Agreements.
SECTION
7.03 Access
to Information.
(a) From
the
date hereof until the Closing Date, the Seller Parties will (a) afford the
Purchaser and each of its Representatives, all cooperation reasonably necessary
or customary in connection with any financing relating to the transactions
contemplated hereby, (b) furnish to the Purchaser and its Representatives
such financial, operational and other data and information related to the
Transferred Business and the Transferred Assets, as the Purchaser shall
reasonably request and (c) furnish to any prospective lenders or investors
in the Purchaser, such financial, operational and other data and information
related to the Transferred Business and the Transferred Assets, as shall be
reasonably requested, subject to the execution by any such prospective lender
or
investor of a confidentiality agreement that is reasonably satisfactory to
Parent.
27
(b) In
order
(i) to facilitate the resolution of any Claims made against or incurred by
the Seller Parties relating to the Transferred Assets or the Assumed
Liabilities, (ii) to respond to any inquiry, request or demand from any
Governmental Authority relating to the Transferred Assets or the Assumed
Liabilities or (iii) to comply with any reporting or filing requirement
imposed by any Governmental Authority or by Law relating to the Transferred
Assets or the Assumed Liabilities, for a period of seven years after the
Closing, the Purchaser will cause the Company to (x) retain the Books and
Records relating to the Transferred Assets or the Assumed Liabilities relating
to periods prior to the Closing, (y) upon reasonable notice, afford the
officers, employees, agents and representatives of the
Seller reasonable access (including the right to make, at the
Seller’s expense, photocopies of information not reasonably considered by the
Company or the Purchaser to be confidential), during normal business hours,
to
such Books and Records and (z) furnish the Seller and its Representatives
reasonable assistance in connection with any Claim (at the Purchaser’s expense);
provided that the Company will notify the Seller at least 60 days in
advance of destroying any such Books and Records in order to provide the Seller
the opportunity to access such Books and Records in accordance with this
Section 7.03(b). The Seller may retain copies of any
Books and Records relating to the Transferred Assets or the Assumed Liabilities
relating to periods prior to the Closing, but only to the extent required by
applicable Law.
(c) In
order
to (i) facilitate the resolution of any Claims made against or incurred by
the Purchaser or the Company relating to the Transferred Assets or the Assumed
Liabilities, (ii) to respond to any inquiry, request or demand from any
Governmental Authority or (iii) to comply with any reporting or filing
requirement imposed by any Governmental Authority or by Law relating to the
Transferred Assets or the Assumed Liabilities (including with respect to a
public offering of securities by the Company or any of its Affiliates), for
a
period of seven years after the Closing the Seller Parties will (x) retain
the Books and Records relating to the Transferred Assets or the Assumed
Liabilities and the Company relating to periods prior to the Closing that have
not otherwise been delivered to the Purchaser or the Company, (y) upon
reasonable notice, afford the officers, employees, agents and representatives
of
the Purchaser and the Company reasonable access (including the right to make,
at
the Purchaser’s or the Company’s expense, photocopies of information not
reasonably considered by Parent to be confidential), during normal business
hours, to such Books and Records and (z) furnish the Purchaser and the
Company reasonable assistance in connection with any Claim (at the Seller’s
expense); provided that Parent, Scimed or the Seller will notify the
Purchaser and the Company at least 60 days in advance of destroying any such
Books and Records in order to provide the Purchaser and the Company the
opportunity to access such Books and Records in accordance with this
Section 7.03(c). The Purchaser and the Company may retain
copies of any Books and Records relating to the Transferred Assets or the
Assumed Liabilities relating to periods prior to the Closing as required by
any
Law or by the Company’s document retention or regulatory compliance
policies.
(d) Notwithstanding
the foregoing, Sections 7.02(a), (b) and (c) shall not
apply with respect to Tax matters and the provisions of Section 7.09
shall apply.
28
SECTION
7.04 Public
Announcements.
(a) The
initial press release with respect to this Agreement or the transactions
contemplated hereby will be substantially in the form of Exhibit J
(the “Press Release”) and will be issued on the date
hereof. The Parties acknowledge and agree that they will answer any
questions asked regarding this Agreement and the transactions contemplated
hereby (e.g., during an analyst call or to investors in private) using the
attached answers to frequently asked questions (the “FAQs”) set
forth on Exhibit K to the extent reasonably practicable to do
so.
(b) Other
than the Press Release and the FAQs, so long as this Agreement is in effect,
the
Parent will, and will cause its Affiliates to, consult with the Purchaser before
issuing any other press releases or otherwise making public announcements with
respect to this Agreement, the transactions contemplated by this Agreement,
Mann, Greiner, any of the Purchaser, the Trust or any of their Affiliates,
and,
except for any press release or public statement required by Law or any listing
agreement with any U.S. or international securities exchange, including the
New
York Stock Exchange, will not issue any press release or make any public
statement with respect to any of the foregoing matters without the consent
of
the Purchaser, which consent will not be unreasonably withheld, delayed or
conditioned.
(c) Other
than the Press Release and the FAQs, so long as this Agreement is in effect,
the
Purchaser will, and will cause its Affiliates to, consult with Parent before
issuing any other press releases or otherwise making public announcements with
respect to this Agreement, the transactions contemplated by this Agreement,
or
any of Parent or its Affiliates, and, except for any press release or public
statement required by Law or any listing agreement with any U.S. or
international securities exchange, including the New York Stock Exchange, the
American Stock Exchange or NASDAQ, will not issue any press release or make
any
public statement with respect to any of the foregoing matters without the
consent of Parent, which consent will not be unreasonably withheld, delayed
or
conditioned.
(d) Notwithstanding
Section 7.04(b) or (c), if a release, announcement or
statement described in Section 7.04(b) or (c) is required by
Law or the rules or regulations of any applicable United States or international
securities exchange or Governmental Authority to which the relevant Party is
subject, and any portion of the subject matter of such release, announcement
or
statement is contained in the Press Release or the FAQs, the Party required
to
make the release, announcement or statement will conform in all material
respects that portion of such release, announcement or statement to the Press
Release or the FAQs and will notify the Parent or the Stockholders
Representative, as applicable, by telephone, email or fax within two hours
of
any officers in the legal department, corporate communications department or
similar department of such Party that
29
routinely
performs such functions concluding that it is reasonably likely that such Party
will issue a release, announcement or statement. If a release,
announcement or statement described in Section 7.04(b) or (c)
is required by Law or the rules or regulations of any applicable United States
or international securities exchange or Governmental Authority to which the
relevant Party is subject, and any portion of the subject matter of such
release, announcement or statement is not contained in the Press Release or
the
FAQs, the Party required to make the release, announcement or statement will
notify Parent or the Stockholders Representative, as applicable, by telephone,
email or fax within two hours of any officers in the legal department, corporate
communications department or similar department of such Party that routinely
performs such functions concluding that it is reasonably likely that such Party
will issue a release, announcement or statement and will use its reasonable
best
efforts to allow such other Party a reasonable time to comment on such release,
announcement or statement in advance of such issuance and will accept the
reasonable comments of such other Party to such
release. Notwithstanding anything contained in this
Section 7.04(d), language in a release, announcement or statement
regarding the transactions contemplated by this Agreement and the Ancillary
Agreements that is substantially similar to language regarding such matters
that
has been previously reviewed by Parent or the Purchaser in compliance with
the
procedures set forth in this Section 7.04(d) will not require
notification to Parent or the Purchaser, as applicable, pursuant to this
Section 7.04(d). The notices provided for in this
Section 7.04(d) will describe the time frame of the release, announcement
or statement. Any reference to a “Party” referenced in a release,
announcement or statement in this Section 7.04 shall include such
Party and, to the extent applicable, its Affiliates.
