Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into
as of March 20, 2003 (the "Effective Date"), by and among Med-El
Elektromedizinische Gerate Gesellschaft m.b.H., a company with limited liability
formed under the laws of Austria with its principal office at Xxxxxxxxxx 00x,
X-0000 Xxxxxxxxx, Xxxxxxx ("Parent"); VIBRANT Med-El Hearing Technology GmbH, a
company with limited liability formed under the laws of Austria and wholly-owned
subsidiary of Parent with its principal office at Xxxxxxxxxx 00, X-0000
Xxxxxxxxx, Xxxxxxx ("Buyer"); and Symphonix Devices, Inc., a Delaware
corporation with its principal office at 0000 X. Xxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxx, Xxxxxxxxxx 00000 ("Seller").
RECITALS
A. Seller is engaged in the business of developing and providing hearing
technology, products, including the Vibrant(R) Soundbridge(TM), a surgical
implant designed to work with the natural structures of the middle-ear to
enhance hearing and communication for people with hearing impairment.
B. Seller owns certain assets related to its business which Seller
desires to sell to Buyer, and Buyer desires to purchase those assets from
Seller, and Seller, Parent and Buyer all desire to enter into certain related
agreements, all pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the parties hereto agree as follows:
1. Defined Terms. As used in this Agreement, the following terms
shall have the definitions set forth herein:
"Acquired Assets" means all right, title and interest in and to the assets
listed on Exhibit A.
"Acquisition Proposal" means an unsolicited bona fide offer, inquiry or
proposal relating to (i) a merger, tender offer, exchange offer, acquisition,
consolidation, or similar transaction involving at least 10% of the equity
securities of Seller or (ii) the acquisition of a material portion of the assets
of Seller.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, injunctions, orders, decrees, rulings,
dues, amounts paid in settlement, Liabilities, taxes, and liens.
"Agreement" means this Asset Purchase Agreement and the Exhibits and
Schedules attached hereto.
"Apportioned Obligations" has the meaning set forth in Section 2(e)(ii)
hereof.
"Assignment and Assumption Agreement" means an assignment and assumption
agreement in substantially the form attached hereto as Exhibit F-1.
"Assumed Contracts" means those contracts listed on Exhibit C.
"Assumed Liabilities" means the Liabilities described on Exhibit B hereto.
"Assumption Agreement" means an assumption agreement in substantially the
form attached hereto as Exhibit F-2.
"Xxxx of Sale" means a xxxx of sale in substantially the form attached
hereto as Exhibit E.
"Buyer" means VIBRANT Med-El Hearing Technology GmbH, a company with
limited liability formed under the laws of Austria and wholly owned subsidiary
of Parent.
"Buyer Disclosure Schedule" means the schedule of exceptions to Buyer's
representations and warranties, set forth in Schedule 4.
"Causes of Action" has the meaning set forth in Section 6(j) hereof.
"Clinical Data" has the meaning set forth in Section 6(n) hereof.
"Closing" has the meaning set forth in Section 2(d) hereof.
"Closing Date" has the meaning set forth in Section 2(d) hereof.
"COBRA" means, collectively, Section 4980B of the Code (as well as its
predecessor provision, Section 162(k) of the Code) and Sections 601 through 608,
inclusive, of ERISA.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means all information and material which is
proprietary to Seller, which pertains to the Acquired Assets, the Assumed
Liabilities or this Agreement, whether or not marked as "confidential" or
"proprietary," including the information contained in all paper and electronic
files transferred to Buyer pursuant to the terms of this Agreement.
"Effective Date" means the date of this Agreement first set forth above.
"Employee Plan" means all "employee benefit plans" as defined by Section
3(3) of ERISA, all specified fringe benefit plans as defined in Section 6039D of
the Code, and all other bonus, incentive-compensation, deferred-compensation,
profit-sharing, stock option, stock-appreciation-right, stock-bonus,
stock-purchase, employee-stock-ownership, savings, severance, change-in-control,
supplemental-unemployment, layoff, salary-continuation, retirement, pension,
health, life-insurance, disability, accident, group-insurance, vacation,
holiday, sick-leave, fringe-benefit or welfare plan, and any other employee
compensation or benefit plan, agreement, policy, practice, commitment, contract
or understanding (whether qualified or nonqualified, currently effective or
terminated, written or unwritten) and any trust, escrow or other agreement
related thereto that (i) is maintained or contributed to by Seller or an ERISA
Affiliate of Seller or has been maintained or contributed to in the last six (6)
years by Seller or any ERISA Affiliate, liability, and (ii) provides benefits,
or describes policies or procedures applicable to any current or former
director, officer,
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employee or service provider of Seller or any ERISA Affiliate, or the dependents
of any thereof, regardless of how (or whether) liabilities for the provision of
benefits are accrued or assets are acquired or dedicated with respect to the
funding thereof.
"Employee Transfer Date" has the meaning set forth in Section 6(f) hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to a party hereto, any other
corporation or trade or business controlled by, controlling or under common
control with such party (within the meaning of Section 414 of the Code or
Section 4001(a)(14) or 4001(b) of ERISA).
"Escrow Account" means the escrow account established and maintained
pursuant to the provisions of the Escrow Agreement.
"Escrow Agent" has the meaning set forth in the Escrow Agreement.
"Escrow Agreement" means that certain Escrow Agreement, dated as of March
20, 2003 by and among Parent, Buyer, Seller and Freshfields Bruckhaus Xxxxxxxx
as Escrow Agent, a copy of which is attached hereto as Exhibit D.
"Exhibit" means an exhibit attached hereto.
"FDA" means the United States Food and Drug Administration.
"Financial Statements" has the meaning set forth in Section 3(l) hereof.
"Initial Deposit" means the Two Hundred Fifty Thousand United States
Dollars (USD250,000) placed in the Escrow Account by Buyer pursuant to the terms
of the Escrow Agreement.
"In-Licenses" has the meaning set forth in Section 3(g)(ii).
"Infringement" has the meaning set forth in Section 3(g)(iv).
"Intellectual Property Rights" has the meaning set forth on Exhibit A.
"Inventory" means finished goods, goods-in-process, manufactured and
purchased parts and raw materials and supplies inventory.
"Liability" means any obligation or liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for taxes.
"Link" has the meaning set forth in Section 9(e)(ii) hereof.
"Losses" means claims, demands, suits, proceedings, taxes, judgments,
obligations to third parties, awards or demands, liabilities, damages,
penalties, fines, losses, costs and expenses
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(including reasonable fees and expenses of attorneys, accountants, consultants
and experts, including court costs).
"Marks" means registered and unregistered trademarks, trademark
applications, trade names, registered and unregistered service marks, and
service xxxx applications.
"Out-Licenses" has the meaning set forth in Section 3(g)(ii).
"Parent" means Med-El Elektromedizinische Gerate Gesellschaft m.b.H., a
company formed under the laws of Austria.
"Permitted Use" has the meaning set forth in Attachment 2 to Exhibit H of
this Agreement.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (for any department, agency or political subdivision
thereof), whether domiciled in the United States or abroad.
"Purchase Price" has the meaning set forth in Section 2(c)(i) hereof.
"Registered Intellectual Property Rights" has the meaning set forth in
Exhibit A.
"Release Agreement" has the meaning set forth in Section 6(i) hereof.
"Representatives" has the meaning set forth in Section 6(l) hereof.
"Rules" has the meaning set forth in Section 11(n)(i) hereof.
"Schedule" means a schedule attached hereto.
"SEC" means the United States Securities and Exchange Commission.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest.
"Seller" means Symphonix Devices, Inc., a Delaware corporation.
"Seller Disclosure Schedule" means the schedule of exceptions to Seller's
representations and warranties, set forth in Schedule 3.
"Seller Products" means all products of Seller included in the Acquired
Assets including, without limitation, the Vibrant(R) Soundbridge(TM).
"Shipping Costs" means the documented, out-of-pocket costs incurred by
Seller in connection with shipping the Acquired Assets to Buyer as contemplated
by this Agreement.
