EXHIBIT 2.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
BY AND AMONG
ESC MEDICAL SYSTEMS LTD.,
ENERGY SYSTEMS HOLDINGS INC.
AND
COHERENT, INC.
DATED AS OF FEBRUARY 25, 2001
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This ASSET PURCHASE AGREEMENT, dated as of February 25, 2001 (the
"AGREEMENT"), is by and among ESC Medical Systems Ltd., a corporation
organized under the laws of the State of Israel ("Parent"), Energy Systems
Holdings Inc., a Delaware corporation and subsidiary of Parent ("BUYER",
and together with Parent and Parent Subsidiaries (as defined in Section
1.1), "BUYER GROUP") and Coherent, Inc., a Delaware corporation ("SELLER").
WHEREAS, Seller is currently engaged in the Business (as
defined in Section 9.7(a));
WHEREAS, Parent and Buyer, directly or through the Parent
Subsidiaries, desire to purchase and assume from Seller, and Seller desires
to sell, assign, transfer, convey and deliver to Parent, Buyer and Parent
Subsidiaries, certain assets, obligations and liabilities relating to the
Business, all in the manner and subject to the terms and conditions set
forth herein;
WHEREAS, Seller desires to retain and continue conducting the
Retained Business (as defined in Section 9.7 (b)); and
WHEREAS, Buyer Group and Seller desire to make certain
representations and warranties and other agreements in connection with the
purchase and sale of the assets, obligations and liabilities set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES
SECTION 1.1 ASSETS TO BE SOLD; ASSUMPTION OF LIABILITIES; TRANSFER OF
NON-U. S. ASSETS
(a) Subject to the terms and conditions of this Agreement, at the
Closing (as defined in Section 1.3), Seller will sell, convey, assign,
transfer and deliver, or will cause its subsidiaries to sell, convey,
assign, transfer and deliver, to Buyer, Parent or one or more domestic or
foreign subsidiaries of Parent reasonably designated by Parent prior to the
Closing ("PARENT SUBSIDIARIES"), and Parent and Buyer agree to purchase and
acquire, or will cause to be purchased and acquired by Parent Subsidiaries,
from Seller, free and clear of any Liens (as defined in Section 3.8),
except for Permitted Encumbrances (as defined in Section 3.8), all of
Seller's and Seller subsidiaries' right, title and interest in and to the
assets, properties and rights primarily related to the Business, other than
Excluded Assets (as defined in Section 1.1(c)) (collectively, the
"ASSETS"). The Assets shall include, among other things, the following:
(i) subject to Section 5.7, all of Seller's contracts,
agreements, license agreements, including amendments and supplements,
modifications, side letters or agreements primarily related to the
Business, including those identified in Schedule 1.1(a)(i) of the
Disclosure Schedules (as defined in the introductory sentence to Article
III) (collectively, the "Contracts");
(ii) all marketing, sales and promotional literature,
correspondence, memoranda, minute books, books of account, records, files,
documents, financial records, bills, accounting, internal and audit
records, operating manuals, personnel and payroll records, customer and
supplier lists and files, including customer lists, preprinted material,
art work and other similar items in the possession of the Seller to the
extent exclusively related to the Business, (the "BOOKS AND RECORDS") and
copies of the portions of all Books and Records and tax returns that relate
in any material respect to the Business but are not included therein;
(iii) all accounts receivable representing the right to
receive payments in respect of goods or services primarily related to the
Business to the extent delivered or provided by the Division (as defined in
Section 9.7(a)) ("RECEIVABLES");
(iv) the Intellectual Property of Seller and its
subsidiaries primarily related to the Business, but excluding the Excluded
Intellectual Property ("TRANSFERRED INTELLECTUAL PROPERTY");
(v) all payments, deposits (including security deposits) and
prepaid expenses made by Seller, in each case primarily related to the
Business, and all rights to insurance proceeds in respect of any of the
Assets or to the extent primarily related to the Business;
(vi) the leases of real property set forth on Schedule
1.1(a)(vi) of the Disclosure Schedules together with all leasehold
improvements owned by Seller and located on the real property subject to
such leases and all security or similar deposits made under such leases
(collectively, the "LEASED REAL PROPERTY");
(vii) all furnishings, furniture, office supplies, fixtures,
equipment (including personal property, plant and equipment) and other
tangible personal property primarily related to the Business or the Leased
Real Property;
(viii) all rights under warranties, representations and
guarantees made by suppliers, manufacturers or contractors to the extent,
but only to the extent related to the operation of the Business or
primarily related to any of the Assets but not to the extent related to the
Retained Business;
(ix) all licenses, permits, authorizations, consents,
approvals, orders, filings or registrations with any court or
administrative or governmental authority held by Seller primarily related
to the Business to the extent transferable to Buyer ("PERMITS"), including,
without limitation, those listed on Schedule 1.1(a)(ix) of the Disclosure
Schedules;
(x) except as set forth in section 1.1(c)(xiii), all the
rights under the Agreement and Plan of Reorganization, dated as of December
7, 1998, by and among Seller, Medical Technologies Acquisition, Inc.,
Palomar Medical Technologies, Inc., Star Medical Technologies, Inc.
("STAR"), Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxx X. Xxxxxxxxx, and the
License Agreement referred to therein (collectively, the "STAR AGREEMENT");
(xi) all claims and causes of action primarily related to
the Business of Seller against other persons or entities (regardless of
whether or not such claims and causes of action have been asserted by
Seller);
(xii) all inventory, supplies and any other disposables or
consumables primarily related to the Business and reflected on the Final
Statement;
(xiii) all claims against third parties for past
infringement of the Transferred Intellectual Property; and
(xiv) all rights of indemnity, warranty rights, rights of
contribution, rights to refunds, rights of reimbursement and other rights
of recovery possessed by Seller and primarily related to the Business
except for losses incurred prior to the Closing, if and to the extent
reflected in the Final Statement.
(b) Such sale, conveyance, assignment, transfer and delivery of the
Assets will be effected by delivery by Seller to Parent, Buyer and Parent
Subsidiaries at the Closing of
(i) a duly executed xxxx of sale ("XXXX OF SALE") in the
form attached hereto as Exhibit A;
(ii) with respect to any Assets located or to be located in
any jurisdiction other than the United States, one or more bills of sale or
similar conveyance documents as may be required under the law of the
applicable jurisdiction to validly convey, assign and transfer such Assets
(the "FOREIGN CONVEYANCE DOCUMENTS");
(iii) instruments of assignment with respect to any Leased
Real Property to be transferred to Buyer Group pursuant to Section
1.1(a)(vi) that is held by Seller, in the form attached hereto as Exhibit B
(collectively, the "ASSIGNMENT OF LEASES"), assigning Seller's interest
under such Leased Real Property;
(iv) an instrument of assignment assigning Seller's interest
in the Registered Transferred Intellectual Property by means of an
assignment in the form attached hereto as Exhibit C (the "INTELLECTUAL
PROPERTY ASSIGNMENT"); and
(v) such other good and sufficient instruments of sale,
conveyance, transfer and assignment, as shall be necessary to vest in
Parent, Buyer or Parent Subsidiaries good and valid title to the Assets
(collectively, the "OTHER INSTRUMENTS"), free and clear of any Liens,
except for Permitted Encumbrances (as defined in Section 3.8). To the
extent that Parent prior to the Closing requests Seller to convey, assign,
transfer and deliver all or any portion of the Assets to Parent
Subsidiaries ("MULTIPLE TRANSFERS"), Seller will execute such Bills of
Sale, Foreign Conveyance Documents, Assignments of Licenses, Intellectual
Property Assignments, licenses (as described in Section 5.14) and Other
Instruments as may be necessary to validly convey, assign and transfer the
Assets; provided, however, that the Buyer Group shall be responsible for
the payment of all fees for applicable recordations and filings of
documents, instruments, declarations, affidavits or other writings
necessary to effect any applicable assignments under this section 1.1(b) to
Parent and/or such designated subsidiaries (other than Transfer Taxes in
accordance with Section 7.6 hereof).
(c) Notwithstanding anything contained in Section 1.1(a) to the
contrary, there are expressly excluded from the assets and properties to be
sold, conveyed, assigned, transferred and delivered any and all assets
primarily related to the Retained Business including, without limitation,
Intellectual Property primarily related to the Retained Business, and the
following assets (collectively, the "EXCLUDED ASSETS"):
(i) the consideration delivered by Buyer Group to Seller
pursuant to this Agreement;
(ii) cash or other cash equivalents, notes receivable (other
than as set forth in Section 1.2(b)) and securities (including, without
limitation, the securities of the direct and indirect subsidiaries of the
Seller, interest in any joint venture of the Seller and any minority
interest of the Seller (equity or otherwise) in any other person);
(iii) all rights of Seller under this Agreement, the Note
and the Ancillary Agreements;
(iv) any of Seller's intercompany receivables, corporate
seals, minute books, and other corporate records;
(v) all records prepared in connection with the sale of the
Business and the Assets;
(vi) all assets of or assets relating to the Plans of the
Seller;
(vii) any Registered Intellectual Property (as defined in
Section 3.7(a)) of Seller not set forth on Schedule 3.7(a) of the
Disclosure Schedules, any Intellectual Property listed on Schedule
1.1(c)(vii) of the Disclosure Schedules and the Licensed Intellectual
Property (the "EXCLUDED INTELLECTUAL PROPERTY");
(viii) all payments, deposits (including security deposits)
and prepaid expenses primarily related to the Retained Business, and all
rights to insurance proceeds (x) in respect of any of the Excluded Assets
or (y) to the extent primarily related to the Retained Business;
(ix) all leasehold interests in real property together with
all leasehold improvements owned by Seller and located thereon and all
security or similar deposits made under such leases other than the Leased
Real Property (the "EXCLUDED REAL PROPERTY");
(x) all furnishings, furniture, office supplies, fixtures,
equipment and other tangible personal property primarily related to the
Excluded Real Property or the Retained Business;
(xi) all rights under warranties, representations and
guarantees made by suppliers, manufacturers or contractors in connection
with the operation of the Retained Business whether arising prior to, after
or on the Closing;
(xii) all licenses, permits, authorizations, consents,
approvals, orders, filings or registrations with any court or
administrative or governmental authority primarily related to the Retained
Business, including, without limitation, those listed on Schedule
1.1(c)(xii) of the Disclosure Schedules;
(xiii) any rights and causes of action under the Star
Agreement relating to any pending claims for indemnifiable losses,
including without limitation the claim set forth on Schedule 1.1(c)(xiii)
of the Disclosure Schedules;
(xiv) any rights or causes of action against the parties
identified on Schedule 1.1(c)(xiv) of the Disclosure Schedules;
(xv) all claims and causes of action related to the Business
against other persons or entities, (regardless of whether or not such
claims and causes of action have been asserted by Seller) primarily related
to the Retained Business or the Excluded Assets, as regards to any matter
arising prior to, after or on the Closing;
(xvi) the Assets listed on Schedule 1.1(c)(xvi) of the
Disclosure Schedule; and
(xvii) all rights of indemnity, warranty rights, rights of
contribution, rights to refunds, rights of reimbursement and other rights
of recovery possessed by Seller and related to the Business to the extent
primarily related to the Retained Business.