SECTION
7.05 Further
Action; HSR Notification.
(a) The
Parties will use all commercially reasonable efforts to take, or cause to be
taken, all appropriate action to do, or cause to be done, all things necessary,
proper or advisable under applicable Law, and to execute and deliver such
documents and other papers, as may be required to carry out the provisions
of
this Agreement or otherwise to consummate and make effective the transactions
contemplated by this Agreement or the Ancillary Agreements as promptly as
practicable, including (i) to obtain from Governmental Authorities all
consents, approvals, authorizations, qualifications and orders as are necessary
for the consummation of the transactions contemplated hereby, (ii) promptly
making all necessary filings, and thereafter making any other required
submissions, with respect to this Agreement required under applicable Law and
(iii) taking action to attempt to vacate, lift, reverse or overturn any
Governmental Order that is then in effect and that enjoins, restrains,
conditions, makes illegal or otherwise restricts or prohibits the consummation
of the transactions contemplated by this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, the Purchaser shall have
the sole and exclusive right to determine, at its option but without any
obligation whatsoever, whether it, any of its Affiliates or Xxxx or any of
his
Affiliates shall have any obligation to take any actions in connection with,
or
agree to, any demands for sale, divestiture or disposition of assets of the
Purchaser or any of its Affiliates (including Xxxx and his Affiliates), asserted
by the United States Federal Trade Commission, the Antitrust Division of the
United States Department of Justice or any other Governmental Authority in
connection with antitrust matters or international competition laws, or to
defend through litigation any proceeding commenced by the Federal Trade
Commission, the Antitrust Division of the United States Department of Justice
or
other Governmental Authority in connection with the foregoing
matters.
(b) Parent
will, and the Purchaser will or will cause its ultimate parent to, make as
promptly as reasonably practicable its respective filing pursuant to the HSR
Act
with respect to the transactions contemplated by this Agreement, but in no
event
later than 10 Business Days after the date hereof, and to supply as promptly
as
reasonably practicable to the appropriate Governmental Authorities any
additional information and documentary material that may be requested pursuant
to the HSR Act. Any filing fee payable in connection with any filing
pursuant to this Section 7.05(b) will be shared equally by Parent and the
Purchaser.
30
(c) Parent
will, and the Purchaser will or will cause its ultimate parent to, make as
promptly as reasonably practicable but in no event later than 20 Business Days
after the date hereof, any required filing pursuant to any non-U.S. Law with
respect to the transactions contemplated by this Agreement, and to supply as
promptly as reasonably practicable to the appropriate Governmental Authorities
any additional information and documentary material that may be requested
pursuant to such non-U.S. Law.
SECTION
7.06 Non-Competition/Non-Solicitation.
(a) For
a
period of five years after the Closing Date, Parent will not, and will cause
its
Affiliates not to, research, develop, manufacture, distribute or sell, directly
or indirectly, anywhere in the world, any products that compete with the
products (including any products in development) developed, manufactured,
distributed or sold by the Transferred Business as of the Closing Date or any
direct evolutions of such products (excluding tinnitus) (such products of the
Transferred Business, the “Auditory
Products”). Parent also will not, and will cause its
Affiliates not to, for a period of five years after the Closing Date, directly
or indirectly, manage, operate, join, control, advise or participate in, be
connected with, render financial assistance to, receive any economic benefit
from, exert any influence upon, or give advice to, as an officer, employee,
partner, stockholder, consultant or other similar position, any Person that
researches, develops, manufactures, distributes or sells products that compete
with the Auditory Products (excluding tinnitus); provided that, for the
purposes of this Section 7.06(a), ownership of securities having no
more than five percent of the publicly listed securities, beneficial ownership,
financial or economic interests outstanding voting power of any Person whose
securities are listed on any U.S. or international securities exchange, that
researches, develops, manufactures, distributes or sells any products that
compete with the Auditory Products will not be deemed to be in violation of
this
Section 7.06(a) as long as the Person owning such securities has no
other connection or relationship with such publicly listed Person.
(b) For
a
period of five years after the Closing Date, the Purchaser will not, and will
cause its Affiliates not to, research, develop, manufacture, distribute or
sell,
directly or indirectly, anywhere in the world, any products used or intended
for
use in any of the indications set forth on Schedule 7.06(b) (the
“Parent Neurostimulation Indications”). The
Purchaser also will not, and will cause its Affiliates not to, for a period
of
five years after the Closing Date directly or indirectly manage, operate, join,
control, advise or participate in or be connected with, render financial
assistance to, receive any economic benefit from, exert any influence upon,
or
advice to, as an officer, employee, partner, stockholder, consultant or other
similar position, any Person that researches, develops, manufactures,
distributes or sells products used or intended for use in the Parent
Neurostimulation Indications; provided that, for the purpose of this
Section 7.06(b), ownership of securities having no more than five
percent of the publicly listed securities, beneficial ownership, financial
or
economic interests or outstanding voting power of any Person whose securities
are listed on any U.S. or international securities exchange, that researches,
develops, manufactures, distributes or sells any products used or intended
for
use in the Parent Neurostimulation Indications will not be deemed to be in
violation of this Section 7.06(b) as long as the Person owning such
securities has no other connection or relationship with such publicly listed
Person;). Xxxx and all Persons controlled by him (except the Excluded
Xxxx Affiliates) will be bound by this Section 7.06(b) to the same
extent as the Purchaser. Notwithstanding the foregoing, the
provisions of this Section 7.06(b) will not apply
31
to
Xxxxxxx and will apply to the Excluded Xxxx Affiliates only if Xxxx is actively
involved in the decision-making process of any of the Excluded Xxxx Affiliates
to take any action that would constitute a breach of this Section 7.06(b)
if such actions were taken by the Purchaser.
(c) Non-Solicitation.