"Siemens" means Siemens Audiologische Technik GmbH, a company with limited
liability formed under the laws of Germany.
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"Siemens Distribution Agreement" has the meaning set forth in Section
7(a)(x) hereof.
"Siemens Supply Agreement" has the meaning set forth in Section 7(a)(xi)
hereof.
"Specified Marks" has the meaning set forth in Attachment 1 to Exhibit G of
this Agreement.
"Storage Fees" means the documented, out-of-pocket costs incurred in
connection with storing the Acquired Assets prior to the Closing.
"Subject Employee" has the meaning set forth in Section 6(f) hereof.
"Superior Proposal" means an unsolicited Acquisition Proposal (i) to
acquire at least fifty percent (50%) of the equity securities of Seller entitled
to vote generally in the election of directors to Seller's board of directors or
all or substantially all of the assets of Seller, (ii) that Seller's board of
directors determines in its good faith judgment (after consultation with its
financial, legal and other advisors) to be more favorable to Seller's
stockholders from a financial perspective than the transactions contemplated by
this Agreement, and (iii) that Seller's board of directors determines in its
good faith judgment (after consultation with its financial, legal and other
advisors) is reasonably capable of being completed (taking into account all
legal, financial, regulatory and other aspects of the Acquisition Proposal and
the Person making the Acquisition Proposal).
"Termination Fee" has the meaning set forth in Section 10(c)(ii) hereof.
"Third Party Claim" has the meaning set forth in Section 5(e)(i) hereof.
"Transfer Tax Reimbursement" has the meaning set forth in Section 2(e)(i)
hereof.
"Transfer Taxes" has the meaning set forth in Section 2(e)(i) hereof.
"Transition Services" has the meaning set forth in Section 9(a) hereof.
"Unregistered Intellectual Property Rights" has the meaning set forth in
Exhibit A.
2. Basic Transaction.
(a) Purchase and Sale of Assets. Subject to the terms and conditions
of this Agreement, at the Closing Buyer shall purchase from Seller, and Seller
shall sell, transfer and convey to Buyer, the Acquired Assets and all of
Seller's right, title and interest therein and thereto for the consideration
specified in Section 2(c) hereof. Buyer is not purchasing nor shall it have any
responsibility whatsoever with respect to any other asset of Seller not included
within the definition of Acquired Assets.
(b) Assumption of Liabilities and Contracts. Subject to the terms
and conditions of this Agreement, Buyer agrees to assume and become responsible
for all of the Assumed Liabilities and Assumed Contracts at the Closing. Buyer
will not assume or have any responsibility whatsoever with respect to any other
obligation or Liability of Seller not included within the definition of Assumed
Liabilities or Assumed Contracts.
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(c) Purchase Price.
(i) The purchase price for the Acquired Assets (the "Purchase
Price") shall be the sum of Xxx Xxxxxxx Xxxx Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxx
Dollars (USD2,500,000) and the Shipping Costs.
(ii) The Purchase Price will be payable at Closing as follows:
(A) Buyer shall pay to Seller an amount equal to Two Million United States
Dollars (USD2,000,000) as follows: (1) through the release by Buyer to Seller of
all rights to the Initial Deposit held in the Escrow Account pursuant to the
terms of the Escrow Agreement, and (2) a cash payment to Seller in an amount
equal to Xxx Xxxxxxx Xxxxx Xxxxxxx Xxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars
(USD1,750,000) by wire transfer or delivery of immediately available funds; (B)
Buyer shall pay to Seller a cash payment in an amount equal to the Shipping
Costs by wire transfer or delivery of immediately available funds; and (C) Buyer
shall place in the Escrow Account, an amount equal to Five Hundred Thousand
United States Dollars (USD500,000) which amount shall be held therein pursuant
to the terms of the Escrow Agreement until the satisfaction of the conditions
set forth in Section 9(a)(i) herein.
(d) The Closing. The closing and consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Squire, Xxxxxxx & Xxxxxxx L.L.P., 000 Xxxxxx Xxx, Xxxx Xxxx, Xxxxxxxxxx
00000, commencing at 10:00 a.m. local time on the business day following the
satisfaction or waiver of all conditions set forth in Section 7 hereof (other
than conditions with respect to actions the respective parties will take at the
Closing itself) or such other date as the parties may mutually determine (the
"Closing Date"); provided, however, that the Closing Date shall be no later than
May 31, 2003.
(e) Taxes.
(i) Any sales, use, excise or similar taxes or governmental
charges or fees imposed on or in connection with the transactions contemplated
by this Agreement by either California or any other state or U.S. taxing
authorities ("Transfer Taxes") shall be initially paid by Seller; provided,
however, that Buyer agrees to reimburse Seller in connection with Seller's
payment of the Transfer Taxes in an amount up to Twenty-five Thousand United
States Dollars (USD25,000) (the "Transfer Tax Reimbursement"). Seller shall be
solely responsible for the payment of all Transfer Taxes applicable to the
transaction when due and shall be responsible for, and shall make, all
applicable filings, reports, and returns as provided by applicable law. Upon
Seller's payment of the Transfer Taxes, Seller shall notify Buyer of the amount
of Transfer Taxes paid and the methodology used to determine the amount of
Transfer Taxes. Within fifteen (15) business days of Buyer's receipt of such
notice, Buyer shall pay to Seller a cash payment in an amount equal to the
Transfer Tax Reimbursement by wire transfer or delivery of immediately available
funds. The parties shall cooperate with each other and use commercially
reasonable efforts to minimize the Transfer Taxes. Seller shall have no
obligation with respect to or responsibility for any other sales, use, excise or
similar taxes or governmental charges or fees imposed on or in connection with
the transactions contemplated by this Agreement.
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(ii) All real property taxes, personal property taxes and
similar ad valorem obligations levied with respect to the Acquired Assets and
Assumed Liabilities for any tax period that includes (but does not end on) the
Closing Date (collectively, the "Apportioned Obligations") shall be apportioned
between Seller and Buyer based on the number of days of such tax period up to
and including the Closing Date and the number of days of such tax period after
the Closing Date. Seller shall be liable for the proportionate amount of such
taxes that is attributable to the portion of the tax period up to and including
the Closing Date, and Buyer shall be liable for the proportionate amount of such
taxes that is attributable to the portion of the tax period beginning after the
Closing Date. Apportioned Obligations shall be timely paid, and all applicable
filings, reports and returns shall be filed, as provided by applicable law. If
the party required by applicable law to pay any such tax is not the party
responsible for such tax under this Agreement, the paying party shall be
entitled to reimbursement from the non-paying party.
(f) Storage Fees. Seller shall be responsible for payment of all
Storage Fees. To the extent that Parent or Buyer pays any Storage Fees, Seller
shall reimburse Parent and/or Buyer, as the case may be, within fifteen (15)
business days of Seller's receipt of notice of such payment and copies of
receipts reflecting such payment.
3. Representations and Warranties of Seller. Seller represents and
warrants to Buyer that the statements contained in this Section 3 are true and
correct as of the date hereof, and will be true and correct as of the Closing,
except as set forth in Schedule 3.
(a) Organization of Seller. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of Delaware and
California. Seller has the requisite corporate authority and power to carry on
its business and to own the Acquired Assets.
(b) Authorization of Transaction. Seller has full power and
authority to execute and deliver this Agreement and to perform Seller's
obligations hereunder. Without limiting the generality of the foregoing, the
board of directors of Seller has duly authorized the execution, delivery, and
performance of this Agreement by Seller. This Agreement constitutes valid and
legally binding obligations of Seller, enforceable in accordance with its terms
and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement nor the consummation of the transactions contemplated herein will
result in any of the following:
(i) any violation of any constitution, statute, regulation,
rule, bulk transfer law, injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or court to which
Seller or the Acquired Assets is subject, or any provision of the charter
documents of Seller;
(ii) a conflict with, a breach of, a default under, the
acceleration of, the creation in any third party the right to accelerate,
terminate, modify, or cancel, or require any notice under any material
agreement, contract, lease, license, lien filing, instrument, or other
arrangement to which any of the Acquired Assets are subject; or
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(iii) a requirement that Seller give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency or any third party in order for the parties to consummate
the transactions contemplated by this Agreement.
