PURCHASE AGREEMENT Dated as of August 4, 2008 among PHOTO THERAPEUTICS GROUP LIMITED, PHOTOMEDEX, INC. and NEIL CRABB
EXHIBIT
2.1
Dated
as of August 4, 2008
among
PHOTO
THERAPEUTICS GROUP LIMITED,
PHOTOMEDEX,
INC.
and
XXXX
XXXXX
TABLE
OF CONTENTS
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Page
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ARTICLE
I
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DEFINITIONS
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1
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Section
1.1
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Definitions
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1
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ARTICLE
II
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PURCHASE
AND SALE; PURCHASE PRICE
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9
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Section
2.1
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Purchase
and Sale of the Shares
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9
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Section
2.2
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Purchase
Price
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10
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Section
2.3
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Escrow
Agreement
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10
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Section
2.4
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Post-Closing
Adjustment to the Purchase Price
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11
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Section
2.5
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Earnout
Payments
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13
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ARTICLE
III
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CLOSING
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15
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Section
3.1
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Closing
Date
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15
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Section
3.2
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Payments
on the Closing Date
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15
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Section
3.3
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Buyer’s
Additional Closing Date Deliveries
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15
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Section
3.4
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Seller’s
Closing Date Deliveries
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15
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ARTICLE
IV
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REPRESENTATIONS
AND WARRANTIES OF SELLER
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16
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Section
4.1
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Organization
and Authority
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16
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Section
4.2
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Title
to Shares
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17
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Section
4.3
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Subsidiaries;
Power and Authority
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17
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Section
4.4
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Investments
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18
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Section
4.5
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Consents
and Approvals
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18
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Section
4.6
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Financial
Statements
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18
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Section
4.7
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Operations
Since Financial Statements Date
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19
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Section
4.8
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Taxes
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19
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Section
4.9
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Governmental
Permits
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20
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Section
4.10
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Real
Property
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20
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Section
4.11
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Intellectual
Property
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20
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Section
4.12
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Title
to Property
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22
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Section
4.13
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No
Violation, Litigation or Regulatory Action
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22
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Section
4.14
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Contracts
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23
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Section
4.15
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Environmental
Compliance
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24
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Section
4.16
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Employee
Relations and Agreements
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25
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Section
4.17
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Customer
and Supplier Relations
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27
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Section
4.18
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Insurance
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27
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Section
4.19
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Warranties
and Products Liability
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28
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Section
4.20
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Products
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28
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Section
4.21
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Information
Supplied
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28
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Section
4.22
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No
Brokers
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29
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ARTICLE
V
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REPRESENTATIONS
AND WARRANTIES OF BUYER
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29
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Section
5.1
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Organization
of Buyer
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29
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Section
5.2
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Authority;
Approvals
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29
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Section
5.3
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No
Violation, Litigation or Regulatory Action
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29
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Section
5.4
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Financing
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30
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Section
5.5
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SEC
Filings; Financial Information
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30
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Section
5.6
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Operations
Since Financial Statements Date
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30
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Section
5.7
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Investment
Intent
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31
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Section
5.8
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No
Brokers
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31
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ARTICLE
VI
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ACTIONS
PRIOR TO THE CLOSING DATE
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31
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Section
6.1
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Access
to Information
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31
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Section
6.2
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Notifications
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31
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Section
6.3
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Consents
of Third Parties; Governmental Approvals
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32
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Section
6.4
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Operations
of Seller Prior to the Closing Date
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32
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Section
6.5
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No
Solicitation, Etc
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33
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Section
6.6
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Contact
with Customers, Suppliers and Others
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34
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Section
6.7
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Contribution
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34
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Section
6.8
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Buyer
Proxy Statement; Shareholder/Stockholder Votes
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35
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Section
6.9
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Documentation
of Trade Secrets
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36
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Section
6.10
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Assignment
Agreement
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36
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ARTICLE
VII
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ADDITIONAL
AGREEMENTS
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36
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Section
7.1
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Employee
Matters
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36
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Section
7.2
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Securities
Law Legends
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38
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Section
7.3
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Indemnification
of Directors and Officers
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38
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Section
7.4
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Financing
Efforts
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38
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Section
7.5
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Tax
Matters
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39
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Section
7.6
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Power
of Attorney and Declaration of Trust
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40
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Section
7.7
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Delegation
of Buyer Subsidiary or Affiliate
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41
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Section
7.8
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Datasite
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41
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ARTICLE
VIII
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POST-CLOSING
COVENANTS
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41
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Section
8.1
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Covenant
Not to Compete
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41
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Section
8.2
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Confidential
Information
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42
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Section
8.3
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Nonsolicitation
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42
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Section
8.4
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Hiring
of Employees
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42
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Section
8.5
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Equitable
Relief
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42
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ARTICLE
IX
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CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF BUYER
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42
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Section
9.1
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No
Misrepresentation or Breach of Covenants and Warranties
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42
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Section
9.2
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Material
Adverse Effect
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43
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Section
9.3
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Closing
Actions
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43
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Section
9.4
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Seller
Shareholder Approval
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43
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Section
9.5
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Buyer
Stockholder Approval
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43
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Section
9.6
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No
Restraint or Action
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43
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Section
9.7
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Governmental
Approvals
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44
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Section
9.8
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Opinions
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44
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ARTICLE
X
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CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF SELLER
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44
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Section
10.1
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No
Misrepresentation or Breach of Covenants and Warranties
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44
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Section
10.2
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Material
Adverse Effect
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44
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Section
10.3
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Seller
Shareholder Approval
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44
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Section
10.4
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Buyer
Stockholder Approval
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44
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Section
10.5
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No
Restraint or Action
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44
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Section
10.6
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Governmental
Approvals
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45
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Section
10.7
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Opinions
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45
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ARTICLE
XI
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INDEMNIFICATION
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45
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Section
11.1
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Indemnification
by Seller
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45
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Section
11.2
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Indemnification
by Buyer
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46
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Section
11.3
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Notice
of Claims
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47
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Section
11.4
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Determination
of Amount
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47
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Section
11.5
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Third
Person Claims
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48
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Section
11.6
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Limitations
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49
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Section
11.7
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Release
from Escrow Account
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50
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Section
11.8
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Seller
Representative
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50
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ARTICLE
XII
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TERMINATION
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51
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Section
12.1
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Termination
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51
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Section
12.2
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Notice
of Termination
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52
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Section
12.3
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Effect
of Termination
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52
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Section
12.4
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Non-Solicitation
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52
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ARTICLE
XIII
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GENERAL
PROVISIONS
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53
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Section
13.1
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Survival
of Representations and Warranties
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53
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Section
13.2
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Governing
Law; Jurisdiction
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53
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Section
13.3
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No
Public Announcement; Confidential Nature of Information
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53
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Section
13.4
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Notices
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54
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Section
13.5
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Successors
and Assigns
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55
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Section
13.6
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Access
to Records after Closing
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55
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Section
13.7
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Entire
Agreement; Amendments
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55
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Section
13.8
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Interpretation
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55
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Section
13.9
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Waivers
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56
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Section
13.10
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Expenses
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56
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Section
13.11
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Partial
Invalidity
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56
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Section
13.12
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Execution
in Counterparts
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57
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Section
13.13
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Further
Assurances
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57
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Section
13.14
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Disclaimer
of Warranties
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57
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List
of Exhibits
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A
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Voting
Agreement
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B
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Form
of Escrow Agreement
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List
of Schedules
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Schedule
2.1
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Purchase
Price Allocation
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Schedule
4.3
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Subsidiary
Officers and Directors
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Schedule
4.5
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Consents
and Approvals
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Schedule
4.6
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Financial
Statements; Exceptions
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Schedule
4.7
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Operations
Since Financial Statements Date
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Schedule
4.8
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Taxes
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Schedule
4.10
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Real
Property
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Schedule
4.11
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Intellectual
Property
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Schedule
4.12
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Assets
Contributed to Subsidiaries
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Schedule
4.13
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Court
Orders
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Schedule
4.14
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Material
Contracts
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Schedule
4.15
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Environmental
Compliance
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Schedule
4.16
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Employee
Benefits
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Schedule
4.17
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Customer
and Supplier Relations
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Schedule
4.18
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Insurance
Coverage
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Schedule
11.1
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Specific
Indemnification Matters
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PURCHASE
AGREEMENT, dated as of August 4, 2008 (this “Agreement”),
among
Photo Therapeutics Group Limited, a private limited company incorporated in
England and Wales (“Seller”),
PhotoMedex, Inc., a Delaware corporation (“Buyer”),
and
Xxxx Xxxxx.
PRELIMINARY
STATEMENT:
WHEREAS,
Seller
is in the business through the Subsidiaries of developing and selling non-laser
light devices and associated skin care products for the treatment of clinical
and aesthetic dermatological conditions (the “Business”);
WHEREAS,
in
connection with the execution and delivery of this Agreement and as a condition
to Buyer’s willingness to enter into this Agreement, certain shareholders of
Seller have entered into Voting Agreements, each substantially in the form
attached hereto as Exhibit
A
(the
“Voting
Agreement”),
pursuant to which such shareholders of Seller have agreed to vote in favor
of
the transactions contemplated hereby and to take certain other actions in
furtherance of the consummation of the transactions contemplated hereby upon
the
terms and subject to the conditions set forth in such Voting
Agreements; and
WHEREAS,
Seller
desires to sell to Buyer, and Buyer desires to purchase from Seller, all of
the
issued and outstanding shares of Photo Therapeutics Limited, a private limited
company incorporated in England and Wales (“PTL”),
and
Photo Therapeutics, Inc., a Delaware corporation, all on the terms and subject
to the conditions set forth herein.
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements hereinafter set forth,
it
is hereby agreed between Seller and Buyer as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Definitions.
In this
Agreement, the following terms have the meanings specified or referred to in
this Section 1.1
and
shall be equally applicable to both the singular and plural forms.
“Affected
Employees”
has the
meaning specified in Section
7.1(a).
“Affiliate”
means,
with respect to any Person, any other Person which directly or indirectly
controls, is controlled by or is under common control with such
Person.
“Agreement”
has the
meaning specified in the first paragraph of this Agreement.
“Anti-Kickback
Act”
has the
meaning specified in Section
4.13(e).
“Arbitration
Firm”
has the
meaning specified in Section 2.4(c).
“Benefit
Plans”
means
any material non-statutory and non-salary plan, program or arrangement including
deferred compensation, bonus compensation, incentive or other compensation,
share option or purchase, severance, change in control policies, termination
pay, hospitalization or other medical benefit, life or other insurance, vision,
dental, drug, sick leave, disability, salary continuation, vacation,
supplemental unemployment benefits, profit sharing, pension or supplemental
pension, retirement compensation, group registered retirement savings, deferred
profit sharing, employee profit sharing, savings, retirement or supplemental
retirement savings, and any other similar plan, program, arrangement, obligation
or practice, whether or not legally enforceable, to provide benefits, other
than
currently-paid salary, as compensation for services rendered, whether funded
or
unfunded, formal or informal, that is maintained, contributed to, or required
to
be maintained or contributed to, by Seller or the Subsidiaries, or to which
Seller or the Subsidiaries is a party, or bound by, or under which Seller or
the
Subsidiaries has any liability, for the benefit of its current and former
directors, officers, consultants, independent contractors and employees and
their dependents.
“Business”
has the
meaning specified in the first recital of this Agreement.
“Business
Intellectual Property”
means
(i) Owned Intellectual Property that is necessary in the conduct of the Business
as currently conducted and (ii) all Intellectual Property that Seller or the
Subsidiaries are licensed to use in the conduct of the Business.
“Buyer”
has the
meaning specified in the first paragraph of this Agreement.
“Buyer
Group Member”
means
(i) Buyer and its Affiliates, (ii) the directors, officers and employees of
Buyer and its Affiliates and (iii) the respective successors and assigns of
each
of the foregoing.
“Buyer
Proxy Statement”
has the
meaning specified in Section
6.8(a).
“Buyer
SEC Documents”
has the
meaning specified in Section
5.5(a).
“Buyer
Stockholder Approval”
has the
meaning specified in Section 5.2(b).
“Buyer
Stockholders Meeting”
has the
meaning specified in Section
6.8(b).
“CERCLA”
has the
meaning specified in Section 4.15.
“Change
in Law”
means
the adoption, promulgation, modification or reinterpretation of any law, rule,
regulation, ordinance or order or any other Requirement of Law of any
Governmental Body which occurs subsequent to the date of this
Agreement.
“Claim
Notice”
has the
meaning specified in Section 11.3.
“Closing”
means
the closing of the transfer of the Shares from Seller to Buyer.
“Closing
Date”
has the
meaning specified in Section 3.1.
“Closing
Date Cash Payment”
has the
meaning specified in Section 2.2(b)(i).
2
“Code”
means
the Internal Revenue Code of 1986, as amended and the regulations promulgated
thereunder.
“Confidentiality
Agreement”
means
that certain letter agreement dated September 13, 2007 between Xxxxxxx Xxxxx
International, Ltd., on behalf of Seller, and Buyer.
“Contract”
means
any written or oral contract, agreement, lease, plan, instrument or other
document, commitment, arrangement, undertaking, practice or authorization that
is binding on any Person or its property.
“Copyrights”
means
rights associated with works of authorship including software, tools, machine
readable texts and files, and literary property rights, including but not
limited to documentation, reports, drawings, charts, graphics, and other written
documentation, registered and unregistered copyrights, and pending applications
to register the same.
“Court
Order”
means
any judgment, order, award or decree of any court or tribunal and any award
in
any arbitration proceeding.
“Deal
Expenses”
any fees
and expenses of Seller’s counsel and financial advisors arising out of or
incurred by Seller or any Subsidiary in connection with the negotiation,
preparation and execution of this Agreement and the consummation of the
transactions contemplated hereby.
“Debt”
has
the
meaning specified in Section
2.2(b)(i)(C).
“Default”
means
(i) a breach, default or violation, (ii) the occurrence of an event that with
or
without the passage of time or the giving of notice, or both, would constitute
a
breach, default or violation or (iii) with respect to any Contract, the
occurrence of an event that with or without the passage of time or the giving
of
notice, or both, would give rise to a right of termination, renegotiation or
acceleration.
“Degrouping
Election”
has the
meaning specified in Section
7.5(f).
“Documentation”
has
the
meaning specified in Section
6.9.
“Earnout
Accounting Principles”
means
U.S. GAAP (including applicable currency translation principles as provided
therein); provided,
however,
that,
with respect to any matter as to which there is more than one principle of
U.S.
GAAP, Earnout Accounting Principles means the principles applied by Buyer in
the
preparation of its financial statements to the extent applicable.
“Earnout
Amount”
has the
meaning specified in Section 2.5(d)(ii).
“Earnout
Escrow Cap”
means
$700,000.
“Encumbrance”
means
any lien, claim, charge, security interest, mortgage, pledge, easement,
conditional sale or other title retention agreement, defect in title or other
restrictions of a similar kind.
3
“Environmental
Laws”
means
all statutes, regulations, ordinances and other provisions having the force
or
effect of law, in each case concerning worker health and safety and pollution
or
protection of the environment.
“Environmental
Matter”
means
any matter relating to violations of or Liabilities arising under applicable
Environmental Laws.
“Environmental
Permit”
means
all permits, licenses, approvals, authorizations or consents required by any
governmental authority under any applicable Environmental Law and includes
any
and all orders, consent orders or binding agreements issued or entered into
by a
governmental authority under any applicable Environmental Law.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
“ERISA
Affiliate”
means
any
Person that, together with a Subsidiary, is or was at any time in the past
six
(6) years treated as a single employer under section 414 of the Code or section
4001 of ERISA.
“Escrow
Account”
has the
meaning specified in Section
2.3.
“Escrow
Agent”
has the
meaning specified in Section
2.3.
“Escrow
Agreement”
has the
meaning specified in Section
2.3.
“Escrow
Amount”
means
$1,000,000.
“Escrow
Release Date”
has the
meaning specified in Section
11.8.
“Estimated
Working Capital”
has the
meaning specified in Section
2.4(a).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Excluded
Liabilities”
has the
meaning specific in Section
6.7(b).
“Expenses”
means
any and all reasonable out-of-pocket expenses incurred in connection with
defending or asserting any claim, action, suit or proceeding incident to any
matter indemnified against hereunder (including court filing fees, court costs,
arbitration fees or costs, witness fees and reasonable fees and disbursements
of
legal counsel, expert witnesses, accountants and other
professionals).
“FCPA”
has the
meaning specified in Section
4.13(e).
“Fee
Credit”
means an
amount equal to $300,000.
“Final
Working Capital”
has the
meaning specified in Section
2.4(c).
4
“Financial
Statements”
means
the unaudited consolidated balance sheet of Seller and the Subsidiaries as
of
the Financial Statements Date, and the related statement of income for the
three months
then ended, included in Schedule
4.6.
“Financial
Statements Date”
means
March 31, 2008.
“Financing”
has the
meaning specified in Section 5.4.
“Fundamental
Representations”
means
the representations and warranties set forth in Section
4.1,
Section
4.2
and
Section
4.3.
“Governmental
Body”
means
any foreign, federal, state, local or other governmental authority or regulatory
body.
“Governmental
Permits”
has the
meaning specified in Section 4.9.
“Gross
Profit”
means
the consolidated gross profit of Seller from the period from July 1, 2008
through, and including, the Closing Date combined with the gross profit of
the
Business from the Closing Date through June 30, 2009, in each case calculated
in
accordance with Earnout Accounting Principles.
“Gross
Profit Statement”
has the
meaning specified in Section 2.5(a).
“Hazardous
Material”
means
any hazardous, toxic or radioactive substance, material or waste which is
regulated as of the Closing Date by any applicable state or local governmental
authority or, in relation to any activity occurring in the United States of
America or real property situated in the United States of America, the United
States of America.
“Indemnified
Party”
has the
meaning specified in Section 11.3.
“Intellectual
Property”
means
registered, and applications to register, Copyrights, Patent Rights and
Trademarks and all material unregistered Copyrights, Trademarks, Trade Secrets
and Software.
“Indemnitor”
has the
meaning specified in Section 11.3.
“Key
Employee”
means
Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxx D’Arcy, Xxxxx Xxxxxx and
Xxxxx Xxxxxxxxxx.
“Key
Intellectual Property Employee”
means
Xxxxx D’Arcy, Xxxxx Xxxxx, Xxxxx Xxxxxxxxxx and Xxxxx Xxxxxx.
“Knowledge
of Buyer”
means,
as to a particular matter, the actual knowledge of Xxxxxxx X. X’Xxxxxxx, Xxxxxx
X. XxXxxxx or Xxxxxxx X. Xxxxxxx following due inquiry of his immediate
reports.
5
“Knowledge
of Seller”
means,
as to a particular matter, the actual knowledge of Xxxxxx Xxxxxx, Xxxxx Xxxxx,
Xxxx Xxxxx, Xxxxx D’Arcy, Xxxxx Xxxxxx, Xxx Xxxx and Xxxxx Xxxxxxxxxx following
due inquiry of his or her immediate reports.
“Liability”
means
any direct or indirect liability, indebtedness, obligation, expense, claim,
loss
or damage, absolute or contingent, accrued or unaccrued, due or to become due,
liquidated or unliquidated.
“Lightsource”
has the
meaning set forth in Section
4.2(b).
“Losses”
means
any and all out-of-pocket losses, costs, settlement payments, awards, judgments,
fines, penalties, damages, expenses, deficiencies or other charges, it being
understood that Losses shall not include exemplary or punitive damages (except
as otherwise provided herein).
“LS
Shares”
has
the
meaning set forth in Section
4.2(b).
“Material
Adverse Effect”
means
any change, effect or occurrence that has had a material adverse effect on
the
assets, results of operations or financial condition of Seller and the
Subsidiaries taken as a whole, other than effects or changes relating to:
(i) generally applicable economic conditions or Seller’s and the
Subsidiaries’ industry in general, except where any such effects or changes
disproportionately affect in any material respect Seller and the Subsidiaries
more than they affect other entities operating in such industry, (ii) any
failure by Seller and the Subsidiaries to meet internal forecasts or budgets
(but not the underlying facts or circumstances giving rise to the failure to
meet such internal forecasts or budgets) except where such failure is
attributable to a breach of this Agreement by Seller, (iii) the public
disclosure of the transactions contemplated by this Agreement, (iv) the
execution of this Agreement or the consummation of the transactions contemplated
hereby, (v) a Change in Law other than a Change in Law that, to the Knowledge
of
Seller, is pending as of the date of this Agreement, except where any such
effects or changes disproportionately affect in any material respect Seller
and
the Subsidiaries more than they affect other entities operating in Seller’s and
the Subsidiaries’ industry in general, or (vi) the commencement, occurrence or
continuation of any war, armed hostilities or acts of terrorism.
“Material
Contracts”
has the
meaning specified in Section 4.14(a).
“Outside
Date”
means
February 28, 2009.
“Owned
Intellectual Property”
means
all registered, and applications to register, Copyrights, Patent Rights and
Trademarks and all material unregistered Copyrights, Trademarks, Trade Secrets
and Software owned by Seller or the Subsidiaries.
“Parties”
means
the parties to this Agreement.
“Patent
Rights”
means
patents, patent applications, continuations, continuations-in-part, divisions,
re-examinations or reissues, industrial designs, industrial models, utility
models, certificates of invention, and other indicia of invention ownership,
and
equivalent or similar rights in inventions and discoveries.
6
“PAYE”
means
Pay As You Earn.
“Permitted
Encumbrances”
means
(a) liens for Taxes and other governmental charges and assessments which
are not yet due and payable, (b) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of business for sums not yet due and payable, (c) Encumbrances
identified on the Schedules to this Agreement, (d) source code escrow agreements
for Software owned by Seller or the Subsidiaries either identified on the
Schedules to this Agreement or related to immaterial Software and (e) other
Encumbrances or imperfections on property which are not material in amount
or do
not materially detract from the value of or materially impair the existing
use
of the property affected by such lien or imperfection.
“Perseus”
has the
meaning specified in Section 5.4.
“Person”
means
any individual, corporation, partnership, limited liability company, joint
venture, association, joint-stock company, trust, unincorporated organization
or
Governmental Body.
“Pre-Closing
Tax Period”
means
any taxable period ending on or before the Closing Date and the portion of
any
Straddle Period ending on the Closing Date.
“Products”
has the
meaning specified in Section 4.19(a).
“PTL”
has
the
meaning specified in the fourth recital of this Agreement.
“Purchase
Price”
has the
meaning specified in Section
2.2(a).
“Requirements
of Law”
means
any laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body.
“Schedules”
has the
meaning specified in the preamble to Article
IV.
“SEC”
means
the Securities and Exchange Commission.
“Section
338 Election”
has the
meaning specified in Section
7.5(e).
“Section
338 Taxes”
means
any Taxes that would not have been imposed but for the Section 338 Election
or
any elections under state, local or other Tax law that are required to be made
or deemed to have been made as a result of any Section 338 Election.
“Securities
Act”
means
the Securities Act of 1933.
“Securities
Purchase Agreement”
has
the
meaning specified in Section
5.4.
“Seller”
has the
meaning specified in the first paragraph of this Agreement.
“Seller
Group Member”
means
(i) each Seller and its Affiliates, (ii) the directors, officers and employees
of each Seller and its Affiliates and (iii) the respective successors and
assigns of each of the foregoing.
7
“Seller
Proxy Statement”
has the
meaning specified in Section
4.21.
“Seller
Representative”
has
the
meaning specified in Section
11.10(a).
“Seller
Representative Confidentiality Agreement”
means
a
Confidentiality Agreement among Seller, the Seller Representative and Buyer,
dated as of the date hereof.
“Seller
Shareholder Approval”
has
the
meaning specified in Section
4.5(b).
“Seller
Shareholders Meeting”
has
the
meaning specified in Section
6.8(b).
“Shares”
means
all of the issued and outstanding shares of PTL and Photo Therapeutics, Inc.,
a
Delaware corporation.
“Software”
means
computer software programs and software systems, including all databases,
compilations, tool sets, compilers, higher level “proprietary” languages,
related documentation and materials, whether in source code, object code or
human readable form; provided,
however,
that
Software does not include software that is available generally through consumer
retail stores, distribution networks or is otherwise subject to “shrink-wrap”
license agreements including any software pre-installed in the ordinary course
of business as a standard part of hardware purchased by Seller or any
Subsidiary.
“Straddle
Period”
means
any taxable period that includes (but does not end on) the Closing
Date.
“Subsidiaries”
means
LightSource Laboratories Limited, a private limited company incorporated in
England and Wales, PTL and Photo Therapeutics, Inc., a Delaware
corporation.
“Tax”
(and,
with correlative meaning, “Taxes”)
means
any income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, property (or unclaimed property), stamp duty, social
security charge, national insurance contribution, withholding, alternative
or
add-on minimum, ad valorem, value added, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty, imposed by any
Governmental Body and including any liability for the payment of the foregoing
obligations of another Person as a result of (a) being or having been a member
of an affiliated, consolidated, combined, unitary or aggregate group of
corporations; (b) being or having been a party to any tax sharing agreement
or
any express or implied obligation to indemnify any Person; and (c) being or
having been a transferee, successor, or otherwise assuming the obligations
of
another Person to pay the foregoing amounts.
“Tax
Return”
means
any return, report or similar statement required to be filed with respect to
any
Tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
“TCGA”
means
the
Taxation of Chargeable Gains Act of 1992.
8
“Threshold
Profit”
has the
meaning specified in Section 2.5(d)(i).
“Total
Indemnity Amount”
means
the
Escrow Amount plus the amount of the Earnout Amount paid to the Escrow Agent
pursuant to Section
2.5(e),
if
any.