(d) At the Closing, Buyer Group will deliver to Seller an instrument
of assumption substantially in the form of Exhibit D hereto (the
"INSTRUMENT OF ASSUMPTION"), whereby Buyer Group will undertake, assume and
agree to perform, pay and discharge when due, and hold Seller harmless from
and indemnify Seller against any and all debts, liabilities and
obligations, absolute or contingent, of Seller, other than Excluded
Liabilities,
(i) under any Contract (to the extent assigned or rights are
otherwise transferred to Buyer Group herein);
(ii) primarily relating to the ownership, use or operation
of the Assets or primarily related to the conduct of the Business (other
than primarily relating to the ownership, use or operation of the Excluded
Assets or primarily relating to the conduct of the Retained Business);
(iii) any liability relating to Buyer Group's ownership, use
or operation of the Assets or conduct of the Business following the
Closing;
(iv) for Taxes (as defined in Section 3.12(m)) arising in
respect of taxable periods beginning after the Closing Date or, with
respect to any taxable period that begins before but ends after the Closing
Date, that portion of such taxable year that begins after the Closing Date
relating to Buyer Group's ownership or operation of the Business after the
Closing; and
(v) all liabilities, including severance and retention costs
and liabilities and obligations, after the Closing for the Continuing
Employees as defined and in accordance with Section 2.3 hereof
(collectively, (i) through (v), inclusive, are referred to herein as the
"ASSUMED LIABILITIES").
(e) Notwithstanding anything contained in Section 1.1(d) to the
contrary, there are expressly excluded from the Assumed Liabilities any
debts, liabilities and obligations primarily related to either the Excluded
Assets or Retained Business (the "EXCLUDED Liabilities"). In addition to
the preceding sentence, Excluded Liabilities shall also include any debts,
liabilities and obligations that
(i) are (x) not specifically assumed by Buyer, (y) are
primarily related to Seller's ownership, use or operation of the Excluded
Assets or primarily related to the conduct of the Retained Business, and
(z) are retained by Seller pursuant to the terms hereof, including, without
limitation, those listed on Schedule 1.1(e) of the Disclosure Schedules;
(ii) any indebtedness for borrowed money owed to third
parties, including interest and penalties in connection therewith;
(iii) are for Taxes arising in respect of the transactions
contemplated in this Agreement or arising in respect of taxable periods
ending on or before the Closing Date or, with respect to taxable periods
that begin before but end after the Closing Date, the Taxes attributable to
that portion of such taxable year that begins before and ends on the
Closing Date;
(iv) are intercompany payables or indebtedness;
(v) arising out of or relating to matters addressed in
and/or contamination associated with the (a) Department of Toxic Substances
Control ("DTSC") Remedial Action Order No. 88/89-016 issued to Coherent
Inc. with respect to the Hillview Xxxxxx Regional site, (b) DTSC Order No.
ISE 90/91-005 with respect to the property located at 0000 Xxxxxx Xxxxx,
Xxxx Xxxx, and (c) the DTSC Order No. HSA 90/91-003, each as amended, with
respect to property located at 0000 Xxxxxxxx Xxx., Xxxx Xxxx, Xxxxxxxxxx,
except to the extent, but only to the extent, that any of the contamination
conditions in this subsection (vi) are caused, contributed to or
exacerbated by Buyer, its agents, affiliates or representatives;, assignees
or invitees (excluding Seller) (the "STANFORD INDUSTRIAL PARK MATTER");
(vi) arising out of the presence on or before the Closing
Date of Hazardous Substances (as defined in Section 3.14 hereof) in the
soil or groundwater of property located at 0000 Xxxxxxxx, Xxxxx Xxxxx,
Xxxxxxxxxx (including, without limitation, any location to which such
contamination migrates to at any time) except to the extent, but only to
the extent, that such Hazardous Substances are caused, contributed to, or
exacerbated by Buyer, its agents, representatives, affiliates, assignees or
invitees (excluding Seller) ("CONDENSA MATTERS");
(vii) the litigation set forth on Schedule 3.9 of the
Disclosure Schedules (as updated as of the Closing); and
(viii) relate to the employment by Seller of any employee of
Seller or the Seller Subsidiaries prior to the Closing, except as
specifically set forth in Section 2.3.
(f) Promptly following the execution and delivery of this Agreement,
Buyer Group and Seller will cooperate in good faith to prepare and execute
appropriate agreements to convey to Buyer Group the Assets, subject to the
Assumed Liabilities and Permitted Encumbrances, held by subsidiaries of
Seller incorporated under the laws of a country other than the United
States or representative offices of such subsidiaries (the "NON-U.S.
COMPANIES"). The parties will use their best efforts to effect such
transfers on the most efficient basis, including minimizing transfer taxes.
Such transfers shall be on terms (including, but not limited to, conditions
to Closing, representations and warranties and indemnification obligations)
consistent with this Agreement, except, and only to the extent, of
modifications required to provide for the intent of this Agreement under
applicable law (and in such case the minimal modifications required to do
so) as may be required by applicable law. Such agreements are collectively
referred to herein as the "NON-U.S. AGREEMENTS." The purchase prices
payable pursuant to the Non-U.S. Agreements shall be paid in cash.
SECTION 1.2 PURCHASE PRICE
(a) Subject to the terms and conditions of this Agreement, and in
consideration of the sale, conveyance, assignment, transfer and delivery of
the Assets, Buyer or Parent, as the case may be, will deliver or cause to
be delivered by Parent Subsidiaries, in full payment, together with the
Assumed Liabilities, for the sale, conveyance, assignment, transfer and
delivery of the Assets, the following:
(i) payment by Buyer at the Closing by wire transfer to such
bank account(s) as specified by Seller in Schedule 1.2(a)(i) of the
Disclosure Schedules (or as otherwise provided in writing to Parent), in
immediately available United States funds, of an aggregate amount up to but
not exceeding $100,000,000;
(ii) payment by Parent at the Closing by wire transfer to
such bank account(s) as specified by Seller in Schedule 1.2(a)(i) of the
Disclosure Schedules (or as otherwise provided in writing to Parent), in
immediately available United States funds, of an amount equal to the
excess, if any, of $100,000,000 over the amount paid by Buyer to Seller
pursuant to Section 1.2(a)(i) hereof (the sum of any payments made by Buyer
and Parent pursuant to Sections 1.2(a)(i) and 1.2(a)(ii) hereof, the
"CLOSING CASH PURCHASE PRICE");
(iii) with respect to the Non-U.S. Agreements, payment by
the appropriate Parent Subsidiaries at the Closing by wire transfer to such
bank account(s) as specified by Seller in Schedule 1.2(a)(i) of the
Disclosure Schedules (or as otherwise provided in writing to Parent), in
immediately available United States funds, of the amount of cash
consideration contemplated by the Non-U.S. Agreements (the "LOCAL
JURISDICTION CASH CONSIDERATION") (the sum of the Closing Cash Purchase
Price and the Local Jurisdiction Cash Consideration, as adjusted pursuant
to Section 1.8, the "FINAL CASH PURCHASE PRICE");
(iv) the issuance and delivery at the Closing by Parent to
Seller of a duly executed note in the principal amount of $12,904,000 (the
"NOTE"), in the form attached hereto as Exhibit E;
(v) the issuance at the Closing by Parent to Seller of one
or more stock certificates registered in the name of Seller or one or more
controlled affiliates of Seller as reasonably designated by Seller prior to
the Closing representing 5,432,099 ordinary shares of Parent, NIS 0.10 par
value per share, subject to adjustment for any stock split, reverse split
or stock dividend or similar transaction occurring after the date hereof
and prior to the Closing (the "PARENT STOCK") (less a number of shares of
Parent Stock with a value as of the Closing equal to the Local Jurisdiction
Cash Consideration); and
(vi) payment of the Earn-out (as defined in Section 1.7), if
any, of up to $25,000,000, in accordance with Section 1.7 of this
Agreement.
The sum of (i) the Final Cash Purchase Price, the Note, the Parent
Stock and Earn-Out and (ii) the absolute value of the Assumed Liabilities
to the extent reflected on the Final Statement and associated with the
operations transferred in asset transactions, is sometimes referred to
herein as the "TOTAL PURCHASE PRICE." The Total Purchase Price shall
include amounts payable under the Non-U.S. Agreements.
(b) At the Closing, Parent shall issue to Seller, and Seller shall
purchase from Parent, additional shares of Parent Stock with a value as of
the Closing equal to the Local Jurisdiction Cash Consideration for cash in
an amount equal to the Local Jurisdiction Cash Consideration.
SECTION 1.3 CLOSING
The closing of the transactions contemplated by this Agreement (the
"CLOSING") shall take place not later than 10:00 A.M., local time, at the
offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000
Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 on the third business day
following the satisfaction or waiver of all of the conditions set forth in
Article VI hereof or at such other time or place as to which the parties
shall agree. The effective time of the Closing is sometimes referred to
herein as the "CLOSING DATE." The parties agree to use their respective
commercially reasonable efforts to cause the Closing to occur as promptly
as practicable and, in any event, before April 15, 2001.