(i) For
a
period of two years after the date hereof, the Purchaser will not, and will
cause its Affiliates not to, directly or indirectly (including by way of
recommendations from Xxxx), solicit any employee of the Seller or any of its
Affiliates for employment or in any other capacity (including as an independent
contractor or consultant) with the Purchaser or the Company; provided
that nothing in this Section 7.06(c)(i) will prohibit the Purchaser
or any of its Affiliates from: (A) publishing or posting a
general posting of open positions in the course of normal hiring practices
that
are not specifically sent to, or do not specifically target, the employees
of
the Seller Parties or their Affiliates; (B) placing a general advertisement
with
respect to open positions that is not specifically sent to, and does not
specifically target, the employees of the Seller Parties or their Affiliates;
(C) engaging an employee recruiter to fill open positions, so long as such
recruiter is not specifically asked or engaged by the Purchaser or any of its
Affiliates to target the employees of the Seller Parties or any of their
Affiliates and so long as such recruiter has been advised of the restrictions
contained in this Section 7.06(c). Xxxx and all Persons
controlled by him (other than the Excluded Xxxx Affiliates) will be bound by
this Section 7.06(c) to the same extent as the
Purchaser. Notwithstanding the foregoing, the provisions of this
Section 7.06(c) will not apply to Xxxxxxx and will apply to the Excluded
Xxxx Affiliates only if Xxxx is actively involved in the decision-making process
of any of the Excluded Xxxx Affiliates to take any action that would constitute
a breach of this Section 7.06(c) if such actions were taken by the
Purchaser.
(ii) For
a
period of two years after the date hereof, the Seller or any of its Affiliates
will not directly or indirectly solicit any employee of the Company or any
of
its Affiliates for employment or in any other capacity (including as an
independent contractor or consultant) with the Seller; provided that
nothing in this Section 7.06(c)(ii) will prohibit the Seller from:
(A) publishing or posting a general posting of open positions in the course
of normal hiring practices that are not specifically sent to, or do not
specifically target, the employees of the Company or its Affiliates;
(B) placing a general advertisement with respect to open positions that is
not specifically sent to, and does not specifically target, the employees of
the
Company or its Affiliates; (C) engaging an employee recruiter to fill open
positions, so long as such recruiter is not specifically asked or engaged by
the
Seller Parties or any of their Affiliates to target the employees of the Company
or any of its Affiliates and so long as such recruiter has been advised of
the
restrictions contained in this Section 7.06(c)(ii).
(d) If
any
covenant in this Section 7.06 is found to be invalid, void or
unenforceable in any situation in any jurisdiction by a final determination
of a
court or any other Governmental Authority of competent jurisdiction, the Parties
agree that: (i) such determination will not affect the validity or
enforceability of (A) the offending term or provision in any other
situation or in any other jurisdiction or (B) the remaining terms and
provisions of this
32
Section 7.06
in any situation in any jurisdiction; (ii) the offending term or provision
will be reformed rather than voided and the court or Governmental Authority
making such determination will have the power to reduce the scope, duration
or
geographical area of any invalid or unenforceable term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term
or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable provision,
in order to render the restrictive covenants set forth in this
Section 7.06 enforceable to the fullest extent permitted by
applicable Law; and (iii) the restrictive covenants set forth in this
Section 7.06 will be enforceable as so modified.
(e) For
the
avoidance of doubt, none of the obligations contained in this
Section 7.06 apply to Xxxxxxx, Xxxxx Xxxxx, Xxxxxxxx or any other
employee or stockholder of Purchaser (other than Xxxx) in their individual
capacities. The Parties acknowledge and agree that Greiner, Goldberg,
Xxxxx Xxxxx and any other employee or stockholder of Purchaser (other than
Xxxx)
may, at any time, outside of their work for Company, participate in any way
they
choose in any business regardless of whether that business competes with Seller
or any of the Seller Parties.
SECTION
7.07 Change
of Names. (a) The
Seller will change its name within 10 Business Days after the Closing Date,
and
within three months after the date on which such name change occurs, the Seller
will cease to use the name “Advanced Bionics,” “Bionics” and “Bionic”
in any public communications; provided, that for a period of up to two
years after the Closing (or such longer period to the extent the FDA has not
provided all necessary approvals described in this proviso), Parent and its
Affiliates will have the right to use the names “Advanced Bionics,” “Bionics”
and “Bionic” to the extent reasonably necessary to allow the Seller and its
Affiliates to obtain in an orderly manner all necessary regulatory approvals
to
reflect the foregoing change of name and to relabel its products and promotional
materials with a name that does not include the words “Advanced Bionics,”
“Bionics” or “Bionic;” provided, further, that the Seller will use
commercially reasonable efforts to discontinue the use of such names by the
Seller and its Affiliates as soon as reasonably practicable after the date
hereof. Notwithstanding anything to the contrary in this
Agreement, the Seller shall have the right, at all times after the Closing
Date,
to (i) keep records and other historical or archived documents containing
or referencing the Assigned Names and Marks, (ii) refer to the historical
fact that the Seller previously conducted business under the Assigned Names
and
Marks, and (iii) use the Assigned Names and Marks to the extent required by
or
permitted as fair use under applicable Law. Notwithstanding the
foregoing and solely for the avoidance of doubt, nothing in this Section
7.07(a) will in any way limit the right of Parent or any of its Affiliates
to use the name “Advanced” for any purpose.
(b) For
a
period not to exceed two years after the Closing (or such longer period to
the
extent the FDA has not provided all necessary approvals described in this
proviso), the Company will have the right to use the names “Boston Scientific
Corporation,” “Boston Scientific,” and “Scimed” to the extent reasonably
necessary to allow the Company time to relabel its existing stock of products
and promotional materials; provided, that the Purchaser will be required
to refrain from using all products and promotional materials using the names
“Boston Scientific,” “Boston Scientific Corporation” or “Scimed” thereafter;
provided, further, that the
33
Company
will use commercially reasonable efforts to discontinue the use of such names
by
the Company as soon as reasonably practicable after the date
hereof.
SECTION
7.08 Insurance. The
Seller will use its commercially reasonable efforts to continuously maintain
in
effect or renew, without any lapse in coverage, through the Closing Date the
insurance policy set forth on Schedule 2.02(a)(xi).
SECTION
7.09 Tax
Cooperation and Exchange of Information. The
Seller and the Purchaser will provide each other with such cooperation and
information as any of them reasonably may request of the other (and the
Purchaser will cause the Company to provide such cooperation and information)
in
filing any Tax Return, amended Tax Return or request for refund, determining
a
liability for Taxes or a right to a refund of Taxes or participating in or
conducting any audit or other proceeding in respect of Taxes; provided
that (a) the Seller shall not be required to provide any income or similar
Tax Returns, or Tax returns or other documents that contain confidential
information relating to Persons other than the Seller, but the Seller shall
provide information that is reasonably necessary, as mutually determined by
the
Parties acting in good faith, for filing any Tax Return, amended Tax Return
or
request for refund, determining a liability for Taxes or a right to a refund
of
Taxes or participating in or conducting any audit or other proceeding in respect
of Taxes and (b) the Purchaser shall not be required to provide any income
or similar Tax Returns, or Tax returns or other documents that contain
confidential information relating to Persons other than the Purchaser, but
the
Purchaser shall provide information that is reasonably necessary, as mutually
determined by the Parties acting in good faith, for filing any Tax Return,
amended Tax Return or request for refund, determining a liability for Taxes
or a
right to a refund of Taxes or participating in or conducting any audit or other
proceeding in respect of Taxes. Any information or documents obtained
under this Section 7.09 shall be kept confidential, except as may be
otherwise necessary in connection with filing any Tax Return, amended Tax Return
or request for refund, determining a liability for Taxes or a right to a refund
of Taxes or participating in or conducting any audit or other proceeding in
respect of Taxes.