“Trademarks”
means
registered and unregistered trademarks, service marks, logos, trade dress,
internet addresses (URLs), trade names, and service names, whether or not
registered, and pending applications to register the foregoing and the goodwill
associated therewith.
“Trade
Secrets”
means
confidential information and ideas, trade secrets, know-how, concepts, methods,
processes, formulae, reports, data, customer lists, mailing lists, business
plans, or other proprietary information that provides the owner with a
competitive advantage.
“Transferred
Employee”
has
the
meaning specified in Section
6.7(a).
“TUPE
Regulations”
has
the
meaning specified in Section
6.7(a).
“U.K.
GAAP”
means
United Kingdom generally accepted accounting principles, consistently applied
by
Seller.
“U.S.
GAAP”
means
United States generally accepted accounting principles.
“Vacation
List”
has the
meaning specified in Section
4.16(f).
“Working
Capital”
means an
amount equal to the excess of (i) the value of the combined current assets
of
the Subsidiaries (after eliminating all intercompany adjustments and giving
effect to the contribution in accordance with Section
6.7)
as of
the Closing, determined in accordance with U.K. GAAP, over (ii) the value of
the
combined current liabilities of the Subsidiaries (after eliminating all
intercompany adjustments and giving effect to the contribution in accordance
with Section
6.7)
as of
the Closing, determined in accordance with U.K. GAAP (excluding all deferred
Tax
liabilities and any Section 338 Taxes) (it being understood that no accrual
for
vacation or holiday pay shall be taken into account in calculating Working
Capital as provided under U.K. GAAP); provided
that all
calculations of Working Capital shall be made in U.S. dollars using the currency
exchange rates published by The
Wall Street Journal
on the
business day immediately preceding the Closing Date; provided further
that all
liabilities related to the matters disclosed on Schedule
11.1,
Excluded Liabilities and the Debt will be excluded from any calculations of
Working Capital as Seller is responsible for such matters pursuant to
Section
11.1(a)(vii),
Section
11.1(a)(v)
and
Section
2.2(b)(i)(C),
respectively.
“Working
Capital Statement”
has
the
meaning specified in Section
2.4(b).
ARTICLE
II
PURCHASE
AND SALE; PURCHASE PRICE
Section
2.1 Purchase
and Sale of the Shares.
Upon the
terms and subject to the conditions of this Agreement, on the Closing Date,
Seller shall sell, transfer, assign, convey and deliver to Buyer, free and
clear
of all Encumbrances, and Buyer shall purchase and accept from Seller, all of
the
Shares. The Purchase Price for such Shares shall be paid as set forth in this
Article
II.
The
Purchase Price, as adjusted pursuant to this Agreement, shall be allocated
among
the Shares of each Subsidiary and the covenant set forth in Section
8.1
for all
purposes (including for Tax and financial accounting purposes) as set forth
on
Schedule
2.1.
9
Section
2.2 Purchase
Price.
(a) General.
The
aggregate purchase price for the Shares (the “Purchase
Price”)
shall,
subject to adjustment pursuant to Section
2.4,
be
equal to:
(i) the
Closing Date Cash Payment, as adjusted in accordance with Section
2.4;
plus
(ii) the
Escrow Amount; plus
(iii) the
payments of the Earnout Amount, if any, under Section
2.5.
(b) Closing
Date Payment.
At the
Closing, Buyer shall:
(i) pay
an
amount (the “Closing
Date Cash Payment”)
equal
to (A) $13,000,000 less
(B) the
Escrow Amount less
(C) the
unpaid principal amount of, and any accrued interest on, any indebtedness for
borrowed money of the Subsidiaries as of the Closing (including any prepayment
penalties or fees) (the “Debt”)
less
(D) the
amount, if any, by which the Estimated Working Capital is less than $1,642,155
plus
(E) the
amount, if any, by which the Estimated Working Capital exceeds $2,463,232
plus
(F) the
Fee Credit less
(G) an
amount equal to five times the amount of any cash dividends or cash
distributions paid (or the value of any assets distributed) by the Subsidiaries
to Seller from the Financial Statements Date prior to or at the Closing (it
being acknowledged by Seller that it has no current intention of causing any
such divided to be paid or any such distributions to be made) by wire transfer
of immediately available funds to the bank account or bank accounts identified
by Seller in writing on or before the Closing Date;
(ii) deposit
the Escrow Amount with the Escrow Agent by wire transfer of immediately
available funds to the bank account identified by the Escrow Agent in writing
on
or before the Closing Date.
Section
2.3 Escrow
Agreement.
At the
Closing, Buyer, Seller, Seller Representative and Mellon Trust of New England,
N.A., as escrow agent (the “Escrow
Agent”),
shall
enter into an Escrow Agreement substantially in the form of Exhibit
B
hereto
(the “Escrow
Agreement”),
providing for the establishment of an escrow account (the “Escrow
Account”)
with
the Escrow Agent to secure any payments to be made to Buyer pursuant to
Section
2.4
or
Article
XI
hereof.
At the Closing, Buyer shall deposit into the Escrow Account the Escrow Amount.
Following the Closing, Buyer shall deposit into the Escrow Account the amount
of
the Earnout Amount paid to the Escrow Agent pursuant to Section
2.5(e),
if any.
The Escrow Amount and the amount of the Earnout Amount paid to the Escrow Agent
pursuant to Section
2.5(e),
if any,
shall be held, invested and disbursed in accordance with the terms, conditions
and provisions hereof and of the Escrow Agreement. 50% of the Escrow Agent’s
scheduled fees shall be paid by Buyer, and the remaining 50% of the Escrow
Agent’s scheduled fees shall be paid by Seller (and Seller shall make reasonable
provision for such payment in any dissolution of Seller following the
Closing).
10
Section
2.4 Post-Closing
Adjustment to the Purchase Price.
The
Purchase Price shall be subject to adjustment, if any, at and after the Closing
Date as set forth below.
(a) Estimated
Working Capital Statement.
Not
less than five (5) business days prior to the Closing Date, Seller shall deliver
to Buyer a statement setting forth its good faith estimate as of such date
of
Working Capital, along with reasonably detailed supporting calculations (the
“Estimated
Working Capital”).
(b) Working
Capital Statement.
As
promptly as reasonably practicable but in any event within sixty
(60) days
after the Closing Date, Buyer shall prepare and deliver to the Seller
Representative an unaudited combined balance sheet showing the combined current
assets and combined current liabilities of the Subsidiaries as of the Closing,
together with a statement (the “Working
Capital Statement”)
setting forth Buyer’s calculation of Working Capital.
(c) Dispute.
Within
30 days following receipt by the Seller Representative of the Working Capital
Statement, the Seller Representative shall deliver written notice to Buyer
of
any dispute it has with respect to the preparation or content of the Working
Capital Statement. If the Seller Representative does not notify Buyer of a
dispute with respect to the Working Capital Statement within such 30-day period,
the Working Capital amount set forth therein will be considered final and
binding for purposes of this Agreement. In the event of such notification of
a
dispute, Buyer and the Seller Representative shall negotiate in good faith
to
resolve such dispute. If Buyer and the Seller Representative, notwithstanding
such good faith effort, fail to resolve such dispute within 15 days after the
Seller Representative advises Buyer of its objections, then within 15 days
thereafter Buyer and the Seller Representative jointly shall engage the firm
of
Xxxxx Xxxxxxxx LLP (the “Arbitration
Firm”)
to
resolve such dispute. Within 30 days thereafter, Buyer and the Seller
Representative shall each prepare and submit a presentation to the Arbitration
Firm. Within 30 days thereafter, Buyer and the Seller Representative shall
cause
the Arbitration Firm to issue a statement setting forth its calculation of
Working Capital, based solely upon the presentation by Buyer and the Seller
Representative. Buyer and Seller shall each pay 50% of all fees and expenses
of
the Arbitration Firm (and Seller shall make reasonable provision for such
payment in any dissolution of Seller following the Closing). All determinations
made by the Arbitration Firm will be final, conclusive and binding on the
parties. The Working Capital as finally determined in accordance with this
Section
2.4(c)
shall be
the “Final
Working Capital.”
(d) Access.
For
purposes of complying with the terms set forth in this Section
2.4,
the
Parties shall cooperate with and make available on a reasonably timely basis
to
the other Party and their respective representatives all information, records,
data and working papers including the working papers of their auditors, and
shall permit access to its facilities and personnel, as may be reasonably
required in connection with the preparation and analysis of the Working Capital
Statement and the resolution of any disputes thereunder.
11
(e) Adjustment.
(i) If
Final
Working Capital is less than Estimated Working Capital and:
(A) Estimated
Working Capital is less than $1,642,155, then the Purchase Price will be
adjusted downward by the difference between Final Working Capital and Estimated
Working Capital, and the Escrow Agent shall pay to Buyer such amount in cash
by
wire transfer of immediately available funds from the Escrow Account to an
account designated in writing by Buyer to the Escrow Agent.
(B) Estimated
Working Capital is greater than $2,463,232, then the Purchase Price will be
adjusted downward by the sum of (x) difference between (1) the greater of Final
Working Capital and $2,463,232 and (2) Estimated Working Capital and (y) the
amount, if any, by which Final Working Capital is less than $1,642,155, and
the
Escrow Agent shall pay to Buyer such sum in cash by wire transfer of immediately
available funds from the Escrow Account to an account designated in writing
by
Buyer to the Escrow Agent.
(C) Estimated
Working Capital is between $1,642,155 and $2,463,232 and Final Working Capital
is less than $1,642,155, and then the Purchase Price will be adjusted downward
by the difference between Final Working Capital and $1,642,155, and the Escrow
Agent shall pay to Buyer such amount in cash by wire transfer of immediately
available funds from the Escrow Account to an account designated in writing
by
Buyer to the Escrow Agent.
(ii) If
Final
Working Capital is greater than Estimated Working Capital and:
(A) Estimated
Working Capital is greater than $2,463,232, then the Purchase Price will be
adjusted upward by the difference between Final Working Capital and Estimated
Working Capital, and Buyer shall deposit such amount in cash with the Escrow
Agent for immediate payment as directed by the Seller
Representative.
(B) Estimated
Working Capital is less than $1,642,155, then the Purchase Price will be
adjusted upward by the sum of (x) difference between (1) the lesser of Final
Working Capital and $1,642,155 and (2) Estimated Working Capital and (y) the
amount, if any, by which Final Working Capital is greater than $2,463,232,
and
Buyer shall deposit such sum in cash with the Escrow Agent for immediate payment
as directed by the Seller Representative.
(C) Estimated
Working Capital is between $1,642,155 and $2,463,232 and Final Working Capital
is greater than $2,463,232, then the Purchase Price will be adjusted upward
by
the difference between Final Working Capital and $2,463,232, and Buyer shall
deposit such amount in cash with the Escrow Agent for immediate payment as
directed by the Seller Representative.
12
(iii) If
Final
Working Capital is equal to the Estimated Working Capital or if both Final
Working Capital and Estimated Working Capital are between $1,642,155 and
$2,463,232, then the Purchase Price will not be adjusted pursuant to this
Section
2.4(e).
(iv) All
payments pursuant to this Section
2.4(e)
shall be
made within five (5) business days of the date on which Final Working Capital
is
determined pursuant to Section
2.4(c).
Section
2.5 Earnout
Payments.
(a) Gross
Profit Statement.
Promptly following the completion of Buyer’s financial statements for the period
ending June 30, 2009, but in no event later than the earlier of August 31,
2009
and the tenth business day following the filing of Buyer’s quarterly report on
Form 10-Q for the period ended June 30, 2009, Buyer shall prepare and deliver
to
the Seller Representative an unaudited statement of Gross Profit, together
with
a statement (the “Gross
Profit Statement”)
setting forth Buyer’s calculation of the Earnout Amount. Within 30 days after
receipt of such statement, the Seller Representative will deliver to Buyer
a
written statement describing any questions or objections to the Gross Profit
Statement. If the Seller Representative does not raise any questions or
objections within such period the Earnout Amount will be considered final and
binding for purposes of this Agreement. If the Seller Representative does raise
any such questions or objections within such period, Buyer and the Seller
Representative shall negotiate in good faith to resolve all such questions
and
objections and, if any such questions or objections cannot be resolved through
the good faith negotiation of Buyer and Seller within 30 days of the delivery
of
such Gross Profit Statement, then the disputed amount of the Earnout Amount
will
be determined using the procedures set forth in Section
2.4(c)
(with
“Gross Profit” substituted for each instance of “Working Capital,” and with
“Gross Profit Statement” substituted for each instance of “Working Capital
Statement”).
(b) Interim
Reports.
As an
interim measure for informational purposes during the period prior beginning
on
the Closing Date and ending on June 30, 2009, Buyer shall prepare and deliver
to
the Seller Representative within 30 days after the filing of Buyer’s quarterly
report on Form 10-Q for each fiscal quarter or Form 10-K for the fiscal year,
as
applicable, a statement setting forth the gross profit of the Business for
such
fiscal quarter, which may be distributed by the Seller Representative in
accordance with the Seller Representative Confidentiality
Agreement.
(c) Access.
For
purposes of complying with the terms set forth in this Section
2.5,
the
Parties shall cooperate with and make available on a reasonably timely basis
to
the other Party and their respective representatives all information, records,
data and working papers including the working papers of their auditors, and
shall permit access to its facilities and personnel, as may be reasonably
required in connection with the preparation and analysis of Gross Profit, the
Gross Profit Statement, the calculation of the Earnout Amount and the resolution
of any disputes related thereto.
13
(d) Determination
of Earnout Amount.
(i) If
Gross
Profit is less than or equal to $7,100,000 (the “Threshold
Profit”),
then
Buyer shall not be required to make any payment of the Earnout Amount to
Seller.
(ii) If
Gross
Profit exceeds the Threshold Profit, Buyer shall pay in accordance with
Section
2.5(e)
an
amount in cash equal to the product of (y) two and eight-tenths (28/10)
multiplied by (z) the amount by which Gross Profit exceeds the Threshold Profit
(the “Earnout
Amount”);
provided,
however,
the
maximum Earnout Amount Buyer shall be obligated to pay shall be
$7,000,000.
(e) Payment
of Earnout Amount.
(i) To
the
extent that the Earnout Amount is less than or equal to the Earnout Escrow
Cap,
Buyer shall deposit the Earnout Amount with the Escrow Agent to be held in
the
Escrow Account pursuant to the terms of the Escrow Agreement. Any payment
deposited pursuant to this Section
2.5(e)(i)
(or the
remainder thereof, if any, on the Escrow Release Date) shall be released from
the Escrow Account on the Escrow Release Date in accordance with Section
11.8.
(ii) To
the
extent that the Earnout Amount exceeds the Earnout Escrow Cap, Buyer shall
(A)
deposit the amount by which the Earnout Amount exceeds the Earnout Escrow Cap
with the Escrow Agent for immediate payment as directed by the Seller
Representative and (B) deposit the Earnout Escrow Cap with the Escrow Agent
to
be held in the Escrow Account pursuant to the terms of the Escrow Agreement.
Any
payment deposited pursuant to clause (B) of this Section
2.5(e)(ii)
(or the
remainder thereof, if any, on the Escrow Release Date) shall be released from
the Escrow Account on the Escrow Release Date in accordance with Section
11.8.
(iii) All
payments in accordance with Sections
2.5(d)
and
(e)
shall be
made within ten (10) business days of the final determination of Gross Profit
pursuant to Section
2.5(a)
by wire
transfer of immediately available funds.
(iv) Notwithstanding
anything to the contrary set forth herein, in the event that Xxxxxxx Xxxxx
International, Ltd. is entitled to any fees or expenses in connection with
the
payment of any Earnout Amount, all such fees or expenses shall be the
distributed out of the Earnout Amount paid by Buyer pursuant to this
Section
2.5,
provided that Xxxxxxx Xxxxx International, Ltd. shall only be entitled to a
portion of the payment, if any, made pursuant to clause (B) of Section
2.5(e)(ii)
or upon
the ultimate release of any funds on the Escrow Release Date, and Buyer shall
have no other obligation or liability with respect thereto.
(f) Operational
Control of Buyer.
Buyer
acknowledges its current intention to use commercially reasonable efforts to
pursue and support the Business in good faith after the Closing in such a manner
that will provide Seller the reasonable opportunity to maximize the Earnout
Amount. Without limiting the generality of the foregoing, Buyer agrees to (i)
use commercially reasonable efforts to assist Seller (and the Business following
the Closing) with developing commercial relationships with the parties
identified on Schedule
2.5(f),
and
(ii) report on a periodic basis with respect to, and provide reasonable access
to the Seller Representative to observe and participate in any meetings
regarding, strategic planning for the Business during the period from the
Closing through June 30, 2009. Subject to the foregoing but notwithstanding any
other provision to the contrary contained herein, Seller acknowledges that
(i)
the power and right to the control of the Business on and after the Closing
as
well as the operations of Buyer and its subsidiaries will rest ultimately with
Buyer and its board of directors and stockholders; (ii) Buyer intends to
exercise or refrain from exercising such power and right as it may in good
xxxxx
xxxx appropriate and in the best overall interests of Buyer and the operations
as a whole of the Subsidiaries (following the Closing) taking into account
the
Subsidiaries’ conditions and prospects from time to time; and (iii) Buyer’s good
faith operation of the Business following the Closing may impact the timing
of
income and expenses in a manner that could decrease Gross Profit for any
period.
14
ARTICLE
III
CLOSING
Section
3.1 Closing
Date.
The
Closing shall be consummated on a date and at a time agreed upon by Buyer and
Seller, but in no event later than the third business day after the conditions
set forth in Articles
IX
and
X
have
been satisfied or waived. The Closing shall be consummated at the offices of
Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois, or at such
other time and place as shall be agreed upon by Buyer and Seller. The time
and
date on which the Closing is actually held is referred to herein as the
“Closing
Date.”
Section
3.2 Payments
on the Closing Date.
At the
Closing Buyer shall make the payments and take the actions set forth in
Section
2.2(b).
Section
3.3 Buyer’s
Additional Closing Date Deliveries.
At the
Closing Buyer shall deliver to Seller all of the following:
(a) The
certificates contemplated by Section
10.1
and
Section
10.2,
duly
executed by a duly authorized officer of Buyer;
(b) A
counterpart of the Escrow Agreement, duly executed by a duly authorized officer
of Buyer;
(c) An
opinion from Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel to Buyer, dated the
Closing Date, in form and substance agreed to by Seller prior to the date
hereof; and
(d) Such
other documents, instruments, certificates and agreements as may be reasonably
required by Seller to consummate and give effect to the transactions
contemplated by this Agreement.
Section
3.4 Seller’s
Closing Date Deliveries.
At the
Closing Seller shall cause to be delivered to Buyer all of the
following:
(a) A
certificate of the Secretary of Seller, given on behalf of Seller and not in
an
individual capacity, certifying as to the resolutions of the board of directors
of Seller authorizing the transfer of the Shares to Buyer (or its
nominee);
15
(b) Duly
executed transfers of the Shares in favor of Buyer, together with the share
certificates (or an indemnity in respect of any lost or destroyed share
certificate) relating to the Shares;
(c) A
power
of attorney in the agreed form in respect of the exercise of the rights
attaching to the Shares pending registration of the transfer of the
Shares;
(d) A
counterpart of the Escrow Agreement, duly executed by Seller and the Seller
Representative;
(e) The
common seal (if any), statutory books and other organizational record books
of
each Subsidiary;
(f) The
certificates contemplated by Sections
9.1,
9.2
and
9.3
duly
executed by a duly authorized officer of Seller;
(g) The
written resignations or other evidence of removal (by shareholder or board
action) of each director and officer of the Subsidiaries specified in writing
by
Buyer;
(h) An
opinion from Sidley Austin LLP, counsel to Seller, dated the Closing Date,
in
form and substance agreed to by Buyer prior to the date hereof;
(i) Certificate
of PTL, in form and substance reasonably acceptable to Buyer, to the effect
that
PTL is not a “U.S. real property holding corporation” for purposes of Section
897 and 1445 of the Code and the regulations promulgated thereunder;
and
(j) Such
other documents, instruments, certificates and agreements as may be reasonably
required by Buyer to consummate and give effect to the transactions contemplated
by this Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SELLER
As
an
inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, except as set forth in the disclosure
schedules attached hereto (the “Schedules”),
Seller represents and warrants to Buyer as of the date hereof and as of the
Closing Date as follows:
Section
4.1 Organization
and Authority.
Seller
has been duly organized and is validly existing under the laws of England and
Wales. Seller has the requisite power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by Seller have been duly authorized and approved by Seller’s board of
directors and do not require any further authorization or consent of Seller
(assuming the receipt of the Seller Shareholder Approval). This Agreement has
been duly authorized, executed and delivered by Seller and is (assuming the
valid authorization, execution and delivery by Buyer) the legal, valid and
binding obligation of Seller, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and similar laws of
general application relating to or affecting creditors’ rights and to general
equity principles.
16
Section
4.2 Title
to Shares.
(a)
Seller is the sole record and beneficial owner of the Shares to be sold and
delivered to Buyer pursuant to this Agreement, free and clear of all
Encumbrances, and does not own any other shares of capital stock or other equity
interests in the Subsidiaries other than the Shares. The Shares represent all
of
the issued and outstanding shares of capital stock or equity interests in the
Subsidiaries (including any convertible or exercisable securities). All of
the
Shares are duly authorized, validly issued and outstanding, fully paid and
nonassessable, and free of preemptive rights and were not issued in violation
of
the terms of any Contract binding upon Seller or any Subsidiary, and were issued
in compliance with all applicable organization documents of Seller or any
Subsidiary and all applicable securities laws and regulations. Except for this
Agreement, there are no agreements, arrangements, warrants, options, puts,
rights or other commitments, plans or understandings of any character assigned
or granted by Seller or any Subsidiary or to which Seller or any Subsidiary
is a
party relating to the issuance, sale, purchase, redemption, conversion,
exchange, registration, voting or transfer of any of the Shares.
(b) PTL
is
the sole record and beneficial owner of all the shares of capital stock or
other
equity interests (the “LS
Shares”)
in
LightSource Laboratories Limited, a private limited company incorporated in
England and Wales (“LightSource”),
free
and clear of all Encumbrances, and does not own any other shares of capital
stock or other equity interests in Lightsource. The LS Shares represent all
of
the issued and outstanding shares of capital stock or equity interests in
Lightsource (including any convertible or exercisable securities). The LS Shares
are duly authorized, validly issued and outstanding, fully paid and
nonassessable, and free of preemptive rights and were not issued in violation
of
the terms of any Contract binding upon Seller or any Subsidiary, and were issued
in compliance with all applicable organization documents of Seller or any
Subsidiary and all applicable securities laws and regulations. Except for this
Agreement, there are no agreements, arrangements, warrants, options, puts,
rights or other commitments, plans or understandings of any character assigned
or granted by Seller or to which Seller is a party relating to the issuance,
sale, purchase, redemption, conversion, exchange, registration, voting or
transfer of any of the LS Shares.
Section
4.3 Subsidiaries;
Power and Authority.
(a) Each
of the Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation.
Each of the Subsidiaries is duly qualified in all material respects to transact
business and is in good standing in each jurisdiction where the character of
its
properties owned or held under lease or the nature of its activities makes
such
qualifications necessary. Each of the Subsidiaries has the requisite power
and
authority to own or lease and operate its assets and to carry on the Business
in
the manner that it was conducted immediately prior to the date of this
Agreement. The officers and directors of the Subsidiaries are set forth on
Schedule
4.3.
(b) The
authorized share capital or capital stock, as applicable, of (i) LightSource
Laboratories Limited consists of 1,000 ordinary shares, par value £1.00 per
share, of which 302 shares are issued and outstanding; (ii) PTL consists of
250,000,000 ordinary shares, par value 0.01p per share, of which 30,395,880
shares are issued and outstanding and (iii) Photo Therapeutics, Inc. consists
of
100 shares of common stock, par value, $1.00 per share, of which 100 shares
are
issued and outstanding.
17
Section
4.4 Investments.
Except
for ownership of capital stock or, as the case may be, ordinary shares, of
the
Subsidiaries, Seller does not, directly or indirectly, own, of record or
beneficially, any outstanding equity interests in any corporation, partnership,
joint venture or other entity.
Section
4.5 Consents
and Approvals.
(a)
Except as set forth in Schedule
4.5,
neither
the execution and delivery of this Agreement by Seller nor the consummation
of
the transactions contemplated hereby (i) will contravene or violate any
Requirement of Law or Court Order which is applicable to Seller or any
Subsidiary, (ii) will result in a material Default under, or require the consent
or approval of any party to, any Material Contract relating to the Business
or
its assets or by which Seller or any Subsidiary is a party or otherwise bound,
or (iii) require Seller or any Subsidiary to notify or obtain any consent from
any Governmental Body.
(b) The
only
vote or consent of holders of any class or series of shares of Seller necessary
to consummate the transactions contemplated hereby is the approval of the
transactions contemplated hereby by the affirmative vote of the holders of
at
least 75% of the outstanding ordinary shares of Seller that are entitled to
vote
and present, in person or by proxy, at the special meeting (the “Seller
Shareholder Approval”).
Prior
to the date of this Agreement, Seller has duly called and given notice of a
meeting of its shareholders (the “Seller
Shareholders Meeting”)
in the
Seller Proxy Statement for the purpose of obtaining the Seller Shareholder
Approval. In
the
Seller Proxy Statement, Seller, through its board of directors, has recommended
to its shareholders that they approve the transactions contemplated hereby.