SECTION 1.4 DELIVERIES BY SELLER
At the Closing, Seller will deliver or cause to be delivered to Buyer
Group (unless previously delivered) the following:
(a) a duly executed counterpart of the Xxxx of Sale in substantially
the form as set forth in Exhibit A;
(b) a duly executed counterpart of the Assignment of Leases in
substantially the form as set forth in Exhibit B;
(c) the officer's certificate referred to in Section 6.3(c);
(d) a certificate of Seller's non-foreign status that complies with
the requirements of Section 1445 of the Internal Revenue Code of 1986, as
amended (the "CODE"), and the Treasury Regulations promulgated thereunder;
(e) a duly executed counterpart of the Intellectual Property
Assignment for each of the Transferred Registered Intellectual Property
substantially in the form as set forth in Exhibit C;
(f) a duly executed counterpart of the Supply Agreement, in the form
attached hereto as Exhibit G (the "SUPPLY AGREEMENT");
(g) a duly executed copy of the Fiber Supply Agreement in the form
attached hereto as Exhibit H (the "FIBER SUPPLY AGREEMENT");
(h) a duly executed counterpart of the Registration Rights Agreement
related to the Parent Stock (as defined in 5.19), in the form attached
hereto as Exhibit I (the "REGISTRATION RIGHTS AGREEMENT");
(i) a duly executed counterpart of the Santa Xxxxx Sublease Agreement
(as defined in Section 5.15), in the form attached hereto as Exhibit J;
(j) The Supply Agreement, the Fiber Supply Agreement, the
Registration Rights Agreement, the Note, the Non-U.S. Agreements (as
defined below), and other agreements required elsewhere in the Agreement
are collectively referred to as the "ANCILLARY Agreements";
(k) The Foreign Conveyance Documents; and
(l) all other documents, instruments, declarations, affidavits and
writings as may be necessary to assign, convey, transfer and deliver to
Parent, Buyer or any Parent Subsidiary, as applicable, good and valid title
to the Assets, free of any Liens other than Permitted Encumbrances or as
may be required to be delivered by Seller at or prior to the Closing Date
pursuant to this Agreement and the Non-U.S. Agreements; provided, that
Buyer Group and Seller shall each file or record or cause to be filed and
recorded such documents, instruments, declarations, affidavits or other
writings as may be necessary in accordance with applicable law; provided,
further, however, that the Buyer Group shall be responsible for the payment
of all fees for applicable recordations and filings of documents,
instruments, declarations, affidavits or other writings necessary to effect
any applicable assignments under this Section 1.4(k) (other than Transfer
Taxes in accordance with Section 7.6 hereof).
SECTION 1.5 DELIVERIES BY BUYER GROUP
At the Closing, Buyer Group will deliver or cause to be delivered to
Seller or, in the case of clause (a), to the affiliates of Seller who are
parties to the Non-U.S. Agreements (unless previously delivered) the
following:
(a) the Closing Cash Purchase Price, the Parent Stock and the duly
executed Note referred to in Section 1.2; provided, that if Seller shall
fail to deliver the certification of non-foreign status required to be
delivered by Seller at the Closing pursuant to Section 1.4(g) hereof, Buyer
Group may (but shall not be required to) withhold from the cash payable at
the Closing and pay over to the appropriate taxing authority an amount
equal to ten percent (10%) of the total "amount realized" (as defined in
Internal Revenue Service Treasury Regulation 1.1445 - 1(g)(5)) by Seller or
its subsidiaries for the transfer of any "U.S. real property interests" (as
defined in section 1445 of the Code). A portion of the Closing Cash
Purchase Price shall be paid in accordance with the terms of the Non-U.S.
Agreements, with the remainder paid to Seller;
(b) duly executed counterpart of the Assignment of Leases pursuant to
which a member of the Buyer Group will assume obligations under the Leases
accruing after the Closing Date;
(c) a duly executed Instrument of Assumption;
(d) the officer's certificate referred to in Section 6.2(c);
(e) a duly executed counterpart of the Intellectual Property
Assignment;
(f) a duly executed counterpart of the Supply Agreement;
(g) a duly executed counterpart of the Fiber Supply Agreement;
(h) a duly executed counterpart of the Registration Rights Agreement;
(i) a duly executed counterpart of the Santa Xxxxx Sublease
Agreement;
(j) a duly executed counterpart of each of the Ancillary Agreements;
and
(k) all other documents, instruments and writings required to be
delivered by Buyer Group at or prior to the Closing Date pursuant to this
Agreement and the Ancillary Agreements.
SECTION 1.6 PREPARATION OF FINAL STATEMENT
(a) On the tenth (10) business day following the completion and
acceptance by all parties of a statement (the "FINAL STATEMENT") of the Net
Tangible Book Value of the Business (as defined below in Section 1.6(c)) as
of the close of business on the Closing Date, either (i) the Buyer Group
shall pay to Seller (together with interest as described below) the amount
by which the Net Tangible Book Value of the Business as set forth in the
Final Statement exceeds $53,700,000 (the "TARGET AMOUNT") by wire transfer
pursuant to Schedule 1.2(a)(i) of the Disclosure Schedules in U.S. funds,
or (ii) Seller shall pay to Buyer Group (together with interest as
described below) the amount by which the Net Tangible Book Value of the
Business as set forth in the Final Statement is less than the Target
Amount; provided, that in no event shall Buyer Group be required to pay to
Seller more than $6,000,000 hereunder; provided, further, however, any and
all amounts payable by Seller hereunder shall be satisfied first by
reducing the principal amount of the Note and thereafter by Seller in cash.
In the event the Note is reduced in accordance with the preceding sentence,
Seller shall surrender to Parent the Note so Parent may effect such
reduction and reissue a new Note in the correct principal amount. In the
event of a payment pursuant to the preceding sentence, such amount shall
bear simple interest at an annual rate of seven (7) percent, accruing from
the Closing Date to the date of payment.
(b) The Final Statement shall be prepared by Seller in the following
manner:
(i) within seventy-five (75) days after the Closing Date,
Seller shall deliver to Parent the Final Statement, presenting the Net
Tangible Book Value of the Business at the close of business on the Closing
Date, together with any amendments to the Allocation (as defined below).
The Final Statement shall be accompanied by a report setting forth (i) the
Net Tangible Book Value of the Business, as reflected in the Final
Statement, and (ii) the amount of any adjustment to the Closing Cash
Purchase Price to be paid and by whom pursuant to Section 1.8 and the basis
therefore;
(ii) following the Closing, Seller shall give Parent and the
independent auditors of Parent full access at all reasonable times to the
working papers relating to the Final Statement and any amendment to the
Allocation (as defined below), including but not limited to any
descriptions of the methodology, procedures, internal audits and analysis
undertaken in connection with the preparation of the Final Statement. Upon
reasonable request of Parent, Seller will cause its relevant employees and
outside accountants to be available for questions and discussions regarding
the preparation of the Final Statement and during normal business hours
upon reasonable notice. Within forty-five (45) days following the delivery
to Parent of the Final Statement and any amendment to the Allocation (or,
if later, 15 days after Buyer files with the Securities and Exchange
Commission its quarterly report on Form 10-Q for the quarter in which the
Closing occurs) (the "DISPUTE PERIOD"), Parent shall notify Seller of any
dispute of any item contained in the Final Statement or any amendment to
the Allocation, which notice shall set forth in reasonable detail the basis
for such dispute. If Parent fails to notify Seller of any such dispute
within such Dispute Period, the Final Statement and any amendment to the
Allocation shall be deemed to be accepted by Parent. In the event that
Parent shall so notify Seller of any dispute, Seller and Parent shall
cooperate in good faith to resolve in writing such dispute as promptly as
possible; and
(iii) if Parent and Seller are unable to resolve any such
dispute within fifteen (15) days of Buyer's delivery of such notice (the
"RESOLUTION PERIOD"), then all amounts remaining in dispute shall be
submitted to a "big five" independent accounting firm (the "INDEPENDENT
ACCOUNTING FIRM") selected by Seller and Parent within ten (10) days after
the expiration of the Resolution Period. If Seller and Parent are unable to
agree on the Independent Accounting Firm, then Parent and Seller shall each
have the right to request the American Arbitration Association to appoint
the Independent Accounting Firm, which shall not have had a material
relationship with Seller, Parent or any of their respective affiliates
within the past two (2) years. Each party agrees to execute, if requested
by the Independent Accounting Firm, a reasonable engagement letter. All
fees and expenses relating to the work, if any, to be performed by the
Independent Accounting Firm shall be borne equally by Seller and Parent.
The Independent Accounting Firm shall act as an arbitrator to determine
only those issues still in dispute and shall be limited to those
adjustments, if any, that need be made to the Final Statement and any
amendment to the Allocation to the extent the Final Statement was not
prepared in accordance with Section 1.6(c). The Independent Accounting
Firm's determination shall be requested to be made within thirty (30) days
of its selection, shall be set forth in a written statement delivered to
Seller and Parent and shall be final, binding and conclusive. The Final
Statement, as modified by resolution of any disputes by Parent and Seller
or by the Independent Accounting Firm, shall be the "FINAL STATEMENT."
(c) The term "NET TANGIBLE BOOK VALUE OF THE BUSINESS" shall mean the
Assets (excluding goodwill, trademarks, tax assets and other intangible
assets and excluding any purchase accounting adjustments as a result of the
transactions contemplated in this Agreement and the Ancillary Agreements)
less the Assumed Liabilities, as calculated in accordance with United
States generally accepted accounting principles, practices and methods
("GAAP"), applied consistently with the Balance Sheets (as defined in
Section 3.4), subject to the exceptions set forth on Schedule 3.4 of the
Disclosure Schedules; it being understood and agreed that to the extent any
items, classes of items, line items or accounts existing on September 30,
2000 are reflected in the Final Statement but are not reflected in the
Balance Sheet as of September 30, 2000 set forth in Schedule 3.4 of the
Disclosure Schedule (the "CURRENT BALANCE SHEET"), or vice-versa, then the
Target Amount will be adjusted to include and reflect any such items or
accounts not previously reflected as such items, classes of items, line
items or accounts were reflected by Seller on its balance sheets as of
September 30, 2000. For avoidance of doubt, (i) to the extent there is a
liability reflected on the Current Balance Sheet but such liability would
not have been, and is not, an Assumed Liability and therefore is not
included on the Final Statement, the Target Amount shall be increased by
the carrying value of such liability on Seller's balance sheet as of
September 30, 2000, (ii) to the extent there is a liability that was on
Seller's balance sheet as of September 30, 2000 that was not reflected on
the Current Balance Sheet but such liability is an Assumed Liability and
therefore is included on the Final Statement, the Target Amount shall be
decreased by the carrying value of such liability on Seller's balance sheet
as of September 30, 2000, (iii) to the extent there is an asset on the
Current Balance Sheet but such asset would not have been, and is not, an
Asset and therefore is not included in the Final Statement, the Target
Amount shall be decreased by the carrying value of such asset on Seller's
balance sheet as of September 30, 2000, and (iv) to the extent there is an
asset that was on Seller's balance sheet as of September 30, 2000 that was
not reflected on the Current Balance Sheet but such asset is an Asset and
therefore is included on the Final Statement, the Target Amount shall be
increased by the carrying value of such asset on Seller's balance sheet as
of September 30, 2000. It is further understood and agreed that any assets
and liabilities on the Final Statement shall, to the extent so reflected,
be treated as Assets and Assumed Liabilities, which shall not, in any way,
limit the provisions set forth in Section 1.1(a) and 1.1(d).