(d) Brokers' Fees. No broker, finder, investment banker, financial
advisor, agent or other Person retained or used by Seller is entitled to any
fees or commissions in connection with the transactions contemplated by this
Agreement.
(e) Title. Seller is the sole and exclusive owner of, and has good
and marketable title to the Acquired Assets, free and clear of restrictions, or
conditions to transfer or assignment, and free and clear of any Security
Interests, conditions, restrictions, or interests of third parties of any kind
whatsoever other than liens for taxes not yet due and payable, and none of the
Acquired Assets is in the possession or control of a third party.
(f) Assumed Contracts.
(i) To the best knowledge of Seller, each Assumed Contract
is valid and in full force and effect, and Seller is, and at all times has been,
in compliance in all material respects with all applicable terms and
requirements of each Assumed Contract.
(ii) To the best knowledge of Seller, each other Person that
has or had any obligation or liability under any Assumed Contract is, and at all
times has been, in compliance in all material respects with all applicable terms
and requirements of such Assumed Contract.
(iii) To the best knowledge of Seller, Seller has not given to
or received from any Person at any time any notice or other communication
(whether oral or written) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any Assumed Contract.
(g) Intellectual Property Rights; Confidential Information.
(i) Seller is the sole and exclusive owner of all right,
title and interest, free and clear of any Security Interest or similar
encumbrance of any kind, in and to Seller's Intellectual Property Rights and
Confidential Information. Seller has all right, title and interest to use and
assign the Intellectual Property Rights and Confidential Information and to
fulfill Seller's obligations under this Agreement.
(ii) Seller has not, except as set forth in Schedule 3, (A)
granted pursuant to written agreement any rights or license under Seller's
Intellectual Property Rights to third parties ("Out-Licenses") or (B) obtained
pursuant to written agreement any rights or license under any intellectual
property rights of third parties ("In-Licenses").
(iii) Seller is not, and will not be, as a result of the
execution and delivery of this Agreement or the performance of Seller's
obligations under this Agreement, in a material breach under any In-License,
Out-License or other agreement to which Seller is a party relating to Seller's
or a third party's intellectual property rights.
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(iv) To the actual knowledge of Seller (without due inquiry or
diligence), no third party has interfered with, infringed upon or otherwise
misappropriated Seller's Intellectual Property Rights ("Infringement").
(v) To the actual knowledge of Seller (without due inquiry or
diligence), Seller's Intellectual Property Rights do not interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
intellectual property rights of any third party, and there are no investigations
of any governmental authority based on Seller's exercise of Seller's
Intellectual Property Rights or Confidential Information.
(vi) Except for (i) written agreements providing for non-use
and non-disclosure requirements and (ii) publications and other written
disclosures, in each case entered into or disseminated in the ordinary course of
Seller's business, Seller has not knowingly disclosed any of its Confidential
Information to any third party.
(vii) Except to the extent inuring by operation of law, Seller
has secured by written assignment, all rights, title and interest in and to all
Intellectual Property Rights created by consultants, independent contractors,
and employees of Seller constituting on the Closing Date, Seller's Intellectual
Property Rights.
(viii) All of Seller's (A) Registered Intellectual Property
Rights are in compliance with all formal legal requirements (including payment
of filing, examination and maintenance fees and proofs of use) and are not
subject to any unpaid fees, taxes or other amounts or actions required to be
paid or undertaken within sixty (60) days of the Closing Date for such
Registered Intellectual Property Rights to remain in compliance with such
requirements and (B), to actual knowledge of Seller (without due inquiry or
diligence), Unregistered Intellectual Property Rights are enforceable and Seller
has not taken any action or failed to take any action which would constitute
abandonment or cancellation of such Unregistered Intellectual Property Rights.
(h) Employment Benefit Plans. Seller has no Employee Plans. In all
material respects, each Employee Plan has been operated in accordance with its
terms and all applicable law, including ERISA and the Code. There is no Employee
Plan that is or was subject to Title IV of ERISA (including multi-employer
plans). There is no Employee Plan that provides post-retirement or other
post-employment health or life insurance benefits, except as may be required to
comply with COBRA. There are no former employees of Seller who elected
healthcare continuation coverage under COBRA.
(i) No Litigation. Seller is not, and has not for the past year
been, (i) subject to any outstanding injunction, judgment, order, decree,
ruling, or charge, or (ii) a party to or, to its knowledge, threatened to be
made a party to, any action, suit, arbitration, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency, which could result in Liability of Seller in excess of Twenty-Five
Thousand United States Dollars (USD25,000).
(j) Product Warranty. Each product manufactured, sold, leased, or
delivered by Seller has been in conformity with all applicable contractual
commitments and all express and implied warranties, and Seller has no Liability
(and to Seller's knowledge no present or future
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action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand has been threatened that would give rise to any Liability of Seller) for
replacement or repair thereof or other damages in connection therewith. No
product manufactured, sold, or delivered by Seller is subject to any guaranty,
warranty, or other indemnity beyond the applicable standard terms and conditions
of sale. Schedule 3(j) of Seller Disclosure Schedule includes copies of the
standard terms and conditions of sale for Seller (containing applicable
guaranty, warranty, and indemnity provisions).
(k) Product Liability. Seller has no Liability (and to Seller's
knowledge no present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand has been threatened that would give rise to
any Liability of Seller) arising out of any injury to individuals or property as
a result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by Seller.
(l) Financial Statements. The audited consolidated financial
statements and unaudited interim consolidated financial statements of Seller
included or incorporated by reference in the forms, reports, registration
statements and proxy statements filed by Seller with the SEC since January 1,
2001 (collectively, the "Financial Statements") have been prepared in accordance
with GAAP applied on a consistent basis (except as may be indicated therein or
in the notes thereto or, in the case of unaudited Financial Statements, as
permitted by applicable securities laws) and fairly present in all material
respects the financial position of Seller as of and at the dates thereof and the
results of operations and cash flows for the periods indicated, subject in the
case of the unaudited interim financial statements, to normal adjustments and
any other adjustments described therein, which were not and are not expected to
be material in amount or effect. Seller has no liabilities or obligations of any
kind or nature (whether accrued, absolute, contingent or otherwise) which would
be required to be reflected, reserved against or disclosed in any balance sheet
of Seller, or in the notes thereto, prepared in accordance with GAAP
consistently applied, except (i) as of the Effective Date as set forth or
reflected in the Financial Statements as of and for the periods ended September
30, 2002 included in Seller's report on Form 10-Q for the quarter ended
September 30, 2002 (the "September 2002 Financial Statements") and liabilities
arising since September 30, 2002 in the Seller's ordinary course of business,
none of which, individually or collectively, would have a material adverse
effect on the Acquired Assets or the Assumed Liabilities, or (ii) as of the
Closing Date, except liabilities arising since the date of the last financial
statements delivered pursuant to Section 6(e) below in Seller's ordinary course
of business, none of which, individually or collectively, would have a material
adverse effect on the Acquired Assets or the Assumed Liabilities.
(m) Debtor-Creditor Matters. Seller Disclosure Schedule contains a
list of the respective name, business address, and business telephone number of
each creditor (as that term is defined in 11 U.S.C. (S) 101(10)) of Seller, and
the respective amount owed to each such creditor, in each case as of the
Effective Date, certified by Seller's duly authorized officer to be accurate and
complete. At Closing, Seller will provide to Buyer an updated creditor list,
effective as of Closing, and similarly certified by Seller's duly authorized
officer.
(n) Tangible Assets. Seller owns all machinery, equipment, and other
tangible assets comprising part of the Acquired Assets, and the Acquired Assets
represent all the machinery, equipment and other tangible assets necessary for
the production of Sellers' Products. Each such tangible asset has been
maintained in accordance with normal industry practice, is in good operating
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condition and repair (subject to normal wear and tear), and is suitable for the
purposes for which it presently is used.