The
shareholders of Seller that are party to a Voting Agreement as of the date
of
this Agreement, hold shares of capital stock of Seller such that a quorum of
the
shareholders of Seller will be present, in person or by proxy, at the Seller
Shareholders Meeting (in accordance with Seller’s Memorandum and Articles of
Association).
Section
4.6 Financial
Statements.
(a)
Schedule 4.6
contains
(i) the audited consolidated balance sheet of Seller and the Subsidiaries as
of
December 31, 2007 and the audited consolidated statements of income and cash
flow of Seller and the Subsidiaries for the year then ended, and the audit
report of the auditors of Seller and the Subsidiaries with respect thereto,
and
(ii) the unaudited consolidated balance sheet of Seller and the Subsidiaries
as
of the Financial Statements Date and the unaudited consolidated statement of
income of Seller and the Subsidiaries for the three month period then ended.
Except as set forth therein and except as set forth in Schedule
4.6,
such
balance sheet and statements of income and cash flows have been prepared in
conformity, in all material respects, with U.K. GAAP, and such balance sheets
and related statements of income and cash flows present fairly in accordance
with U.K. GAAP, in all material respects, the financial position and results
of
operations of Seller and the Subsidiaries, as of its date and for the period
covered thereby, subject, in the case of the unaudited financial statements,
to
(i) the absence of footnote disclosure, and (ii) changes resulting from normal
year end adjustments, none of which, individually or in the aggregate, are
material. Except as described in Schedule
4.6,
all
material Liabilities of Seller and the Subsidiaries as of the Financial
Statements Date required to be reflected or reserved for by U.K. GAAP on a
consolidated balance sheet of Seller and the Subsidiaries as of the Financial
Statements Date are reflected or reserved in the balance sheet of Seller and
the
Subsidiaries as of the Financial Statements Date contained in Schedule
4.6.
18
(b) Seller
and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that in all material respects (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with UK GAAP and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(c) All
Liabilities of Seller to be contributed to the Subsidiaries, in accordance
with
Section
6.7,
are set
forth on Schedule
4.6(c)
Section
4.7 Operations
Since Financial Statements Date.
Except
as set forth on Schedule
4.7,
since
the Financial Statements Date, Seller and the Subsidiaries have conducted the
Business only in the ordinary course and there has not been with respect to
the
Business or Seller and the Subsidiaries:
(a) any
change that has had or is reasonably likely to have a Material Adverse
Effect;
(b) except
as
has occurred in the ordinary course of business and consistent as to timing
and
amount with past practices or as pursuant to applicable Requirements of Law
or
the terms of any Benefit Plan: (i) any increase in the compensation payable
or to become payable to or for the benefit of any of its employees;
(ii) any increased security or tenure of employment with respect to any of
its employees; (iii) any increase in the amount payable to any of its
employees upon the termination of such persons’ employment; or (iv) any
increase, augmentation or improvement in benefits granted to or for the benefit
of its employees under any bonus, profit sharing, pension, retirement, deferred
compensation, insurance or other direct or indirect benefit plan or
arrangement;
(c) any
sale,
assignment or transfer of material assets, or any additions to or transactions
involving any material assets;
(d) other
than in the ordinary course of business, any waiver or release of any claim
or
right or cancellation of any debt held;
(e) any
distributions or payments to any Affiliate of Seller or any
Subsidiary;
(f) any
capital expenditure involving in any individual case more than $100,000 (or
the
equivalent thereof in any other currency);
(g) any
declaration or payment of any dividend or other distribution on the capital
stock of Seller; or
(h) any
incurrence of any debts for money borrowed.
Section
4.8 Taxes.
Except
as
set forth on Schedule
4.8,
(a)
Seller and each Subsidiary have filed all material Tax Returns required to
have
been filed on or before the date hereof with respect to Seller or the
Subsidiaries and such Tax Returns were true, correct and complete in all
material respects as of the time of such filing; (b) all Taxes owed by Seller
and each Subsidiary (whether or not shown on any Tax Return) have been timely
paid; (c) no issues that have been raised in writing by the relevant taxing
authority in connection with the examination of the Tax Returns referred to
in
clause (a) are currently pending; (d) all Tax deficiencies asserted in writing
or Tax assessments made in writing as a result of any examination of the Tax
Returns referred to in clause (a) by a taxing authority have been paid in full;
(e) to the Knowledge of Seller, there is no current or threatened investigation
of Seller or any of the Subsidiaries with respect to the Tax liability of any
of
them in any jurisdiction; (f) the Subsidiaries have, in accordance with U.K.
GAAP or U.S. GAAP, as the case may be, provided for, in their books of account
and related records, liability for all unpaid Taxes, being current Taxes not
yet
due and payable; (g) to the Knowledge of Seller, no claim has ever been made
by
a taxing authority in a jurisdiction other than that in which Seller or the
relevant Subsidiary is incorporated that Seller or the relevant Subsidiary
is or
may be subject to taxation by that jurisdiction; (h) there are no material
liens
for Taxes (other than Taxes not yet due and payable) upon any of the assets
of
Seller or the Subsidiaries; (i) all material related party transactions
involving Seller, and any of its Subsidiaries or Affiliates, have been on terms
commensurate with arm’s length terms; (j) neither Seller nor any of its
Subsidiaries has entered into any transaction that is or would be under the
Code
either a “listed transaction” or one that Seller believes in good faith is a
“reportable transaction” (each as defined in Treas. Reg. § 1.6011-4) and (k) all
documents in the possession of any Subsidiary and which any Subsidiary may
need
(as determined by Seller acting reasonably) to enforce, defend or produce in
a
Court of England or Wales, or to present to a UK tax authority, and which are
subject to stamp duty have been duly stamped.
19
Section
4.9 Governmental
Permits.
Seller
and the Subsidiaries own, hold or possess all material licenses, franchises,
permits, privileges, immunities, approvals and other material authorizations
from a Governmental Body that are necessary to entitle them to own or lease,
operate and use their assets and to carry on and conduct the Business and to
manufacture and sell the Products, each as conducted immediately prior to the
date of this Agreement (herein collectively called “Governmental
Permits”).
Each
of Seller and the Subsidiaries has complied in all material respects with all
terms and conditions of the Governmental Permits and is not in material Default,
nor since January 1, 2005 has it received any written notice of, any claim
of
material Default with respect to the Governmental Permits.
Section
4.10 Real
Property.
Neither
Seller nor any of the Subsidiaries owns any real or freehold property or holds
any option to acquire any real or freehold property. Schedule
4.10
sets
forth the leasehold interests held by Seller and the Subsidiaries. Neither
Seller nor any of the Subsidiaries is in material Default under any such lease,
nor has Seller or any of the Subsidiaries received notice of any Default under
any such lease.
Seller
has paid all rents and other material charges to the extent due and payable
under each lease. There are no leases, subleases, licenses, concessions or
any
other contracts or agreements granting to any person or entity other than Seller
or the Subsidiaries any right to the possession, use, occupancy or enjoyment
of
any real property leased by Seller or the Subsidiaries or any portion
thereof.
Section
4.11 Intellectual
Property.
(a)
Seller and the Subsidiaries either: (i) own the entire right, title and interest
in and to the Intellectual Property that is necessary in the conduct of the
business as currently conducted, free and clear of any Encumbrance or (ii)
have
a valid contractual right or license to use all Intellectual Property that
is
necessary in the conduct of the Business.
20
(b) Schedule
4.11(b)
sets
forth a true, complete and accurate list of (i) all Owned Intellectual Property,
including the name of the entity that owns each item scheduled, and (ii) all
agreements pursuant to which Seller or any Subsidiaries license any Owned
Intellectual Property or Business Intellectual Property.
(c) (i)
All
Owned Intellectual Property and Business Intellectual Property are in force
or
pending and in good standing and, to the Knowledge of Seller, all Owned
Intellectual Property and Business Intellectual Property are valid, all without
challenge of any kind and (ii) Seller and the Subsidiaries have the sole
right to bring actions for infringement or unauthorized use of the Owned
Intellectual Property.
(d) To
the
Knowledge of Seller, as of the date of this Agreement, (i) no infringement,
misappropriation or other violation by Seller or the Subsidiaries of any
Copyrights, Patent Rights, Trademarks, Trade Secrets and Software of any other
Person has occurred or resulted in any way from the conduct of the Business,
and
(ii) except as set forth in Schedule
4.11(d)(ii),
no
written notice of a claim of any infringement of any Copyrights, Patent Rights,
Trademarks and Trade Secrets of any other Person has been made or asserted
to
Seller or the Subsidiaries in respect of the conduct of the
Business.
(e) No
proceedings are pending or, to the Knowledge of Seller, threatened against
Seller or the Subsidiaries which challenge the validity or ownership of any
Owned Intellectual Property. To the Knowledge of the Seller, there are no
proceedings pending or threatened against Seller or the Subsidiaries which
challenge the validity, ownership or the Seller’s or the Subsidiaries’ use of
Intellectual Property that Seller or the Subsidiaries are licensed to use in
the
conduct of the Business.
(f) To
the
Knowledge of Seller, Schedule
4.11(f)
sets
forth a true, complete and accurate list of all Third Parties who infringe,
misappropriate or otherwise violate Owned Intellectual Property or Business
Intellectual Property, including information reflecting which Third Parties
have
been contacted by Seller and the Subsidiaries regarding such
infringements.
(g) Schedule
4.11(g)
sets
forth a true, complete and accurate list of all Third Parties who have provided
written notice of Copyrights, Patent Rights, Trademarks, Trade Secrets and
Software to Seller and the Subsidiaries.
(h) Seller
and the Subsidiaries have taken commercially reasonable precautions in all
material respects to protect material Owned Intellectual Property and the
Seller’s or the Subsidiaries’ use of Business Intellectual Property in
accordance with industry practices.
(i) Except
as
set forth in Schedule
4.11(i),
each
Key Intellectual Property Employee of Seller or the Subsidiaries has entered
into a confidentiality and intellectual property assignment agreement, in the
form provided to Buyer prior to the date hereof.
21
Section
4.12 Title
to Property.
Except
for assets disposed of in the ordinary course of business: (a) as of the date
hereof Seller and the Subsidiaries have valid title to each item of equipment
and other tangible personal property reflected on the Financial Statements
as
owned by Seller and the Subsidiaries, free and clear of all Encumbrances, except
for Permitted Encumbrances; and (b) as of the Closing Date, the Subsidiaries
will have valid title to each item of equipment and other tangible personal
property reflected on the Financial Statements as owned by Seller and the
Subsidiaries, free and clear of all Encumbrances, except for Permitted
Encumbrances. All assets of Seller which are necessary for the conduct of the
Business and required to be contributed to the Subsidiaries, in accordance
with
Section
6.7,
are set
forth on Schedule
4.12.
At the
Closing, the assets of the Subsidiaries will be sufficient for the conduct
and
operation of the Business, as currently conducted, by Buyer following the
Closing, in all material respects in the same manner as conducted and operated
by Seller or the Subsidiaries on or prior to the Closing Date. Except pursuant
to leases described on any Schedule hereto: (a) as of the date hereof, no Person
other than Seller and the Subsidiaries owns any material item of equipment
and
other tangible personal property situated on the facilities used by Seller
and
the Subsidiaries in the Business (other than immaterial items of personal
property owned by Seller’s and the Subsidiaries’ employees) which are necessary
to the operation of the Business; and (b) as of the Closing Date, no Person
other than the Subsidiaries will own any material item of equipment and other
tangible personal property situated on the facilities used by Seller and the
Subsidiaries in the Business (other than immaterial items of personal property
owned by Seller’s and the Subsidiaries’ employees) which are necessary to the
operation of the Business.
Section
4.13 No
Violation, Litigation or Regulatory Action.
(a) Seller
and the Subsidiaries have complied in all material respects with all applicable
Requirements of Law and Court Orders and all Court Orders to which Seller or
any
Subsidiary is a party are listed on Schedule
4.13.
(b) Seller
and the Subsidiaries have made all material filings or notifications required
to
be made by them under any Requirements of Law and Court Orders applicable to
the
Business, Seller or any Subsidiary, or Seller’s or the Subsidiaries’
assets.
(c) There
are
no material lawsuits, claims, suits, proceedings or investigations pending
or,
to the Knowledge of Seller, threatened against Seller or any of the
Subsidiaries.
(d) There
is
no action, suit or proceeding pending or, to the Knowledge of Seller, threatened
that questions the legality of the transactions contemplated by this
Agreement.
(e) Neither
Seller nor any Subsidiary has otherwise taken any action that would cause Seller
or any Subsidiary to be in violation in any material respect of the Foreign
Corrupt Practices Act of 1977 (the “FCPA”),
as
amended, the Anti-Kickback Act of 1986 (“Anti-Kickback
Act”),
laws
restricting the payment of contingent fee arrangements, or any applicable
Requirements of Laws of similar effect. There is no material charge, proceeding
or, to the Knowledge of Seller, investigation by any Governmental Body with
respect to a violation of the FCPA or Anti-Kickback Act that is now pending
or,
to the Knowledge of Seller, has been asserted or threatened with respect to
Seller or any Subsidiary.
22
Section
4.14 Contracts.
(a)
Schedule
4.14
lists
all of the following Contracts (collectively, the “Material
Contracts”):
(i) each
Contract or group of related Contracts under which Seller or any Subsidiary
has
agreed to provide products or services and which contain a commitment on the
part of any Person or Persons to make future payments during any twelve (12)
month period to Seller or any Subsidiary for such services in an aggregate
amount in excess of $100,000 (or the equivalent thereof in any other currency);
(ii) each
collective bargaining agreement or Contract with any labor union;
(iii) each
Contract relating to the borrowing of money or to mortgaging, pledging or
otherwise placing an Encumbrance (other than Permitted Encumbrances) on any
portion of the assets of Seller or any Subsidiary;
(iv) each
guaranty by Seller or any Subsidiary of any obligation for borrowed money or
other guaranty of an obligation or liability of a third party;
(v) each
Contract or group of related Contracts with the same party under which Seller
or
any Subsidiary has agreed to purchase products or services and which contain
a
commitment on the part of Seller or any Subsidiary to make future payments
to
any Person or Persons for such services in an aggregate amount in excess of
$100,000 (or the equivalent thereof in any other currency);
(vi) each
Contract that restricts the ability of Seller or any Subsidiary to conduct
any
business anywhere in the world, including any arrangement that (A) purports
to
restrict or impair the right of Seller or any Subsidiary to compete with any
Person or solicit or hire any Person for employment (other than mutual
non-solicitation covenants contained in agreements with customers or
subcontractors entered into in the ordinary course of business), or (B) includes
covenants restricting the development, marketing or distribution of the products
or services of Seller or any Subsidiary;
(vii) each
Contract that establishes a partnership, joint venture or other similar
arrangement;
(viii) any
Contract that is an exclusive dealing, requirements or take-or-pay contract
or
pursuant to which Seller or any Subsidiary has granted, or agreed to grant,
to
another Person exclusive rights with respect to any goods or services, items
of
the Owned Intellectual Property or Business Intellectual Property, or territory
or pursuant to which Seller or any Subsidiary has granted, or agreed to grant,
any customer right to “most favored nation” pricing terms;
(ix) any
Contract that provides for the sale or lease of any assets of Seller or any
Subsidiary with a book value in excess of $100,000 (or the equivalent thereof
in
any other currency);
23
(x) any
other
material Contract that is otherwise not required to be listed in this
Schedule
4.14
and is
not cancelable by Seller or any Subsidiary (without penalty, cost or other
liability) upon thirty (30) days’ notice.
(b) Neither
Seller nor any of the Subsidiaries is in material Default under any Material
Contract and, to the Knowledge of Seller, no other Person that is party to
any
Material Contract is in Default under such Material Contract. Each Material
Contract constitutes a legal, valid and binding obligation of Seller or the
Subsidiary, as applicable, and to the Knowledge of Seller, each other Person
that is party to any Material Contract, enforceable in accordance with its
terms, in each case subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors’ rights and to general equity principles.
Section
4.15 Environmental
Compliance.
Except
as disclosed on Schedule
4.15
and
except as would not reasonably be expected to result in a material Liability
to
Seller or the Subsidiaries, with respect to Seller, the Subsidiaries and the
Business, there are and have been: (a) to the Knowledge of Seller, no releases
of Hazardous Materials at or from any property during the period it was owned
or
leased by Seller or any Subsidiary, (b) to the Knowledge of Seller, no judicial
or administrative proceedings, order, judgment, decree or settlement alleging
or
addressing a violation of or liability under any applicable Environmental Law
by
Seller or the Subsidiaries, (c) no underground storage tanks owned by Seller,
or
located at any facility owned or operated by Seller or any Subsidiary, (d)
to
the Knowledge of Seller, no facts, circumstances, or conditions that could
reasonably be expected to restrict, under any Environmental Law or Environmental
Permit in effect prior to or at the Closing Date, the ownership, occupancy,
use
or transferability of any property now owned, operated, leased or otherwise
used
by Seller or any Subsidiary, (e) no requests received by Seller or any
Subsidiary under any of the applicable Environmental Laws for information
relating to any of the property now or at any time owned, operated, leased
or
otherwise used by Seller, (f) no unsatisfied financial assurance or closure
requirements under the applicable Environmental Laws pertaining to any property
on account of Seller’s or any Subsidiary’s use or ownership of such property,
(g) to the Knowledge of Seller, no contaminant levels resulting from any
releases of Hazardous Materials at or from the properties now owned, operated,
leased or otherwise used by Seller or any Subsidiary that do not meet applicable
remediation standards under applicable Environmental Law, (h) in relation to
real property situated in the United States of America, to the Knowledge of
Seller, no properties owned, operated, leased or otherwise used by Seller or
any
Subsidiary that are now or have in the past been listed on the National
Priorities List of sites under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended (42 U.S.C. §9601 et seq.)
(“CERCLA”)
or the
CERCLA Information System, (i) to the Knowledge of Seller, no
asbestos-containing material, lead-based paint or equipment containing
polychlorinated biphenyls located at any of the facilities or properties now
used by Seller or any Subsidiary, (j) to the Knowledge of Seller, no information
provided by or to any applicable governmental authority of any actual,
threatened or suspected releases of Hazardous Materials at or from the
properties now owned, operated, leased or otherwise used by Seller or any
Subsidiary, or, in respect of Seller properties, any violation of an
Environmental Permit, term or other requirement of applicable Environmental
Laws
and (k) no liability under applicable Environmental Laws with respect to the
cleanup or investigation at any facility or property owned, operated, leased
or
otherwise used by Seller or any Subsidiary resulting from the disposal or
treatment (with a transporter or otherwise) of Hazardous Materials by Seller.
This Section
4.15
contains
the sole representations and warranties made by Seller with respect to
applicable Environmental Laws or any other Environmental Matter, and no
representation or warranty as to Environmental Laws or any other Environmental
Matter is intended, or shall be implied, from any of the other provisions in
this Agreement.
24
(b) Schedule
4.16(b)
lists
each of the officers, directors, consultants and employees employed or engaged
by Seller or the Subsidiaries and the aggregate base salary paid by Seller
or
each of the Subsidiaries to officers, directors, consultants and employees.
Seller and the Subsidiaries have made available to Buyer true and correct copies
of the standard terms and conditions of employment applicable to employees
in
the United Kingdom of Seller and the Subsidiaries. Seller and the Subsidiaries
have made available to Buyer copies of the terms and conditions of employment
applicable to Key Employees and the offer letters with respect to employees
of
Seller or the Subsidiaries in the United States, including, in each case, the
terms and conditions of any bonus opportunities or commissions applicable to
such Key Employee or employee. Except as set forth on Schedule
4.16(b),
all
employees of Seller and the Subsidiaries as of the date hereof may be terminated
by not more than three months’ contractual notice of termination and without
payment of damages or compensation (other than a statutory redundancy
payment).
(c) As
of the
date hereof: (i) no employees of Seller
or
any
Subsidiary are represented by a labor union or organization, (ii) no labor
union
or organization has been certified or recognized as a representative of any
employee of Seller
or
any
Subsidiary, (iii) there are no pending or, to the Knowledge of Seller,
threatened representation campaigns, elections or proceedings concerning union
representation involving any employees of Seller
or
any
Subsidiary and (iv) other than in the ordinary course of business with respect
to the Benefit Plans, there are no claims, demands, arbitrations or material
grievances pending or, to the Knowledge of Seller, threatened, between any
of
Seller and the Subsidiaries, on the one hand, and any of their respective
employees or any actual or claimed representative thereof, on the other
hand.
(d) Except
as
set forth in Schedule
4.16(d),
as of
the date hereof, (i) there are no employees of Seller
or
any
Subsidiary who are currently on a leave of absence which is anticipated to
last
more than three (3) months; (ii) Seller and the Subsidiaries have not given
or
received notice to terminate the employment or engagement of any employee or
independent contractor as of a date following the date of this Agreement; (iii)
there is no person previously employed by Seller
or
the
Subsidiaries who now has a statutory or contractual right to return to work
or
be reinstated or re-engaged by the Subsidiaries; (iv) Seller and the
Subsidiaries have not made any assurance or undertaking to any of their
employees as to any future change to their remuneration or benefits in
connection with this Agreement, (v) all contracts between Seller and the
Subsidiaries and their employees in the United Kingdom materially complies
with
the relevant statutory requirements; (vi) no employee is currently subject
to
any discipline or grievance proceedings; and (vii) Seller and the Subsidiaries
do not use the services of agency workers, independent contractors or “leased
employees” as defined in section 414(n) of the Code (or comparable provision of
any applicable Requirements of Law).
25
(e) Except
as
set forth on Schedule
4.16(e),
within
the period of one year ending on the date of this Agreement, Seller and the
Subsidiaries have not (i) made or started implementation of any collective
dismissals that are reasonably expected to require notification to any
Governmental Body or notification to or consultation with any trade union,
works
council, staff association or other body representing employees or (ii) been
a
party to any transfer of a business or undertaking that is reasonably expected
to require notification to or consulting with any trade union, works council,
staff association or other body representing employees.
(f) No
material amounts due to, or in respect of, any of the employees or any former
employee of Seller
or
any
Subsidiary other than amounts not yet due for payment, including salary,
expenses to be reimbursed, holiday pay, PAYE, National Insurance, pension
contributions, other levies or contributions in any jurisdiction, are in arrears
or unpaid. Seller has delivered to Buyer a list of the vacation entitlement
of
each employee of Seller or any Subsidiary as of the Financial Statements Date
(the “Vacation
List”).
Except as set forth on Schedule
4.16(f),
other
than loans under employee benefit plans or unreimbursed business expenses,
neither Seller nor the Subsidiaries have made any loan or advance to any
employee or any future or former director, officer or employee of Seller or
the
Subsidiaries which is outstanding.
(g) All
Benefit Plans are in compliance with all applicable Requirements of Laws in
all
material respects and, if applicable, have received all required approvals
from
the relevant Governmental Body and have been operated in accordance with their
respective terms in all material respects. There are no underfunded liabilities
under or in respect of the Benefit Plans which are pension plans and subject
to
funding requirements, and all contributions or other payments required to be
made to or in respect of the Benefit Plans prior to the date of this Agreement
have been made. No action is pending, or to the Knowledge of Seller, threatened
with respect to any Benefit Plan (other than claims for benefits in the ordinary
course) and, to the Knowledge of Seller, no fact or event exists that would
reasonably be expected to give rise to any such action.
(h) None
of
the Benefit Plans provides for payment of “parachute payments” (as defined in
section 280G(b)(2) of the Code), separation, severance, termination or
similar type benefits to any Person or obligates Seller or the Subsidiaries
to
pay separation, severance, termination or similar type benefits solely as a
result of any transaction contemplated by this Agreement or as a result of
an
event occurring under section 280G(b)(2)(A)(i) of the Code. Except as
required by applicable Requirements of Law, none of the Benefit Plans provides
for retiree medical, disability or life insurance benefits for any current
or
former employee, officer or director of Seller, the Subsidiaries or any
Affiliate. No Benefit Plan is an “employee stock ownership plan” (as defined in
section 4975(e)(7) of the Code). Neither Seller nor the Subsidiaries has
declared or paid any bonus compensation in contemplation of the transactions
contemplated by this Agreement.
26
(i) To
the
Knowledge of Seller, (i) all Persons classified by the Subsidiaries as
independent contractors in the United States satisfy the applicable Requirements
of Law to be so classified, (ii) the Subsidiaries have fully and accurately
reported their compensation on IRS Forms 1099 when required to do so, and (iii)
the Subsidiaries have no obligation to provide benefits with respect to such
Persons under Benefit Plans or otherwise.
(j) Each
Benefit Plan that is subject to section 409A of the Code has been maintained
and
operated in material, good faith compliance with the proposed and/or final
regulations and related guidance issued with respect to section 409A of the
Code
and has been, or will be prior to the Closing Date, amended to comply with
section 409A of the Code and no Benefit Plan subject to section 409A of the
Code
triggers the imposition of penalty taxes under section 409A of the
Code.
(k) To
the
Knowledge of Seller, there has been no prohibited transaction (within the
meaning of section 406 of ERISA or section 4975 of the Code or
comparable provision of any other applicable Requirements of Law) with respect
to any Benefit Plan (for which an exemption does not exist under
section 408 of ERISA or section 4975(d) of the Code or comparable
provision of any other applicable Requirements of Law), which would reasonably
be expected to result in the imposition of any material liability on such
Benefit Plan, Seller or the Subsidiaries. Neither Seller nor the Subsidiaries
has incurred any material liability for any penalty or tax arising under
sections 4971, 4972, 4980 or 4980B of the Code (or comparable provision of
any other applicable Requirements of Law), and, to the Knowledge of Seller,
no
fact or event exists which would reasonably be expected to give rise to any
such
liability.