SECTION 1.7 EARN-OUT PAYMENT CALCULATION
(a) On the fifth (5th) business day following the earlier of (i)
acceptance by Seller of a certificate executed by an officer of Buyer
setting forth the Ophthalmic Earn-Out Revenue (as defined in Section 1.7(d)
hereof) and setting forth Buyer Group's calculation of the Earn-Out (the
"EARN-OUT STATEMENT") or (ii) the final, binding and conclusive
determination by an Independent Accounting Firm of the Earn-Out as
contemplated by Section 1.7(b), Buyer Group shall pay to Seller the amount
of the Earn-Out in cash, except as expressly set forth herein, delivered by
wire transfer to the bank account set forth in Section 1.2(a), or such
other wire instruction information as may be provided by Seller to Buyer
Group or Parent. The "EARN-OUT" shall equal an amount equal to $215,000 for
every $1,000,000 (and a prorated amount for any amounts less than
$1,000,000) of Ophthalmic Earn-Out Revenue in excess of $450,000,000 during
the Earn-Out Period (as defined in Section 1.7(d)), if any; provided,
however, that in no event shall the total amount of the Earn-Out exceed
$25,000,000 (whether paid in one or more installments). Notwithstanding the
foregoing, in the event that Buyer Group, following the Closing and during
the Earn-Out Period, sells or disposes, in one or a series of transactions,
of the business relating to lasers or laser devices for the ophthalmic
market (the "SOLD OPHTHALMIC BUSINESS"), the Earn-Out shall equal fifty
percent (50%) of the fair market value of the proceeds (net of all
documented out-of-pocket expenses in connection with services provided by
third parties with respect to such transaction up to an aggregate of
$5,000,000) received by Buyer Group from the sale of the Sold Ophthalmic
Business in excess of $110,000,000, but in no event shall the Earn-Out
exceed $25,000,000 (whether paid in one or more installments). If Buyer
Group shall have received all or a portion of the proceeds for the Sold
Ophthalmic Business in registered publicly traded securities (with the
remainder in cash), Buyer Group shall be entitled to (x) retain any cash
consideration received so that Buyer Group should receive, to the maximum
extent possible, $110 million in cash and (y) to pay the Earn-Out in cash
and registered publicly traded securities in the same proportion as the
proceeds received by Buyer Group (excluding, for these purposes, any cash
received up to $110 million). If Buyer Group shall have received all or a
portion of the proceeds in property other than cash or registered publicly
traded securities, Buyer Group shall pay the Earn-Out in cash and such
other property in the same proportion as the proceeds received by Buyer
Group. In addition, if all or any portion of the proceeds from the sale of
the Sold Ophthalmic Business is contingent or deferred, such proceeds shall
not be treated as proceeds from the sale of the Sold Ophthalmic Business
until actually received by the Buyer Group. The fair market value of
proceeds received shall be calculated as follows: (i) in the case of cash,
the amount of cash denominated in United States dollars based upon the
exchange rate published in the Financial Times as the mid-point closing
United States dollar exchange on the day preceding the closing of the sale;
(ii) in the case of publicly traded securities, the average of the closing
price of the securities on the principal U.S. or foreign securities
exchange upon which the securities are listed, or if the securities are not
traded on any such exchange, the average of the closing sales prices or the
closing bid quotations of such securities on Nasdaq or any other principal
securities market upon which such securities are listed for the twenty (20)
days immediately preceding the closing of the sale; and (iii) in the case
of all other property other than cash or registered publicly traded
securities, as mutually agreed upon by Buyer Group and Seller, provided
further if Buyer Group and Seller cannot agree, the value as determined in
writing by a nationally recognized investment bank mutually agreed by Buyer
Group and Seller, provided, if the Buyer Group and Seller cannot agree on a
single investment bank, each of the Buyer Group and Seller shall be
entitled to select one nationally recognized investment bank and each
investment bank shall determine the fair market value and deliver its
written valuation to Buyer Group and Seller within thirty (30) days after
selection of an investment bank by each of Seller and Buyer Group. In the
event that the two investment banks do not agree on a fair market value,
the fair market value shall be the average of the two valuations, except
that if the higher of the two valuations is greater than 25% of the lower
valuation, the two investment banks shall select another nationally
recognized investment bank who shall determine the fair market value
independently of the other two investment banks and without knowledge of
the valuation of the other two banks within thirty (30) days of appointment
and the determination of the third investment bank shall be arithmetically
averaged with the two prior valuations and the valuation farther from the
average of the three valuations shall be disregarded and the fair market
value shall be the average of the two remaining valuations. Each of Buyer
Group and Seller will pay (i) the fees and expenses incurred in connection
with the valuation by the investment bank selected by it, and (ii) one half
of the fees and expenses incurred in connection with the valuation by any
investment bank jointly selected in accordance with this Section 1.7.
(b) The Earn-Out Statement shall be prepared by Buyer Group in the
following manner:
(i) For each fiscal year prior to December 31, 2004, Buyer
Group shall cause to be delivered to Seller no later than ninety (90) days
following the end of Buyer's fiscal year, a certificate executed by Buyer's
Chief Financial Officer or President reflecting the net revenue generated
by the ophthalmic segment of the Business in the prior fiscal year (the
"INTERIM STATEMENTS").
(ii) Within ninety (90) days after December 31, 2004, Buyer
Group shall deliver to Seller the Earn-Out Statement;
(iii) Buyer Group shall give Seller and the independent
auditors and authorized representatives of Seller full access at all
reasonable times to the working papers related to the Earn Out Statement,
the Interim Statements and any amendments related to the Allocation
including, but not limited to, any description of the methodology,
procedures, audits and analysis undertaken in connection with the Earn Out
Statement, the Interim Statements and any amendments to the Allocation for
purposes of preparing, reviewing and resolving any disputes concerning the
Interim Statements, the Earn-Out Statement and any amendment to the
Allocation. Within forty-five (45) days following the delivery to Seller of
the Earn-Out Statement and any amendment to the Allocation, Seller shall
notify Buyer Group of any dispute of any item contained in the Earn-Out
Statement or any amendment to the Allocation, which notice shall set forth
in reasonable detail the basis for such dispute. If Seller fails to notify
Buyer Group of any such dispute within such forty-five (45)-day period, the
Earn-Out Statement and any amendment to the Allocation shall be deemed to
be accepted by Seller; and
(iv) in the event that Seller shall so notify Buyer Group of
any dispute, Buyer Group and Seller shall cooperate in good faith to
resolve such dispute as promptly as possible. If Buyer Group and Seller are
unable to resolve any such dispute within fifteen (15) days of Seller's
delivery of such notice (the "EARN-OUT RESOLUTION PERIOD"), then all
amounts remaining in dispute shall be submitted to an Independent
Accounting Firm selected by Seller and Buyer Group within ten (10) days
after the expiration of the Earn-Out Resolution Period. If Seller and Buyer
Group are unable to agree on the Independent Accounting Firm, then Buyer
Group and Seller shall each have the right to request the American
Arbitration Association to appoint the Independent Accounting Firm, which
shall not have had a material relationship with Seller, Buyer Group or any
of their respective affiliates within the past two (2) years. Each party
agrees to execute, if requested by the Independent Accounting Firm, a
reasonable engagement letter. All fees and expenses relating to the work,
if any, to be performed by the Independent Accounting Firm shall be borne
equally by Seller and Buyer Group. The Independent Accounting Firm shall
act as an arbitrator to determine only those issues still in dispute and
shall be limited to those adjustments, if any, that need be made for the
Earn-Out Statement and any amendment to the Allocation to comply with this
Section 1.7). The Independent Accounting Firm's determination shall be
requested to be made within thirty (30) days of its selection, shall be set
forth in a written statement delivered to Seller and Buyer Group and shall
be final, binding and conclusive.
(c) During the Earn-Out Period, Buyer Group shall not, without the
written consent of Seller, take or cause to be taken any action in
connection with the Business which reduces or otherwise adversely affects,
in either instance in any material respect, the amount of the Earn-Out,
unless such action is (i) undertaken in the ordinary course of business or
(ii) in the best interests of the Buyer Group (including all subsidiaries
of Parent) as determined in good faith by management of the Buyer Group
(but excluding for purposes of such determination the possible benefit of
not paying the Earn-Out pursuant to this Section 1.7) and the primary
purpose of such action is a purpose other than a reduction of the Earn-Out
.
(d) The "OPHTHALMIC EARN-OUT REVENUE" shall mean the net revenue
generated by the ophthalmic segment of the Business for the fiscal period
beginning on January 1, 2001 and ending on December 31, 2004 (the "EARN-OUT
PERIOD") as calculated in accordance with GAAP and included in the
financial statements included in Buyer Group's public filings; provided,
that (i) in the event that Buyer Group, following the Closing, acquires any
additional medical laser (or other light-based devices) and related
equipment for the ophthalmic market, including intellectual property, or
acquires a business that has medical laser (or other light-based devices)
and related equipment for the ophthalmic market, or (ii) Buyer Group shall
sell a portion of the Ophthalmic Business, then there shall be an equitable
adjustment to the Earn-Out, as mutually agreed by the parties, to reflect
the impact of such acquisition or sale on the revenue generated by Buyer
Group in its operation of the ophthalmic segment of the Business. It being
understood, however, that without limiting the generality of the foregoing,
among other circumstances, the Earn-Out shall not be adjusted, (i) if the
object of any such acquisition is to acquire additional intellectual
property (rather than ongoing businesses or products) that allows Buyer
Group to modify or enhance the existing ophthalmic products, or (ii) to
reflect product updates, general improvements or other like modifications
to products or equipment for the ophthalmic market in the ordinary course
of business (whether such updates, improvements or modifications are
developed solely by Buyer Group or by accessories, components or technology
acquired from third parties). For purposes of such equitable adjustment,
the following criteria, among other things, shall be taken into account in
the event of a sale of part of the Ophthalmic Business: the past revenue
contribution and expected future revenue contribution of such part of the
Ophthalmic Business. In addition, if the parties are unable to reach
agreement as to the terms and amount of an equitable adjustment to the
Earn-Out in any such case, then such differences shall be resolved in
accordance with the dispute resolution mechanism set forth in Schedule
1.7(d) of the Disclosure Schedules.