(o) Full Disclosure. The representations and warranties contained in
this Section 3 do not contain any untrue statement of any fact or omit to state
any fact necessary in order to make the statements and information contained in
this Section 3 not misleading.
4. Representations and Warranties of Parent and Buyer. Parent and Buyer
represent and warrant to Seller that the statements contained in this Section 4
are true and correct as of the date hereof, and will be true and correct as of
the Closing, except as set forth in Schedule 4.
(a) Organization. Parent and Buyer are companies with limited
liability duly organized, validly existing, and in good standing under the laws
of Austria.
(b) Authorization of Transaction. Parent and Buyer have full power
and authority to execute and deliver this Agreement and to perform their
respective obligations hereunder. Without limiting the generality of the
foregoing, the boards of directors of Parent and Buyer have duly authorized the
execution, delivery, and performance of this Agreement by Parent and Buyer. This
Agreement constitutes valid and legally binding obligations of Parent and Buyer,
enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement nor the consummation of the transactions contemplated herein will
result in any of the following:
(i) a violation of any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Parent or Buyer is
subject, or any provision of the charter documents of Parent or Buyer;
(ii) a conflict with, a breach of, a default under, the
acceleration of, the creation in any third party the right to accelerate,
terminate, modify, or cancel, or require any notice under any material
agreement, contract, lease, license, lien filing, instrument, or other
arrangement to which Parent or Buyer is a party; or
(iii) a requirement that Parent or Buyer give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency or any third party in order for the parties to
consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. No broker, finder, investment banker, financial
advisor, agent or other Person retained or used by Parent or Buyer is entitled
to any fees or commissions in connection with the transactions contemplated by
this Agreement.
(e) Net Worth. Either Parent or Buyer has a minimum unencumbered net
worth, calculated in accordance with GAAP, of at least Xxx Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxx Xxxxxx Xxxxxx Dollars (USD2,500,000).
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5. General Provisions Regarding Representations and Warranties;
Indemnification.
(a) Survival of Representations and Warranties. The representations
and warranties made hereunder shall survive until the third anniversary of the
Closing.
(b) Representations and Warranties Independent. The parties intend
that each representation and warranty contained herein shall have independent
significance. If any party has breached any representation or warranty contained
herein in any respect, the fact that there exists another representation or
warranty relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation or
warranty.
(c) Indemnification by Seller. Seller shall indemnify, defend and
hold harmless Buyer and any of its officers, directors, employees and agents,
from and against any and all Losses which are asserted against, imposed upon, or
incurred or suffered directly or indirectly by any such indemnified party as a
result of, arising from or relating to (i) any inaccuracy in, or breach or
nonperformance of, any of the representations, warranties, covenants or
agreements made by Seller in this Agreement, including any claim, demand, suit
or action brought by a third party asserting matters which, if true, would
result in such a breach or nonperformance, or (ii) any Liabilities or other
obligations of Seller other than the Assumed Liabilities, except that such
indemnity shall not apply to the extent that such matter results directly from a
breach of any obligation of Buyer to Seller. Seller shall not have any
obligation to indemnify Buyer from and against any Losses caused by the breach
by Seller of any representation or warranty in this Agreement to the extent the
Losses Buyer has suffered by reason of such breaches exceeds a $2,500,000
ceiling (after which point Seller will have no obligation to indemnify Buyer
from and against any further such Losses). The foregoing indemnification ceiling
shall not apply to, and Seller shall be liable for the entirety of any Losses
with respect to, (i) any breach by Seller of the aforementioned representations
and warranties if Seller had knowledge of such breach at any time prior to the
date on which the representation or warranty is made, (ii) any breach of any
covenant or agreement of Seller, or (iii) in relation to any Liability other
than the Assumed Liabilities.
(d) Indemnification by Buyer. Buyer shall indemnify, defend and hold
harmless Seller and any of its officers, directors, employees and agents, from
and against any and all Losses which are asserted against, imposed upon, or
incurred or suffered directly or indirectly by any such indemnified party as a
result of, arising from or relating to any inaccuracy in, or breach or
nonperformance of, any of the representations, warranties, covenants or
agreements made by Buyer in this Agreement, including any claim, demand, suit or
action brought by a third party asserting matters which, if true, would result
in such a breach or nonperformance, except that such indemnity shall not apply
to the extent that such matter results directly from a breach of any obligation
of Seller to Buyer. Buyer shall not have any obligation to indemnify Seller from
and against any Losses caused by the breach by Buyer of any representation or
warranty in this Agreement to the extent the Losses Seller has suffered by
reason of such breaches exceeds a $2,500,000 ceiling (after which point Buyer
will have no obligation to indemnify Seller from and against any further such
Losses). The foregoing indemnification ceiling shall not apply to, and Buyer
shall be liable for the entirety of any Losses with respect to, (i) any breach
by Buyer of the aforementioned representations and warranties if Buyer had
knowledge of such breach at any time prior to the date on which the
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representation or warranty is made, (ii) any breach of any covenant or agreement
of Buyer or (ii) in relation to any Assumed Liability.
(e) General Indemnification Procedures.
(i) If a party or Person entitled to indemnification
hereunder obtains knowledge of any claim, obligation, Liability or action for
which indemnification may be sought hereunder by such indemnified party (a
"Third Party Claim"), such indemnified party shall give prompt written notice
thereof to the indemnifying party; provided, however, that no delay on the part
of the indemnified party shall relieve the indemnifying party from any
obligation hereunder unless (and then solely to the extent) the indemnifying
party thereby is prejudiced.
(ii) The indemnifying party shall be entitled to control the
defense of any such legal proceeding, through legal counsel reasonably
satisfactory to the indemnified party and at the sole expense of the
indemnifying party, so long as (A) the indemnifying party notifies the
indemnified party in writing within fifteen (15) business days after the
indemnified party has given to the indemnifying party the notice required by
Section 5(e)(i) above that the indemnifying party will indemnify the indemnified
party from and against the entirety of any Adverse Consequences the indemnified
party may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim, (B) the indemnifying party provides the
indemnified party with reasonable evidence that the indemnifying party will have
the financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, and (C) the indemnifying party conducts
the defense of the Third Party Claim actively and diligently. The indemnified
party shall cooperate with the indemnifying party when the latter controls the
defense of a Third Party Claim.
(iii) So long as the indemnifying party is conducting the
defense of the Third Party Claim in accordance with Section 5(e)(ii) above, (A)
the indemnified party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
indemnified party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the indemnifying party, which consent may not be unreasonably
withheld, and (C) the indemnifying party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the indemnified party, which consent may
not be unreasonably withheld.
(iv) In the event any of the conditions in Section 5(e)(ii)
above is or becomes unsatisfied, (A) the indemnified party may defend against,
and consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the indemnified party need not consult with, or obtain any
consent from, the indemnifying party in connection therewith provided the
indemnified party has provided to the indemnifying party notice of such intent
to defend against or consent to such entry at least five (5) business days prior
thereto), (B) the indemnifying party will reimburse the indemnified party
promptly and periodically for the costs of defending against the Third Party
Claim (including reasonable attorneys' fees and expenses), and (C) the
indemnifying party will remain responsible for any Adverse Consequences the
indemnified party may suffer resulting from, arising out of, relating
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to, in the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Section 5.
6. Pre-Closing Covenants. The parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the parties shall use its best efforts to take
all actions and to do all other things necessary in order to satisfy the
conditions set forth with respect to such party in Section 7 hereof and to
consummate the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the Closing Conditions set forth in Section 7
below).
(b) Notices and Consents. Seller will give notices to third parties,
and Seller and Buyer will both use their best efforts to obtain the third party
consents and novations set forth on Schedule 6(b). Each of the parties will give
any notices to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the consummation of the transactions contemplated herein.
(c) Escrow Agreement. Buyer and Seller shall execute and deliver the
Escrow Agreement and carry out the applicable provisions thereof prior to the
Closing. (d) Operation of Business. Except as is consistent with the terms of
this Agreement, Seller shall not engage in any practice, take any action, or
enter into any transaction with respect to the Acquired Assets or Assumed
Liabilities outside the ordinary course of business except in connection with
the dissolution of the company.