Section
4.17 Customer
and Supplier Relations.
Schedule
4.17
sets
forth: (a) each customer that accounted for $100,000 (or the equivalent thereof
in any other currency) or more of Seller’s and the Subsidiaries’ total sales
during the twelve month period ending on March 31, 2008; and (b) each supplier
from which Seller or any Subsidiary purchased $100,000 (or the equivalent
thereof in any other currency or more of supplies during the twelve month period
ending on March 31, 2008. Since the Financial Statements Date, no customer
or
supplier of Seller or any Subsidiary identified on Schedule
4.17
has
terminated or has given written notice to Seller or any Subsidiary prior to
the
date hereof of an intention or plan to terminate any of its Contracts with
Seller or any Subsidiary, or reduce or change all or a substantial portion
of
its business relationship with Seller or any Subsidiary in any material
respect.
Section
4.18 Insurance.
Seller’s and the Subsidiaries’ current insurance coverage is listed on
Schedule
4.18.
All
material insurance policies owned or held by or on behalf of Seller or any
Subsidiary are reasonably believed to be adequate for the businesses engaged
in
by Seller and the Subsidiaries. All insurance policies maintained by Seller
and
the Subsidiaries are in full force and effect in all material respects and
provide insurance in such amounts and against such risks as the management
of
Seller reasonably has determined to be prudent in accordance with industry
practices or as is required by law or regulation, and all premiums due and
payable thereon have been paid. Neither Seller nor any Subsidiary is in material
breach or default of any of such insurance policies. Neither the execution
and
delivery of this Agreement by Seller nor the consummation of the transactions
contemplated hereby will violate or require consent under any insurance policies
maintained by Seller and the Subsidiaries.
27
Section
4.19 Warranties
and Products Liability.
(a)
There are no written warranties outstanding with respect to any products
currently or formerly manufactured, sold, distributed, provided, shipped or
licensed by Seller or the Subsidiaries (“Products”),
beyond those set forth in the standard conditions of sale or service. Each
Product sold, distributed, provided, shipped or licensed by Seller or any of
the
Subsidiaries has been in conformity with all applicable contractual commitments
and warranties in all material respects. To the Knowledge of Seller, there
are
no material design, manufacturing or other defects with respect to any Products.
Each Product that has been sold, distributed, provided, shipped or licensed
by
Seller or any Subsidiary prior to Closing contains all material warnings or
other disclosures required by the Requirements of Law.
(b) Seller
and each of the Subsidiaries have complied in all material respects with all
Requirements of Law in the manufacture, sale and distribution of its Products.
Seller has not received any notice from any Governmental Body claiming that
a
Product is not currently in compliance with any relevant requirement of such
Governmental Body.
Section
4.20 Products.
(a)
Since January 1, 2005, neither Seller nor any Subsidiary has received from
any
applicable Governmental Body a rejection letter, refusal to file letter, not
approvable letter or any similar correspondence relating to any permits or
licenses required for the Products (other than such letters or correspondence
that relate to matters subsequently resolved to the satisfaction of such
Governmental Body by the action of Seller or any Subsidiary and not by Seller’s
or any Subsidiary’s abandonment of or modification to such permit or license
that materially impairs the Business as currently conducted).
(b) Since
January 1, 2005, neither Seller nor any Subsidiary has received any written
notice from any Governmental Body claiming that a Product is not currently
in
compliance in any material respect with any relevant requirement of such
Governmental Body.
(c) Seller
has at all material times complied in all material respects with adverse event
reporting requirements with respect to each Product.
Section
4.21 Information
Supplied.
None
of
the information supplied or to be supplied by Seller specifically for inclusion
or incorporation by reference in the Buyer Proxy Statement or the proxy
materials delivered to the shareholders of Seller (the “Seller
Proxy Statement”)
will
at the time it is first mailed to the shareholders or stockholders of Seller
or
Buyer and at the time of the Seller Shareholders Meeting and the Buyer
Stockholder Meeting, contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
are
made, not misleading or necessary to correct any statement in any earlier
communication by Seller with respect to the solicitation of proxies for the
Seller Shareholders Meeting and the Buyer Stockholder Meeting which has become
false or misleading.
28
Section
4.22 No
Brokers.
Except
for the services of Xxxxxxx Xxxxx International, Ltd., neither Seller nor any
Person acting on its behalf has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement. The Subsidiaries have no obligation
to Xxxxxxx Xxxxx International, Ltd. with respect to any fee or expenses payable
to it in connection with the transactions contemplated by this
Agreement.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF BUYER
As
an
inducement to Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer hereby represents and warrants to Seller
as follows:
Section
5.1 Organization
of Buyer.
Buyer is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer has the corporate power and authority
to
own or lease and operate its assets and to carry on its businesses in the manner
that they were conducted immediately prior to the date of this
Agreement.
Section
5.2 Authority;
Approvals.
(a)
Buyer has the corporate power and corporate authority to execute, deliver and
perform this Agreement and the Escrow Agreement. The execution, delivery and
performance of this Agreement and the Escrow Agreement by Buyer have been duly
authorized and approved by Buyer’s board of directors and do not require any
further authorization or consent of Buyer or its stockholders. This Agreement
has been duly authorized, executed and delivered by Buyer and (assuming the
valid authorization, execution and delivery of this Agreement by the other
parties hereto) is the legal, valid and binding agreement of Buyer enforceable
in accordance with its terms, and the Escrow Agreement has been duly authorized
by Buyer and upon execution and delivery by Buyer will be (assuming the valid
authorization, execution and delivery by the other party or parties thereto)
a
legal, valid and binding obligation of Buyer enforceable in accordance with
its
terms, in each case subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors’ rights and to general equity principles.
(b) The
only
vote or consent of holders of any class or series of capital stock of Buyer
necessary to approve and adopt this Agreement, the Escrow Agreement and the
transactions contemplated hereby and thereby is the approval of the Financing,
including the securities issuable in the Financing, by the affirmative vote
of a
majority of the shares of common stock of Buyer present in person and voting
on
the issue or represented by proxy and voting on the issue at the Buyer
Stockholders Meeting (provided that the total vote cast on the proposal
represents over 50% in interest of all securities entitled to vote on the
proposal) (the “Buyer
Stockholder Approval”).
Section
5.3 No
Violation, Litigation or Regulatory Action.
(a) As
of the date of this Agreement, there are no lawsuits, claims, suits, proceedings
or investigations pending or, to the Knowledge of Buyer, threatened against
Buyer or its subsidiaries which are reasonably expected to have a material
adverse effect on Buyer or the ability of Buyer to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
29
(b) As
of the
date of this Agreement, there is no action, suit or proceeding pending or,
to
the Knowledge of Buyer, threatened that questions the legality of the
transactions contemplated by this Agreement.
(c) Buyer
and
its subsidiaries have complied with all applicable Requirements of Law and
Court
Orders, other than those instances of noncompliance which would not reasonably
be expected to have a material adverse effect on Buyer.
Section
5.4 Financing.
Buyer
has delivered to Seller a true and complete copy of the Securities Purchase
Agreement (the “Securities
Purchase Agreement”),
dated
as of the date hereof to be entered into concurrently with this Agreement by
and
between Buyer and Perseus Partners VII, L.P.
(“Perseus”),
that
will provide for convertible debt financing in an aggregate amount set forth
therein (the “Financing”).
Other
than the Securities Purchase Agreement (including any agreements ancillary
thereto and the related letter of intent), there are no side letters or other
agreements or arrangements relating to the Financing to which Buyer or any
of
its Affiliates is a party. Except for the Buyer Stockholder Approval, there
are
no conditions precedent or other similar contractual contingencies related
to
the funding of the full amount of the Financing, other than as set forth in
the
Securities Purchase Agreement. The aggregate proceeds contemplated by Securities
Purchase Agreement will be sufficient for Buyer to pay the Purchase Price,
including the maximum Earnout Amount as contemplated by Article
II.
Section
5.5 SEC
Filings; Financial Information.
(a)
Buyer has filed all reports, schedules, forms, statements and other documents
with the SEC required to be filed by Buyer since January 1, 2007 (the
“Buyer
SEC Documents”).
As of
their respective dates of filing (or, if amended or superseded by a filing
prior
to the date of this Agreement, then on the date of such filing), the Buyer
SEC
Documents complied as to form in all material respects with the requirements
of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable thereto, and none
of
the Buyer SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) The
audited consolidated financial statements and the unaudited quarterly financial
statements (including, in each case, the notes thereto) of Buyer included in
the
Buyer SEC Documents when filed complied as to form in all material respects
with
the published rules and regulations of the SEC with respect thereto, have been
prepared in all material respects in accordance with U.S. GAAP (except, in
the
case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC
or
other rules and regulations of the SEC) applied on a consistent basis during
the
periods involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of Buyer
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited quarterly statements, to normal year-end
adjustments).
Section
5.6 Operations
Since Financial Statements Date.
From
the date of the most recent consolidated financial statements included in the
Buyer SEC Documents to the date hereof, Buyer has conducted its business only
in
the ordinary course and there has not been any change, effect or occurrence
that
has had or is reasonably likely to have a material adverse effect on
Buyer.
30
Section
5.7 Investment
Intent.
Buyer
is acquiring the Shares as an investment for its own account and not with a
view
to the distribution thereof. Buyer shall not sell, transfer, assign, pledge
or
hypothecate any of the Shares in the absence of registration under, or pursuant
to an applicable exemption from, all applicable state securities
laws.
Section
5.8 No
Brokers.
Except
for the services of Xxxxx and Company, LLC, neither Buyer nor any Person acting
on its behalf has paid or become obligated to pay any fee or commission to
any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
ARTICLE
VI
ACTIONS
PRIOR TO THE CLOSING DATE
The
respective parties hereto covenant and agree to take the following actions
between the date of this Agreement and the Closing Date:
Section
6.1 Access
to Information.
Seller
shall afford to the officers, employees and authorized representatives of Buyer
(including independent public accountants, financing sources, financial advisors
and attorneys) reasonable access during normal business hours, upon reasonable
advance notice, to the offices, properties, employees and business and financial
records of Seller and the Subsidiaries to the extent Buyer shall reasonably
deem
necessary or desirable and shall furnish to Buyer or its authorized
representatives such additional information concerning Seller or the
Subsidiaries as shall be reasonably requested; provided,
however,
that
neither Seller nor any Subsidiary shall be required to violate any obligation
of
confidentiality or any Requirements of Law (including the U.K. Data Protection
Act of 1998 (as amended) to which Seller or any Subsidiary is subject or to
waive any privilege which it may possess in discharging its obligations pursuant
to this Section
6.1.
Buyer
agrees that such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operations of Seller or the Subsidiary.
Section
6.2 Notifications.
Each of
Buyer and Seller shall promptly notify the other of any action, suit or
proceeding that shall be instituted or threatened against such party to
restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement. From the date hereof until the Closing Date,
each of Buyer and Seller shall disclose to the other in writing any material
variances from their respective representations and warranties contained herein
promptly upon discovery thereof. If a party fails to notify the other party
under this Section
6.2,
(i)
such non-breaching party shall only be entitled to seek indemnification for
breach of this Section
6.2
if and
to the extent such non-breaching party is otherwise entitled to indemnification
pursuant to Article
XI
for
breach of a representation and warranty and the limits set forth in Article
XI
shall
apply to any such indemnification and (ii) a failure to comply with this
Section
6.2
shall
not cause the failure of any condition set forth in Article
IX
or
Article
X
to be
satisfied unless the underlying change, event or development would independently
result in the failure of a condition set forth in Article
IX
or
Article
X
to be
satisfied.
31
Section
6.3 Consents
of Third Parties; Governmental Approvals.
(a)
Buyer and Seller will use commercially reasonable efforts to obtain in a timely
manner, before the Closing Date, the consent, approval or waiver, in form and
substance reasonably satisfactory to the other party, required to be obtained
under any Requirement of Law to consummate the transactions contemplated by
this
Agreement
(b) During
the period prior to the Closing Date, Buyer shall act in a commercially
reasonable manner, and Seller, upon the request of Buyer, shall use its
commercially reasonable efforts to cooperate with Buyer, in attempting to secure
any consents and approvals of any Governmental Body required to be obtained
by
Buyer in order to permit the consummation of the transactions contemplated
by
this Agreement.
(c) Subject
to the terms and conditions of this Agreement, each party shall use its
commercially reasonable efforts to cause the Closing to occur.
Section
6.4 Operations
of Seller Prior to the Closing Date.
From the
date of this Agreement until the Closing, Seller shall (and shall cause each
Subsidiary to) (i) use its commercially reasonable efforts to conduct the
Business in the ordinary course; (ii) use its commercially reasonable efforts
to
duly comply with all Requirements of Law; (iii) maintain its corporate or entity
existence in good standing in the jurisdictions of its incorporation and its
due
qualification in good standing in all jurisdictions in which it is so qualified;
(iv) maintain all of its books and records in the usual, regular and ordinary
manner on a basis consistent with past practices; (v) maintain all of the
properties used or useful in the Business in good operating condition and repair
(ordinary wear and tear excepted); and (vi) maintain all insurance covering
the
Business, employees, directors and assets in fully force and effect until 12:01
A.M. on the first day following the Closing Date with responsible companies,
substantially comparable in amount, scope and coverage to that in effect on
the
date hereof; it being understood that Seller shall be permitted to take steps
consistent with this Agreement prior to the Closing to allow it to liquidate
and
dissolve as soon as reasonably practicable following the Closing, including
convening a meeting of its shareholders to vote upon any necessary resolutions
related thereto, and Seller shall provide Buyer with a copy of the notice of
any
such meeting contemporaneously with such notice being provided to Seller’s
shareholders. Without limiting the generality of the foregoing, from the date
hereof until the Closing, Seller shall not declare or pay any cash dividends
or
cash distributions to its shareholders, and except as otherwise contemplated
by
this Agreement, required by Requirements of Law or consented to in writing
by
Buyer (which Buyer agrees (1) shall not be unreasonably withheld or delayed
and
(2) shall be deemed to have been granted if Buyer does not, within five (5)
business days of a written request for a consent by Seller expressly referencing
that such request is for purposes of this Section
6.4(b)
and
providing all of the material terms and conditions of the matter which is the
subject of the request, respond to such a request), Seller shall not (and shall
not permit any Subsidiary to):
(a) issue,
sell or deliver any shares of share capital of any Subsidiary or issue or sell
any securities convertible into, or options with respect to, or warrants to
purchase or rights to subscribe for, any shares of share capital of any
Subsidiary;
(b) effect
any recapitalization, reclassification, share split or like change in the
capitalization of any Subsidiary;
32
(c) amend
the
Memorandum and Articles of Association (or
equivalent organizational or formation documents) of any Subsidiary;
(d) make
any
redemption or purchase of any shares of the share capital of any
Subsidiary;
(e) sell,
rent, lease or otherwise dispose of any of its material assets, except in the
ordinary course of business consistent with past practice;
(f) except
in
the ordinary course of business consistent with past practice or pursuant to
applicable Requirements of Law, (1) incur any indebtedness for money borrowed
or
lend money to any third Person, (2) make any capital expenditures or commitments
for capital expenditures in excess of $100,000 (or the equivalent thereof in
any
other currency), (3) assume, guarantee, endorse or otherwise become liable
or
responsible (whether directly, contingently or otherwise) for the obligations
of
any other Person, (4) create or suffer to exist any material new Encumbrance,
(5) enter into any employment contract, increase the rate of compensation
payable or to become payable by it to any officer or any other executive
employee or make any increase in the compensation or rate of compensation
payable or to become payable to hourly employees or salaried employees or (6)
adopt, terminate or materially amend or modify any Benefit Plan, except that
Seller may make modifications to its existing equity compensation plans, or
issue new equity or equity-like participation rights, so long as the
Subsidiaries have no obligations with respect to such modifications or new
rights;
(g) make
any
material Tax election (except as taken into account in the preparation of the
Financial Statements or the calculation of Working Capital or elections made
in
accordance with Section
7.5(f),
materially change any method of Tax accounting or settle any material claim
for
Taxes;
(h) enter
into any Contract that if entered into prior to the date hereof would have
been
a Material Contract other than in the ordinary course consistent with past
practice; or
(i) agree
to
do any of the foregoing.
Section
6.5 No
Solicitation, Etc.
Prior
to the Closing:
(a) Seller
shall not, and shall not permit any Subsidiary to, directly or indirectly,
make,
solicit, initiate, consider or encourage submission of proposals or offers
from
any persons relating to any liquidation, dissolution, recapitalization, merger,
consolidation or acquisition or purchase of all or substantially all of the
assets of, or Shares or any equity interest in, Seller or any Subsidiary or
any
other similar transaction or business combination; it being understood that
Seller shall be permitted to take steps consistent with this Agreement prior
to
the Closing to allow it to liquidate and dissolve as soon as reasonably
practicable following the Closing, including convening a meeting of its
shareholders to vote upon any necessary resolutions related thereto , and Seller
shall provide Buyer with a copy of the notice of any such meeting
contemporaneously with such notice being provided to Seller’s shareholders.
Seller shall, and shall cause the Subsidiaries to cease immediately and cause
to
be terminated all contracts, negotiations and communications with third Persons
with respect to the foregoing, if any, existing on the date hereof. Seller
shall
cause the financial and other advisors and representatives of them and Seller
to
comply with each of the covenants contained in this Section
6.5;
and
33
(b) Seller
shall not, and shall not permit the Subsidiaries to participate, directly or
indirectly, in any negotiations regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with, or assist,
any effort or attempt by any other Person to do or seek any of the activities
referred to in Section
6.5(a)
hereof.
Should Seller or any Subsidiary receive any proposal, inquiry or contact about
the sale of the Shares or any of the other activities referred to in
Section
6.5(a)
hereof,
Seller shall within two (2) business days give written notice thereof to Buyer
and also shall promptly provide Buyer with a summary in reasonable detail of
such information regarding such proposal, inquiry or contact.
Section
6.6 Contact
with Customers, Suppliers and Others.
Buyer
hereby agrees that it is not authorized to and shall not (and shall not permit
any of its employees, agents, representatives or Affiliates to) contact any
supplier, customer, distributor or other material business relation of Seller
or
any Subsidiary prior to the Closing without the prior written consent of
Seller.
Section
6.7 Contribution.
(a)
Prior to the Closing, Seller shall contribute all of its right, title and
interest in, to and under all of its assets (other than the Shares) to PTL
and
PTL shall assume all of the liabilities of Seller (other than the Excluded
Liabilities) on an “as is, where is” basis pursuant to a contribution agreement
reflecting the terms set forth in this Section
6.7.
Notwithstanding the foregoing, Seller may elect, in its sole discretion, to
release any or all obligations owed to it by a Subsidiary in lieu of
contributing such obligations to PTL. No other consideration shall be paid
for
such contribution and assumption. In
connection with such contribution and assumption, the
parties agree and intend that the Transfer of Undertakings (Protection of
Employment) Regulations 2006 (“TUPE
Regulations”)
shall
apply to transfer the sole employee of Seller to PTL (the “Transferred
Employee”)
unless
such employee is employed by Buyer at the Closing. By reason of and in
accordance with the TUPE Regulations the contracts of employment of the sole
employee employed by Seller and all of Seller’s rights, powers, duties and
liabilities in connection with such contract of employment shall transfer
automatically to PTL as at the date of transfer of Seller’s assets (other than
the Shares) to
PTL.
(b) Notwithstanding
Section
6.7(a),
none of
the Subsidiaries shall assume or otherwise be responsible for any of the
following (collectively, the “Excluded
Liabilities”):
(i) any
indebtedness for borrowed money of Seller, if any and any Liabilities related
thereto;
(ii) any
Liabilities related to the issuance or ownership of capital stock or securities
exchangeable for capital stock of Seller;
(iii) any
Contract entered into in connection with the sale of, or related to the issuance
or ownership of, Seller’s capital stock or securities exchangeable for capital
stock of Seller, and any Liability in connection therewith;
34
(iv) any
Liabilities of Seller or any of its officers, directors or securityholders
(a)
arising from this Agreement or any of the transactions and documents
contemplated by this Agreement and any distributions of the proceeds of such
transactions to Seller’s securityholders, arising from or related to Seller’s
dissolution and plan of liquidation, arising from or related to Seller’s and its
officers, directors or securityholders’ approvals, actions or omissions in
connection with the foregoing, except in each case to the extent properly
included in Working Capital with respect to expenses (other than Deal Expenses)
incurred with respect to the foregoing; or (b) incurred as a result of any
action, suit, proceeding or other claim by any officer, director or
securityholder of Seller in its capacity as such against Seller, any Subsidiary,
Buyer or any of their respective directors or officers, the basis for which
is
that Seller has entered into this Agreement or consummated the transactions
contemplated hereby or consummated its dissolution and liquidation or otherwise
arising out of this Agreement or the transactions contemplated hereby or such
dissolution and liquidation;
(v) any
Liabilities of Seller to the Seller Representative; and
(vi) any
Deal
Expenses, including any Deal Expenses incurred by Seller after the Closing
Date.
Section
6.8 Buyer
Proxy Statement; Shareholder/Stockholder Votes.
(a) As
promptly as practicable after execution and delivery of this Agreement but
in no
event later than forty-five (45) days from the date hereof, Buyer and Seller
shall cooperate in preparing and shall cause to be filed with the SEC mutually
acceptable proxy materials relating to the Buyer Stockholders Meeting and the
votes of the stockholders of Buyer with respect to the Financing and any other
matters requiring approval of Buyer’s stockholders in connection therewith
(“Buyer
Proxy Statement”).
Seller shall furnish all information about Seller
and the
Subsidiaries, and the Business to Buyer as may reasonably be requested in
connection with the preparation of the Buyer Proxy Statement.
(b) Buyer
shall, as soon as practicable following the date of this Agreement, duly call,
give notice of, convene and hold a meeting of its stockholders (the
“Buyer
Stockholders Meeting”),
for
the purpose of obtaining the Buyer Stockholder Approval and any other matters
requiring approval of Buyer’s stockholders in connection therewith. In
accordance with the terms and conditions of the Securities Purchase Agreement
and, except as otherwise required by the exercise of its fiduciary duties,
Buyer
shall, through its board of directors, recommend to its stockholders that they
approve the Financing and any other matters requiring approval of Buyer’s
stockholders in connection therewith and not withdraw, modify, amend or qualify
its recommendation in any manner adverse to Seller. Buyer shall include its
recommendation set forth above in its proxy statements and submit proposals
to
approve the Financing to its stockholders at the Buyer Stockholders Meeting,
for
the purpose of obtaining the Buyer Stockholder Approval.
(c) Except
as
otherwise required by the exercise of its duties under applicable Requirements
of Law, Seller shall, through its board of directors, recommend to its
shareholders that they approve the transactions contemplated hereby and not
withdraw, modify, amend or qualify its recommendation in any manner adverse
to
Buyer. Seller shall submit proposals to approve the transactions contemplated
hereby to its shareholders at the Seller Shareholders Meeting, for the purpose
of obtaining the Seller Shareholder Approval.
35
(d) Notwithstanding
the foregoing, to the extent Buyer determines that no approval of its
stockholders is required to consummate the transactions contemplated hereby,
either because Buyer has made alternative financing arrangements not requiring
a
stockholder vote or otherwise, Buyer shall notify Seller and shall no longer
be
required hereunder to hold the Buyer Stockholders Meeting.
Section
6.9 Documentation
of Trade Secrets.
Seller
and the Subsidiaries shall: (i) use best efforts to document or cause to be
documented all Trade Secrets relating to Business Intellectual Property and
Owned Intellectual Property that Buyer in good faith considers to be material
(“Documentation”)
in
such way and within such time frames as reasonably requested by Buyer
at
or
prior to the dissolution of Seller.
Documentation shall be in all material respects current, accurate and sufficient
in detail and content to identify and explain such Trade Secrets, and to allow
full and proper use of such Trade Secrets by Buyer without reliance on the
knowledge or memory of any individual and transfer or cause to be transferred
to
Buyer any and all such Documentation; (ii) use best efforts to work with Buyer
and allow Buyer to have full and property use of the Trade Secrets and
Documentation, including, if so requested by Buyer, providing for Seller’s
and/or Subsidiaries’ personnel to attend meetings with and actively educate
Buyer; and (iii) do all such other acts and things regarding the transfer of
Documentation as reasonably requested by Buyer.
Section
6.10 Assignment
Agreement.
Seller
shall use commercially reasonable efforts to cause the Key Employees to enter
into a confidentiality and intellectual property assignment agreement prior
to
the Closing Date, in such customary form as may be mutually agreed upon by
Buyer
and Seller as soon as practicable following the date of this
Agreement.
ARTICLE
VII
ADDITIONAL
AGREEMENTS
Section
7.1 Employee
Matters.
(a)
For a
period commencing on the Closing Date and ending no earlier than the first
anniversary of the Closing Date, Buyer shall take any action necessary so that
(i) all employees of Seller and the Subsidiaries on the Closing Date (the
“Affected
Employees”)
shall
continue to receive base wages and salaries at rates no less favorable to such
employee than the rates of wages and salaries paid by Seller or any of the
Subsidiaries to such Affected Employees immediately prior to the Closing Date,
and (ii) all Affected Employees who remain employed with a Subsidiary (or Buyer
or one of its Affiliates) after the Closing Date shall be provided with
benefits, in the aggregate, that are substantially comparable to those offered
to employees of Seller or the Subsidiaries immediately prior to the Closing
Date
(excluding equity incentive benefit programs), subject to the terms and
conditions of employment of each Affected Employee and Requirements of Law.