SECTION
7.10 Conveyance
Taxes. The
Purchaser and the Seller will each pay 50% of any Conveyance Taxes that may
be
imposed upon, or payable or collectible or incurred in connection with this
Agreement and the transactions contemplated hereby. The Purchaser and
the Seller agree to cooperate in the execution and delivery of all instruments
and certificates necessary to enable the Purchaser to comply with any pre
Closing filing requirements.
SECTION
7.11 Bulk
Transfer Laws. The
Purchaser hereby waives compliance by the Seller with any applicable bulk sale
or bulk transfer laws of any jurisdiction in connection with the sale of the
Transferred Assets (other than any obligations with respect to the application
of the proceeds therefrom). Pursuant to Article X, the
Seller Parties will indemnify the Purchaser and the Company against
all Liabilities (other than Tax Liabilities) that may be asserted by third
parties against the Purchaser or the Company as a result of the Seller’s
noncompliance with such law.
SECTION
7.12 Use
of Information. (a) From
and after the Closing Date, the Seller Parties will not, and will cause their
respective Affiliates and their respective
34
Representatives
not to, disclose to any other Person any confidential information relating
to
the Purchaser or the Transferred Business (other than information or data that
becomes available to the public other than as a result of a breach of this
Section 7.12(a)), unless such disclosure of confidential information
is required by applicable Law.
(b) From
and
after the Closing Date, the Purchaser will not, and will cause its Affiliates
and its Representatives not to, disclose to any other Person any confidential
information relating to the Seller Parties (other than the Company or the
Transferred Business) or the Retained Business (other than information or data
that becomes available to the public other than as a result of a breach of
this
Section 7.12(b)), unless such disclosure of confidential information
is required by applicable Law.
SECTION
7.13 IP
Further Assurance. From
the date hereof until the Closing, the Seller and the Purchaser shall cooperate
in good faith to identify those invention disclosures (if any) owned by the
Seller that if known or existing on the date hereof would be included in
Transferred Intellectual Property and prior to the Closing shall update
Schedule 1.01(e)(i) accordingly. From the date hereof until
the Closing, the Seller and Purchaser shall cooperate in good faith to identify
those registered Copyrights (if any) that are Transferred Intellectual Property,
and to the extent any such registered Copyrights are identified, the Seller
and
the Purchaser shall execute at Closing those documents reasonably necessary
to
record the assignment of such registered Copyright with the appropriate
Governmental Authority.
SECTION
7.14 Transition
of Drug Eluting Electrode Contracts. The
Parties agree that, as of the date hereof, the Drug Eluting Electrode Contracts
will be, for all purposes, part of the Transferred Business. As
promptly as practicable, Representatives of Parent, the EOR Designee (as defined
in the Amendment Agreement) and any relevant Transferred Employees shall meet
to
transition any activities historically performed by the Parent pursuant to
the
Drug Eluting Electrode Contracts. Parent shall not be entitled to
recover any amounts paid as of the date hereof under the Drug Eluting Electrode
Contracts, and upon the two week anniversary of the date hereof shall
discontinue all material efforts associated with the drug eluting electrode
projects.
ARTICLE
VIII.
EMPLOYEE
MATTERS
SECTION
8.01 Severance
Costs. To
the extent the employment of any employee of the Seller Parties who would have
been a Transferred Employee if his or her employment was transferred to the
Company pursuant to Section 2.04 is terminated between the date hereof
and the Closing, any cost in connection with such termination will be allocated
to the Company pursuant to the Separation Agreement. To the extent
that the Company terminates any Transferred Employee on or after the Closing,
the Company will pay all severance and benefits costs incurred in connection
with the termination of such Transferred Employee.
SECTION
8.02 Phantom
Earn Out Recipients. (a) In
connection with the transactions contemplated hereby, the Seller’s “Special Cash
Bonus Plan” (commonly referred to as the “Phantom Earn Out Plan”) (the
“Cash Bonus Plan”) will be terminated at
Closing. Promptly following the Closing, the Seller will pay to
the recipients under the Cash
35
Bonus
Plan (the “Cash Bonus Plan Recipients”) an
aggregate amount equal to $2,149,645.00 (which represents $5.38 per Cash Bonus
Plan unit). Each of the Seller and the Company shall establish a
replacement plan that provides that under certain conditions (i) within 15
days
of the end of each of the 2008 and 2009 fiscal years, the Purchaser will cause
the Company to pay to the Transferred Employees who are Cash Bonus Plan
Recipients, and the Seller will pay to its employees who are Cash Bonus Plan
Recipients, in each case if such employees are employed by the Company or the
Seller, as applicable, on January 1, 2009 and 2010 (as applicable), $5 per
Cash
Bonus Plan unit and (ii) in the case of “uncapped” Cash Bonus Plan
Recipients, within 15 days of the end of the 2010 fiscal year, the Purchaser
will cause the Company to pay to the Transferred Employees who are Cash Bonus
Plan Recipients and the Seller will pay to its employees who are Cash Bonus
Plan
Recipients, in each case, if such employees are employed by the Company or
the
Seller, as applicable, on January 1, 2011, $7.50 per Cash Bonus Plan
unit. In respect of the Transferred Employees, the Company will cause
such arrangements to comply with the requirements of Section 409A of the Code,
and in respect of the employees of the Retained Business, the Seller will cause
such arrangements to comply with the requirements of Section 409A of the
Code.
(b) Effective
as of the Closing, the Seller will release each employee of the Seller as of
the
Closing who entered into a retention letter agreement with the Seller in
connection with the consummation of the transactions contemplated by the Merger
Agreement from all of his or her obligations under such retention letter
agreement.
SECTION
8.03 Treatment
of Options. Effective
as of the Closing, Parent shall accelerate to the Closing Date the vesting
of
the tranche of employee stock options held by the Transferred Employees that
would have otherwise vested on February 13, 2008, which options shall otherwise
remain governed by their existing terms.
SECTION
8.04 2007
Performance Incentive Plan Payments. The
Seller will pay, directly to each Transferred Employee who is employed by the
Seller immediately prior to the Closing, the amount determined by the EOR
Designee to be payable under Parent’s 2007 Performance Incentive Plan to such
Transferred Employee in recognition of such Transferred Employee’s performance
during the 2007 fiscal year after consultation with Xxxx XxXxxxxxxx consistent
with past practice; provided, however, that the aggregate amount
payable to all Transferred Employees will not exceed the total funding amount
allocated by Parent with respect to the Transferred Employees under Parent’s
2007 Performance Incentive Plan (based on the achievement of the plan funding
conditions and individual performance). The Seller will make such
payments to the Transferred Employees at substantially the same time as payments
are made to employees of Parent under Parent’s 2007 Performance Incentive
Plan.