(e) Interim Financial Statements.
(i) Seller shall deliver to Buyer an unaudited balance sheet
of Seller as of December 31, 2002, and the related unaudited statements of
income, changes in stockholders' equity and cash flows for the three (3) months
then ended, including in each case the notes thereto certified by Seller's chief
financial officer.
(ii) Until the Closing Date, Seller shall deliver to Buyer
within ten (10) days after the end of each month an unaudited balance sheet of
Seller and the related unaudited statements of income, changes in stockholders'
equity and cash flows for such month, including in each case the notes thereto
certified by Seller's chief financial officer.
(iii) The unaudited financial statements delivered by Seller to
Buyer pursuant to this Section 6(e) shall (A) fairly present the financial
condition and the results of operations, changes in shareholders' equity and
cash flows of Seller as at the respective dates of and for the periods referred
to in such financial statements and (B) be prepared in accordance with GAAP
applied on a consistent basis (except as may be indicated therein or in the
notes thereto or as permitted by applicable securities laws) and fairly present
in all material respects the financial position of Seller as of and at the dates
thereof and the results of operations and cash flows for the periods indicated,
subject to normal adjustments and any other adjustments described therein, which
were not and are not expected to be material in amount or effect.
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(f) Offer of Employment. Buyer may, but shall not be obligated to,
interview and offer employment to any employee of Seller who is an employee of
Seller that Parent or Buyer desires to employ (each a "Subject Employee"). If
Parent or Buyer makes an offer of employment to a Subject Employee, such
employment shall commence on the date specified in such offer, which date may be
before or after the Closing (the "Employee Transfer Date"), and be on such terms
as Parent or Buyer and Subject Employee shall mutually agree. Neither Parent nor
Buyer shall be obligated to continue the employment of any Subject Employee or
to continue to provide any compensation and benefits package to any Subject
Employee after the Employee Transfer Date. The employment of any Subject
Employee and the provision of any benefit may be terminated by Parent or Buyer
in their sole discretion at any time after the Employee Transfer Date. Parent
and Buyer shall pay or be severally liable for any obligation or Liability that
may arise from the termination by Parent or Buyer on or after the Closing Date
of the employment of the Subject Employees who become employees of Parent or
Buyer as of the Closing Date. Seller shall pay or be liable for any obligation
or Liability that may arise from the termination by Seller on or before the
Closing Date of the employment of the Subject Employees. Seller shall retain all
obligations and Liabilities to all employees of Seller who do not become
employees of Parent or Buyer. Seller shall have no obligation to keep a
healthcare plan in effect, but so long as a healthcare plan is in effect for
Seller, Seller shall be responsible for healthcare continuation coverage under
COBRA for all Subject Employees who do not become employees of Buyer.
(g) Full Access. Seller shall permit representatives of Parent and
Buyer to have full access at reasonable times during the business day and upon
reasonable notice, and in a manner so as not to interfere with the normal
business operations of Seller, to all premises, properties, personnel, books,
records, contracts, and documents of or pertaining to the Acquired Assets.
(h) Preservation of Business.
(i) Seller will keep the Acquired Assets substantially intact.
(ii) Seller shall use commercially reasonable efforts to assist
Buyer in the continuation or establishment of relationships with suppliers, who
agree and are capable of supplying in a timely manner, the parts, components and
materials necessary to manufacture Seller Products in quantities and at prices
commercially reasonable to Buyer.
(i) Release Agreements. At least two (2) business days prior to
Closing, Seller will provide to Buyer an executed, true and correct copy of each
settlement and release agreement, in a form reasonably satisfactory to Buyer and
its counsel (each, a "Release Agreement") that Seller has entered into with any
of the creditors listed on the Seller Disclosure Schedule. In the event that
Seller enters into a Release Agreement with any of the creditors listed on the
Seller Disclosure Schedule after the date described in the immediately preceding
sentence and before Closing, Seller will provide to Buyer an executed, true and
correct copy of each such Release Agreement within two (2) business days
following the parties' execution and delivery of such agreement. Each such
Release Agreement will contain, among other things, a provision that the
creditor's release of Seller includes Seller's successors and assigns.
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(j) Causes of Action. Seller shall allow Buyer to participate in
settlement proceedings regarding any outstanding claims or causes of action
relating to the Acquired Assets or the Assumed Liabilities ("Causes of Action"),
and Seller shall cooperate with Buyer with regard to such participation. Seller
may retain separate co-counsel at its sole cost and expense and participate in
settlement proceedings regarding the Causes of Action. Neither Buyer nor Seller
will enter into any settlement with respect to the Causes of Action without the
prior written consent of the other, which consent may not be unreasonably
withheld.
(k) Notice of Developments. Each party shall give prompt written
notice to the other party of any material adverse development which causes or is
likely to cause a breach of any of its own representations and warranties set
forth herein.
(l) Acquisition Proposal. Seller shall not, nor shall it authorize
or permit any officer, director or any investment banker, attorney or other
advisor, agent or representative of Seller (collectively, "Representatives") to,
nor shall it authorize, and it shall use commercially reasonable efforts not to
permit any employee or agent of Seller to, (i) directly or indirectly solicit or
initiate the submission of any Acquisition Proposal, (ii) enter into any
agreement with respect to any Acquisition Proposal or (iii) participate in any
discussions or negotiations regarding, or furnish to any Person any information
with respect to, any Acquisition Proposal; provided, however, that nothing in
this Section 6(l) or elsewhere in this Agreement shall prohibit Seller, before
the Closing Date, from furnishing information regarding Seller to, or entering
into negotiations or discussions with, any Person in response to an Acquisition
Proposal made, submitted, or announced by such Person (and not withdrawn) and
any such actions enumerated in this provision shall not be considered a breach
of this Agreement if and to the extent that each of the following conditions is
satisfied: (1) Seller's board of directors concludes in good faith that the
Acquisition Proposal is reasonably likely to lead to a Superior Proposal, (2)
such Acquisition Proposal is not attributable to a breach by Seller of this
Section 6(l); (3) Seller's board of directors concludes in good faith, after
consultation with its outside legal counsel, that it is reasonably likely that
the failure to take such action would constitute a breach of its fiduciary
duties to Seller's stockholders under applicable law; (4) Seller promptly gives
Buyer written notice of the existence of such Acquisition Proposal, all of the
material terms and conditions of such Acquisition Proposal and Seller's
intention to furnish information to, or enter into discussions or negotiations
with, such Person, and Seller promptly gives Buyer written notice of any
amendment in the material terms and conditions of such Acquisition Proposal
(which notice shall include materially amended material terms and conditions)
throughout the pendency of Seller's discussions or negotiations with such Person
relating to such amended Acquisition Proposal; (5) such Person executes a
confidentiality agreement with Seller that is customary for such transactions
and (6) Seller promptly furnishes to Buyer any information provided to such
Person (to the extent that such information has not been previously furnished by
Seller to Buyer). Subject to the foregoing provisions of this Section 6(l),
Seller shall, and shall cause its Representatives to, cease immediately all
existing activities, discussions and negotiations with Persons other than Parent
and Buyer regarding any proposal that constitutes, or which Seller reasonably
believes would lead to, an Acquisition Proposal, and will take the necessary
steps to inform the Persons referred to above of the obligations undertaken in
this Section 6(l).
(m) Seller Stockholder Approval. Subject to Section 10 herein and
the fiduciary duties of Seller's board of directors, Seller shall use its best
efforts to obtain the authorization,
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consent and approval of its stockholders authorizing the sale of the Acquired
Assets which may be required for the consummation of the transactions
contemplated by this Agreement.
(n) Clinical Data. Seller shall deliver to Buyer the clinical data
described in Schedule 6(n) hereof (collectively the "Clinical Data"). The
Clinical Data shall be in electronic form to the extent available in such format
or to the extent such data can be placed in such format through Seller's
exercise of commercially reasonable efforts.