Buyer shall grant to such Affected Employees service credit under Buyer’s
employee benefit plans for eligibility, vesting, and for benefit calculation
purposes for benefits where seniority increases the benefit to which an employee
is entitled (but not for purposes of benefit accrual under a defined benefit
or
defined contribution retirement plan) equal to years of service with Seller
and
the Subsidiaries for such Affected Employees. In the event Buyer does not
continue the Benefit Plans for the 12-month period following the Closing Date
and instead causes the Affected Employees to participate in employee benefit
programs sponsored or maintained by Buyer or its Affiliates, Buyer shall, to
the
extent permissible under its employee benefit programs, including any applicable
insurance contracts: (A) waive all limitations as to preexisting condition
exclusions and waiting periods with respect to Affected Employees under Buyer’s
employee benefit programs (including medical, dental and disability coverage)
and (B) cause Affected Employees to be credited with any amounts paid under
employee benefit plans and programs maintained by any of the Subsidiaries prior
to the Closing Date toward satisfaction of the applicable deductible amounts
and
co-payment minimums under such programs. Nothing in this Section
7.1(a)
shall
negate either party’s obligations or duties pursuant to the TUPE Regulations
with respect to the Transferred Employee or require Buyer to put into place
a
replacement share option scheme.
36
(b) Buyer
shall cause the Subsidiaries to recognize all unused vacation as of the Closing
Date (in the amounts reflected in the
listing of vacation entitlement of each employee of Seller or any Subsidiary,
as
provided by Seller to Buyer on the Closing Date, to the extent consistent with
the Vacation List other than updates thereto for any additional vacation
entitlement that becomes due consistent with past practice between the date
hereof and the Closing Date),
and for
the 12-month period following the Closing Date, Buyer shall cause the
Subsidiaries to provide such paid vacation, in accordance with the terms of
the
Subsidiaries vacation policy as in effect immediately prior to the Closing
Date.
Thereafter, the Affected Employees shall be permitted to take accrued vacation,
subject to the terms of Buyer’s vacation policy and vacation shall be subject in
all respects to the terms of Buyer’s vacation policy, as then in effect, and the
prior service crediting provided in Section
7.1(a),
subject
to the terms and conditions of employment of each Affected Employee and
Requirements of Law. Buyer shall cause the Subsidiaries to recognize the bonus
programs for Affected Employees existing as of the Closing Date and to pay
to
the Affected Employees the bonuses they have accrued under such programs at
the
end of the bonus determination period, or earlier if so determined by Buyer
and
permitted under the applicable Requirements of Law.
(c) Notwithstanding
anything to the contrary in this Agreement, subject to the terms and conditions
of employment of each Affected Employee and Requirements of Law, the Parties
expressly acknowledge and agree that (i) this Agreement is not intended to
create a Contract between Buyer, Seller, any Subsidiary, or any of their ERISA
Affiliates on the one hand and any United States Affected Employee, and no
United States Affected Employee may rely on this Agreement as the basis for
any
breach of contract claim against Buyer, Seller, any Subsidiary, or any of their
ERISA Affiliates; (ii) any Affected Employee who is employed by the Subsidiaries
(or Buyer or one of its Affiliates) on or after the Closing Date in the United
States shall be an at-will employee, who shall be subject to the Subsidiaries’
(or Buyer or one of its Affiliates) policies and procedures; (iii) nothing
in
this Agreement shall be deemed or construed to require Buyer, any Subsidiary,
or
any of their ERISA Affiliates to continue to employ any particular employee
of
Seller, the Subsidiaries, or their ERISA Affiliates for any period either prior
to or after Closing; (iv) nothing in this Agreement shall be deemed or construed
to limit the Subsidiaries’ (or Buyer’s or one of its Affiliates’) right to
terminate the employment of any Affected Employee after Closing; and (v) nothing
in this Agreement shall modify or amend any Benefit Plan or other agreement,
plan, program or document (save for any right to participate in any Seller
employee share option plan). Notwithstanding anything contained in this
Section
7.1(c),
nothing
shall restrict, limit or otherwise alter the rights of the Affected Employees
under any employment agreement with Buyer, Seller, any Subsidiary, or any of
their ERISA Affiliates.
37
Section
7.2 Securities
Law Legends.
Buyer
agrees and understands that the Shares have not been, and will not be,
registered under the Securities Act or the securities laws of any state or
foreign jurisdiction and that the Shares may be sold or disposed of only in
one
or more transactions registered under the Securities Act and all applicable
securities laws or as to which an exemption from the registration requirements
of the Securities Act and all applicable securities laws is available. Buyer
acknowledges and agrees that no person has any right to require Seller to cause
the registration of any of the Shares. The certificates representing the Shares
shall contain a legend similar to the following and other legends necessary
or
appropriate under applicable state securities laws:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933 (THE “ACT”) OR ANY STATE OR FOREIGN SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE
COMPANY IS IN RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO IT TO THE EFFECT
THAT SUCH SHARES MAY BE SOLD IN COMPLIANCE WITH THE ACT AND SUCH
LAWS.
Section
7.3 Indemnification
of Directors and Officers.
For a
period of six years after the Closing Date, Buyer shall cause the Subsidiaries
to indemnify and hold harmless each present and former director or officer
of
any Subsidiary to the fullest extent allowed by applicable law or under the
Subsidiaries Memorandum and Articles of Association or Certificate of
Incorporation (or equivalent organizational or formation documents) in respect
of acts or omissions arising out of such director’s or officer’s service as a
director or officer of a Subsidiary occurring at or prior to the Closing Date;
provided, however, that such indemnification shall be subject to any limitation
imposed from time to time under applicable law.
Section
7.4 Financing
Efforts.
(a)
Buyer shall use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to arrange the Financing on the terms and conditions described
in
the Securities Purchase Agreement, including using commercially reasonable
efforts to (i) maintain in effect the Securities Purchase Agreement and enforce
its rights thereunder, (ii) satisfy on a timely basis all conditions applicable
to Buyer to obtaining the Financing set forth therein and (iii) consummate
the
Financing at or prior to Closing. If any portion of the Financing becomes
unavailable on the terms and conditions contemplated in the Securities Purchase
Agreement, including because the Buyer Stockholder Approval is not obtained
at a
meeting of Buyer’s stockholders convened to approve the Financing, Buyer shall
use its commercially reasonable efforts to arrange to obtain alternative
financing from alternative sources in an amount sufficient to consummate the
transactions contemplated by this Agreement as promptly as practicable following
the occurrence of such event but no later than the business day prior to the
Outside Date. Buyer shall give Seller prompt notice of any material breach
by
any party other than Buyer to the Securities Purchase Agreement of which Buyer
becomes aware, or if Buyer receives written notice from Perseus of a material
breach by Buyer of the Securities Purchase Agreement, or any termination of
the
Securities Purchase Agreement. Buyer shall keep Seller informed on a reasonably
current basis of the status of the Financing and provide copies of all material
documents related to the Financing to Seller.
38
(b) Seller
and each Subsidiary shall each use its commercially reasonable efforts to take
such actions as reasonably requested by Buyer in connection with the
Financing
Section
7.5 Tax
Matters.
(a) Straddle
Period Taxes.
For
purposes of this Agreement, the amount of Taxes attributable to the Pre-Closing
Tax Period of any Straddle Period shall be determined based on an interim
closing of the books as of the close of the Closing Date, except that the amount
of any such Taxes that are imposed on a periodic basis shall be determined
by
reference to the relative number of days in the Pre-Closing Tax Period of such
Straddle Period.
(b) Tax
Returns.
(i)
Seller (or, if applicable, the Seller Representative) shall be responsible
for
the timely filing of all Tax Returns required to be filed by Seller or any
of
the Subsidiaries on or prior to the Closing Date. Seller shall file such Tax
Returns in a manner consistent with past practices to the extent consistent
with
applicable laws.
(ii) Buyer
shall be responsible for the timely filing of all Tax Returns required to be
filed by the Subsidiaries after the Closing Date, other than those Tax Returns
which Seller is required to file pursuant to Section 7.5(b)(i), and with respect
to any such Tax Returns for a Pre-Closing Tax Period or Straddle Period, Buyer
must obtain the consent and approval of Seller or, if applicable, the Seller
Representative, which consent and approval shall not be unreasonably withheld
or
delayed and shall be deemed made if objection to such Tax Returns has not been
received by Buyer within 15 Business Days of receipt by Seller of such Tax
Returns.
(c) Tax
Refunds.
Seller
shall be entitled to any refunds (including any interest received thereon)
in
respect of any Taxes of the Subsidiaries relating to the Pre-Closing Tax Period,
except to the extent that any such refund is reflected as a current asset on
the
calculation of Working Capital. In the event Buyer receives any such refund
to
which Seller is entitled, Buyer shall cause such refund to be paid as directed
by the Seller Representative within 15 days following the receipt of such
refund.
(d) Transfer
Taxes. Notwithstanding
anything herein to the contrary, Buyer shall pay, and agrees to indemnify and
hold harmless each Seller Group Member from and against, any and all real
property transfer Taxes, sales Taxes, use Taxes, stock transfer Taxes, or other
similar Taxes imposed on the transactions contemplated by this Agreement.
Notwithstanding anything herein to the contrary, any stamp duty, stamp duty
reserve tax or other stamp taxes (including interest and penalties) payable
in
respect of the transactions contemplated by this Agreement shall be borne by
Buyer; provided
that
nothing set forth in this Section
7.5(d)
shall
impose any obligation or Liability on Buyer with respect to income Taxes of
any
Seller Group Member for any Pre-Closing Tax Period.
(e) US
Tax
Elections. (i)
The
parties hereto acknowledge that Buyer may make the election pursuant to Section
338(g) of the Code (or any similar election under any applicable US state or
local income Tax law) with respect to the purchase of the Shares of all or
any
of the Subsidiaries (collectively, the “Section
338 Election”).
Within fifteen (15) days of making the Section 338 Election, Buyer shall provide
the Seller Representative with written notice of the Section 338
Election.
39
(ii) Seller,
Buyer, and the Subsidiaries agree that the Purchase Price and the Liabilities
of
each Subsidiary (plus all other relevant items) will be allocated to the assets
of each Subsidiary to the extent the Section 338 Election is made with respect
to such Subsidiary for all U.S. purposes (including Tax and financial accounting
purposes) in a manner consistent with Code Sections 338 and 1060 and the
regulations thereunder, as determined by a third-party appraisal performed
prior
to the Closing Date (at Buyer’s sole expense) and utilizing the fair market
value principles set forth in Schedule
7.5
attached
hereto, prepared by Buyer. Seller, Buyer and the Subsidiaries shall file all
Tax
Returns (including amended returns and claims for refund) and information
reports in a manner consistent with this Section
7.5.
(iii) Buyer
agrees to indemnify and hold harmless each Seller Group Member from and against
any and Section 338 Taxes.
(f) Degrouping
Election.
(i)
Prior
to
Closing, or, in any event within
six
months of the Closing, Seller shall, at its own cost, enter into such valid
elections pursuant to section 179A TCGA and/or paragraph 66 of Schedule 29
to
the Finance Act 2002 (as appropriate), so far as is permitted by law, with
the
relevant Subsidiary, in respect of the whole of any chargeable gain or any
assessable income which is treated as accruing to any Subsidiary pursuant to
section 179(3) TCGA and/or paragraph 58 of Schedule 29 to the Finance Xxx 0000
related to the actions of Seller pursuant to Section
6.7(a)
of this
Agreement (each such election being the “Degrouping
Election”)
as
will result in the whole of such chargeable gain or assessable income (if any)
being treated as accruing to Seller.
(ii) Seller
shall not revoke, withdraw or otherwise amend any Degrouping Election made
pursuant to this Section
7.5
except
if required by law or following a written request by Buyer.
(g) Continuation
of Trading.
Buyer
shall cause the Subsidiaries to continue their trading activities in the
ordinary course substantially consistent with past practice for a period of
not
less than one (1) business day following the Closing Date.
Section
7.6 Power
of Attorney and Declaration of Trust.
At and
following the Closing:
(a) in
order
to secure Buyer’s interests under this Agreement, Seller hereby irrevocably
appoints Buyer to be its attorney pending Buyer’s registration as a member of
the Subsidiaries (at which time the power granted hereunder will expire and
be
of no further effect) with power on that Seller’s behalf to execute and deliver
all deeds and documents and to do all acts and things and exercise all rights
which Buyer would be entitled to execute, deliver and do and exercise if Buyer
was registered as the holder of the Shares with power to sub-delegate this
power
and power to appoint a substitute attorney in addition to Buyer. Further, Seller
hereby irrevocably declares and acknowledges that for the period starting from
the Closing Date and ending when Buyer is registered as a member of the
Subsidiaries, they shall on a joint and several basis, hold the Shares on bare
trust for the benefit of Buyer, who shall be the sole beneficial owner
thereof.
40
(b) Seller
agrees that for so long as any of the Shares remain registered in its name
it
will:
(i) not
exercise any of its rights as a member of record of any Subsidiary or appoint
any other person to exercise such rights;
(ii) hold
on
trust for and pay or deliver to Buyer any distributions or notices, documents
or
other communications which may be received after the date of this deed by that
Seller in its capacity as a member of record of any Subsidiary from such
Subsidiary or any third party; and
(iii) on
request by Buyer ratify all documents executed and acts done by Buyer as its
attorney for the purpose of this Section
7.6.
Section
7.7 Delegation
of Buyer Subsidiary or Affiliate.
Seller
acknowledges that Buyer may designate one or more subsidiaries or Affiliates
to
acquire the Shares at the Closing; it being understood that such assignment
shall not relieve Buyer of any of its obligations hereunder.
Section
7.8 Datasite.
Seller
acknowledges that effective as of the date prior to the date hereof, no
additional documentation or filings has been posted on that certain
Internet-based datasite administered by IntraLinks, Inc. designed to provide
access to Buyer to documents and information relating to Seller and the
Subsidiaries. Seller acknowledges that such datasite shall continue to be
maintained, and Buyer continue to have access to the datasite, until the Closing
Date.
ARTICLE
VIII
POST-CLOSING
COVENANTS
Section
8.1 Covenant
Not to Compete.
Seller
shall not, and shall cause each of its Affiliates that it controls not to,
at
any time within the 24-month period following the Closing Date, directly or
indirectly, engage in, or have any interest on behalf of itself or others in
any
person, firm, corporation or business (whether as an employee, officer,
director, agent, security holder, creditor, partner, joint venturer, beneficiary
under a trust, investor, consultant or otherwise) that engages in, anywhere
in
the world any of those business activities in which Seller or any Subsidiary
has
been engaged in the last 12 months, including information technology management
consulting services. In the event of lawsuits, claims, suits, proceedings or
investigations pending involving this Agreement, if a court of competent
jurisdiction determines that the scope of this Section
8.1
is too
broad in any respect, then the scope shall be deemed to be reduced or narrowed
to such scope as is found lawful and reasonable by such court. Seller
acknowledges, however, that this Section
8.1
has been
negotiated by the parties and that the geographical and time limitations, as
well as the limitation on activities, are reasonable in light of the
circumstances pertaining to Seller and the Business.
41
Section
8.2 Confidential
Information.
For an
indefinite period after the Closing, Seller shall not divulge, communicate
or
use in any way, any confidential information, including any formula, pattern,
list, compilation, device, method, technique or process that derives independent
economic value, actual or potential, from not being generally known to the
public or to other Persons who can obtain economic value from its disclosure
or
use, of the Business.
Section
8.3 Nonsolicitation.
Seller
agrees, for the 24-month period following the Closing Date, not to directly
or
indirectly, call on or solicit for the purpose of selling the services offered
by Seller or any Subsidiary during the 12-month period prior to the Closing
Date, or divert or take away from any Subsidiary (including, by divulging to
any
competitor or potential competitor of the Business the name of), any Person,
who
or which at the Closing Date was, or at any time during the 12-month period
prior to the Closing Date had been, a customer of Seller or any Subsidiary
or
whose identity is known to Seller at the Closing Date as one whom Seller or
any
Subsidiary had intended to solicit within the succeeding year. Nothing contained
in this Section
8.3
shall be
deemed to limit or impair, or be limited or impaired by, any other provision
of
this Agreement.
Section
8.4 Hiring
of Employees.
During
the 24-month period following the Closing Date, Seller shall not (directly
or
indirectly) solicit for employment, or hire or offer employment to, (a) any
employee of Seller or any Subsidiary whose employment is continued by Buyer
(or
one of its Affiliates, including the Subsidiaries) after the Closing Date unless
Buyer (or its relevant Affiliate) first terminates the employment of such
employee, or (b) any person not employed by Seller or the Subsidiaries on the
Closing Date who at any time during the 180 day period prior to the Closing
was
an employee of Seller or any Subsidiary. Nothing contained in this Section
8.4
shall
affect or be deemed to affect in any manner any other provision of this
Agreement.
Section
8.5 Equitable
Relief.
In the
event of any breach or threatened breach by either Party of any provision of
this Article
VIII,
the
other Parties shall be entitled to injunctive or other equitable relief to
enforce the respective obligations under this Article
VIII.
Such
relief shall be in addition to and not in lieu of any other remedies that may
be
available, including an action for the recovery of damages.
ARTICLE
IX
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF BUYER
The
obligations of Buyer under this Agreement shall, at the option of Buyer, be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
Section
9.1 No
Misrepresentation or Breach of Covenants and Warranties.
There
shall not have been any material breach by Seller in the performance of any
of
its covenants and agreements herein which shall not have been remedied or cured;
each of the representations and warranties of Seller contained in this Agreement
other than those contained in the Fundamental Representations, disregarding
all
qualifications and exceptions contained therein relating to materiality,
Material Adverse Effect or similar standard or qualifications, shall be true
and
correct on the Closing Date as though made on and as of the Closing Date (except
to the extent that they expressly relate to an earlier date, which shall be
true
and correct on that date), except for changes therein specifically permitted
by
this Agreement or resulting from any transaction expressly consented to in
writing by Buyer or any transaction permitted by this Agreement and other than
breaches of representations and warranties which, individually or in the
aggregate, have not had or would not reasonably be expected to have a Material
Adverse Effect; each of the representations and warranties of Seller contained
in the Fundamental Representations, disregarding all qualifications and
exceptions contained therein relating to materiality, Material Adverse Effect
or
similar standard or qualifications, shall be true and correct in all material
respects on the Closing Date as though made on and as of the Closing Date
(except to the extent that they expressly relate to an earlier date, which
shall
be true and correct on that date); and there shall have been delivered to Buyer
a certificate to such effect, dated the Closing Date, signed by a duly
authorized officer of Seller.
42
Section
9.2 Material
Adverse Effect.
Since
the date of this Agreement, there shall have been no Material Adverse Effect,
and there shall be no conditions existing or, to the Knowledge of Seller,
threatened, which might be reasonably expected to have a Material Adverse Effect
in the future, and there shall have been delivered to Buyer a certificate to
such effect, dated the Closing Date, signed by a duly authorized officer of
Seller.
Section
9.3 Closing
Actions.
Since
the date of this Agreement, there shall be no lawsuits, claims, suits,
proceedings or investigations pending or, to the Knowledge of Seller, threatened
against Seller or any of the Subsidiaries that are reasonably likely to (i)
result in a Liability to the Subsidiaries at any time in excess of $3,000,000,
(ii) result in a reduction in annual gross sales of the Business in an amount
equal to or greater than 20% of annual gross sales of the Business for the
fiscal year ended December 31, 2007, or (iii) materially impair the right to
use
or the ownership of the Owned Intellectual Property or Business Intellectual
Property. There shall have been delivered to Buyer a certificate to the effect
of the matters set forth in this Section
9.3,
dated
the Closing Date, signed by a duly authorized officer of Seller.
Section
9.4 Seller
Shareholder Approval.
The
Seller Shareholder Approval shall have been obtained.
Section
9.5 Buyer
Stockholder Approval.
The
Buyer Stockholder Approval shall have been obtained; it being understood that
this condition shall no longer be applicable if (i) alternative financing is
obtained and the Parties determine that the Buyer Stockholder Approval is no
longer required as a condition to the consummation of the transactions
contemplated hereby; or (ii) Buyer determines that the Buyer Stockholder
Approval is no longer required to be obtained in connection with the
consummation of the transactions contemplated hereby.
Section
9.6 No
Restraint or Action.
No
injunction or restraining order shall have been issued by any court of competent
jurisdiction and be in effect which restrains or prohibits any material
transaction contemplated hereby. No action shall be pending or threatened before
any court or other Governmental Body (a) seeking to prevent consummation of
the
transactions contemplated by this Agreement, (b) seeking to impose any material
limitation on the right of Buyer to own the Shares and to control the
Subsidiaries or (c) seeking to restrain or prohibit Buyer’s ownership or
operation of all or any material portion of the Business or the assets of the
Subsidiaries, in each case, that has a reasonable success on the
merits.
43
Section
9.7 Governmental
Approvals.
Buyer
shall have received all approvals and actions of or by all Governmental Bodies
necessary to consummate the transactions contemplated hereby, which are required
to be obtained prior to the Closing by applicable Requirements of
Law.
Section
9.8 Opinions.
Buyer
shall have received opinion(s) from Sidley Austin LLP, counsel to Seller, dated
the Closing Date, in form and substance agreed to by Buyer prior to the date
hereof.
ARTICLE
X
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF SELLER
The
obligations of Seller under this Agreement shall, at the option of Seller,
be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
Section
10.1 No
Misrepresentation or Breach of Covenants and Warranties.
There
shall not have been any breach by Buyer in the performance of any of its
covenants and agreements herein which shall not have been remedied or cured;
each of the representations and warranties of Buyer contained in this Agreement,
disregarding all qualifications and exceptions contained therein relating to
materiality, material adverse effect or similar standard or qualifications,
shall be true and correct on the Closing Date as though made on and as of the
Closing Date, except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing
by
Seller or any transaction contemplated by this Agreement and other than breaches
of representations and warranties which, individually or in the aggregate,
would
not reasonably be expected to have a material adverse effect on Buyer or on
Buyer’s ability to consummate the transactions contemplated hereby; and there
shall have been delivered to Seller a certificate to such effect, dated the
Closing Date, signed by a duly authorized officer of Buyer.
Section
10.2 Material
Adverse Effect.
Since
the date of this Agreement, there shall have been no material adverse effect
on
Buyer, and there shall be no conditions existing or, to the Knowledge of Buyer,
threatened, which might be reasonably expected to have a material adverse effect
on Buyer in the future, and there shall have been delivered to Seller a
certificate to such effect, dated the Closing Date, signed by a duly authorized
officer of Buyer.
Section
10.3 Seller
Shareholder Approval.
The
Seller Shareholder Approval shall have been obtained.
Section
10.4 Buyer
Stockholder Approval.
The
Buyer Stockholder Approval shall have been obtained; it being understood that
this condition shall no longer be applicable if alternative financing is
obtained and the Parties determine that the Buyer Stockholder Approval is no
longer required as a condition to the consummation of the transactions
contemplated hereby.
Section
10.5 No
Restraint or Action.
No
injunction or restraining order shall have been issued by any court of competent
jurisdiction and be in effect which restrains or prohibits any material
transaction contemplated hereby. No action shall be pending or threatened before
any court or other Governmental Body (a) seeking to prevent consummation of
the
transactions contemplated by this Agreement, (b) seeking to impose any material
limitation on the right of Buyer to own the Shares and to control the
Subsidiaries or (c) seeking to restrain or prohibit Buyer’s ownership or
operation of all or any material portion of the Business or the assets of the
Subsidiaries, in each case, that has a reasonable success on the
merits.
44
Section
10.6 Governmental
Approvals.
Seller
shall have received all approvals and actions of or by all Governmental Bodies
necessary to consummate the transactions contemplated hereby, which are required
to be obtained prior to the Closing by applicable Requirements of
Law.
Section
10.7 Opinions.
Seller
shall have received opinion(s) from Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel to
Buyer, dated the Closing Date, in form and substance agreed to by Seller prior
to the date hereof.
ARTICLE
XI
INDEMNIFICATION
Section
11.1 Indemnification
by Seller.
(a) From and after the Closing, Seller agrees to indemnify and hold
harmless each Buyer Group Member from and against any and all Losses and
Expenses incurred by such Buyer Group Member in connection with or arising
from:
(i) any
breach of any warranty or the inaccuracy of any representation of Seller
contained in Article
IV
of this
Agreement;
(ii) any
breach by Seller of, or failure by Seller to perform, any of its covenants
or
obligations contained in this Agreement;
(iii) any
Liabilities of Seller to any holder of equity interests (including any
convertible or exercisable securities) in Seller;
(iv) any
Liability or obligation which relates to, or which involves any claim based
on a
design defect, manufacturing defect, failure to warn, or other product liability
claim related to production, sale, distribution, marketing or placing in a
“chain of supply” to the Products, to extent that such liability or obligation
relates to or arises out of any activity occurring, condition existing, omission
to act or other matter existing prior to or at the Closing (except to the extent
reflected as a current liability on the calculation of Final Working Capital);
(v) any
Excluded Liability;
(vi) any
Tax
(other than Section 338 Taxes) imposed on or relating to Seller or any of its
Subsidiaries with respect to (except to the extent reflected as a current
liability on the calculation of Final Working Capital):
(A) any
Pre-Closing Tax Period;
(B) any
affiliated group of corporations of which Seller or any of its Subsidiaries
(or
any predecessor) is or was a member pursuant to Treas. Reg. § 1.1502-6 (or any
similar provision of state, local, or foreign Law); and
45
(C) the
status of Seller or any of its Subsidiaries as a transferee or successor, or
an
obligation to pay the Taxes of another Person by contract, or
otherwise.