SECTION
8.05 Employee
Plans.
(a) The
Transferred Employees shall cease to participate in the Employee Plans on the
Closing Date (except to the extent otherwise provided under any applicable
transition services agreement). The Seller Parties shall take any
action that may be necessary or appropriate to ensure that each Transferred
Employee is 100% vested in his or her account balance under Parent’s
tax-qualified defined contribution plan (the “BSC 401(k) Plan”)
as of the Closing Date. The Seller Parties shall cause the trustee(s)
of the BSC 401(k) Plan to permit
36
distribution
of the account balances thereunder to the Transferred Employees in accordance
with the terms of such plan, to roll over such account balances to individual
retirement accounts of the Transferred Employees or to roll over account
balances (including, to the extent practicable, any notice evidencing a
participant loan) to a new tax-qualified defined contribution plan established
by the Company. Parent will cooperate with the Purchaser in the
distribution and rollover of the Transferred Employee’s account balances to the
Company’s new tax-qualified defined contribution plan in compliance with
applicable requirements of the Code.
(b) Neither
the Purchaser nor the Company shall have any Liability or obligation with
respect to any Employee Plan and, except as otherwise expressly provided herein,
neither the assets or Liabilities of any Employee Plan nor the sponsorship
of
the Plans themselves shall be transferred to the Company or the Purchaser
pursuant to or in connection with the transactions contemplated by this
Agreement. Without limiting the foregoing, the Seller Parties shall
retain all Liability with respect to (i) all claims made or incurred under
the Employee Plans, and (ii) COBRA coverage (and applicable state law
continuation coverage) on account of “qualifying events” occurring prior to the
Closing. For purposes of this Section 8.05(b), a claim
shall be considered incurred under a health, dental or vision plan when the
services giving rise to the claim are rendered, under workers’ compensation and
disability policies when the event giving rise to the claim occurs and in other
cases when the expense giving rise to the claim is otherwise
incurred.
ARTICLE
IX.
CONDITIONS
TO CLOSING
SECTION
9.01 Conditions
to Obligations of the Parties. The
respective obligations of the Seller Parties, on the one hand, and of the
Purchaser, on the other hand, to consummate the transactions contemplated by
this Agreement will be subject to the fulfillment, at or prior to the Closing,
of each of the following conditions, any of which may, to the extent permitted
by applicable Law, be waived in writing by any applicable party in its sole
discretion; provided that such waiver shall only be effective as to the
obligations of such party:
(a) Antitrust
Waiting Period. The waiting period (and any extension thereof)
applicable to the consummation of the transactions contemplated hereby under
the
HSR Act shall have expired or been terminated.
(b) No
Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Governmental Order (whether
temporary, preliminary or permanent) that has the effect of making the
transactions contemplated by this Agreement or the Ancillary Agreements illegal
or that otherwise restrains or otherwise prohibits the consummation of such
transactions.
(c) Amendment
Agreement. The Closing (as defined in the Amendment Agreement)
shall have occurred.
SECTION
9.02 Conditions
to Obligations of the Seller Parties. The
obligations of the Seller Parties to consummate the transactions contemplated
by
this Agreement
37
shall
be
subject to the fulfillment, at or prior to the Closing, of the following
condition, which may be waived in writing by the Seller in its sole
discretion:
Representations,
Warranties and Covenants. (a) The representations and
warranties of the Purchaser in this Agreement shall be true and correct (without
regard to any qualifications as to materiality) as of the Closing Date (or,
in
the case of representations and warranties that are made as of a specified
date,
as of such specified date); (b) the Purchaser shall have performed all
obligations and agreements and complied with all covenants required by this
Agreement to be performed or complied with by it prior to or at the Closing,
except where the failure of such representations and warranties to be true
and
correct or the failure of the Purchaser to so perform or comply does not prevent
the Purchaser from consummating the transactions contemplated hereby; and
(c) the Seller shall have received from the Purchaser a certificate by the
Purchaser to the effect set forth in the foregoing clauses (a) and (b), signed
by a duly authorized officer or person thereof.
SECTION
9.03 Conditions
to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by
this
Agreement shall be subject to the fulfillment, at or prior to the Closing,
of
the following condition, which may be waived in writing by the Purchaser in
its
sole discretion:
Representations,
Warranties and Covenants. (a) (i) the representation and
warranty contained in Section 4.04 shall be true and correct in all
material respects as of the Closing Date and (ii) the representations and
warranties of the Seller Parties contained in the other Sections of Article
IV shall be true and correct (without regard to any qualification as to
materiality) as of the Closing Date (or, in the case of any representations
and
warranties that are made as of a specified date, as of such specified date);
(b) the Seller Parties shall have performed all obligations and agreements
and complied with all covenants required by this Agreement or any Ancillary
Agreement to be performed or complied with by it prior to or at the Closing,
except where the failure of such representations and warranties described in
clause (a)(ii) to be true and correct or the failure of the Seller Parties
to so
perform or comply does not materially and adversely affect the Transferred
Business taken as a whole; provided, that the representations and warranties
contained in Sections 4.02, 4.04 and 4.05 shall be disregarded for
purposes of this Section 9.03 to the extent the failure of such
representation and warranty to be true and correct is a result of any action
or
failure to act by any of Xxxx, Xxxxxxx and Xxxxxxxx in their capacity as
officers of the Company and (c) the Purchaser shall have received from the
Seller Parties a certificate by each of the Seller Parties to the effect set
forth in the foregoing clauses (a) and (b), signed by a duly authorized officer
thereof.
ARTICLE
X.
INDEMNIFICATION
SECTION
10.01 Indemnification
by Parent and Scimed.
(a) The
Purchaser and its Affiliates (including, after the Closing, the Company), and
each of their respective officers, directors, employees, agents, successors
and
assigns (each, a “Purchaser Indemnified Party”) will be jointly
and severally saved,
38
indemnified
and held harmless by Parent and Scimed from and against all Losses actually
suffered or incurred by the Purchaser Indemnified Parties arising out of or
resulting from:
(i) any
breach of any representation or warranty made by a Seller Party contained in
this Agreement; or
(ii) any
breach of any covenant or agreement by a Seller Party contained in this
Agreement, including the covenants in 2.02(a) that contain Seller’s obligations
under the Xxxx of Sale and Assignment.
(b) The
Company and its Affiliates and each of their respective officers, directors,
employees, agents, successors and assigns (each, a “Company Indemnified
Party”) will be saved, indemnified and held harmless by Parent and
Scimed from and against all Losses arising out of or resulting
from:
(i) any
of
the Excluded Assets; or
(ii) any
of
the Excluded Liabilities.