7. Conditions to Obligations to Close.
(a) Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions to be performed by it in connection with the Closing
are subject to satisfaction of the following conditions:
(i) The representations and warranties set forth in Section
3 above shall be true and correct at and as of the Closing (except as to any
such representation or warranty that speaks as of a specific date, which must be
true and correct as of such date) except where the failure to be so true and
correct (A) has not had a material adverse effect on the Acquired Assets, and
(B) has not resulted in a material increase in the Assumed Liabilities;
(ii) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) The parties shall have received any authorizations,
consents, and approvals of any governments and governmental agencies which may
be required for the consummation of the transactions contemplated by this
Agreement, including without limitation, the receipt of any necessary FDA and
TUV approvals required to transfer the Acquired Assets, and Buyer shall have
been able to comply with the requirements of the California Bulk Sales statutes
(Division 6 of the California Uniform Commercial Code) or to determine that such
compliance is not required by law;
(iv) Seller shall have procured any authorization, consent
and approval of its stockholders authorizing the sale of the Acquired Assets
which may be required for the consummation of the transactions contemplated by
this Agreement;
(v) Seller shall have procured all of the third party
consents specified in Section 6(b) above;
(vi) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation;
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(vii) No event, occurrence or circumstance shall have taken
place which has resulted in a material adverse change which includes any event,
occurrence or circumstance that has had a material adverse effect on the
Acquired Assets, the Assumed Liabilities or the Seller Products;
(viii) Seller shall have delivered to Buyer the Clinical Data;
(ix) Seller shall have executed and delivered to Buyer a
certificate to the effect that each of the conditions specified in Section
7(a)(i)-(viii) above is satisfied in all respects;
(x) Seller shall have agreed to the termination of the
Marketing and Distribution Agreement entered into on November 2, 1999, as
amended, between Seller and Siemens (the "Siemens Distribution Agreement") by a
mutual termination agreement; and
(xi) Siemens shall have consented in writing to the
assignment by Seller to Buyer of the OEM and Supply Agreement entered into on
June 21, 1999, as amended, between Seller and Siemens (the "Siemens Supply
Agreement") in accordance with and if required by Section 16.2 thereof.
(xii) Seller's product liability insurance coverage shall have
remained in full force without interruption through the Closing Date.
Buyer may waive any condition specified in this Section 7(a) if
it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) The representations and warranties set forth in Section
4 above shall be true and correct in all material respects at and as of the
Closing;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) The parties shall have obtained any authorizations,
consents, or approvals of any governments or governmental agencies which may be
required for the consummation of the transactions contemplated by this
Agreement;
(iv) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
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(v) Buyer shall have executed and delivered to Seller a
certificate to the effect that each of the conditions specified in Section
7(b)(i)-(iv) above is satisfied in all respects; and
(vi) Seller shall have agreed to the termination of the Siemens
Distribution Agreement by a mutual termination agreement; and
(vii) Siemens shall have consented in writing to the assignment
by Seller to Buyer of the Siemens Supply Agreement in accordance with Section
16.2 thereof.
Seller may waive any condition specified in this Section 7(b) if it
executes a writing so stating at or prior to the Closing.
8. Actions at the Closing.
(a) Buyer Actions. At the Closing, Buyer shall take the following
actions:
(i) Deliver payment of the Purchase Price in the manner
provided in Section 2(c)(ii) hereof;
(ii) Execute and deliver to Seller (A) the Assignment and
Assumption Agreement and (B) the Assumption Agreement;
(iii) Deliver to Seller an executed and completed California
Reseller Certficate for filing by Seller with the State of California; and
(iv) Deliver to Seller a Buyer's officer's certificate required
pursuant to Section 7(b)(v) hereof.
(b) Seller Actions. At the Closing, Seller shall take the following
actions:
(i) Deliver to Buyer all documents of title necessary to
transfer title to the Acquired Assets, including title to all patents and Marks
conveyed hereunder, to Buyer and take such other reasonable actions as may be
necessary to deliver to Buyer (at a location mutually agreed by Seller and
Buyer) the Acquired Assets;
(ii) Execute and deliver to Buyer (A) the Assignment and
Assumption Agreement and (B) the Assumption Agreement;
(iii) Execute and deliver to Buyer patent assignments in the
form attached hereto as Exhibit G for any patents comprising part of the
Acquired Assets;
(iv) Execute and deliver to Buyer trademark assignments in the
form attached hereto as Exhibit H for any Marks comprising part of the Acquired
Assets;
(v) Execute and deliver to Buyer the Xxxx of Sale;
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(vi) Deliver to Buyer Seller officer's certificate required to
be delivered pursuant to Section 7(a)(ix) hereof;
(vii) Deliver to Buyer a certificate of good standing of
Seller, issued not earlier than ten (10) days prior to the Closing Date, by the
Secretary of State of Delaware; and
(viii) Deliver to Buyer certified resolutions of Seller's board
of directors and stockholders authorizing the execution, delivery and
performance of this Agreement.
(c) General. All actions to be taken at the Closing shall be deemed
to have been taken simultaneously, and none of those actions shall be deemed to
have been completed until all such actions are completed.
9. Post-Closing Matters.
(a) Transition Services. Following the Closing, Seller shall take
the actions or facilitate and provide the services (collectively, the
"Transition Services") listed below:
(i) transfer all product manufacturing equipment and know-how
related to manufacturing Seller Products, which transfer shall be measured by
the successful manufacture of at least one Vibrant(R) Soundbridge(TM), that
passes release specifications currently in effect in the approved manufacturing
process, at a facility of Buyer;
(ii) support and assist Buyer in a commercially reasonable
manner in the transfer of any FDA, TUV and other approvals related to the
Buyer's use of the Acquired Assets (including the sale of any products developed
or derived from the Acquired Assets) not obtained prior to Closing until such
time as such approvals are granted); and
(iii) promptly following the Closing, place the statement
attached hereto as Exhibit I (as prepared pursuant to Section 9(e)(ii) hereof)
and Link on its Website.
For the avoidance of doubt, the parties hereto agree and
acknowledge that the requirements set forth in subparagraph (i) above are not
contingent upon or subject to any approvals, inspections or other actions of
either the FDA or the TUV.
(b) Covenant Not to Compete. For a period of three (3) years after
the Closing Date, Seller shall not, directly or indirectly, organize, acquire or
own any interest in (including by way of equity, debt or any other interest),
engage in, be employed by, serve as a consultant to, act as an agent for, or
otherwise assist or provide services to, any entity or business that engages in
any business which is similar to or competitive in any way with any business
activity previously or currently engaged in by Seller whether anywhere in the
United States or worldwide.
(c) Non-Solicitation. For a period of three (3) years after the
Closing Date, Seller shall not directly or indirectly solicit, divert or take
away any of the customers or employees of Parent or Buyer, notwithstanding that
such customers, advisors or employees may have been originally obtained or
recruited through the efforts of Seller.
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(d) Confidential Information. Following the Closing, Seller shall
maintain the confidentiality of all Confidential Information and shall not use
any Confidential Information for any purpose whatsoever or disclose it to any
third party except as may be expressly agreed in writing by Buyer.
Notwithstanding the foregoing, Seller may disclose Confidential Information to
any governmental agency to the extent such disclosure is necessary for the
purposes of effecting the dissolution of Seller; provided, however, that (i)
such disclosure is not made electronically or delivered in an electronic format,
(ii) only such information as counsel to Seller advises Seller is legally
required to be disclosed shall be disclosed, and (iii) Seller uses best efforts
to prevent disclosure of the Confidential Information to the general public.
(e) Referral.
(i) For a period of twelve (12) months following the Closing,
Seller shall promptly following the receipt thereof forward or refer to Buyer
all third party written (and shall use reasonable efforts to forward or refer
any oral) inquiries and correspondence relating to the Acquired Assets.
(ii) Seller shall (A) place the statement attached hereto as
Exhibit I prominently on its website to the effect that Seller's Products (and
expressly referring to Vibrant(R) Soundbridge(TM)) are now being manufactured,
developed and sold by Buyer and (B) include a link (the "Link") to Buyer's
website.