(vii) the
matters disclosed on Schedule
11.1.
provided,
however,
that
Seller shall be required to indemnify and hold harmless the Buyer Group Members
only to the extent that:
(A) the
aggregate amount of such Losses and Expenses under Sections
11.1(a)(i)
and
(iv)
exceeds
$100,000 (it being understood that such $100,000 shall be a deductible for
which
Seller shall bear no indemnification responsibility); and
(B) the
aggregate amount required to be paid by Seller pursuant to Section
11.1(a)
shall
not exceed the Total Indemnity Amount, and in no event shall Seller be obligated
to provide indemnification in excess of the funds held in the Escrow Account
from time to time.
(b) The
indemnification provided for in Section
11.1(a)
shall
terminate on the date that is eighteen (18) months after the Closing Date (and
no claims shall be made by any Buyer Group Member under Section 11.1(a)
thereafter), except that the indemnification by Seller shall continue as to
any
Losses or Expenses of which any Buyer Group Member has validly given a Claim
Notice to Seller in accordance with the requirements of Section
11.3
on or
prior to the date such indemnification would otherwise terminate in accordance
with this Section
11.1,
as to
which the obligation of Seller shall continue solely with respect to the
specific matters in such Claim Notice until the liability of Seller shall have
been determined pursuant to this Article
XI,
and
Seller shall have reimbursed all Buyer Group Members for the full amount of
such
Losses and Expenses that are payable with respect to such Claim Notice in
accordance with this Article
XI.
Notwithstanding anything to the contrary set forth in this Agreement, the
limitation set forth in Section
11.1(a)(A)
shall
not apply to claims under Section
11.1(a)(i)
with
respect to the Fundamental Representations or claims under Sections
11.1(a)(ii),
(iii),
(v),
(vi)
and
(vii).
Section
11.2 Indemnification
by Buyer.
(a)
From and after the Closing, Buyer agrees to indemnify and hold harmless each
Seller Group Member from and against any and all Losses and Expenses incurred
by
such Seller Group Member in connection with or arising from:
(i) any
breach of any warranty or the inaccuracy of any representation of Buyer
contained in Article
V
of this
Agreement;
(ii) any
breach by Buyer of, or failure by Buyer to perform, any of its covenants and
obligations contained in this Agreement;
(iii) any
Section 338 Taxes; and
46
(iv) any
Tax
or any amount on account of Tax for which Seller or a Seller Group Member is
liable as a result of the failure, following the Closing, of a Subsidiary or
any
other Buyer Group Member to pay Tax, other than any Tax in respect of which
Seller would be liable under Section
11.1(a)(vi),
unless
a payment has been made in respect thereof by or on behalf of Seller and such
Tax was not paid to the relevant Governmental Body by or on behalf of the
relevant Subsidiary (in which case this undertaking of Buyer will still
apply).
(b) The
indemnification provided for in Sections
11.2(a)(i)
and
11.2(a)(ii)
shall
terminate on the date that is eighteen (18) months after the Closing Date (and
no claims shall be made by any Seller Group Member under Sections
11.2(a)(i)
and
11.2(a)(ii)
thereafter), except that the indemnification by Buyer shall continue as to
any
Losses or Expenses of which any Seller Group Member has validly given a Claim
Notice to Buyer in accordance with the requirements of Section
11.3
on or
prior to the date such indemnification would otherwise terminate in accordance
with this Section
11.2,
as to
which the obligation of Buyer shall continue solely with respect to the specific
matters in such Claim Notice until the liability of Buyer shall have been
determined pursuant to this Article
XI,
and
Buyer shall have reimbursed all Seller Group Members for the full amount of
such
Losses and Expenses that are payable with respect to such Claim Notice in
accordance with this Article
XI.
Section
11.3 Notice
of Claims.
Any
Buyer Group Member or Seller Group Member seeking indemnification hereunder
(the
“Indemnified
Party”)
shall
give promptly to the party obligated to provide indemnification to such
Indemnified Party (the “Indemnitor”)
a
notice (a “Claim
Notice”)
describing in reasonable detail the facts giving rise to the claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the amount or the method of computation of the amount of such claim, and a
reference to the provision of this Agreement or any other agreement, document
or
instrument executed hereunder or in connection herewith upon which such claim
is
based; provided,
however,
that a
Claim Notice in respect of any action at law or suit in equity by or against
a
third Person as to which indemnification will be sought shall be given promptly
after the action or suit is commenced. The failure to give notice as provided
in
this Section
11.3
shall
not relieve the Indemnitor of its obligations hereunder except to the extent
it
shall have been prejudiced by such failure.
Section
11.4 Determination
of Amount.
(a) In
calculating any Loss or Expense there shall be deducted any insurance proceeds
recovered in respect thereof, after reduction for any costs or expenses incurred
in connection therewith, including any deductible, retroactive or retrospective
premium adjustments, experience-based premium adjustments, and indemnification
obligations. Buyer and Seller agree that, for purposes of computing the amount
of any indemnification payment under this Article
XI
attributable to the relevant Subsidiaries, any such indemnification payment
shall be treated as an adjustment to the Purchase Price for all Tax
purposes.
(b) After
the
giving of any Claim Notice pursuant to Section
11.3,
the
amount of indemnification to which an Indemnified Party shall be entitled under
this Article
XI
shall be
determined: (i) by the written agreement between the Indemnified Party and
the
Indemnitor; (ii) by a final judgment or decree of any court of competent
jurisdiction; or (iii) by any other means to which the Indemnified Party and
the
Indemnitor shall agree. The judgment or decree of a court shall be deemed final
when the time for appeal, if any, shall have expired and no appeal shall have
been taken or when all appeals taken shall have been finally determined. The
Indemnified Party shall have the burden of proof in establishing the amount
of
Losses and Expenses suffered by it.
47
Section
11.5 Third
Person Claims.
(a) As
to any indemnification provided for under this Agreement in respect of, arising
out of or involving a claim or demand made by any third Person against the
Indemnified Party, such Indemnified Party will notify the Indemnitor in writing,
and in reasonable detail, of the third Person claim within ten (10) days after
receipt by such Indemnified Party of written notice of the third Person claim.
Thereafter, the Indemnified Party shall deliver to the Indemnitor, within five
(5) business days after the Indemnified Party’s receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified
Party
relating to the third Person claim. Notwithstanding the foregoing, should a
party be physically served with a complaint with regard to a third Person claim,
the Indemnified Party shall notify the Indemnitor with a copy of the complaint
within five (5) business days after receipt thereof and shall deliver to the
Indemnitor within seven (7) business days after the receipt of such complaint
copies of notices and documents (including court papers) received by the
Indemnified Party relating to the third Person claim. If such notice is not
given within such (5) business day period, the Indemnitor shall still be
required to provide indemnity and defense unless the Indemnitor has in fact
been
prejudiced in its defense by such tardy notice.
(b) In
the
event any legal proceeding shall be threatened or instituted or any claim or
demand shall be asserted by any Person in respect of which payment may be sought
by one party hereto from another party under the provisions of this Article
XI,
the
Indemnified Party shall promptly cause written notice of the assertion of any
such claim of which it has knowledge which is covered by this indemnity to
be
forwarded to the Indemnitor. Any notice of a claim by reason of any of the
representations, warranties or covenants contained in this Agreement shall
contain a reference to the provision of this Agreement or any other agreement,
document or instrument executed hereunder or in connection herewith upon which
such claim is based, the facts giving rise to an alleged basis for the claim
and
the amount of the liability asserted against the Indemnitor by reason of the
claim. In the event of the initiation of any legal proceeding against the
Indemnified Party by a third Person, the Indemnitor shall have the right after
the receipt of notice, at its option and at its own expense, to be represented
by counsel satisfactory to the Indemnified Party and to participate in any
proceeding, claim or demand which relates to any loss, liability or damage
indemnified against hereunder, provided,
however,
that
the Indemnified Party shall retain control of the proceeding. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such legal proceeding, claim or demand. To
the
extent the Indemnitor elects not to defend such proceeding, claim or demand,
and
the Indemnified Party defends against or otherwise deals with any such
proceeding, claim or demand, the Indemnified Party may retain counsel, at the
expense of the Indemnitor, and control the defense of such proceeding. Neither
the Indemnitor nor the Indemnified Party may settle any such proceeding which
settlement obligates the other party to pay money, to perform obligations or
to
admit liability without the consent of the other party, such consent not to
be
unreasonably withheld. After any final judgment or award shall have been
rendered by a court, arbitration board or administrative agency of competent
jurisdiction and the time in which to appeal therefrom has expired, or a
settlement shall have been consummated, or the Indemnified Party and the
Indemnitor shall arrive at a mutually binding agreement with respect to each
separate matter alleged to be indemnified by the Indemnitor hereunder, the
Indemnified Party shall forward to the Indemnitor notice of any sums due and
owing by it with respect to such matter and the Indemnitor shall pay all of
the
sums so owing to the Indemnified Party by wire transfer, certified or bank
cashier’s check within 30 days after the date of such notice.
48
Section
11.6 Limitations.
(a) In
any case where an Indemnified Party recovers from third Persons any amount
in
respect of a matter with respect to which an Indemnitor has indemnified it
pursuant to this Article
XI,
such
Indemnified Party shall promptly pay over to the Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses incurred
by
it in procuring such recovery), but not in excess of the sum of (i) any
amount previously so paid by the Indemnitor to or on behalf of the Indemnified
Party in respect of such matter and (ii) any amount expended by the
Indemnitor in pursuing or defending any claim arising out of such
matter.
(b) The
liability for any inaccuracy in or breach of any representation, warranty,
covenant or agreement by Seller or any other indemnification or other obligation
hereunder shall not be limited if Buyer or any of its officers, employees,
counsel or other representative had any knowledge on or before the Closing
Date
of the facts as a result of which such representation, warranty, covenant or
agreement was inaccurate or breached or with respect to which the
indemnification or other obligation relates.
(c) Notwithstanding
anything to the contrary as set forth herein, except for remedies that cannot
be
waived as a matter of law and injunctive and provisional relief:
(i) if
the
Closing occurs, this Article
XI
shall be
the exclusive remedy of the Parties, and no claim shall be made by any Buyer
Group Member against any Person other than Seller or made by any Seller Group
Member against any Person other than Buyer, for breaches of this Agreement
(including any covenant, obligation, representation or warranty contained in
this Agreement) or otherwise in respect of the sale of the Shares contemplated
hereby;
(ii) after
the
Closing Date, no party may seek the rescission of the transactions contemplated
by this Agreement; and
(iii) following
the Closing the Escrow Account shall be the sole and exclusive remedy for any
and all claims for indemnification made by Buyer Group Members against
Seller.
(d) No
party
hereto shall have any liability for any exemplary or punitive damages suffered
or incurred by any Buyer Group Member or Seller Group Member, as the case may
be; provided,
however,
in the
event that an Indemnified Party’s Loss incurred as a result of a third Person
claim includes any Liability for any exemplary or punitive damages, the
Indemnitor shall have Liability hereunder for such exemplary or punitive
damages.
(e) Notwithstanding
anything to the contrary set forth herein, none of the limitations on the
indemnification obligations of the Parties or the limitations of this
Section
11.6
shall
apply in the event of fraud or willful misconduct.
49
Section
11.7 Release
from Escrow Account.
On the
date that is eighteen (18) months following the Closing Date (the “Escrow
Release Date”),
the
Escrow Agent shall release immediately and automatically such account(s) as
provided by the Seller Representative (without any action or impairment by
any
party) the remaining amount of funds held in the Escrow Account less the
aggregate amount of all Losses and Expenses that are specified in any
then-unresolved good faith claims for indemnification made by Buyer Group
Members pursuant to this Article
XI.
To the
extent that on the Escrow Release Date any amount has been reserved and withheld
from distribution from the Escrow Account on account of an unresolved claim
for
indemnification and, subsequent to such Escrow Release Date, such claim is
resolved, the parties shall immediately direct the Escrow Agent to release
(a)
to the Buyer Group Members the amount of Losses and Expenses, if any, due in
respect of such claim as finally determined and (b) to such account(s) as
provided by the Seller Representative an amount equal to the excess, if any,
of
the amount theretofore reserved and withheld from distribution at such Escrow
Release Date in respect of such claim over the payment, if any, made pursuant
to
the foregoing clause (a).
Section
11.8 Seller
Representative.
(a) The
“Seller
Representative”
shall
be Xxxx Xxxxx, who may be replaced by Seller prior to the Closing Date.
Following the dissolution of Seller, the Seller Representative shall be
constituted and appointed as the true and lawful attorney-in-fact and exclusive
agent for and on behalf of Seller and the former shareholders of Seller, with
the full power of substitution or resubstitution, to give and receive notices
and communications, to authorize delivery to Buyer from the Escrow Account
in
satisfaction of claims by Buyer Group Members, to agree to, negotiate, enter
into settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to such claims’
determination, to incur expenses and retain counsel, to receive service of
process in connection with any claims under this Agreement, to execute and
deliver all documents (including the Escrow Agreement) in connection with the
transactions contemplated hereby or amendments thereto and to take any and
all
actions necessary or appropriate in the judgment of the Seller Representative
for the accomplishment of the foregoing. Any action taken by the Seller
Representative must be in writing and must be signed by the Seller
Representative. The appointment of the Seller Representative hereunder shall
be
deemed coupled with an interest and shall be irrevocable.
(b) The
Seller Representative shall not be liable to any shareholder of Seller, any
Seller Group Member or any Buyer Group Member for any act done or omitted
hereunder or under the Escrow Agreement as the Seller Representative while
acting in good faith and in the exercise of reasonable judgment, and any act
done or omitted pursuant to the advice of counsel shall be conclusive evidence
of such good faith; provided, however, that the Seller Representative may be
liable for damages arising from willful violation of applicable law or gross
negligence in the performance of such duties under this Agreement.
(c) In
the
event that Xxxx Xxxxx dies, becomes legally incapacitated or resigns from his
position as Seller Representative, Xxxxx Xxxxxxx shall select a replacement
Seller Representative, which replacement Seller Representative shall be deemed
to be the Seller Representative for all purposes of this Agreement. No bond
shall be required of the Seller Representative, and the Seller Representative
shall receive no compensation for his services. Any expenses incurred by the
Seller Representative in connection with his services hereunder shall be
reimbursed by Seller. Buyer
shall have no Liability with respect to any expenses or compensation of the
Seller Representative in connection with the Seller Representative’s duties and
services provided hereunder.
50
(d) Any
decision, act, waiver, consent or instruction of the Seller Representative
shall
constitute a decision of Seller and shall be final, binding and conclusive,
and
the Escrow Agent and Buyer may conclusively and absolutely rely, without
inquiry, upon any decision, act, consent or instruction of the Seller
Representative as being the decision, act, consent or instruction of
Seller.
ARTICLE
XII
TERMINATION
Section
12.1 Termination.
Anything contained in this Agreement to the contrary notwithstanding, this
Agreement may be terminated at any time prior to the Closing Date:
(a) by
the
mutual consent of Buyer and Seller;
(b) by
Buyer
in the event of any breach by Seller of any of its agreements, representations
or warranties contained herein which has resulted in (i) a Material Adverse
Effect or (ii) a material adverse effect on the ability of Seller to consummate
the transactions contemplated hereby; provided,
however,
that if
such breach is curable by Seller through the exercise of commercially reasonable
efforts prior to the Outside Date, for so long as Seller continues to exercise
such commercially reasonable efforts, Buyer may not terminate this Agreement
under this Section
12.1(b)
during
such period;
(c) by
Seller
in the event of any breach by Buyer of any of Buyer’s agreements,
representations or warranties contained herein which has resulted in a material
adverse effect on Buyer or on Buyer’s ability to consummate the transactions
contemplated hereby; provided,
however,
that if
such breach is curable by Buyer through the exercise of commercially reasonable
efforts prior to the Outside Date, for so long as Buyer continues to exercise
such commercially reasonable efforts, Seller may not terminate this Agreement
under this Section
12.1(c)
during
such period;
(d) by
Buyer
or Seller if any court of competent jurisdiction or other Governmental Body
shall have issued a final and non-appealable order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby;
(e) by
Buyer
if (i) it fails to receive proceeds sufficient to pay the Closing Date Cash
Payment from the transactions contemplated by the Securities Purchase Agreement
or any alternative financing arrangement within 2 business days after the
satisfaction or waiver of all conditions to the consummation of such
transactions, or (ii) it fails to receive the Buyer Stockholder Approval at
a
meeting duly called for the purpose of approving the Financing; provided,
however,
that
the right to terminate this Agreement pursuant to this Section
12.1(e)
shall
not be available to Buyer if its failure to fulfill its obligations under this
Agreement, including Section
7.4,
has
been the cause or resulted in the failure to receive such proceeds;
51
(f) by
Seller
if the Buyer Stockholder Approval is not obtained at a meeting duly called
for
the purpose of approving the Financing and Buyer has not identified within
ten
(10) business days of such meeting alternative financing arrangements sufficient
to pay the Purchase Price that are reasonably likely to be capable of
consummation prior to the Outside Date; provided,
however,
Buyer
shall have no obligation to identify such alternative financing arrangement
except in accordance with Section
7.4;
or
(g) by
Buyer
or Seller if the Closing shall not have occurred on or before the Outside Date
(or such later date as may be mutually agreed in writing by Buyer and Seller);
provided,
however,
that no
termination may be made under this Section
12.1(g)
if the
failure to close on or prior to such date shall be caused by the action or
inaction of the terminating party.
Section
12.2 Notice
of Termination.
Any
party desiring to terminate this Agreement pursuant to Section
12.1
shall
give written notice of such termination to the other party to this
Agreement.
Section
12.3 Effect
of Termination.
(a) If
this Agreement shall be terminated pursuant to this Article
XII,
all
further obligations of the parties under this Agreement (other than Sections
12.3(b),
12.4,
13.2,
13.3
and
13.10)
shall
be terminated without further liability of any party to the other; provided,
however,
that
nothing herein shall relieve any party from liability for its willful breach
of
this Agreement.
(b) In
the
event that this Agreement is terminated by Buyer pursuant to Section
12.1(e)
or by
Seller pursuant to Section
12.1(f),
then
Buyer shall reimburse Seller for all out-of-pocket costs and expenses incurred
by it in connection with the negotiation and preparation of this Agreement
(including the fees, expenses and disbursements of its counsel, financial
advisors and independent public accountants) by wire transfer of immediately
available funds to an account designated in writing by Seller on the date of
such termination; provided,
however,
the
maximum amount required to be paid by Buyer under this Section
12.3(b)
shall
not exceed $400,000. Buyer acknowledges that the agreement set forth in this
Section
12.3(b)
is an
integral part of the transactions contemplated by this Agreement, and that
without this agreement, Seller would not enter into this Agreement; accordingly,
if Buyer fails to timely pay the amount due pursuant to this Section
12.3(b),
and, in
order to obtain the payment, Seller commences a suit which results in a judgment
against Buyer for the payment set forth in this Section
12.3(b),
Buyer
shall pay Seller its reasonable and documented costs and expenses (including
reasonable and documented attorneys’ fees) in connection with such suit. For the
avoidance of doubt, upon the payment of the amount due pursuant to this
Section
12.3(b),
Buyer
shall have no further obligation to Seller under this Agreement (other than
pursuant to this Section
12.3(b),
Section
12.4,
Section
13.2,
Section
13.3
or
Section
13.10).
Section
12.4 Non-Solicitation.
In the
event this Agreement is terminated, during the two-year period commencing on
the
date of termination, Buyer and its Affiliates shall not (and shall not assist
or
encourage others to), directly or indirectly, solicit the services, as employee,
consultant or otherwise, of any employee of Seller or any Subsidiary;
provided,
however,
that
Buyer and its Affiliates shall not be restricted or precluded from making
generalized searches for employees through general advertisements or trade
publications. Without limiting the rights of Seller to pursue all other legal
and equitable rights available for a violation of this Section 12.4
by Buyer
or its Affiliates, it is agreed that other remedies cannot fully compensate
Seller for such a violation and that Seller shall be entitled to injunctive
relief to prevent a violation or continuing violation hereof.
52
ARTICLE
XIII
GENERAL
PROVISIONS
Section
13.1 Survival
of Representations and Warranties.
All
representations and warranties contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement through the
period during which claims for indemnification may be made for such
representations and warranties pursuant to Article XI
(at
which time such representations and warranties shall terminate). If applicable,
covenants shall survive the Closing in accordance with their terms.
Section
13.2 Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the internal
laws (as opposed to the conflicts of law provisions) of the State of New York.
Each of the Parties irrevocably submit to the jurisdiction of the State Courts
of the State of New York or any court of the United States located in the State
of New York, for the purposes of any suit, action or other proceeding arising
out of this Agreement. Each of the Parties further agree that service of any
process, summons, notice or document by U.S. registered mail to such Party’s
respective address set forth in Section 13.4
shall be
effective service of process for any action, suit or proceeding with respect
to
any matters to which it has submitted to jurisdiction as set forth above in
the
immediately preceding sentence and Seller hereby irrevocably appoints the Seller
Representative (and agrees to take any and all necessary action to maintain
such
appointment) as its agent for service of any process, summons, notice or
document by U.S. registered mail to the address set forth in Section 13.4
and
agrees that any such process, summons, notice or document delivered shall be
effective service of process for any action, suit or proceeding with respect
to
any matters to which it has submitted to jurisdiction as set forth above in
the
immediately preceding sentence Each of the Parties hereto irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement in any State Court of the State
of
New York or any court of the United States located in the State of New York,
and
hereby further irrevocably and unconditionally waive and agree not to plead
or
claim in any such court that any such action, suit or proceeding brought in
any
such court has been brought in an inconvenient forum.
Section
13.3 No
Public Announcement; Confidential Nature of Information.
(a)
Neither Buyer nor Seller shall, without the approval of the other, make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by law, in which case the other party shall be advised
and
the parties shall use their reasonable efforts to cause a mutually agreeable
release or announcement to be issued; provided,
however,
that
the foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with the accounting
and
the SEC disclosure obligations or the rules of any stock exchange.
(b) Each
party hereto agrees that all documents, materials and other information which
it
shall have obtained regarding the other parties during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents shall be kept strictly confidential pursuant to the Seller
Representative Confidentiality Agreement and the Confidentiality Agreement;
provided,
however,
that
the foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with the accounting
and
the SEC disclosure obligations or the rules of any stock exchange.
53
Section
13.4 Notices.
All
notices or other communications required or permitted hereunder shall be in
writing and shall be deemed given or delivered when delivered personally or
when
sent by registered or certified mail or by private courier addressed as
follows:
If
to
Buyer, to:
PhotoMedex,
Inc.
000
Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx,
XX 00000
Attention:
President and CEO
Facsimile:
(000) 000-0000
with
a
copy to:
Xxxxxx,
Xxxxx & Xxxxxxx, LLP
0000
Xxxxxx Xxxxxx,
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxx
Facsimile:
(215) 963 - 5001
If
to
Seller or to the Seller Representative, to:
Photo
Therapeutics Group Limited
Xxxxxxx
Xxxxx Xxxxxxxx Xxx Xxxx
Xxxxxxxxxx,
Xxxxxxxx
XX00
0XX
United
Kingdom
Attention:
Chief Executive Officer
Facsimile:
x00 (0) 0000 000 000
for
purposes of Section
13.2
only:
[omitted]
United
Kingdom
Attention:
Xxxx Xxxxx
54
with
a
copy to:
Sidley
Austin LLP
Xxx
Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxx
Facsimile:
(000) 000-0000
or
to
such other address as such party may indicate by a notice delivered to the
other
parties hereto.
Section
13.5 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns; provided,
however,
that no
party to this Agreement may assign its rights prior to the Closing or delegate
its obligations under this Agreement without the express prior written consent
of the other parties to this Agreement. Following the Closing, any party may
assign any of its rights hereunder, but no such assignment shall relieve it
of
its obligations hereunder. Nothing in this Agreement, expressed or implied,
is
intended or shall be construed to confer upon any Person other than the parties
and successors and assigns permitted by this Section
13.5
and
pursuant to Sections
7.1,
7.4
and
8.5
and
Article
XI
any
right, remedy or claim under or by reason of this Agreement.
Section
13.6 Access
to Records after Closing.
For a
period of six (6) years after the Closing Date, Seller and its representatives
shall have reasonable access to all of the books and records of the Subsidiaries
to the extent that such access may reasonably be required by Seller in
connection with matters relating to or affected by the operations of the
Subsidiaries prior to the Closing Date. Such access shall be afforded by Buyer
upon receipt of reasonable advance notice and during normal business hours.
Seller shall be solely responsible for any costs or expenses incurred by them
pursuant to this Section
13.6.
If
Buyer or the Subsidiaries shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, Buyer shall, prior
to
such disposition, give Seller a reasonable opportunity, at Seller’s expense, to
segregate and remove such books and records as Seller may select.
Section
13.7 Entire
Agreement; Amendments.
This
Agreement, the Exhibits and Schedules referred to herein, the documents
delivered pursuant hereto and the Confidentiality Agreement contain the entire
understanding of the parties hereto with regard to the subject matter contained
herein or therein, and supersede all other prior representations, warranties,
agreements, understandings or letters of intent between or among any of the
parties hereto. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each
of
the parties hereto.