SECTION
10.02 Indemnification
by the Purchaser or the Company. (a) The
Seller Parties and their respective Affiliates (excluding the Company),
officers, directors, employees, agents, successors and assigns (each, a
“Seller Indemnified Party”) will be saved, indemnified and held
harmless by the Purchaser from and against all Losses, arising out of or
resulting from:
(i) any
breach of any representation or warranty made by the Purchaser contained in
this
Agreement; or
(ii) any
breach of any covenant or agreement to be performed prior to the Closing by
the
Purchaser contained in this Agreement.
(b) The
Seller Indemnified Parties will be saved, indemnified and held harmless by
the
Company and the Purchaser from and against all Losses, arising out of or
resulting from:
(i) any
of
the Assumed Liabilities;
(ii) any
of
the Transferred Assets; or
(iii) any
breach of any covenant or agreement to be performed after the Closing by the
Purchaser or the Company contained in this Agreement;
provided
that the Seller Parties, on behalf of themselves and the other Seller
Indemnified Parties, hereby agree that their first recourse for any Losses
described in this Section 10.02(b) will be against the Company and the
Seller Indemnified Parties may request indemnification from the Purchaser
pursuant to this Section 10.02(b) only if the Company fails to satisfy,
or Parent reasonably determines that the Company is unlikely to satisfy within
a
reasonable period of time
39
following
request therefor (such period of time not to be less than 30 days), its
obligations under this Article X.
SECTION
10.03 Limits
on Indemnification.
(a) Parent
and Scimed will not have any liability pursuant to
Section 10.01(a)(i) and Purchaser will not have any liability
pursuant to Section 10.02(a)(i), unless and until the aggregate
amount of indemnifiable Losses that may be recovered from the applicable
Indemnifying Party equals or exceeds $1,000,000 (the “Aggregate
Threshold”) in which case such Indemnifying Party shall be liable for
all such Losses.
(b) Parent
and Scimed will not have any liability pursuant to
Section 10.01(a)(i) and Purchaser will not have any liability
pursuant to Section 10.02(a)(i) for any Losses resulting from a
single Claim or a series of related Claims arising out of an individual breach
of any representation or warranty that totals less than the Per Claim
Threshold. The Indemnified Party shall have no recourse for such
Losses and these Losses shall be excluded in their entirety from indemnification
pursuant to Section 10.01 and 10.02.
(c) With
respect to (i) the representations and warranties in Section 4.07,
Section 4.08 and Section 4.09, Parent and Scimed will not have any
liability pursuant to Section 10.01(a)(i) in excess of $75 million
and (ii) the other representations and warranties in Articles IV and
V, none of Parent and Scimed or the Purchaser and the Company
will have
any liability pursuant to Section 10.01(a)(i) or Section
10.02(a)(i) respectively, in excess of the Purchase Price.
(d) Notwithstanding
anything to the contrary contained in this Agreement, no party hereto will
have
any liability under any provision of this Agreement for any punitive,
incidental, consequential, special or indirect damages, including loss of future
revenue or income, or loss of business reputation or opportunity.
(e) For
all
purposes of this Article X, “Losses” will be net of
any insurance or other recoveries payable to the Indemnified Party or its
Affiliates in connection with the facts giving rise to the right of
indemnification.
SECTION
10.04 Notice
of Loss; Third Party Claims.
(a) An
Indemnified Party will give the Indemnifying Party notice of any matter other
than a Third Party Claim which an Indemnified Party has determined has given
or
could give rise to a right of indemnification under this Agreement within 60
days of such determination, stating the amount of the Loss, if known, and method
of computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises; provided, that the failure to provide such notice will not
release the Indemnifying Party from any of its obligations under this
Article X except to the extent the Indemnifying Party is actually
prejudiced by such failure.
(b) (i) If
an Indemnified Party receives notice of a Third Party Claim against it that
may
give rise to a right of indemnification under this Article X, then,
within 30 days of the receipt of such notice, the Indemnified Party will give
the
40
Indemnifying
Party notice of such Third Party Claim; provided, that the failure to
provide such notice will not release the Indemnifying Party from any of its
obligations under this Article X except to the extent that the
Indemnifying Party is actually prejudiced by such failure. If the Indemnifying
Party acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, then
the Indemnifying Party will be entitled to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice if
it
gives notice of its intention to do so to the Indemnified Party within five
days
of the receipt of such notice from the Indemnified Party; provided, that
if there exists a conflict of interest that would make it inappropriate for
the
same counsel to represent both the Indemnified Party and the Indemnifying Party,
then the Indemnified Party will be entitled to retain its own counsel in each
jurisdiction for which the Indemnified Party determines counsel is required
at
the expense of the Indemnifying Party and such counsel will be entitled to
full
participation in the defense of or prosecution of counterclaims related to
any
such claim and the Indemnifying Party will direct its counsel to reasonably
cooperate in connection therewith. In the event that the Indemnifying
Party exercises the right to undertake any such defense against any such Third
Party Claim as provided above, the Indemnified Party will cooperate with the
Indemnifying Party in such defense and make available to the Indemnifying Party,
at the Indemnifying Party’s expense, all witnesses, pertinent records, materials
and information in the Indemnified Party’s possession or under the Indemnified
Party’s control relating thereto as is reasonably required by the Indemnifying
Party. No such Third Party Claim may be settled by the Indemnifying
Party without the prior written consent of the Indemnified Party, which will
not
be unreasonably withheld. However, the Indemnifying Party may settle
any Third Party Claim without the Indemnified Party’s prior written consent as
long as such settlement (x) does not involve an admission of wrongdoing by
such Indemnified Party, (y) includes an unconditional written release by
the claimant or the plaintiff of the Indemnified Party from all Liability in
respect of such Third Party Claim and (z) does not impose any obligation on
the Indemnified Party. If the Indemnifying Party elects to direct the
defense of any such Claim, the Indemnified Party will not pay, or permit to
be
paid, any part of such Third Party Claim unless the Indemnifying Party consents
in writing to such payment or unless the Indemnifying Party withdraws from
the
defense of such Third Party Claim or unless a final judgment from which no
appeal may be taken by or on behalf of the Indemnifying Party is entered against
the Indemnified Party for such Third Party Claim.
(ii) If
the
Indemnified Party is controlling the defense of any such Third Party Claims
pursuant to this Section 10.04 (either because the Indemnifying
Party does not acknowledge in writing its obligation to indemnify the
Indemnified Party or because it does acknowledge in writing its obligation
to
indemnify the Indemnified Party, but elects not to assume and control the
defense, or because there is a conflict that allows the Indemnified Party to
hire its own counsel) and proposes to settle such claims or proceeding prior
to
a final judgment thereon or to forgo any appeal with respect thereto, then
the
Indemnified Party will give the Indemnifying Party prompt written notice thereof
and the Indemnifying Party will have the right to participate in the settlement
or, if the Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnified Party with respect to such Third Party Claim (if
not
previously acknowledged) or assume or reassume the defense of such Third Party
Claims. In the event the Indemnified Party
41
is,
directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnifying Party will cooperate with the Indemnified Party in
such
defense and make available to the Indemnified Party, at the Indemnifying Party’s
expense, all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto as is reasonably required by the Indemnified
Party.