(f) Specified Marks. Seller hereby agrees that commencing
immediately following the Closing Date and continuing until the dissolution of
the Seller, Seller shall (A) not at any time make any further use, directly or
indirectly, of the Specified Marks unless such use qualifies as a Permitted Use,
and (B) not assign, license or transfer any of the Specified Marks or any rights
therein to any third-party, or otherwise authorize any third-party to make any
use of any of the Specified Marks other than Permitted Uses made by such
third-party on Seller's behalf. Seller shall cooperate with Buyer to prevent any
infringement by any third-party of Seller's remaining rights in the Specified
Marks. As part of Seller's obligations under this provision, Seller shall remove
the Specified Marks from any goods or other materials (including materials in
any electronic media) and/or destroy any goods or other materials that bear the
Specified Marks, as reasonably required to ensure that Seller's use of the
Specified Marks is limited to Permitted Uses.
(i) Immediately prior to the dissolution of Seller, Seller
shall transfer all right, title and interest in and to the Specified Marks to
Buyer.
(g) General Cooperation. Seller shall from time to time, at the
reasonable request of Buyer, and without further consideration, execute and
deliver such instruments, and take such actions, as may be reasonably necessary
to effect the transactions contemplated by this Agreement, including the
substitution of Buyer for Seller as plaintiff in the Causes of Action.
(h) Third Party Consents.
(i) To the extent that the rights of Seller under any of the
Acquired Assets intended to be transferred or assigned to Buyer hereunder may
not be transferred or assigned without
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the consent of another entity which consent has not been obtained, this
Agreement shall not constitute an agreement to transfer or assign the same if an
attempted transfer or assignment would constitute a breach thereof or be
unlawful. Notwithstanding anything to the contrary contained in this Agreement,
to the extent that the transfer or assignment or attempted transfer or attempted
assignment to Buyer of any of the Acquired Assets or Assumed Liabilities is
prohibited by any applicable law or would require any consent, and any such
consent shall not have been obtained prior to the Closing Date, this Agreement
shall not constitute a sale, assignment, transfer, conveyance or delivery, or
any attempted sale, assignment, transfer, conveyance or delivery, thereof.
(ii) After the Closing, Seller shall, until the transfer or
assignment with respect to any Acquired Asset is accomplished, at the request
and for the account of Buyer, and subject to Buyer's direction, use commercially
reasonable efforts to enforce Seller's rights thereto or interests therein
against any other parties thereto (including the right to terminate any contract
assumed pursuant to the Assignment and Assumption Agreement in accordance with
such contract's terms); provided, however, that if Seller would be required to
incur or assume any material expense in fulfilling its obligations under this
Section 9(h)(ii), such expense shall be borne by Buyer or, if paid by Seller,
reimbursed to Seller.
(iii) If and only to the extent that Buyer receives the
benefits associated with any asset that would otherwise be an Acquired Asset
except for parties' inability to obtain any necessary consent and/or remove any
other impediments to the transfer or assignment of each asset, Buyer shall (A)
perform the obligations of Seller arising with respect to such asset to the
extent that, by reason of consummation of the transactions contemplated by this
Agreement, Buyer has control over the resources necessary to perform such
obligations or (B) reimburse Seller for the reasonable cost of such performance.
(iv) If, after sixty (60) days after the Closing Date, Seller
is unable to obtain any consent required to transfer or assign any asset that
would otherwise be an Acquired Asset, Buyer shall be entitled to assert a claim
for any Losses arising out of or relating to Seller's inability to transfer or
assign such asset (without regard for any arrangements pursuant to Section
9(i)(ii) hereof).
(i) Excluded Assets and Liabilities. Seller shall remain solely
responsible for all aspects of the assets and Liabilities of Seller not assumed
by Buyer pursuant to the terms of this Agreement.
10. Termination.
(a) Termination of Agreement. The parties may terminate this
Agreement as provided below:
(i) Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing (A) in the event Seller has
breached any representation, warranty, or
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covenant contained in this Agreement in any material respect and such breach has
given rise to the failure of any condition set forth in Section 7(a) hereof,
Buyer has notified Seller of the breach, and the breach has continued without
cure for a period of fifteen (15) days after the notice of breach or (B) if the
Closing shall not have occurred on or before May 31, 2003, by reason of the
failure of any condition precedent under Section 7(a) hereof (unless the failure
results primarily from Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement);
(iii) Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing (A) in the event Buyer has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect and such breach is reasonably likely to
interfere with Buyer's ability to consummate the transactions contemplated
hereby, Seller has notified Buyer of the breach, and the breach has continued
without cure for a period of fifteen (15) days after the notice of breach or (B)
if the Closing shall not have occurred on or before May 31, 2003, by reason of
the failure of any condition precedent under Section 7(b) hereof (unless the
failure results primarily from Seller itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iv) Seller may terminate this Agreement, in connection with
entering into an agreement as permitted by Section 6(l) hereof with respect to a
Superior Proposal by giving written notice to Buyer.
(b) Effect of Termination. Except as provided in Section 10(b)(iii)
below, if either party validly terminates this Agreement pursuant to Section
10(a) above, all rights and obligations of the parties hereunder shall terminate
without any Liability of either party to the other party (except for any
Liability of any party then in breach of this Agreement). Any such termination
shall not affect any cause of action which may have otherwise accrued prior to
such termination as a result of any breach of any representation, warranty,
covenant or other obligation hereunder.
(c) Certain Payments upon Termination.
(i) Disbursement of Amounts in Escrow. Pursuant to the
provisions of the Escrow Agreement, in the event of a termination of this
Agreement pursuant to Section 10(a) above, the Escrow Agent shall immediately
remit and return to the appropriate party the amounts set forth in the Escrow
Agreement.
(ii) Termination Payment. In the event this Agreement is
terminated by Seller pursuant to Section 10(a)(iv) above, Seller shall promptly,
but in no event later than three (3) business days after the date of such
termination, pay to Buyer in immediately available funds a fee equal to Fifty
Thousand United States Dollars (USD50,000) (the "Termination Fee") and pay to
Parent or Buyer, as the case may be, in immediately available funds plus the
out-of-pocket fees and expenses incurred by Parent and Buyer in connection with
this transaction (up to a maximum of Seventy-Five Thousand United States Dollars
(USD75,000)) as evidenced by documentation delivered to Seller prior to such
payment.
11. Miscellaneous.
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(a) Independent Contractors. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give any party the power
to direct or control the day-to-day activities of any of the other parties, (ii)
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) allow any party to
create or assume any obligation on behalf of any other party for any purpose
whatsoever.
(b) Press Releases and Public Announcements. No party shall issue
any press release or make any public announcement or statement relating to the
subject matter of this Agreement without the prior written approval of the other
parties (which approval shall not be unreasonably withheld); provided, however,
that any party may make any public disclosure it believes in good faith is
required by applicable law or regulatory process or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing party will use its reasonable best efforts to advise the other
parties prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents
referred to herein and therein) constitute the entire agreement between the
parties and supersede any prior understandings, agreements, or representations
by or among the parties, written or oral, to the extent they related in any way
to the subject matter hereof.
(e) No Assignment or Delegation. No party shall assign or delegate
any of its rights or obligations arising under this Agreement, whether
voluntarily or by operation of law, and any such purported assignment or
delegation shall be void and without effect.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, demands, claims, and other formal
communications hereunder will be in writing. Any such communication hereunder
shall be deemed duly given if delivered by any reasonable means, including by
personal delivery, registered or certified airmail or facsimile (confirmed by
registered or certified airmail), to the following address of the party to which
that notice is to be given:
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To Seller: Symphonix Devices, Inc.