SECTION 1.8 POST-CLOSING PURCHASE PRICE ADJUSTMENT
(a) The amounts, if any, referred to in Sections 1.6 and 1.7 shall be
paid by the paying party under Section 1.6 or Section 1.7 by wire transfer
in immediately available United States funds to an account designated by
the other party.
(b) Any amount to be paid by either Seller or Buyer Group pursuant to
Section 1.6 or by Buyer Group pursuant to Section 1.7 shall be treated as
an adjustment to the Total Purchase Price.
SECTION 1.9 INTERCOMPANY LIABILITIES
Immediately prior to the Closing, Seller will cancel, settle or
otherwise repay, and will cause its affiliates to cancel, settle or
otherwise repay, all of its or their liabilities and obligations to the
Business arising prior to the Closing which would have otherwise been
required to have been set forth on the Final Statement. Immediately prior
to the Closing, Seller will cause the Division to cancel, settle or
otherwise repay all of its liabilities and obligations owed to Seller and
its affiliates which would have otherwise been required to be set forth on
the Final Statement, and Buyer Group shall not have any responsibility for
those liabilities.
ARTICLE II
RELATED MATTERS
SECTION 2.1 BOOKS AND RECORDS OF SELLER
Any material Books and Records that are related to the Business that
are not either delivered to Buyer Group hereunder or copies of which are
not delivered to Buyer Group hereunder will be preserved by Seller until at
least the third anniversary of the Closing Date and will be made available
(for review and copying to the extent related to the Business) to Buyer
Group and its authorized representatives upon reasonable notice during
normal business hours to the extent reasonably required by Buyer Group,
including, without limitation, to the extent reasonably required in
connection with audit, accounting, tax, litigation, federal securities
disclosure or other similar needs; provided, that Seller shall notify Buyer
Group prior to destroying any such records. Buyer Group will preserve and
make available (for review and copying) to Seller and its authorized
representatives upon reasonable notice during normal business hours the
records transferred by Seller until at least the third anniversary of the
Closing Date and thereafter in accordance with the document retention
policy of the Business as in effect on the date hereof and, with respect to
records that may be relevant to any actual tax audits or proceedings, such
additional period as is reasonably required by Seller; provided, that Buyer
Group shall notify Seller prior to destroying any such record during such
period.
SECTION 2.2 MAIL HANDLING
Effective as of the Closing Date, Buyer shall have the right to open
all mail and packages addressed to Seller and delivered to Buyer Group
relating to the Business. To the extent Buyer Group receives any mail or
packages addressed to Seller and delivered to Buyer Group not relating to
the Business, Buyer Group shall promptly deliver such mail or packages to
Seller. After the Closing Date, Buyer Group may deliver to Seller any
checks or drafts made payable to Seller received on account of any
Receivables or other Assets constituting a right to receive payment, Seller
shall promptly deposit such checks or drafts, and, upon receipt of funds,
reimburse Buyer Group within five (5) business days for the amounts of all
such checks or drafts, or, if so requested by Buyer Group, endorse such
checks or drafts to Buyer Group for collection. To the extent Seller
receives any mail or packages addressed and delivered to Seller but
relating to the Business, Seller agrees that it will promptly transfer or
deliver or cause to be promptly transferred or delivered, to Buyer Group or
its designee any cash or other property received directly or indirectly by
it or any of its affiliates after the Closing in respect of Receivables,
including any amounts paid as interest thereon for periods following the
Closing.
SECTION 2.3 EMPLOYEES AND EMPLOYEE BENEFITS
(a) Except for the individuals set forth on Schedule 5.9 of the
Disclosure Schedules, at the Closing, all employees of the Business,
including, without limitation, all employees of the Business employed
outside the United States and any employees on an approved leave of absence
set forth on Schedule 2.3(a) of the Disclosure Schedules, but excluding
employees receiving short-term disability as of the Closing, (each such
person, an "OFFEREE") shall become employees of Buyer Group effective as of
the Closing; provided, however, that such employees receiving short-term
disability as of the Closing shall become Offerees upon eligibility to
return to work and shall become Continuing Employees if and when they
commence employment with Buyer Group. All Offerees accepting employment
with Buyer Group are referred to herein as the "CONTINUING EMPLOYEES." Such
initial employment with Buyer Group shall provide, on an individual basis
(i) at least an equal salary, and (ii) total benefits and other
compensation in the aggregate of substantially equivalent value as was
provided by Seller to such Continuing Employees or Offeree prior to the
Closing, and (iii) substantially similar job responsibilities as the
Continuing Employee or Offeree held prior to the Closing with Seller
(collectively "QUALIFYING CONDITIONS"). If (i) Buyer Group fails to provide
an Offeree with employment on Qualifying Conditions as described in this
Section 2.3(a) and such Offeree declines such employment with the Buyer
Group or (ii) a Continuing Employee is terminated by Buyer Group within
twelve (12) months of the Closing Date, then Buyer Group shall promptly pay
severance to such individual under the terms set forth in Schedule N. If
any Continuing Employee commences employment with the Buyer Group with
employment terms on Qualifying Conditions, then, in the event that the
Buyer Group shall subsequently request within 90 days of the Closing, as a
condition of employment, that any such Continuing Employee relocate more
than 25 miles from such employee's place of employment as of the Closing (a
"RELOCATION REQUEST") and such Continuing Employee shall decline such
Relocation Request and terminate employment with Buyer Group, then the
Buyer Group shall pay severance with respect to such employee as set forth
on Schedule N. In the event that a Relocation Request is made of any
Continuing Employee employed under Qualifying Conditions with the Buyer
Group more than 90 days but less than 365 days after the Closing, then, in
the event that such Relocation Request is declined and such Continuing
Employee terminates employment, then the Buyer Group shall pay severance to
such Continuing Employee in an amount to be determined; provided that such
amount shall not be less than 50% of the amount otherwise required to be
paid under Schedule N. Any and all severance obligations with respect to
Continuing Employees or Offerees as described above shall be the sole and
absolute responsibility of Buyer Group (provided that any amounts paid
under applicable law, paid previously by Seller or payable by a third
party, including but not limited to an insurance company, shall reduce
Buyer Group's payment obligation hereunder). Individuals receiving
severance other than in connection with a Relocation Request more than 90
days but less than 365 days after the Closing shall receive the greater of
(X) severance pursuant to the terms of the Severance Terms attached hereto
as Exhibit N, and (Y) such severance as is required by applicable law;
provided, however, that this provision shall not result in duplication of
benefits regarding severance with respect to Continuing Employees as
provided in the preceding sentence. Buyer Group shall be responsible for
COBRA obligations with respect to Continuing Employees. No later than 180
days following the one year anniversary of the Closing Date, Buyer Group
shall deliver to Seller a written schedule of the amount of severance paid
to each Continuing Employee or Offeree during the 12 months following the
Closing Date.
(b) Effective at the Closing, Continuing Employees shall cease
participation in the employee benefit plans of Seller. As of the Closing
Date, Continuing Employees shall become participants in the employee
benefit plans of Buyer Group. Buyer agrees that, for purposes of all
employee benefit plans (including, but not limited to, all employee benefit
plans within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), any and all equity-based plans
(presently or hereinafter established) and any and all policies and
employee fringe benefit programs (including vacation and severance
policies) of Buyer Group (such plans, programs, policies and arrangements,
(the "BUYER Plans") in which Continuing Employees shall participate on and
after the Closing under which such employee's eligibility or benefit
depends, in whole or in part, on length of service, credit will be given to
such employees for service previously credited with the Business prior to
the Closing; provided, that such crediting of service does not result in
duplication of benefits; provided, further, that such crediting of service
shall not be given for benefit accrual purposes under any Buyer Plan that
is a "defined benefit plan" within the meaning of ERISA or similar statutes
applicable in any jurisdiction other than the United States. Continuing
Employees shall also be given credit for any deductible or co-payment
amounts paid (under an analogous Seller employee benefit plan) in respect
of the plan year in which the Closing occurs, to the extent that, following
the Closing, such employees participate in any Buyer Plan for which
deductibles or co-payments are required. Buyer Group shall permit the
transfer of Continuing Employees' election and current account balances
from the flexible spending arrangement plan of Seller to the flexible
spending arrangement plan of Buyer Group, and in the event such a plan is
not sponsored by Buyer Group, Buyer Group shall establish, as soon as
practicable following the Closing, such a plan and permit the plan to plan
transfer of such account balances. Buyer Group shall honor all elections
made under Seller's flexible spending arrangement plan. Buyer Group shall
also cause each Buyer Plan to waive to the extent waived under the
applicable plans of the Seller (i) any pre-existing condition or other
restriction under the Buyer Plans or (ii) any waiting period limitation
that would otherwise be applicable to Continuing Employees on or after the
Closing under the Buyer Plans.
(c) As soon as practicable following the Closing Date, (i) Buyer
Group shall provide Seller with such documents and other information as
Seller shall reasonably request to assure itself that the ESC Medical
Systems, Inc. Profit Sharing Plan (the "ESC SAVINGS PLAN") provides for the
receipt of eligible rollover distributions (as such term is defined under
Section 402 of the Code) or shall be amended as soon as practicable
following the Closing Date to provide for the immediate receipt from the
Continuing Employees of eligible rollover distributions; (ii) Buyer Group
shall provide Seller with a favorable determination letter issued by the
Internal Revenue Service (as soon as such favorable determination letter
becomes available) to the effect that the terms of the ESC Savings Plan and
its related trust qualify under Sections 401(a) and 501(a) of the Code; and
(iii) Seller shall provide Buyer Group with such documents as Buyer Group
shall reasonably request to assure itself that the accounts of the
Continuing Employees under the Coherent Employee Retirement and Investment
Plan (the "SELLER SAVINGS PLAN" would be eligible rollover distributions.
Effective as of the Closing Date, each Continuing Employee who is a
participant in a Seller Savings Plan shall cease to accrue any further
benefits under such Seller Savings Plan. The accounts of each Continuing
Employee who is a participant in a Seller Savings Plan shall be one hundred
percent (100%) vested as of the of Closing Date. Each Continuing Employee
who is a participant in a Seller Savings Plan shall be given the
opportunity to "rollover" such account balance by way of an eligible
rollover distribution to the ESC Savings Plan. Notwithstanding anything in
this Agreement to the contrary, each Continuing Employee who is eligible to
participate in a Seller Savings Plan will first become eligible to
participate in the ESC Savings Plan immediately after the Closing Date.