(iii) Notwithstanding
the foregoing, with respect to any Third Party Claim relating to Taxes for
which
the Seller, on the one hand, and the Purchaser, on the other hand, may be liable
under this Agreement or otherwise, the proceeding will be controlled by the
party which would bear the burden of the greater portion of the adjustment;
provided, that the non-controlling party will be entitled to participate in
the
proceeding at its own expense and the controlling party will not settle or
compromise the proceeding without the prior written consent of the
non-controlling party (such consent not to be unreasonably
withheld).
SECTION
10.05 Remedies. Except
in respect of remedies for fraud by a Party and except for the remedy of
specific performance provided for in Section 12.08, the
indemnification provided for in this Article X will be the exclusive
remedy of any Party with respect to any Losses incurred by such Party as a
result of any breach of a representation or warranty contained in this
Agreement, and each Party waives any other statutory or common law
remedy that such party would otherwise have for any Claim related to such
matters.
SECTION
10.06 Tax
Treatment. For
Tax purposes, the Parties agree to treat all payments made under this
Article X and for any breaches of representations, warranties,
covenants or agreements, as adjustments to the Purchase Price or as capital
contributions.
SECTION
10.07 Survival
of Representations and Warranties.
(a) The
representations and warranties of the Parties contained in this Agreement will
survive the Closing until the date that is 18 months from the Closing Date;
provided that in the case of fraud, a representation or warranty will survive
indefinitely.
(b) None
of
the Parties will have any Liability whatsoever with respect to any such
representations and warranties unless a Claim for indemnification is made
hereunder prior to the expiration of the survival period for such representation
and warranty, in which case such representation and warranty will survive as
to
such Claim until such Claim has been finally resolved.
42
SECTION
10.08 No
Loss of Remedies. No
Party will be foreclosed from asserting any right under this Article X as
a result of consummating the transactions contemplated by this
Agreement.
ARTICLE
XI.
TERMINATION
SECTION
11.01 Termination. This
Agreement may be terminated at any time prior to the Closing only:
(a) by
either
Parent or the Purchaser if the Closing has not occurred by January 10,
2008; provided that the right to terminate this Agreement under this
Section 11.01(a) will not be available to any Party whose failure to
fulfill any obligation under this Agreement has caused the failure of the
Closing to occur on or prior to such date;
(b) by
either
Parent or the Purchaser in the event that any Governmental Order restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement has become final and nonappealable; provided, that the Party so
requesting termination will have used its commercially reasonable efforts,
in
accordance with Section 7.05(a);
(c) (i) by
Parent, if the Purchaser breaches in any material respect any of its
representations or warranties or fails to perform in any material respect any
of
its covenants or agreements contained in this Agreement and such breach or
failure to perform (A) would give rise to the failure of a condition set
forth in Section 9.02, (B) cannot or has not been cured within 15
days following delivery by the Seller of written notice to the Purchaser of
such
breach or failure to perform and (C) has not been waived by the Seller; or
(ii) by the Purchaser, if any of the Seller Parties or the Company breaches
in any material respect any of its representations or warranties or fails to
perform in any material respect any of its covenants or agreements contained
in
this Agreement and such breach or failure to perform (x) would give rise to
the failure of a condition set forth in Section 9.03,
(y) cannot be or has not been cured within 15 days following delivery by
the Purchaser of written notice to the Seller of such breach or failure to
perform and (z) has not been waived by the Purchaser;
(d) by
either
Parent or the Purchaser if the Amendment Agreement is terminated;
or
(e) upon
the
mutual written consent of Parent and the Purchaser.
SECTION
11.02 Effect
of Termination. In
the event of termination of this Agreement as provided in
Section 11.01, this Agreement will immediately become void and of no
further force or effect except for the provisions of Sections 4.06
and 5.03 relating to broker’s fees and finder’s fees,
Section 7.04 relating to public announcements, this
Section 11.02 and
Article XII. Notwithstanding the foregoing, nothing in
this Section 11.02 or any other part of this Agreement will relieve
any Party from Liability for any breach or failure to perform under this
Agreement occurring prior to the termination of this Agreement, and any Party
may xxx the other Party in respect of any such breach or failure to perform
under this Agreement.
43
ARTICLE
XII.
GENERAL
PROVISIONS
SECTION
12.01 Fees
and Expenses. Except
as otherwise specified in this Agreement, all costs and expenses, including
legal fees and the fees and expenses of any financial advisors, incurred in
connection with this Agreement and the transactions contemplated hereby will
be
paid, to the extent incurred by the Purchaser or any of its Affiliates, by
the
Purchaser, and to the extent incurred by any of Seller Parties or any of their
Affiliates, by Parent, whether or not the Closing shall have
occurred.
SECTION
12.02 Amendment. This
Agreement may only be amended by the Parties at any time prior to the Closing
by
an instrument in writing signed by each of the Parties..
SECTION
12.03 Waiver. Any
(a) extension of the time for the performance of any obligation or other
act of any Party, (b) waiver of any inaccuracy in the representations and
warranties of any Party contained herein or in any document delivered pursuant
hereto or (c) waiver of compliance with any agreement of any Party or any
condition to its own obligations contained herein will be valid only if set
forth in an instrument in writing signed by the Party or parties to be bound
thereby. No failure or delay of any Party in exercising any right or
remedy hereunder will operate as a waiver thereof, nor will any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, or any course of
conduct, preclude any other or further exercise thereof or the exercise of
any
other right or power. The rights and remedies of the Parties are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have hereunder.
SECTION
12.04 Notices. All
notices, requests, Claims and other communications hereunder will be in writing
and will be given (and will be deemed to have been duly given upon receipt
as
conclusively determined by the date shown on a signed receipt for such notice)
by delivery in person, by overnight courier, by registered or certified mail
(postage prepaid, return receipt requested) or e-mail pursuant to
Section 7.04 to the Parties at the following addresses (or at such
other address for a Party as will be specified in a notice given in accordance
with this Section 12.04):
if
to any
of the Seller Parties:
Xxx
Xxxxxx Xxxxxxxxxx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000-0000
Facsimile
No: (000) 000-0000
Attention: General
Counsel
E-mail: xxxx.xxxxxxx@xxxx.xxx
44
with
a
copy to:
Shearman
& Sterling LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000-0000
Facsimile
No: (000) 000-0000
Attention: Xxxxx
X’Xxxxx
if
to the
Purchaser:
Advanced
Bionics Holding Corporation
Xxxx
Biomedical Park
00000
Xxx
Xxxxxx Xxxx
Xxxxxxxx,
XX 00000
Facsimile
No: (000) 000-0000
Attention: President
E-mail: xxxx.xxxxxxx@xxxxxxxxxxxxxxx.xxx
with
a
copy to :
XxXxxxxxx
Will & Xxxxx LLP
0000
Xxxxxx Xxxxx
Xxxx
Xxxx, Xxxxxxxxxx 00000
Fax:
(000) 000-0000
Attention: Xxxx
X. Xxxxxxxxx
SECTION
12.05 Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of Law or public policy, all other conditions
and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
by
this Agreement is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties will negotiate
in
good faith to modify this Agreement so as to effect the original intent of
the
Parties as closely as possible in a mutually acceptable manner in order that
the
transactions contemplated by this Agreement are consummated as originally
contemplated to the fullest extent possible.