Section
13.8 Interpretation.
For
purposes of this Agreement: (i) the words “include”, “includes” and “including”
shall be deemed to be followed by the words “without limitation”; (ii) the word
“or” is not exclusive; (iii) the words “herein”, “hereof”, “hereby”, “hereto”
and “hereunder” refer to this Agreement as a whole; and (iv) the words
“material” and “materiality” and words of similar import, when used in this
Agreement, are to be understood by reference to the businesses, assets and
properties of Seller and the Subsidiaries taken as a whole. Unless the context
otherwise requires, references herein to: (i) Articles, Sections and Schedules
mean the Articles and Sections of, and the Schedules attached to, this
Agreement; (ii) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and by
this
Agreement; (iii) to a statute means such statute as amended from time to time
and includes any successor legislation thereto and any regulations promulgated
thereunder, in each case through the date of this Agreement; and (iv) to dollars
or “$” means U.S. dollars. Articles, titles and headings to Sections herein are
inserted for convenience of reference only and are not intended to be a part
of
or to affect the meaning or interpretation of this Agreement. This Agreement
and
the Escrow Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting an
instrument or causing any instrument to be drafted. The Schedules and Exhibits
referred to herein shall be construed with and as an integral part of this
Agreement to the same extent as if they were set forth verbatim herein. Neither
the specification of any dollar amount in any representation or warranty
contained in this Agreement nor the inclusion of any specific item in any
Schedule hereto is intended to imply that such amount, or higher or lower
amounts, or the item so included or other items, are or are not material, and
no
party shall use the fact of the setting forth of any such amount or the
inclusion of any such item in any dispute or controversy between the parties
as
to whether any obligation, item or matter not described herein or included
in
any Schedule is or is not material for purposes of this Agreement. Unless this
Agreement specifically provides otherwise, neither the specification of any
item
or matter in any representation or warranty contained in this Agreement nor
the
inclusion of any specific item in any Schedule hereto is intended to imply
that
such item or matter, or other items or matters, are or are not in the ordinary
course of business, and no party shall use the fact of the setting forth or
the
inclusion of any such item or matter in any dispute or controversy between
the
parties as to whether any obligation, item or matter not described herein or
included in any Schedule is or is not in the ordinary course of business for
purposes of this Agreement.
55
Section
13.9 Waivers.
Any term
or provision of this Agreement may be waived, or the time for its performance
may be extended, by the party or parties entitled to the benefit thereof. Any
such waiver shall be validly and sufficiently authorized for the purposes of
this Agreement if, as to any party, it is authorized in writing by an authorized
representative of such party. The failure of any party hereto to enforce at
any
time any provision of this Agreement shall not be construed to be a waiver
of
such provision, nor in any way to affect the validity of this Agreement or
any
part hereof or the right of any party thereafter to enforce each and every
such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
Section
13.10 Expenses.
Except
as expressly set forth herein, each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses
and
disbursements of its counsel and independent public accountants.
Section
13.11 Partial
Invalidity.
Wherever
possible, each provision hereof shall be interpreted in such manner as to be
effective and valid under applicable law, but in case any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such provision shall be ineffective
to
the extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid, illegal
or
unenforceable provision or provisions or any other provisions hereof, unless
such a construction would be unreasonable.
56
Section
13.12 Execution
in Counterparts.
This
Agreement may be signed in any number of counterparts, including any counterpart
delivered via facsimile, “.pdf” or other similar format, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by all of the other
parties hereto. Until and unless each party has received a counterpart hereof
signed by all other parties hereto, this Agreement shall have no effect and
no
party shall have any right or obligation hereunder (whether by virtue of any
other oral or written agreement or other communication).
Section
13.13 Further
Assurances.
On and
after the Closing Date, each party hereto shall take such other actions and
execute such other documents and instruments of conveyance and transfer as
may
be reasonably requested by the other party hereto from time to time to
effectuate or confirm Seller’s or the Subsidiaries’ ownership of Owned
Intellectual Property and/or the transfer of the Shares to Buyer in accordance
with the terms of this Agreement. Without limiting the provisions of
Section
6.3,
upon
the terms and subject to the conditions herein, each of the parties hereto
agrees to use its commercially reasonable efforts to take or cause to be taken
all action, to do or cause to be done, and to assist and cooperate with the
other party in doing, all things necessary, proper or advisable under applicable
laws and regulations or otherwise to consummate and make effective, in the
most
expeditious manner practicable, the transactions contemplated by this Agreement,
including: (i) the satisfaction of the conditions precedent to the obligations
of any of the parties hereto; (ii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement
or
the performance of the obligations hereunder; and (iii) the execution and
delivery of such instruments, and the taking of such other actions as the other
party hereto may reasonably require in order to carry out the intent of this
Agreement.
Section
13.14 Disclaimer
of Warranties. EXCEPT
AS TO THOSE MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND WARRANTIES
IN
THIS AGREEMENT AND THE CERTIFICATES DELIVERED BY ANY PARTY PURSUANT TO THIS
AGREEMENT, EACH OF THE PARTIES HERETO DISCLAIMS ALL OTHER WARRANTIES,
REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR IMPLIED. EACH OF THE PARTIES
HERETO MAKES NO REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS
FOR
ANY PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES
WHATSOEVER.
[Remainder
of page intentionally left blank; signature pages follow.]
57
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the day and year first above written.
|
By:
|
/s/ |
|
Name:
|
|
|
Title:
|
|
|
PHOTOMEDEX,
INC.
|
|
|
By:
|
/s/ |
|
Name:
|
Xxxxxxx
X. X’Xxxxxxx
|
|
Title:
|
President
& Chief Executive Officer
|
| /s/ | |
|
XXXX
XXXXX
|
|
[Signature
Page to PHMD/PTL Purchase Agreement]
Exhibit
A
Voting
Agreement
EXHIBIT
A
| To: |
PhotoMedex,
Inc.
|
000
Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx,
XX 00000
Date:
,
2008
Dear
Sirs,
The
undersigned refers to the proposed transactions (the "Proposals")
to be
effected pursuant to a Purchase Agreement (the "Purchase
Agreement")
to be
entered into by and among Photo Therapeutics Group Limited, a private limited
company incorporated under the laws of England and Wales with registered
number
04197580 (the "Company"),
and
PhotoMedex, Inc., a Delaware corporation ("Buyer").
We
note that the Proposals will be subject to the approval of the Company's
shareholders at a general meeting (the "General
Meeting").
The
Proposals involve the sale of each of the subsidiaries of the Company for
a cash
payment of Thirteen Million United States Dollars (US$13,000,000) and a
potential earnout payment of up to an additional Seven Million United States
Dollars (US$7,000,000) (the “Payments”).
The
Payments will be subject to adjustment and deferral based on deal expenses,
working capital levels at closing and potential indemnity claims by the Buyer
to
be negotiated by the Company and the Buyer.
By
this
deed the undersigned hereby confirms (in the case of paragraph 1 below),
represents and warrants (in the case of paragraph 3.1 below), acknowledges
(in
the case of paragraph 3.2 below), covenants and irrevocably undertakes in
the
terms set out below.
|
1.
|
The
undersigned confirms that:
|
|
(a)
|
the
number of ordinary shares of £0.01 each in the capital of the Company
specified below (the "Shares")
are, as at the date of this undertaking, legally and beneficially
owned by
the undersigned free from any charge, security interest, option,
lien,
equity, restriction or any other encumbrance
whatsoever:
|
|
Number
of Shares ______________
|
|
(b)
|
the
number of ordinary shares of £0.01 each in the capital of the Company
specified below (the "Option
Shares")
are, as at the date of this undertaking, subject to options to
purchase
such ordinary shares legally and beneficially owned by the undersigned
free from any charge, security interest, option, lien, equity,
restriction
or any other encumbrance whatsoever, other than any applicable
vesting
provisions:
|
|
Number
of Shares Subject to Options ______________
|
|
(c)
|
we
have full discretionary right, capacity and authority to control
the
exercise of all voting rights attached to the Shares and, upon
issuance of
Option Shares, the Option Shares; there are no other shares in
the capital
of the Company in which we have any interest or have any such rights.
|
1
|
2.1
|
At
the General Meeting at which shareholders will be asked to consider
and
approve the Proposals, we undertake
that:
|
|
(a)
|
we
shall vote (either personally or by proxy) in respect of the Shares
and,
if any Option Shares have been issued, such Option Shares in favour
of the
resolution required to implement the Proposals (the "Resolution")
which is to be proposed at the General Meeting (or any adjournment
thereof);
|
|
(b)
|
we
shall vote against any proposal at the General Meeting, or otherwise,
which is contrary to the Resolution, and against any action or
agreement
which would result in a breach of any representation, warranty,
covenant
or obligation of the Company in the Purchase
Agreement;
|
|
(c)
|
we
shall vote against any proposed adjournment of the General Meeting
put to
the meeting other than by the
Chairman;
|
|
(d)
|
(subject
to paragraph (e) below) we shall not join in demanding a poll unless
such
a poll is to be taken forthwith;
|
|
(e)
|
if
the Resolution is defeated on a show of hands, we shall call for
and join
in demanding a poll on the Resolution;
and
|
|
(f)
|
we
shall not revoke or otherwise withdraw any form of proxy submitted
by us
or on our behalf in accordance with the provisions of paragraph
(a)
above.
|
|
2.2
|
We
acknowledge and agree that we have delivered along with this undertaking
a
complete and duly executed power of attorney in the form attached
hereto
as the Appendix (the "Power
of Attorney")
granting a power of attorney to Buyer, to Xxxxx Xxxxxxxx, the designee
of
Buyer, in such capacity (and allowing Buyer to appoint a substitute
or
delegate its power), to execute a proxy in relation to the General
Meeting
(the "Proxy"),
such that the Proxy shall provide an authority to Buyer or its
authorised
representative to vote in accordance with the terms of paragraph
2.1 above
in respect of the votes attaching to the Shares which are capable
of being
cast at the General Meeting.
|
|
In
addition, we shall, no later than 6.00 pm, London time, on the
tenth
Business Day after the despatch to the shareholders of the Company
of
notice of the General Meeting, together with the accompanying form
of
proxy for holders of shares in relation to the General Meeting
(the "Form
of Proxy"), fully complete, duly execute and deliver the Form of
Proxy (or
procure that this is done), in accordance with the procedure set
out in
the materials related to the General Meeting and on the Form of
Proxy, so
that such completed, executed and delivered Form of Proxy shall
provide an
authority to Buyer or its authorised representative to vote in
accordance
with the terms of paragraph 2.1 above in respect of the votes attaching
to
the Shares which are capable of being cast at the General
Meeting.
|
|
2.3
|
At
or prior to the General Meeting, we shall not (without the prior
consent
of Buyer) do anything which restricts the voting rights of any
of the
Shares or Option Shares nor shall we exercise the voting rights
attaching
to the Shares or Option Shares in any manner, or take any other
action, in
each case which impedes or frustrates the Proposals (including,
but
without limitation, by voting in favour of any competing proposal
or any
action or agreement which is contrary to the Resolutions or which
would
result in a breach of any representation, warranty, covenant or
obligation
of the Company in the Purchase Agreement) or the passing of the
Resolution.
|
2
| 3.1 |
The
undersigned represents and warrants to you
that:
|
|
(a)
|
the
undersigned has the legal capacity to execute and deliver this
undertaking, to perform its obligations hereunder and to consummate
the
transactions contemplated hereby;
|
|
(b)
|
this
undertaking has been duly and validly executed and delivered by
the
undersigned and constitutes a legal, valid and binding obligation
of the
undersigned, enforceable against the undersigned in accordance
with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors; rights
generally
and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law);
|
|
(c)
|
the
execution and delivery of this undertaking by the undersigned does
not,
and the performance of the obligations of the undersigned under
this
undertaking and the consummation by the undersigned of the transactions
contemplated hereby will not, (i) conflict with or violate any
law, rule,
regulation, order, judgment or decree applicable to the undersigned
or
(ii) result in any breach of or constitute a default (or an event
that
with notice or lapse of time or both would become a default) under
any
contract to which the undersigned is a
party;
|
|
(d)
|
the
execution and delivery of this undertaking by the undersigned does
not,
and the performance of the obligations of the undersigned under
this
undertaking will not, require any consent, approval, authorization
or
permit of, or filing with or notification to, any court or arbitrator
or
any governmental entity, agency or official;
and
|
|
(e)
|
we
are a sophisticated investor with respect to our Shares (and Option
Shares, if any) and have independently and without reliance upon
Buyer and
based on such information as we have deemed appropriate, made our
own
analysis and decision to enter into this undertaking.
|
|
3.2
|
The
undersigned acknowledges
that Buyer has not made, and does not make, any representation
or
warranty, whether express or implied, of any kind or character
whatsoever
to us. However, this shall not prejudice or limit in any way the
terms of
any representations or warranties given by Buyer under the Purchase
Agreement.
|
|
4.
|
The
undersigned agrees that the undersigned shall
not (a) sell, transfer, grant security in respect of, or otherwise
dispose
of any interest in, the Shares or the Option Shares (or any rights
arising
in relation to the Shares or the Option Shares) or (b) enter into
any
agreement or understanding with any person or party to vote or
give any
instructions inconsistent with this undertaking or that otherwise
conflicts with this undertaking; in each case at any time prior
to the
Closing Date (as defined in the Purchase Agreement) or the date
on which
the Purchase Agreement is terminated in accordance with its
terms.
|
3
|
5.
|
The
undersigned agrees
that, if the undersigned fails to vote or act in accordance with
this
undertaking or breach any of its obligations in this undertaking,
damages
would not be an adequate remedy and, accordingly, Buyer shall be
entitled
to the remedy of specific performance or injunctive relief in any
court of
competent jurisdiction. Nothing contained in this undertaking shall
be
construed as prohibiting any person from pursuing any other remedies
available to it, either at law or in equity, in relation to such
breach of
this undertaking.
|
|
6.
|
The
terms of this undertaking shall terminate and cease to be of any
further
effect upon the earliest of:
|
| (a) |
the
Closing Date (as defined in the Purchase Agreement);
or
|
| (b) |
the
termination of the Purchase Agreement in accordance with its
terms,
|
and
where
this undertaking does so terminate it is acknowledged that no person shall
have
any claim against any other person pursuant to the terms of this undertaking
save in respect of any prior breaches of such terms. For the avoidance of
doubt,
if this undertaking is terminated prior to the General Meeting but after
the
submission of our Form of Proxy, the undersigned shall be entitled to withdraw
its Form of Proxy and shall be entitled to cast the votes attaching to the
Shares or the Option Shares which are capable of being cast at the General
Meeting at the undersigned’s sole discretion.
|
7.
|
The
undersigned shall,
as promptly as practicable, notify Buyer of the number of any new
shares
in the capital of the Company acquired by the undersigned, if any
and
including any Option Shares, after the date hereof and prior to
the
General Meeting. Any such shares shall be subject to the terms
of this
undertaking as though beneficially owned by the undersigned on
the date hereof. The undersigned agrees
that the undersigned will
promptly notify Buyer in writing upon any representation or warranty
of
the undersigned in
this undertaking becoming untrue in any material respect or upon
an
obligation of the undersigned not
being complied with in any material
respect.
|
|
8.
|
The
undersigned authorises
you to refer to this undertaking in any document, announcement
or medium
which you are required to release in order to complete the Proposals
or to
disclose it to any persons, if you are required to so disclose
by law,
regulation or any competent judicial or regulatory body or stock
exchange
or trading market.
|
|
9.
|
Any
time, date or period mentioned in this undertaking may be extended
by
mutual agreement in writing between the undersigned and
Buyer but time shall be of the essence as regards any time, date
or period
mentioned in this undertaking or as extended by mutual
agreement.
|
|
10.
|
If
any term or provision contained in this undertaking shall be held
to be
illegal or unenforceable, in whole or in part, by a court of competent
jurisdiction, that term or provision shall to that extent be deemed
not to
form part of this undertaking and the enforceability of the remainder
of
this undertaking shall be
unaffected.
|
|
11.
|
This
undertaking shall be governed by, and construed in accordance with,
the
laws of England and Wales and the undersigned hereby
submits to the non-exclusive jurisdiction of the English courts
as regards
any claim or matter arising in relation to this
undertaking.
|
4
|
12.
|
All
notices, requests, claims, demands and other communications under
this
undertaking shall be in writing and shall be deemed given (a) on the
date of delivery, upon delivery in person or if sent by facsimile
(receipt
of which is confirmed), (b) on the day after delivery, by registered
or certified mail (postage prepaid, return receipt requested),
or
(c) one business day after having been sent by express mail through
a
nationally recognised overnight courier, in each case to the parties
at
the following addresses (or at such other address for a party as
shall be
specified by like notice):
|
if
to the
undersigned, to the address of the undersigned set forth on the signature
page
hereto,
with
a
copy (which copy shall not constitute notice) to:
Sidley
Austin LLP
Xxx
Xxxxx
Xxxxxxxx
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxx Xxxxxxx
Fax:
x0.000.000.0000
|
if
to Buyer, to:
|
PhotoMedex,
Inc.
000
Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx,
XX 00000
Attention:
President and CEO
Facsimile:
000-000-0000
|
with
a copy (which copy shall not constitute notice)
to:
|
|
Xxxxxx,
Xxxxx & Bockius, LLP
|
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxx
Facsimile:
x0.000.000.0000
|
13.
|
Capitalised
terms used herein and not otherwise defined shall have the meanings
ascribed thereto in the Purchase
Agreement.
|
|
14.
|
If
the Purchase Agreement is not executed by both the Company and
Buyer by
August 31, 2008, this undertaking shall have no further force or
effect.
|
5
IN
WITNESS
whereof
this undertaking has been duly executed by us as a deed on the date first
stated
above.
[For
shareholder which is a company]
EITHER
Executed
as a deed by ______________ acting by ______________ and
______________
| Director | Director/Secretary |
OR:
Executed
as a deed by ______________ acting by ______________
| Director |
| In the presence of | Witness signature | |
| Name | ||
| Address | ||
| Occupation |
[For
shareholder who is a natural person]
Executed
as a deed by ______________
| In the presence of | Witness signature | |
| Name | ||
| Address | ||
| Occupation |
[Signature
Page of Voting Agreement]
6
Countersigned
by way of agreement with the terms of this undertaking.
| Authorised signatory for |
| PHOTOMEDEX, INC. |
7
APPENDIX
POWER
OF ATTORNEY
A.
Company/corporation as grantor
BY
THIS POWER OF ATTORNEY made
on
|
1.
|
We,
_________________, a company incorporated in _________________
(registered
no. _________________), whose registered office is at _________________
(the "Shareholder")
APPOINT
PhotoMedex,
Inc. of 000 Xxxxxxxx Xxxxx; Xxxxxxxxxxxxxxx, XX 00000 XXX ("Buyer")
and Xxxxx Xxxxxxxx of PhotoMedex, Inc., 000 Xxxxxxxx Xxxxx,
Xxxxxxxxxxxxxxx, XX 00000 XXX, as the designee of Buyer, jointly
and
severally, to be its attorneys (the "Attorneys")
for the following purposes:
|
|
(a)
|
to
complete and execute a form of proxy (the "Proxy")
in favour of the chairman of the General Meeting of Photo Therapeutics
Group Limited to be held in connection with the Proposals, pursuant
to
which Buyer or its authorised representative will be instructed
to vote
upon the resolutions before the meeting in accordance with the
obligations
of the Shareholder pursuant to Clause 2.1 of the Voting Agreement
dated
_________________ between the Shareholder and Buyer (the "Voting
Agreement");
and
|
|
(b)
|
to
deliver the Proxy in accordance with the instructions printed thereon
and,
in any event, no later than 48 hours before the stated time for
the
commencement of the General
Meeting.
|
|
2.
|
An
Attorney may appoint one or more persons to act as substitute or
substitutes in his or its place for all or any of the purposes
referred to
in this power of attorney and may revoke any such appointment at
any time.
|
|
3.
|
An
Attorney may delegate to one or more persons all or any of the
powers
referred to in Clause 1 on such terms as he or it thinks fit and
may
revoke any delegation at any time.
|
|
4.
|
The
Company undertakes to ratify whatever the attorney does or lawfully
causes
to be done under the authority or purported authority of this power
of
attorney.
|
|
5.
|
This
power of attorney is irrevocable from the date on which it is executed
until the date upon which the Voting Agreement is
terminated.
|
|
6.
|
Capitalised
terms used herein and not defined shall have the meanings given
to them in
the Voting Agreement.
|
|
7.
|
This
power of attorney is governed by, and shall be construed in accordance
with, English law.
|
8
IN
WITNESS of
which
this instrument is executed as a deed and delivered on the date first stated
above.
EITHER:
| SIGNED as a DEED by | )___________________Director |
| LIMITED/PLC acting by | )___________________Director/Secretary |
| _________________, a | ) |
| director, and | ) |
| _________________, a | ) |
| director/secretary | ) |
OR:
| SIGNED as a DEED by | )___________________Director |
| LIMITED/PLC acting by | ) |
| _________________, a director | ) |
| In the presence of: | Witness signature | |
| Name | ||
| Address | ||
| Occupation |
[Signature
Page of Power of Attorney]
9
POWER
OF ATTORNEY
B.
Natural person as grantor
BY
THIS POWER OF ATTORNEY made
on
|
1.
|
I,
_________________ of _________________ (the "Shareholder")
APPOINT
PhotoMedex,
Inc. of 000 Xxxxxxxx Xxxxx; Xxxxxxxxxxxxxxx, XX 00000 XXX ("Buyer")
and Xxxxx Xxxxxxxx of PhotoMedex, Inc., 000 Xxxxxxxx Xxxxx,
Xxxxxxxxxxxxxxx, XX 00000 XXX, as the designee of Buyer, jointly
and
severally, to be my attorneys (the "Attorneys")
for the following purposes:
|
|
(a)
|
to
complete and execute a form of proxy (the "Proxy")
in favour of the chairman of the General Meeting of Photo Therapeutics
Group Limited to be held in connection with the Proposals, pursuant
to
which the chairman as proxy will be instructed to vote upon the
resolutions before the meeting in accordance with the obligations
of the
Shareholder pursuant to Clause 2.1 of the Voting Agreement dated
_________________ between the Shareholder and Buyer (the "Voting
Agreement");
and
|
|
(b)
|
to
deliver the Proxy in accordance with the instructions printed thereon
and,
in any event, no later than 48 hours before the stated time for
the
commencement of the General
Meeting.
|
|
2.
|
An
Attorney may appoint one or more persons to act as substitute or
substitutes in his or its place for all or any of the purposes
referred to
in this power of attorney and may revoke any such appointment at
any time.
|
|
3.
|
An
Attorney may delegate to one or more persons all or any of the
powers
referred to in Clause 1 on such terms as he or it thinks fit and
may
revoke any delegation at any time.
|
|
4.
|
This
power of attorney is irrevocable from the date on which it is executed
until the date upon which the Voting Agreement
terminates.
|
|
5.
|
Capitalised
terms used herein and not defined shall have the meanings given
to them in
the Voting Agreement.
|
|
6.
|
This
power of attorney is governed by, and shall be construed in accordance
with, English law.
|
10
IN
WITNESS of
which
this instrument is executed as a deed and delivered on the date first stated
above.
| SIGNED as a DEED by | )___________________ |
| _________________ | ) |
| In the presence of: | Witness signature | |
| Name | ||
| Address | ||
| Occupation |
11
Exhibit
B
Form
of
Escrow Agreement
EXHIBIT
B
ESCROW
AGREEMENT
This
Escrow Agreement, dated as of August [___], 2008 (this “Agreement”),
is by
and among Photo Therapeutics Group Limited, a private limited company
incorporated in England and Wales having its principal place of business
at
Xxxxxxx Xxxxx, Xxxxxxxx Xxx Xxxx, Xxxxxxxxxx, Xxxxxxxx, XX00 0XX (“Seller”),
PhotoMedex, Inc., a Delaware corporation having its principal place of
business
at 000 Xxxxxxxx Xxxxx, Xxxxxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (“Buyer”
and,
together with Seller, the “Escrow
Parties”),
and
BNY Mellon, N.A. , a national banking association with its principal place
of
business at XXX Xxxxxx Xxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000
(the
“Escrow
Agent”).
WHEREAS,
Seller, Buyer and Xxxx Xxxxx (“Seller
Representative”),
Xxxx
0, 000 Xxxxxxx Xxxx, Xxxxxx XX0 0XX, have entered into that certain Purchase
Agreement, dated as of the date hereof (the “Purchase
Agreement”),
pursuant to which Buyer will purchase at the closing of the transactions
contemplated thereby (the “Closing”)
all of
the issued and outstanding equity securities of Seller’s
subsidiaries;
WHEREAS,
pursuant to the terms and conditions of the Purchase Agreement, Buyer has
agreed
to deliver to the Escrow Agent the following amounts, which amounts are
to be
held by the Escrow Agent under the terms of this Agreement: (i) an aggregate
sum
of US $1,000,000 pursuant to Section 2.3 of the Purchase Agreement (the
“Closing
Amount”),
and
(ii) an amount, if any, to be deposited and held in escrow pursuant to
Section
2.5(e) of the Purchase Agreement (the “Earnout
Escrow Amount”
and
together with the Closing Amount, the “Escrow
Amount”);
WHEREAS,
pursuant to the terms and conditions of the Purchase Agreement, Buyer has
agreed
to deliver to the Escrow Agent to be distributed as directed by Seller
Representative on behalf of Seller amounts, if any, pursuant to Section
2.4(e)
and 2.5(e) of the Purchase Agreement (collectively, the “Distribution
Amounts”);
and
WHEREAS,
the parties hereto desire to set forth their understandings with regard
to the
escrow account and distribution procedures established by this
Agreement.