(d) Buyer Group shall assume liability for, and shall indemnify
Seller against, all claims under the applicable Plans for health, accident,
sickness, and disability benefits that are deemed incurred on or after the
Closing Date with respect to Continuing Employees in accordance with the
terms of Section 2.3(a) hereof, and Seller shall have no further liability
therefore with respect to such claims. Seller shall retain responsibility
for, and shall indemnify Buyer against, any and all claims under the
applicable Plans for health, accident, sickness, and disability benefits,
including any claims for workmen's compensation (i) that are deemed
incurred prior to the Closing Date with respect to Continuing Employees.
(e) Nothing contained herein, expressed or implied, is intended to
confer upon any Continuing Employee any right to continued employment for
any period by reason of this Agreement. Nothing contained herein is
intended to confer upon any Continuing Employee any particular term or
condition of employment other than with respect to the particular employee
benefit plans or severance plans, policies or arrangements expressly
referred to in this Agreement.
(f) Seller shall retain and Buyer Group shall not assume any
liabilities incurred by Seller prior to the Closing with respect to any
Continuing Employee (unless otherwise expressly provided herein) or any
employee benefit plans including, but not limited to, any defined benefit
pension plan as defined in Section 3(37) of ERISA (including any withdrawal
liability (as provided under 4203 or 4205 of ERISA) with respect thereto);
provided, that Buyer Group shall assume all loans made by Seller or the
Seller Subsidiaries to Continuing Employees, all of which are listed on
Schedule 2.3(f) of the Disclosure Schedules.
(g) Buyer Group will promptly after Closing establish an employee
retention plan providing, among other things, certain cash or equity-based
incentives for qualifying employees of Buyer Group (including, but not
limited to, Continuing Employees) (the "RETENTION PLAN"). Buyer Group shall
provide Seller with the opportunity to review and comment on the terms of
the Retention Plan prior to its adoption.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer Group as follows,
subject to such exceptions as are disclosed in a disclosure schedule
supplied by Seller to Parent (the "DISCLOSURE SCHEDULES"):
SECTION 3.1 ORGANIZATION
Each of Seller, Star and the Non-U.S. Companies (together with Star,
the "SELLER SUBSIDIARIES") is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation.
Each of Seller and the Seller Subsidiaries is duly qualified or licensed to
do business in each jurisdiction in which property relating to the Business
is owned, leased or operated by Seller or the nature of the Business makes
such qualification necessary, except where the failure to be so qualified
or licensed would not have a Material Adverse Effect on the Business.
Seller and Seller Subsidiaries are all of the entities of Seller and its
Affiliates which are engaged in the Business.
SECTION 3.2 AUTHORIZATION
Each of Seller and the Seller Subsidiaries has the corporate power
and authority to execute and deliver this Agreement and the Ancillary
Agreements (to which it is a party) and consummate or cause to be
consummated the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Agreements (to which it is
a party) by Seller and the Seller Subsidiaries and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors of Seller and the Seller Subsidiaries,
as applicable, and no other corporate proceedings (including, without
limitation, a vote of Seller's stockholders) on the part of Seller and the
Seller Subsidiaries is necessary to authorize the execution, delivery and
performance of this Agreement, the Ancillary Agreements or the consummation
of the transactions contemplated hereby and thereby. This Agreement and the
Ancillary Agreements (to which it is a party) have been duly executed and
delivered by Seller and the Seller Subsidiaries and constitute, and, in the
case of Ancillary Agreements not contemplated to be executed concurrently
herewith, will constitute, valid and binding agreements of Seller and the
Seller Subsidiaries, as applicable, enforceable against Seller and the
Seller Subsidiaries, as applicable, in accordance with their respective
terms, except as such enforceability may be limited by principles of public
policy and subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and to rules of law
governing specific performance, injunctive relief and other equitable
remedies.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS
(a) Except for applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), or
antitrust or other regulatory laws of jurisdictions other than the United
States, there are no governmental approvals or consents required for the
execution, delivery or performance of this Agreement or the consummation by
Seller of the transactions contemplated hereby or by the Ancillary
Agreements.
(b) The execution, delivery and performance of this Agreement and the
Ancillary Agreements and the consummation by Seller or Seller Subsidiaries
of the transactions contemplated hereby and thereby will not (i) conflict
with or result in any breach or violation of any provision of the
certificate of incorporation or by-laws of Seller or any of the Seller
Subsidiaries; (ii) require Seller or any of the Seller Subsidiaries to file
or register with, or give notice to, or obtain the authorization, consent
or approval of any person (other than a governmental entity) whether within
or outside the United States; (iii) violate, conflict with or result in a
material default (or any event that, with notice or lapse of time or both,
would constitute a material default) under, or result in any termination,
cancellation or acceleration or give rise to any such right of termination,
cancellation or acceleration under, any of the terms, conditions or
provisions of any Contract to which Seller or any Seller Subsidiary is a
party and constitute Assets or by which Seller, any Seller Subsidiary is a
party or any of their assets are subject or by which any of them may be
bound that would materially impair Seller's ability to consummate the
transactions contemplated hereby and in the Ancillary Agreements; (iv)
violate any order, injunction, decree, statute, rule or regulation
applicable to Seller, any Seller Subsidiary or the Assets or that would
materially impair the ability of Seller or any Seller Subsidiary to
consummate the transactions contemplated hereby and in the Ancillary
Agreements; or (v) result in the creation or imposition of any Lien upon
any Asset other than Permitted Encumbrances. As used in this Section 3.3,
references to Seller and its Subsidiaries shall refer only to Seller and
its Subsidiaries in connection with the conduct of the Business.
SECTION 3.4 FINANCIAL STATEMENTS
(a) Attached as Schedule 3.4 of the Disclosure Schedules are (i) the
unaudited balance sheet of the Business as of September 30, 2000 and
December 30, 2000 (the "BALANCE SHEETS"), (ii) the unaudited balance sheet
of the Business as of September 30, 1999 and (iii) the related unaudited
statements of income of the Business for the years ended September 30,
1999, September 30, 2000 and for the quarter ended December 30, 2000 (the
financial statements referred to in clauses (i), (ii) and (iii) above and
the accompanying notes thereto are referred to herein collectively as the
"FINANCIAL STATEMENTS"), which have been extracted from the books and
records of Seller, which books and records are the basis of the Seller's
preparation of financial statements audited by Deloitte & Touche LLP.
Except as disclosed in the Financial Statements or on Schedule 3.4 of the
Disclosure Schedules, the Financial Statements have been prepared in
accordance with GAAP, consistently applied and fairly present in all
material respects the financial condition of the Business as of such date
and the results of operations of the Business for such periods (subject, in
the case of unaudited statements, to normal recurring year-end audit
adjustments which were not or are not expected to be material in amount and
the omission of financial statement footnotes that are required by GAAP).
(b) The audited consolidated financial statements of Seller as of
September 30, 2000 and the notes thereto, as attached to the Seller's
annual report on Form 10-K, filed with the Securities and Exchange
Commission on December 14, 2000, as amended, have been prepared in
accordance with GAAP consistently applied and fairly present in all
material respects the consolidated financial position of Seller as of the
date thereof and the consolidated results of operations for such period,
except as indicated in the notes thereto.
SECTION 3.5 ABSENCE OF UNDISCLOSED LIABILITIES
Except for (i) Excluded Liabilities, (ii) liabilities reflected on
the Balance Sheets; (iii) liabilities and obligations incurred in the
ordinary course of business since December 31, 2000, (iv) as otherwise
disclosed herein or on the Disclosure Schedules and (v) such liabilities
and obligations as would not have a Material Adverse Effect (as defined in
Section 3.6(c)), the Business does not have any liabilities or obligations
(whether direct, indirect, accrued or contingent) which would have been
required to be disclosed on the Balance Sheets in accordance with GAAP or
in the notes thereto.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES
Except as set forth on Schedule 3.6 of the Disclosure Schedules or as
otherwise contemplated by this Agreement, since December 31, 2000 and
through the date hereof:
(a) Seller and the Seller Subsidiaries have carried on the Business
in the ordinary course and there has not been any Material Adverse Effect;
and
(b) Neither Seller nor any of the Seller Subsidiaries, with respect
to the Business, have:
(i) sold, assigned, licensed, transferred, conveyed or
otherwise disposed of any of the assets primarily related to the Business,
except in the ordinary course of business;
(ii) made any loans, advances (other than advances in the
ordinary course of business) or capital contributions to, or investments
in, any other person;
(iii) to the extent it is primarily related to the Business,
purchased any business;
(iv) terminated, modified, transferred or amended any of the
Contracts, except in the ordinary course of business;
(v) Increased in any manner the compensation of any of the
employees who are working primarily for the Business whether in the United
States or otherwise (the "BUSINESS EMPLOYEES"), except for such increases
to Business Employees (other than members of senior management) in the
ordinary course of business (including annual reviews) or in accordance
with the terms of any employment contract or collective bargaining
agreement as currently in effect (except for incentives paid to sales
persons in the ordinary course);
(vi) adopted, granted, extended or increased the rate or
terms of any bonus insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with any such Business Employees,
except increases required by any applicable law, rule or regulation (except
for incentives paid to sales persons in the ordinary course);
(vii) made any change in any of the Business' present
accounting methods and practices, except as required by GAAP;
(viii) licensed (other than in connection with sales of
products by virtue of such sale) any of the Transferred Intellectual
Property to any third party or licensed any of the Licensed Intellectual
Property (as defined in Section 5.14(a)) or Licensed Trademarks (as defined
in Section 5.14(c)) to any third party for use in the Business, except to
the extent it otherwise would have been permitted under the terms of the
license agreements referred to in Section 5.14 had such agreement been in
effect;
(ix) made or authorized any capital expenditures other than
in accordance with the Business' annual plan or other than capital
expenditures not exceeding $100,000 individually or $500,000 in the
aggregate;
(x) subjected any of the Assets to any Liens other than
Permitted Encumbrances;
(xi) canceled or compromised any debt or claim or waived or
released any rights of the Business; or
(xii) entered into any agreement to do any of (i) through
(xi) of this Section 3.6(b).