SECTION
12.06 Entire
Agreement; Assignment. This
Agreement constitutes the entire agreement among the Parties with respect to
the
subject matter hereof and supersedes all prior agreements (including the letter
of intent and term sheet, dated May 30, 2007, by and between Parent and
Xxxx, but excluding the Merger Agreement as amended as contemplated in the
Amendment Agreement and the Amendment Agreement) and undertakings, both written
and oral, among the Parties, or any of them, with respect to the subject matter
hereof. This Agreement may not be assigned by any Party, except that
the Seller Parties may assign all or any of their rights and obligations
hereunder to any Affiliate of Parent, provided that
45
no
such
assignment will relieve the assigning Party of its obligations hereunder if
such
assignee does not perform such obligations.
SECTION
12.07 Parties
in Interest. This
Agreement will be binding upon and inure solely to the benefit of each Party,
and nothing in this Agreement, express or implied, is intended to or will confer
upon any other Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION
12.08 Specific
Performance. The
Parties agree that irreparable damage would occur in the event any provision
of
this Agreement were not performed in accordance with the terms hereof and that
the Parties will be entitled to specific performance of the terms hereof, in
addition to any other remedy at Law or equity.
SECTION
12.09 Governing
Law. This
Agreement and all disputes or controversies arising out of or relating to this
Agreement or the transactions contemplated hereby will be governed by, and
construed in accordance with, the laws of the State of New
York. Except as provided in Sections 2.06(b), 3.02(c) and 3.03(b),
all actions and proceedings arising out of or relating to this Agreement will
be
heard and determined exclusively in any New York federal court sitting in the
Borough of Manhattan of The City of New York. In the event that
jurisdiction is not available in any federal court sitting in the Borough of
Manhattan of The City of New York, the Parties agree that all such actions
and
proceedings will be heard in the state courts of
Delaware located in the City
of
Wilmington. The Parties hereby (a) submit to the
exclusive jurisdiction of any federal court sitting in the Borough of Manhattan
of The City of New York for the purpose of any Action arising out of or relating
to this Agreement brought by any Party (subject to the preceding sentence),
and
(b) irrevocably waive, and agree not to assert by way of motion, defense,
or otherwise, in any such Action, any Claim that it is not subject personally
to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the transactions contemplated by this Agreement may not be enforced
in or by any of the above-named courts.
SECTION
12.10 Waiver
of Jury Trial. Each
of the Parties hereby waives to the fullest extent permitted by applicable
Law
any right it may have to a trial by jury with respect to any litigation directly
or indirectly arising out of, under or in connection with this Agreement or
the
transactions contemplated by this Agreement. Each of the Parties
(a) certifies that no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in
the
event of litigation, seek to enforce that foregoing waiver and
(b) acknowledges that it has been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this
Section 12.10.
SECTION
12.11 Arbitration.
(a) Binding
Arbitration. Any controversy arising under Sections
2.06(b), 3.02(c), or 3.03(b) that the Parties are unable to
resolve on their own shall be resolved by binding arbitration administered
by
JAMS, The Resolution Experts (“JAMS”). The
arbitration shall be conducted before JAMS at one of its New York Resolution
Centers in accordance with the JAMS Streamlined Arbitration Rules and Procedures
(or such additional or different procedures
46
as
the
Parties may agree upon or the arbitrator shall require), before a single neutral
arbitrator, selected as provided in paragraph (b) below, who shall provide
an oath or undertaking of impartiality. The arbitrator shall have no
authority to award any type of relief (e.g., compensatory,
consequential, incidental, or punitive damages) other than what is specifically
contemplated under Sections 2.06(b), 3.02(c), or 3.03(b),
except with respect to reasonable attorneys’ fees and costs as set forth in this
Section 12.11. Each Party will cooperate with the
arbitrator and will promptly provide whatever Books and Records and other
information the arbitrator requests. The arbitrator’s resolution
shall be rendered in writing within 30 days from the date he or she has accepted
his or her appointment (as set forth in subparagraph (b) below) and will include
a determination by the arbitrator of which side was the prevailing
Party. The non-prevailing Party will pay all JAMS fees and costs
related to resolving the matter and will pay to the prevailing Party all of
its
reasonable attorneys’ fees and costs incurred in connection with the
arbitration. The arbitrator will resolve any dispute regarding the
reasonableness of the prevailing Party’s attorneys’ fees and other
costs. Any matter resolved by the arbitrator pursuant to these
procedures described in this Section 12.11 shall be final and
binding upon the Parties.
(b) Selection
of Arbitrator. Promptly following the referral of the Parties’
dispute to JAMS, the referring Party shall request from JAMS a list of
six
neutral arbitrators from the JAMS New York Resolution Centers with general
business and commercial expertise, which list will be sent by JAMS to the
referring Party and the second Party to the arbitration. Within one
Business Day following its receipt of that list, the referring Party shall
strike one name from the list and provide notice to the second Party of which
name has been stricken. Within one Business Day of receipt of that
notice, the second Party shall strike one name from the list and provide notice
to the referring Party of which name has been stricken. The Parties
shall continue alternately to strike names from the original list in this
fashion until one name remains. If that individual thereafter accepts
the appointment, he or she shall be the arbitrator for purposes of this
Section 12.11. If for any reason he or she is unable or
unwilling to accept the appointment, then the last individual stricken will
be
asked to serve as the arbitrator, and this process will be repeated until an
arbitrator is selected.
SECTION
12.12 Counterparts. This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different Parties in separate counterparts,
each of which when executed will be deemed to be an original but all of which
taken together will constitute one and the same agreement.
[SIGNATURE
PAGE FOLLOWS]
47
IN
WITNESS WHEREOF, each of the Parties has executed or caused this Agreement
to be
duly executed as of the date first written above by their respective officers
thereunto duly authorized.
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BOSTON
SCIENTIFIC CORPORATION
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By: _______________________________________
|
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Name: ________________________________
Title: ________________________________
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BOSTON
SCIENTIFIC SCIMED, INC.
|
| | |
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By: _______________________________________
|
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Name: ________________________________
Title: ________________________________
|
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ADVANCED
BIONICS CORPORATION
|
| | |
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By: _______________________________________
|
| |
Name: ________________________________
Title: ________________________________
|
| | |
| | |
| | |
| |
ADVANCED
BIONICS HOLDING CORPORATION
|
| | |
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By: _______________________________________
|
| |
Name: ________________________________
Title: ________________________________
|
| | |