NOW,
THEREFORE, in consideration of the premises and agreements of the parties
contained in this Agreement, and for other good and valuable consideration,
the
receipt and sufficiency of which are acknowledged, the parties hereto agree
as
follows:
| 1. |
Appointment
of Escrow Agent; Seller Representative.
|
(a) The
Escrow Parties appoint the Escrow Agent as their agent to hold in escrow,
and to
administer the disposition of, the Escrow Fund (as defined below) and the
Distribution Amounts in accordance with the terms of this Agreement, and
the
Escrow Agent accepts such appointment.
(b) Seller
appoints Seller Representative on Seller’s behalf to take any and all actions
and make any decisions required or permitted to be made by Seller or Seller
Representative under this Agreement. Seller represents and warrants to
the
Escrow Agent that Seller has the power and authority to enter into this
Agreement and perform the obligations of Seller hereunder.
(c) Buyer
represents and warrants to the Escrow Agent that it has the power and authority
to enter into this Agreement and perform the obligations of Buyer
hereunder.
1
| 2. |
Establishment
of Escrow.
|
(a) On
or
prior to the date hereof, Buyer shall, in accordance with the terms and
conditions of the Purchase Agreement, cause the Closing Amount to be deposited
with the Escrow Agent. Subject to the terms and conditions of the Purchaser
Agreement, after the date hereof, Buyer shall cause to be deposited with
the
Escrow Agent the Earnout Escrow Amount, if any, and the Distribution Amounts,
if
any. Buyer and Seller Representative shall jointly designate whether any
amounts
deposited after the date hereof constitute a payment of the Earnout Escrow
Amount or a Distribution Amount in accordance with the terms of the Purchase
Agreement. Escrow Agent shall, upon request of the Escrow Parties or Seller
Representative, or any of them, promptly acknowledge to the Escrow Parties
or
Seller Representative, or any of them, receipt of any funds so deposited.
On or
prior to the date hereof, each of the Escrow Parties shall deliver one
fully
executed original of this Agreement to the Escrow Agent in accordance with
Section 12 below, with a copy to the Escrow Agent’s attorney.
(b) The
Escrow Amount and all additional amounts now or hereafter deposited with
the
Escrow Agent other than the Distribution Amounts, together with all interest
and
other income earned, shall be referred to collectively as the “Escrow
Fund.”
The
Escrow Parties acknowledge that the sum held in escrow hereunder may be
reduced
from time to time during the term hereof pursuant to the terms of this
Agreement. Accordingly, the term “Escrow
Fund”
shall
refer both to the aggregate amounts of the Closing Amount and the Earnout
Escrow
Amount and to such lesser or greater amount as may be held pursuant hereto
at
any point during the term hereof, as the case may be, but shall not include
the
Distribution Amounts. The term “Distribution Amounts” shall include all interest
and other income earned on the amounts designated by Buyer and Seller
Representative as Distribution Amounts as provided herein.
(c) Each
of
Seller and Buyer intend that the Escrow Fund shall not be taxable to Seller
or
Seller Representative unless and to the extent actually released and paid
as
directed by Seller Representative pursuant to this Agreement and this Agreement
shall be interpreted and applied in a manner consistent with such intent.
In
furtherance thereof, Seller and Buyer acknowledge and agree that the Escrow
Fund
and amounts deposited and earned thereon shall be treated as owned by Buyer
(and
not Seller or Seller Representative) for tax purposes unless and until
actually
released and paid to Seller
Representative pursuant to this Agreement.
| 3. |
Customer
Identification and TIN Certification.
|
(a) To
help
the government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify and record
information that identifies each individual or entity that opens an account.
Therefore, the Escrow Agent must obtain the name, address, taxpayer or
other
government identification number, and other information, such as date of
birth
for individuals, for each individual and business entity that is a party
to this
Agreement. For individuals signing this Agreement on their own behalf or
on
behalf of another, the Escrow Agent requires a copy of a driver’s license,
passport or other form of photo identification. For business and other
entities
that are parties to this Agreement, the Escrow Agent will require such
documents
as it deems necessary to confirm the legal existence of the entity.
2
(b) At
the
time of or prior to execution of this Agreement, any Escrow Party providing
a
tax identification number for tax reporting purposes shall provide to the
Escrow
Agent a completed IRS Form W-9 or FORM W-8BEN, and every individual executing
this Agreement on behalf of an Escrow Party shall provide to the Escrow
Agent a
copy of a driver’s license, passport or other form of photo identification
acceptable to the Escrow Agent. The Escrow Parties agree to provide to
the
Escrow Agent such organizational documents and documents establishing the
authority of any individual acting in a representative capacity as the
Escrow
Agent may require in order to comply with its established practices, procedures
and policies. In the event that any Escrow Party fails to provide any such
organizational documents or documents establishing authority, or any individual
executing this Agreement on behalf of an Escrow Party fails to provide
to the
Escrow Agent an acceptable form of identification, within ten (10) calendar
days
after the Escrow Agent requests the same, the Escrow Agent is authorized,
not
withstanding any other provision of this Agreement to the contrary, to
place the
Escrow Fund in a non-interest bearing deposit account until such documents
are
received by the Escrow Agent. The Escrow Agent is hereby authorized and
directed
to assign the tax identification number certified by Buyer to said
account.
(c) The
Escrow Agent is authorized and directed to report all interest and other
income
earned on the Escrow Fund in accordance with the Form W-9 information provided
to the Escrow Agent by Buyer. The Escrow Parties understand that, in the
event
one or more tax identification number is not certified to the Escrow Agent,
the
Internal Revenue Code, as amended from time to time, may require withholding
of
a portion of any interest or other income earned on the Initial
Deposit.
(d) The
Escrow Agent shall have no duty to prepare or file any information reports
(including without limitation IRS Forms 1099-B) other than such information
reports of interest earned on the Escrow Fund as the Escrow Agent is required
to
prepare and file in the ordinary course of its business.
4.
Deposit
of the Funds. The
Escrow Agent shall deposit the Escrow Fund and Distribution Amounts in
one or
more deposit accounts at BNY Mellon, N.A. in accordance with such written
instructions and directions as may from time to time be provided to the
Escrow
Agent by Seller Representative. In the event that the Escrow Agent does
not
receive written instructions, the Escrow Agent shall deposit the Escrow
Fund and
Distribution Amounts in money market accounts at BNY Mellon, N.A. Deposits
shall
in all instances be subject to the Escrow Agent’s standard funds availability
policy. The
Escrow Agent shall not be responsible for any loss due to interest rate
fluctuation or early withdrawal penalty. The Escrow Parties understand
that
deposits of the Escrow Fund and Distribution Amounts are not necessarily
insured
by the United States Government or any agency or instrumentality thereof,
or of
any state or municipality, and that such deposits do not necessarily earn
a
fixed rate of return. In no instance shall the Escrow Agent have any obligation
to provide investment advice of any kind. The Escrow Agent shall not be
liable
or responsible for any loss resulting from any deposits made pursuant to
this
Section 4, other than as a result of the bad faith, gross negligence or
willful
misconduct of the Escrow Agent.
3
| 5. |
Release
of the Escrow Fund and Payment of Distribution
Amounts.
|
(a) The
Escrow Amount shall be used to pay all amounts due and owing to Buyer,
if any,
pursuant to the terms and conditions of Section 2.4(e)(i) and Article XI
of the
Purchase Agreement. At
any
time prior to 11:59 pm New York time on the 18-month anniversary of the
date of
this Agreement (the “Termination
Date”),
upon a
determination that Buyer is entitled to a payment in accordance with Section
2.4(e)(i) and Article XI of the Purchase Agreement, Buyer and Seller (or
Seller
Representative on its behalf) shall promptly (and in any event no later
than
five (5) business days following such determination) deliver joint written
instructions substantially in the form attached hereto as Exhibit
A,
signed
by Buyer and Seller (or Seller Representative, as the case may be), to
the
Escrow Agent instructing the Escrow Agent to pay to Buyer the appropriate
amount
from the Escrow Fund (the “Joint
Written Instructions”).
Upon
receipt of the Joint Written Instructions, the Escrow Agent shall pay to
Buyer
such amount by wire transfer of immediately available funds.
(b) As
promptly as is practicable following receipt of written instructions signed
by
Seller or Seller Representative, substantially in the form of Exhibit
A
hereto,
setting forth the account or accounts or the payee or payees to which the
Distribution Amounts should be distributed, the Escrow Agent shall pay
such
amounts, together with all interest, dividends and other income, if any,
earned
thereon, in accordance with such instructions; it being understood that
Buyer
shall have no rights to receive the Distribution Amounts or object to the
distribution of the Distribution Amounts following their deposit with the
Escrow
Agent hereunder and the Escrow Agent shall be entitled to rely on the written
instructions of Seller or Seller Representative with respect thereto; provided,
however, that Buyer shall have no obligation or liability in connection
with the
written instructions of Seller or Seller Representative.
(c) Notwithstanding
anything to the contrary in this Agreement, the Escrow Agent shall have
no
obligation to follow any directions set forth in any Joint Written Instructions
unless and until the Escrow Agent is satisfied, in its sole discretion,
that the
persons executing said Joint Written Instructions are authorized to do
so.
(d) Notwithstanding
anything to the contrary in this Agreement, if any amount to be released
at any
time or under any circumstances exceeds the balance in the Escrow Fund,
the
Escrow Agent shall release the balance of such account and shall have no
liability or responsibility to the Escrow Parties for any
deficiency.
(e) As
promptly as is practicable after the Termination Date, upon receipt of
Joint
Written Instructions, the Escrow Agent shall distribute the balance, if
any, of
the remaining Escrow Fund (the “Escrow
Termination Release”).
4
6.
Methods
of Payment.
All
payments required to be made by the Escrow Agent under this Agreement shall
be
made by wire transfer or by cashier’s check, as elected by the party to receive
such payment as set forth herein. Any wire transfers shall be made subject
to,
and in accordance with, the Escrow Agent’s normal funds transfer procedures in
effect from time to time. The Escrow Agent shall be entitled to rely upon
all
bank and account information provided to the Escrow Agent by any of the
Escrow
Parties (or, with respect to Seller, Seller Representative). The Escrow
Agent
shall have no duty to verify or otherwise confirm any written wire transfer
instructions but it may do so in its discretion on any occasion without
incurring any liability to any of the Escrow Parties for failing to do
so on any
other occasion. The Escrow Agent shall process all wire transfers based
on bank
identification and account numbers rather than the names of the intended
recipient of the funds, even if such numbers pertain to a recipient other
than
the recipient identified in the payment instructions. The Escrow Agent
shall
have no duty to detect any such inconsistencies and shall resolve any such
inconsistencies by using the account number.
| 7. |
Responsibilities
and Liability of Escrow Agent.
|
(a) Duties
Limited.
The
Escrow Agent undertakes to perform only such duties as are expressly set
forth
in this Agreement. The Escrow Agent’s duties shall be determined only with
reference to this Agreement and applicable laws and it shall have no implied
duties. The Escrow Agent shall not be bound by, deemed to have knowledge
of, or
have any obligation to make inquiry into or consider, any term or provision
of
any agreement between any of the Escrow Parties and/or any other third
party or
as to which the escrow relationship created by this Agreement relates,
including
without limitation any documents referenced in this Agreement.
(b) Limitations
on Liability of Escrow Agent.
(i) Except
in
cases of the Escrow Agent’s bad faith, willful misconduct or gross negligence,
the Escrow Agent shall be fully protected (1) in acting in reliance upon
any
certificate, statement, request, notice, advice, instruction, direction,
other
agreement or instrument or signature reasonably and in good faith believed
by
the Escrow Agent to be genuine, (2) in assuming that any person purporting
to
give the Escrow Agent any of the foregoing in connection with either this
Agreement or the Escrow Agent’s duties, has been duly authorized to do so, and
(3) in acting or failing to act in good faith on the advice of any counsel
retained by the Escrow Agent. The Escrow Agent shall not be liable for
any
mistake of fact or law or any error of judgment, or for any act or omission,
except as a result of its bad faith, willful misconduct or gross negligence.
The
Escrow Agent shall not be responsible for any loss incurred upon any action
taken under circumstances not constituting bad faith, willful misconduct
or
gross negligence.
(ii) In
connection with any payments that the Escrow Agent is instructed to make
by wire
transfer, the Escrow Agent shall not be liable for the acts or omissions
of (1)
any Escrow Party or other person, including Seller Representative, providing
such instructions, including without limitation errors as to the amount,
bank
information or bank account number, or (2) any other person or entity,
including, without limitation, any Federal Reserve Bank, any transmission
or
communications facility, any funds transfer system, any receiver or receiving
depository financial institution, and no such person or entity shall be
deemed
to be an agent of the Escrow Agent.
5
(iii) Without
limiting the generality of the foregoing, it is agreed that in no event
will the
Escrow Agent be liable for any lost profits or other indirect, special,
incidental or consequential damages which the parties may incur or experience
by
reason of having entered into or relied on this Agreement or arising out
of or
in connection with the Escrow Agent’s services, even if the Escrow Agent was
advised or otherwise made aware of the possibility of such damages; nor
shall
the Escrow Agent be liable for acts of God, acts of war, breakdowns or
malfunctions of machines or computers, interruptions or malfunctions of
communications or power supplies, labor difficulties, actions of public
authorities, or any other similar cause or catastrophe beyond the Escrow
Agent’s
reasonable control.
(iv) In
the
event that the Escrow Agent shall be uncertain as to its duties or rights
under
this Agreement, or shall receive any certificate, statement, request, notice,
advice, instruction, direction or other agreement or instrument from any
other
party with respect to the Escrow Fund which, in the Escrow Agent’s reasonable
and good faith opinion, is in conflict with any of the provisions of this
Agreement, or shall be advised that a dispute has arisen with respect to
the
Escrow Fund or any part thereof, the Escrow Agent shall be entitled, without
liability to any person, to refrain from taking any action other than to
keep
safely the Escrow Fund until the Escrow Agent shall be directed otherwise
in
accordance with Joint Written Instructions or an order of a court with
jurisdiction over the Escrow Agent. The Escrow Agent shall be under no
duty to
institute or defend any legal proceedings, although the Escrow Agent may,
in its
discretion and at the expense of the Escrow Parties as provided in Section
7(c)
or Section 7(d) below, institute or defend such proceedings.
(c) Indemnification
of Escrow Agent.
Each of
Seller and Buyer jointly and severally agree to indemnify the Escrow Agent
for,
and the same agree to hold it harmless against, any and all claims, suits,
actions, proceedings, investigations, judgments, deficiencies, damages,
settlements, liabilities and expenses (including reasonable legal fees
and
expenses of attorneys chosen by the Escrow Agent) as and when incurred,
arising
out of or based upon any act, omission, alleged act or alleged omission
by the
Escrow Agent or any other cause, in any case in connection with the acceptance
of, or performance or non-performance by the Escrow Agent of, any of the
Escrow
Agent’s duties under this Agreement, except as a result of the Escrow Agent’s
bad faith, willful misconduct or gross negligence.
(d) Authority
to Interplead.
The
Escrow Parties authorize the Escrow Agent, if the Escrow Agent is threatened
with litigation or is sued, to interplead all interested parties in any
court of
competent jurisdiction and to deposit the Escrow Fund with the clerk of
that
court. In the event of any dispute, the Escrow Agent shall be entitled
to
petition a court of competent jurisdiction and shall perform any acts ordered
by
such court.
(e) Survival.
Notwithstanding anything in this Agreement to the contrary, the provisions
of
this Section 7 shall survive any resignation or removal of the Escrow Agent,
and
any termination of this Agreement.
8.
Termination.
This
Agreement and all the obligations of the Escrow Agent shall terminate upon
(a)
the distribution of all Distribution Amounts delivered to the Escrow Agent
and
(b) the earliest to occur of (i) the release of the entire Escrow Fund
prior to
the Termination Date by the Escrow Agent in accordance with this Agreement,
(ii)
the release of the Escrow Termination Release following the Termination
Date, or
(iii) the deposit of the Escrow Fund by the Escrow Agent in accordance
with
Section 7(d) hereof.
6
9.
Removal
of Escrow Agent.
The
Escrow Parties (including Seller Representative on Seller’s behalf) acting
together shall have the right to terminate the appointment of the Escrow
Agent,
specifying the date upon which such termination shall take effect. Thereafter,
the Escrow Agent shall have no further obligation to the Escrow Parties
except
to hold the Escrow Fund as depository and not otherwise. The Escrow Parties
agree that they will jointly appoint a banking corporation, trust company
or
attorney as successor escrow agent. Escrow Agent shall refrain from taking
any
action until it shall receive joint written instructions from the Escrow
Parties
designating the successor escrow agent. The Escrow Agent shall deliver
all of
the Escrow Fund and any Distribution Amounts to such successor escrow agent
in
accordance with such instructions and upon receipt of the Escrow Fund and
any
such Distribution Amounts, the successor escrow agent shall be bound by
all of
the provisions of this Agreement.
10. Resignation
of Escrow Agent.
The
Escrow Agent may resign and be discharged from its duties and obligations
hereunder at any time by giving no less than ten (10) days’ prior written notice
of such resignation to Buyer, Seller and Seller Representative, specifying
the
date when such resignation will take effect. Thereafter, the Escrow Agent
shall
have no further obligation to the Escrow Parties except to hold the Escrow
Fund
as depository and not otherwise. In the event of such resignation, Buyer
and
Seller agree that they will jointly appoint a banking corporation, trust
company, or attorney as successor escrow agent within ten (10) calendar
days of
notice of such resignation. Escrow Agent shall refrain from taking any
action
until it shall receive joint written instructions from Buyer and Seller
Representative designating the successor escrow agent. Escrow Agent shall
deliver all of the Escrow Fund and any Distribution Amounts held by it
to such
successor escrow agent in accordance with such instructions and upon receipt
of
the Escrow Fund and any such Distribution Amounts, the successor escrow
agent
shall be bound by all of the provisions of this Agreement.
11. Accounting.
On a
monthly basis, the Escrow Agent shall render a written statement setting
forth
the balance of the Escrow Fund, all interest earned and all distributions
made,
which statements shall be delivered to Buyer and Seller Representative
at the
addresses set forth under Section 12 below.
12. Notices.
All
notices under this Agreement shall be transmitted to the respective parties,
shall be in writing and shall be considered to have been duly given or
served
when personally delivered to any individual party, or on the business day
on
which such notice is deposited with a courier for delivery, postage paid,
or on
the date of telecopy, fax or similar transmission during normal business
hours,
as evidenced by mechanical confirmation of such telecopy, fax or similar
transmission, addressed in all cases to the party at his or its address
set
forth below, or to such other address as such party may designate, provided
that
notices will be deemed to have been given to the Escrow Agent on the actual
date
received:
If
to
Buyer, to:
PhotoMedex,
Inc.
000
Xxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx,
XX 00000
Attention:
Chief Financial Officer
Facsimile:
(000) 000-0000
with
a
copy to:
Xxxxxx,
Xxxxx & Xxxxxxx, LLP
0000
Xxxxxx Xxxxxx,
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxx
Facsimile:
(215) 963 - 5001
7
If
to
Seller, Seller Representative or to its agent, to:
Photo
Therapeutics Group Limited
Xxxxxxx
Xxxxx Xxxxxxxx Xxx Xxxx
Xxxxxxxxxx,
Xxxxxxxx
XX00
0XX
United
Kingdom
Attention:
Chief Executive Officer
Facsimile:
x00 (0) 0000 000 000
and
Xxxx
Xxxxx
[omitted]
Facsimile:
x00 000 0000000
with
a
copy to:
Sidley
Austin
Xxx
Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxx Xxxxxxx
Facsimile:
(000) 000-0000
If
to the
Escrow Agent:
BNY
Mellon, N.A.
BNY
Mellon Center
000
Xxxxxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Facsimile:
(000) 000-0000
| Attention: |
Art
Xxxxxxxxx, First Vice President
|
Xxxx
Xxxxxx, Escrow Administrator
Xxxx
Xxxxx, Private Banking Relationship Assistant
Copy
(which shall not constitute notice to the Escrow Agent) to:
Xxxxx
X.
Xxxxx, Esq.
Xxxxxxxxx,
Xxxxx & Xxxxxx LLC
00
Xxxxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Facsimile:
(000) 000-0000
8
Any
notice, except notice to the Escrow Agent, may be given on behalf of any
party
by its counsel or other authorized representative. In all cases the Escrow
Agent
shall be entitled to rely on a copy or a fax transmission of any document
with
the same legal effect as if it were the original of such document.
To
facilitate the performance by the Escrow Agent of its duties and obligations
hereunder, including resolving any issues arising hereunder (but not the
giving
of notice as provided above), the Escrow Parties agree that the Escrow
Agent may
contact the following representatives of each the Escrow Parties identified
below, or such other individuals as any of the Escrow Parties may identify
by
written notice to the Escrow Agent:
Buyer:
| Name: |
Xxxxx
Xxxxxxxx
|
| Telephone: |
(000)
000-0000
|
| E-mail: |
xxx@xxxxxxxxxx.xxx
|
Seller:
| Name: |
Xxxx
Xxxxx
|
| Telephone: |
[_____________]
|
| E-mail: |
|
13. Escrow
Agent Fees, Costs, and Expenses.
The
Escrow Agent shall charge an administrative fee of $0.00 and shall be entitled
to be reimbursed for its customary fees and charges for any wire transfers
or
other depository services rendered in connection with the Escrow Fund and
Distribution Amounts and any delivery charges or other out of pocket expenses
incurred in connection with the Escrow Fund and Distribution Amounts. Buyer
and
Seller Representative shall each pay 50% of any fees, expenses and other
amounts
owed to the Escrow Agent pursuant to this Agreement. The Escrow Agent shall
provide written invoices of any fees, expenses or other amounts owed in
connection with the Escrow Agent’s services provided hereunder to the Escrow
Parties. The Escrow Parties agree that the Escrow Agent shall be entitled
to
withhold any distribution otherwise required to be made from the Escrow
Fund if
any fees, expenses or other amounts owed to the Escrow Agent remain unpaid
on
the date such distribution would otherwise be made.
9
14. Modifications;
Waiver.
This
Agreement may not be altered or modified without the express prior written
consent of Buyer, Seller (or Seller Representative on its behalf) and the
Escrow
Agent. No course of conduct shall constitute a waiver of any terms or conditions
of this Agreement, unless such waiver is specified in writing, and then
only to
the extent so specified. A waiver of any of the terms and conditions of
this
Agreement on one occasion shall not constitute a waiver of the other terms
of
this Agreement, or of such terms and conditions on any other
occasion.
15. Further
Assurances.
If at
any time the Escrow Agent shall determine or be advised that any further
agreements, assurances or other documents are reasonably necessary or desirable
to carry out the provisions of this Agreement and the transactions contemplated
by this Agreement, the Escrow Parties shall execute and deliver any and
all such
agreements or other documents, and do all things reasonably necessary or
appropriate to carry out fully the provisions of this Agreement.
16. Assignment.
This
Agreement shall inure to the benefit of and be binding upon the successors,
heirs, personal representatives, and permitted assigns of the parties.
This
Agreement is freely assignable by the Escrow Parties; provided, however,
that no
assignment by such party, or it successors or assigns, shall be effective
unless
prior written notice of such assignment is given to the other parties,
including, without limitation, the Escrow Agent. This Agreement may not
be
assigned by the Escrow Agent, except that upon prior written notice to
the
Escrow Parties, the Escrow Agent may assign this Agreement to an affiliated
or
successor trust company or other qualified bank entity.
17. Section
Headings.
The
section headings contained in this Agreement are inserted for purposes
of
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
18. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York, without regard to any principles of conflicts of
law.
19. Counterparts
and Facsimile Execution.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one and the
same
instrument. The exchange of copies of this Escrow Agreement and of signature
pages by facsimile transmission shall constitute effective execution and
delivery of this Escrow Agreement as to the parties and may be used in
lieu of
the original Escrow Agreement for all purposes (and such signatures of
the
parties transmitted by facsimile shall be deemed to be their original signatures
for all purposes).
20. Waiver
of Jury Trial.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH
PARTY
HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT
OF
ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN WHOLE OR
IN PART
UNDER, RELATED TO, BASED ON OR IN CONNECTION WITH THIS AGREEMENT OR THE
SUBJECT
MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING
IN
TORT OR CONTRACT OR OTHERWISE. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF
EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY
JURY.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
10
IN
WITNESS WHEREOF, the parties have executed this Escrow Agreement as of
the date
first written above.
| PHOTO THERAPEUTICS GROUP LIMITED | ||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
| PHOTOMEDEX, INC. | ||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
| BNY MELLON, N.A. | ||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
11
EXHIBIT
A
JOINT
WRITTEN INSTRUCTIONS
FOR
RELEASE OF ESCROW AMOUNT
Pursuant
to Section 5(a) of the Escrow Agreement dated as of August [___], 2008,
by and
among Photo Therapeutics Group Limited, a private limited company incorporated
in England and Wales, PhotoMedex, Inc., a Delaware corporation, and BNY
Mellon,
N.A., a national banking association (the “Escrow
Agent”)
the
undersigned hereby instruct the Escrow Agent to release $[___________]
from the
Escrow Fund in accordance with the following instructions:
[Wire
Instructions:
| Account Name: | |||
| Account Number: | |||
| Bank Name: | |||
| Bank ABA Number: | |||
| Bank Address: | |||
| For credit to: | |||
| Special Instructions: | |||
| Bank Check: | |||
| Payee Name: | |||
| Mailing Address: | |||
|
]
|
1 |
| SELLER REPRESENTATIVE | PHOTOMEDEX, INC. | ||
| By: | |||
| Xxxx Xxxxx | Name:
Title:
|
||
Date:
_____________________
1
Additional account or payee information to be added by schedule, if
necessary.
1