(c) Except as set forth in Schedule 3.6(c) of the Disclosure
Schedules or as set forth on the Balance Sheets and other than claims made
in the ordinary course of business, to Seller's knowledge, there are no
claims against Seller or any of the Seller Subsidiaries with respect to the
Business to return products by reason of alleged over shipments, defective
products or otherwise, nor, except as set forth on Schedule 3.6(c) of the
Disclosure Schedules and except for customary business practices, are there
any products in the hands of customers on a test basis with the
understanding that such products would be returnable.
As used in this Agreement, "MATERIAL ADVERSE EFFECT" shall mean any
change, circumstance or effect which, individually or in the aggregate, has
had or would reasonably be expected to have a material adverse change in,
or effect on the assets, liabilities, financial condition or results of
operations of the Business or on the ability of Seller to consummate the
transactions contemplated hereby or by the Ancillary Agreements; provided,
however, "Material Adverse Effect" shall not include any material adverse
change or effect occurring (i) to the extent that Seller can demonstrate
that such change or effect is a result of the execution and public
announcement of this Agreement, the pendency of the Agreement or the
consummation of the transactions contemplated hereby that, in each case,
can be reasonably attributed to the identity of the Buyer or Buyer Group,
as the buyer, (ii) to the extent that Seller or Buyer, as the case may be,
can demonstrate that there has been a similar effect on the other party, or
(iii) occurring as a result of general market or industry conditions
provided that to the extent such changes affect Seller, the Business or
Buyer Group, as the case may be, disproportionately relative to other
entities operating in such industries, such disproportionate impact may be
taken into account in determining whether a Material Adverse Effect has
occurred.
SECTION 3.7 INTELLECTUAL PROPERTY
For the purposes of this Agreement, "INTELLECTUAL PROPERTY" shall
mean all rights in, arising out of, or associated therewith whether
individually or collectively, in mediums that are either currently known or
later discovered, authored, developed, made, perfected, improved, designed
or engineered and all works of authorship, formulas, processes, drawings,
routines, subroutines, techniques, concepts, object code, flow charts,
diagrams, coding sheets, source code, listings and annotations, technical
specifications of components, information, work papers, work product, and
other materials pertaining to: (i) all United States, international and
foreign patents and applications therefor and all reexaminations, reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("PATENTS"); (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing ("TRADE
SECRETS"); (iii) all copyrights, copyrights registrations and applications
therefor, and all other rights corresponding thereto throughout the world,
all databases and data collections and all rights therein throughout the
world ("COPYRIGHTS") (iv) all domain names, uniform resource locators
("URLS") and other names and locators associated with the Internet
(collectively, "DOMAIN NAMES"), (v) all computer software, including all
source code, object code, firmware, development tools, files, records and
data, and all media on which any of the foregoing is recorded ("Software");
and (vi) all trade names, logos, common law trademarks and service marks,
trademark and service xxxx registrations and applications therefor
throughout the world ("TRADEMARKS").
(a) all Patents, Trademarks and Copyrights that are the subject of
any filing, application or registration with the United States Patent and
Trademark Office or the U.S. Copyright Office and any similar or comparable
agency or office in any other jurisdiction ("REGISTERED INTELLECTUAL
PROPERTY") and any application to such Registered Intellectual Property, in
each case, that constitute Transferred Intellectual Property are set forth
in Schedule 3.7(a) of the Disclosure Schedules (the "TRANSFERRED REGISTERED
INTELLECTUAL PROPERTY"). In addition, certain common law trademarks of
Seller are also set forth in Schedule 3.7(a) of the Disclosure Schedules.
(b) Except as set forth on Schedule 3.7(b) of the Disclosure
Schedules:
(i) to the knowledge of Seller, each of Seller and its
subsidiaries currently has, and the Buyer Group will have after the
Closing, such ownership of or other rights by license or other agreement to
the Transferred Intellectual Property, Licensed Intellectual Property, and
the Intellectual Property made available through the supply of products
covered under the Supply Agreement, as the case may be, as is necessary to
permit the Business to conduct its operations as currently conducted.
Except for the Licensed Intellectual Property, the Buyer Group will receive
at the Closing all Intellectual Property owned by Seller or Seller
Subsidiaries which is primarily related to, or necessary to the operation
of, the Business;
(ii) there are no pending proceedings or litigation before
any court, tribunal (including the United States Patent and Trademarks
Office) or equivalent authority anywhere in the world or any other adverse
claims, or, to the knowledge of Seller, no such proceedings, litigation or
any other adverse claims are threatened, by any person against the use by
Seller or any of its subsidiaries (as it relates to the Business) of any
Transferred Intellectual Property;
(iii) neither Seller nor any of its subsidiaries has
received notice from any person claiming that the operation of the Business
as currently conducted or any act, product, technology or service
(including products, technology or services currently under development)
infringes or misappropriates any Intellectual Property of any person or
constitutes unfair competition or trade practices under the laws of any
jurisdiction;
(iv) to the knowledge of Seller, the Transferred
Intellectual Property is free and clear of any material Lien other than
Permitted Encumbrances, fully transferable, alienable and licensable by, or
between, Seller or any of its subsidiaries and Buyer Group without material
restriction and without payment of any kind being due to any third party;
(v) all material and necessary registration, maintenance and
renewal fees in connection with the Transferred Registered Intellectual
Property have been paid and all material and necessary documents and
certificates in connection with such Transferred Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or
other authority in the United States or international or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Transferred Registered Intellectual Property except where it has been
determined by Seller in the ordinary course of its business not to maintain
such Transferred Registered Intellectual Property;
(vi) there are no contracts, licenses or agreements between
Seller or any of its subsidiaries and any other person with respect to the
Transferred Intellectual Property under which, to the knowledge of Seller,
there is any material dispute regarding the scope of such agreement or
performance under such agreement including with respect to any payments to
be made or received by Seller or any of its subsidiaries thereunder; and
(vii) in each case in which Seller or any of the Seller
Subsidiaries has acquired ownership or a license of any material
Transferred Intellectual Property from any person, Seller or any of the
Seller Subsidiaries, as the case may be, has obtained a valid and
enforceable assignment sufficient to transfer such rights in such
Transferred Intellectual Property to Seller or any of the Seller
Subsidiaries.
(c) To the knowledge of the Seller, the operation of the Business as
it is currently conducted, including but not limited to the design,
development, use, import, branding, advertising, promotion, marketing,
manufacture and sale of the products, technology or services (including
products, technology or services currently under development) of Seller and
its subsidiaries does not, in any material respect, and will not, in any
material respect, when conducted by Buyer Group in substantially the same
manner following the Closing, infringe or misappropriate the Intellectual
Property of any other person, violate the rights of any person (including
rights to privacy or publicity), or constitute unfair competition or trade
practices under the laws of any jurisdiction.
(d) Each of Seller and any of its subsidiaries has taken such steps
that are reasonably necessary to protect material confidential information
and trade secrets of the Business.
(e) The instruments of assignment to be delivered by Seller to Buyer
Group (or parties designated by Buyer Group) at the Closing, pursuant to
which Seller will assign, or will cause to be assigned, all Transferred
Registered Intellectual Property (including any registrations and pending
applications with respect thereto) will be duly executed.
(f) Any and all current or prior employees of Seller or Seller
Subsidiaries have signed an agreement with Seller or Seller Subsidiaries
assigning to Seller or Seller Subsidiaries, as the case may be, any and all
rights such employee may have in inventions created by such employee in the
scope of his or her employment by the Business, except as limited by law.
SECTION 3.8 TITLE, OWNERSHIP AND RELATED MATTERS
(a) As used herein, the term "LIENS" shall mean any pledge, mortgage,
charge, claim, title, imperfection, defect or objection, security interest,
conditional or installment sales agreement, encumbrance, easement,
encroachment, third party right or restriction, of any kind, whether
incurred or assumed by Seller or any of the Seller Subsidiaries. As used
herein, the term "PERMITTED ENCUMBRANCES" shall mean (i) Liens for current
taxes not yet due or taxes being contested in good faith, (ii) mechanics',
materialmen's, warehousemen's, contractors', workmens', repairmens',
carriers' and similar Liens attaching by operation of law, incurred in the
ordinary course of business and securing payments not delinquent or
payments which are being contested in good faith, which are not,
individually or in the aggregate, material, (iii) the rights, if any, of
third-party suppliers or other vendors having possession of equipment of
the Business, (iv) Liens, imperfections of Title and easements and zoning
restrictions, if any, which do not materially impair the operations of the
Business or materially detract from the value of the property subject
thereto and purposes to which such property is currently employed and (v)
those items listed in Schedule 3.8(a) of the Disclosure Schedules.
(b) Neither Seller nor any of Seller Subsidiaries own or holds any
fee interest in real estate relating to the Business.
(c) Schedule 3.8(c) of the Disclosure Schedules contains a complete
and correct list, as of the date hereof, of the Leased Real Property,
setting forth the address, landlord and tenant for each such lease or
sublease (the "LEASES"). Seller or its subsidiaries hold good and valid
leasehold title to the Leased Real Property, in each case, subject only to
the terms, covenants and conditions of the applicable Lease, the Permitted
Encumbrances and those items listed in Schedule 3.8(c) of the Disclosure
Schedules. Seller has delivered true, correct and complete copies of all
Leases with respect to the Leased Real Property, including all amendments,
assignments and agreements relating thereto to Buyer Group. Except as set
forth in Schedule 3.8(c) of the Disclosure Schedules, each Lease grants the
tenant thereunder the right to use and occupy the demised premises and to
enjoy peaceful and undisturbed possession with respect to the Leased Real
Property. As of the date hereof, all Leases relating to the Leased Real
Property are in full force and effect and constitute legal, valid and
binding obligations of Seller or its subsidiaries. There exist no material
defaults or conditions which with the giving of notice or the passage of
time, or both, would constitute a material default by Seller, or to the
knowledge of Seller, the other party or parties thereto with respect to the
Leases for the Leased Real Property.