0000 X. Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx, Chief Executive Officer
Facsimile: x0.000.000.0000
with a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Facsimile: x0.000.000.0000
To Buyer: VIBRANT Med-El Hearing Technology GmbH
Xxxxxxxxxx 00
X-0000 Xxxxxxxxx
Xxxxxxx
Attn: Xx. Xxxxxxxx X. Xxxxxxxx
Facsimile: x00.000.00.00.00
with copies to: Med-El Elektromedizinische Gerate Gesellschaft m.b.H.
Xxxxxxxxxx 00x
X-0000 Xxxxxxxxx
Xxxxxxx
Attn: Xx. Xxxxxxxx X. Xxxxxxxx
Facsimile: x00.000.00.00.00
Freshfields Bruckhaus Xxxxxxxx
Xxxxxxxxxxx 00
X-0000 Xxxx
Xxxxxxx
Attn: Xx. Xxxxxx Xxxxx
Facsimile: x00.0.000.00.00
Squire, Xxxxxxx & Xxxxxxx L.L.P.
000 Xxxxxx Xxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Xx.
Facsimile: x0.000.000.0000
or to such other address of which a party may subsequently notify the other
parties. Communications shall be effective upon actual receipt by the intended
recipient, provided that in the case of communications sent by registered or
certified mail, such receipt shall be deemed to have occurred no later than
three (3) business days after such communication is sent.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the parties. Except
-25-
as otherwise expressly provided herein, any delay or failure by any party to
enforce at any time any of its rights under any provision of this Agreement
shall not be deemed to be a waiver of that party's right thereafter to enforce
those rights or a waiver of such provision or of that party's right to resort to
any remedy available to it. A waiver on one occasion shall not be construed as a
waiver of any right on any future occasion.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each party shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby and thereby.
(l) Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
(m) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule.
(n) Resolution of Disputes.
(i) All disputes, controversies or differences of any kind
arising out of or in connection with or related in any way to this Agreement, or
any of the claims, demands, damages, actions or causes of action released in
this Agreement, shall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce (the "Rules") by three arbitrators. Buyer
shall nominate one arbitrator, Seller shall nominate one arbitrator, and the two
arbitrators so selected shall jointly nominate the third arbitrator. If the
first two arbitrators cannot agree on a third arbitrator within thirty (30) days
of the International Chamber of Commerce's confirmation of the second
arbitrator, the third arbitrator shall be appointed by the International Court
of Arbitration of the International Chamber of Commerce in accordance with the
Rules. The place of arbitration shall be London, England. The laws of the State
of Delaware, without giving effect to any choice or conflict of law provision or
rule, shall govern the arbitration and all disputes determined therein. The
language of the arbitration shall be English. Unless the parties otherwise
agree, the arbitrators shall not have the power to appoint experts. The
arbitrators shall award reasonable attorneys' fees to the prevailing party and
shall allocate the expenses and costs of arbitration and of the parties'
preparation and presentations at the arbitration as part of their award. The
arbitrators shall not issue any award, grant any relief or take any action that
is prohibited by or inconsistent with the provisions of this Agreement. The
award rendered by the arbitrators shall be final and binding on the parties and
judgment on the award may be entered in any court having jurisdiction thereof.
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(ii) Notwithstanding Section 11(n)(i) above, any party may at
any time seek injunctive or other provisional relief from a court with
appropriate jurisdiction to enjoin any prospective ongoing breach of this
Agreement pending the final resolution of any such dispute pursuant to Section
11(n)(i) above.
(o) Facsimile Signatures. Any signature page hereto delivered by a
fax machine or telecopy machine shall be binding to the same extent as an
original signature page, with regard to any agreement subject to the terms
hereof or any amendment thereto. Any party who delivers such a signature page
agrees to later deliver an original counterpart to any party that requests it.
-27-
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Effective Date.
SELLER:
SYMPHONIX DEVICES, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
PARENT:
MED-EL ELEKTROMEDIZINISCHE
GERATE GESELLSCHAFT m.b.H.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
---------------------------------------
Title: CEO
--------------------------------------
BUYER:
VIBRANT MED-EL HEARING
TECHNOLOGY GmbH
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
---------------------------------------
Title: CEO
--------------------------------------
LIST OF EXHIBITS AND SCHEDULES
--------------------------------------------------------------------------------
Exhibit A Acquired Assets
--------------------------------------------------------------------------------
Exhibit B Assumed Liabilities
--------------------------------------------------------------------------------
Exhibit C Assumed Contracts
--------------------------------------------------------------------------------
Exhibit D Escrow Agreement
--------------------------------------------------------------------------------
Exhibit E Xxxx of Sale
--------------------------------------------------------------------------------
Exhibit F-1 Assignment and Assumption Agreement
--------------------------------------------------------------------------------
Exhibit F-2 Assumption Agreement
--------------------------------------------------------------------------------
Exhibit G Patent Assignment
--------------------------------------------------------------------------------
Exhibit H Trademark Assignment
--------------------------------------------------------------------------------
Exhibit I Web Referral Statement
--------------------------------------------------------------------------------
Schedule 3 Seller Disclosure Schedule
--------------------------------------------------------------------------------
Schedule 4 Buyer Disclosure Schedule
--------------------------------------------------------------------------------
Schedule 6(b) Third Party Consents and Novations
--------------------------------------------------------------------------------
Schedule 7(a) Clinical Data
--------------------------------------------------------------------------------
EXHIBIT A
ACQUIRED ASSETS
The Acquired Assets include the following:
1. All worldwide (A) patents, patent applications, registered copyrights and
applications for copyright registration, registered trademarks, service
marks and trade names and applications therefor ("Registered Intellectual
Property Rights"), (B) all unregistered copyrights, trademarks, service
marks, trade names and all trade secrets and other intellectual property
rights of any kind ("Unregistered Intellectual Property Rights", together
with Registered Intellectual Property Rights, "Intellectual Property
Rights") owned or used by Seller, including, but not limited to all of
Seller's Intellectual Property Rights set forth in Attachment 1 of this
Exhibit A ("Seller's Intellectual Property Rights"), and any and all causes
of action or rights to damages or other remedies which Seller may own or to
which Seller may be entitled related in any way to infringement or
misappropriation or any such Intellectual Property Rights, including under
the cause(s) of action listed under Attachment 2 of this Exhibit A.
2. All Confidential Information.
3. All Assumed Contracts.
4. Any causes of action or rights to damages or other remedies which Seller
may own or to which Seller may be entitled relating in any way to any
violation of the Assumed Contracts or any other Acquired Asset.
5. All Inventory, including, without limitation, spare parts, materials,
components and sub-assemblies, including without limitation the Inventory
listed in Attachment 3 of this Exhibit A. Notwithstanding the foregoing,
the Inventory shall not include any Inventory used or sold by Seller in the
ordinary course of business between the date of this Agreement and the
Closing Date, which Seller shall disclose to Buyer in an itemized written
list delivered at Closing.
6. All other tangible personal property and other interests in tangible
personal property (such as machinery, equipment, furniture, fixtures and
software), including, without limitation, the tangible personal property
listed in Attachment 4 of this Exhibit A and all tangible personal property
of Seller located at Siemens' premises. Notwithstanding the foregoing,
Seller shall be deemed to have delivered all the tangible personal property
required pursuant to this Section 6 so long as any deviations from the
items listed in Attachment 4 of this Exhibit A are not determined to be
material in the good faith judgment of Buyer.
7. All documents related to the Acquired Assets, including all technical,
regulatory, marketing and sales related documentation, lists of suppliers
and customers, warranty policies and promises, product and equipment
drawings, lists of corrective actions and open FDA and notified
governmental or regulatory body actions, lists of open orders and scheduled
surgeries, and all documentation related to manufacturing machines, tools,
2
fixtures,R&D equipment, finished goods and work in process inventory,
materials, components and subassemblies, all in print and, where available,
in electron
3
EXHIBIT B
ASSUMED LIABILITIES
Any liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due) to Seller's customers under
written warranty agreements in the forms disclosed pursuant to Section 3(k) of
the Agreement given by Seller to its customers in the ordinary course of
business prior to the Closing Date (other than any liability arising out of or
relating to a breach or alleged breach of warranty that occurred prior to the
Closing Date).
4