(d) (i) The Leased Real Property constitutes all the leasehold
interests in real estate occupied by the Seller for use by the Business;
(ii) to the knowledge of Seller, the use and operation of the Leased Real
Property does not violate, in any material respect, any agreement affecting
the Leased Real Property to which Seller or any of the Seller Subsidiaries
is a party; (iii) neither Seller nor any of the Seller Subsidiaries has
received written notice that the Leased Real Property is in violation in
any material respect of any instrument of record (iv) there is no violation
of any covenant, condition, restriction, or easement relating to the Leased
Real Property, except for such violations which do not, or would not
reasonably be expected to have a Material Adverse Effect; (v) other than
the Stanford Industrial Park Matter and the Condensa Matter, neither the
Seller nor any of the Seller Subsidiaries has received written notice or,
to the knowledge of Seller, is otherwise aware that the Leased Real
Property is not in compliance, in any material respect, with any applicable
building, zoning, subdivision, land use or other similar applicable laws
affecting the Leased Real Property (excluding Environmental Laws, which is
addressed in Section 3.14 hereof) ("REAL PROPERTY LAWS"); and (vi) none of
the Leased Real Property is subject to any pending, or, to the knowledge of
the Seller, threatened suit for condemnation or other taking by any
governmental authority.
(e) Except as set forth in Schedule 3.8(e) of the Disclosure
Schedules, Seller has, and at the Closing Seller will deliver to Buyer
Group good, valid and marketable title to the Assets (other than the Leased
Real Property, which are addressed in subsection (a)), free and clear of
all Liens except for Permitted Encumbrances.
SECTION 3.9 LITIGATION; PRODUCT LIABILITY
(a) Except as set forth on Schedule 3.9(a) of the Disclosure
Schedules, there are no claims, actions, suits, administrative, arbitration
or other inquiries, investigations or proceedings (collectively, "CASES")
pending, or, to Seller's knowledge, threatened, against Seller or any of
its subsidiaries or any of their properties, assets and business
operations, as of the date hereof, by or before any court, governmental or
regulatory authority or by any third party, in each case relating to the
Business. Seller is not subject to any judgments, orders or decrees entered
in any lawsuits or proceedings that are related to the Business.
(b) Except as set forth on Schedule 3.9(b) of the Disclosure
Schedules, as of the date hereof, there are no pending, or, to the
knowledge of Seller, threatened civil, criminal or administrative actions,
suits, demands, claims, notices of violation, investigations, proceedings
or demand letters against Seller or any of its subsidiaries relating to any
alleged hazard or alleged defect in design, manufacture, materials or
workmanship, including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any product manufactured,
distributed or sold by or on behalf of Seller with respect to the Business.
Schedule 3.9(b) of the Disclosure Schedules sets forth, as of the date
hereof, a true and complete list of all written, non-uniform product
warranties, indemnifications or guarantees with respect to any products
manufactured by Seller and sold or distributed by the Business that Seller
has extended to any of its customers.
SECTION 3.10 COMPLIANCE WITH APPLICABLE LAW
(a) Except as set forth on Schedule 3.10(a) of the Disclosure
Schedules, to Seller's knowledge, Seller and its subsidiaries have
conducted and conduct the Business in compliance in all material respects
with all applicable laws, orders, ordinances, rules and regulations of any
federal, state, local or foreign governmental authority applicable to the
Business (other than Environmental Laws, which are governed by Section
3.14).
(b) Except as disclosed in Schedule 3.10(b) of the Disclosure
Schedules:
(i) Seller and the Seller Subsidiaries hold all governmental
licenses necessary for the operation of the Business (the "Licenses");
(ii) each License is valid and binding on Seller and in full
force and effect; and
(iii) neither Seller is, nor has it received any notice that
it or any of its subsidiaries is, in material default (or with the giving
of notice or lapse of time or both, would be in material default) under any
License.
SECTION 3.11 CERTAIN CONTRACTS AND ARRANGEMENTS
(a) Except as set forth on Schedule 3.11 of the Disclosure Schedules,
as of the date hereof, neither Seller nor any of its subsidiaries is a
party to any of the following Contracts:
(i) collective bargaining agreement;`
(ii) employment agreement with any Business Employee or
consulting agreement with any person in each case providing for total
annual payments in excess of $100,000 not terminable at will;
(iii) partnership, joint venture or other similar agreement
or arrangement requiring the commitment of capital in excess of $100,000;
(iv) license or other similar agreement (other than (i)
governmental permits or licenses used in connection with the operation of
the Business and (ii) off-the-shelf software licenses);
(v) agency, sales representation, distribution or other
similar agreement providing for annual payments in excess of $100,000;
(vi) agreement for the purchase of supplies or materials
other than in the ordinary course of business providing for annual payments
in excess of $175,000;
(vii) agreement for the sale of goods or services other than
in the ordinary course of business providing for annual payments in excess
of $100,000
(viii) agreement (non-compete or otherwise) or commitment
that is binding upon Seller or any of its subsidiaries or, in each case,
any of its officers, directors or employees which has or may have the
effect of prohibiting or impairing any material business practice, any
acquisition of material property (tangible or intangible) or the conduct of
business by Seller, any of its subsidiaries or any affiliates thereof;
(ix) agreement under which Seller or any of its subsidiaries
or, in each case, its officer, director, or employee is restricted from
selling, licensing or otherwise distributing any of Seller's or any of its
subsidiaries' technology or products to or providing services to, customers
or potential customers or any class of customers, in any geographic area,
during any period of time or in any segment of the market;
(x) any agreement which is not terminable without penalty on
three (3) (or fewer) month notice, providing for payments individually in
excess of $100,000, or in the aggregate in excess of $250,000; and
(xi) other than this Agreement, any agreement for the
acquisition or disposition of assets related to the Business entered into
in the last three (3) years, other than in the ordinary course of business
providing for payment, individually or in the aggregate, in excess of
$50,000.
(b) except as set forth on Schedule 3.11 of the Disclosure Schedules,
all such agreements are valid, binding and enforceable in accordance with
their terms and Seller is not in default under any of the aforesaid
agreements and, to the best knowledge of Seller, no other party is in
default under any of the aforesaid agreements. Seller has provided Buyer
with access to true and complete copies of each agreement, contract and
commitment identified on Schedule 3.11 of the Disclosure Schedules.
(c) Schedule 3.11(c) of the Disclosure Schedules sets forth Seller's
best good faith estimate of any costs that may be incurred upon the
termination of any of Seller's distribution agreements Related to the
Business.
SECTION 3.12 TAXES
(a) To the extent that failure to do so adversely affects any member
of Buyer Group, the Assets or the Business, or any member of Buyer Group's
use of the Assets or the Business, Seller and its subsidiaries have duly
filed or will duly file or cause to be duly filed all Tax Returns (as
defined in Section 3.12) that are required to be filed and have duly paid
or will duly pay or cause to be duly paid in full or made provision or will
provide in accordance with GAAP (or there has been paid or provision has
been made on their behalf) for the payment of all Taxes (as defined in
Section 3.12) for all periods or portions thereof ending through and
including the Closing Date. All such Tax Returns are correct and complete
and accurately reflect or will accurately reflect all liability for Taxes
for the periods covered thereby.
(b) There are no liens for Taxes on the Assets.
(c) Seller has not made any change in accounting methods with respect
to the Business, received a ruling from any taxing authority or signed an
agreement with respect thereto or signed any closing agreement with respect
to any Taxes that are related to the Business for any period ending on or
before the Closing.
(d) To the extent that failure to do so adversely affects any member
of Buyer Group, the Assets or the Business, or any member of Buyer Group's
use of the Assets or the Business, Seller and each of its subsidiaries have
complied or will comply in all respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes within the
time and the manner prescribed by law, and have withheld and paid or will
withhold and pay over to the proper taxing authorities all amounts required
to be so withheld and paid over under applicable laws.
(e) No federal, state, local or foreign audits, examinations,
investigations or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of Seller or any
of its subsidiaries that are related to the Business.
(f) To the extent that failure to do so adversely affects any member
of Buyer Group, the Assets or the Business, or any member of Buyer Group's
use of the Assets or the Business, all Tax deficiencies that have been
claimed, proposed or asserted against Seller or any of its subsidiaries
have been fully paid or finally settled, and no issue has been raised in
any examination by any taxing authority that, by application of similar
principles, could reasonably be expected to result in the proposal or
assertion of such a Tax deficiency related to the Business for another year
not so examined.
(g) There are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies related to the Business against
Seller or any of its subsidiaries.
(h) No power of attorney has been granted or imposed upon the
Business by or with respect to Seller or any of its subsidiaries with
respect to any matter relating to Taxes.
(i) Schedule 3.12 of the Disclosure Schedules sets forth (i) all
material elections with respect to Taxes made by Seller and each of its
subsidiaries with respect to the Business to the extent such election would
affect any member of Buyer Group, the Assets or the Business, or any member
of Buyer Group's use of the Assets or the Business, and (ii) all foreign,
state and local jurisdictions in which Seller and/or any of its
subsidiaries is or has been subject to Taxes and each material type of Tax
payable in such jurisdiction during the previous three (3) taxable periods,
in each case, related to the Business.
(j) Seller and its controlled affiliates do not as of Closing own or
have any present plan or intention to own directly or indirectly voting
securities or rights to acquire voting securities of Parent or any
subsidiary thereof, in an amount which, when added to the Parent Stock
delivered to Seller pursuant to Section 1.2(a)(v) hereof and any other
securities then held by Seller and its affiliates would cause Seller and
its affiliates to hold more than 20% of the outstanding voting stock of the
Buyer (taking into account for this purpose only the stock of Parent then
outstanding but including any other right to acquire stock of Parent then
held by Seller or its affiliates).
(k) Neither Seller nor any of the Seller Subsidiaries has received
written notice of any claim made by an authority in a jurisdiction where
neither Seller nor any of the Seller Subsidiaries file Tax Returns, that
Seller or any of the Seller Subsidiaries is or may be subject to taxation
by that jurisdiction in respect of the Assets or the Business.
(l) The Assets represent less than two-thirds (in value) of all the
assets used in trades or businesses carried on by Seller.
(m) "TAXES" shall mean all taxes, levies, charges or fees including,
without limitation, income, corporation, gross receipts, transfer, excise,
property, sales, use, value-added, goods and services, license, payroll,
withholding, social security, stamp, business consumption and franchise or
other governmental taxes or charges, imposed by the United States or any
state, county, local or foreign government, and such term shall include any
interest, penalties or additional tax attributable thereto.
(n) "TAX RETURN" shall mean any report, return (including any
information return) or statement required to be supplied to a taxing
authority in connection with Taxes including, without limitation, any
amendments thereto.
SECTION 3.13 EMPLOYEE BENEFIT PLANS; ERISA; EMPLOYEES
(a) Schedule 3.13(a) of the Disclosure Schedules lists all benefit
(including medical and retiree medical or welfare) and compensation plans
and contracts including, but not limited to, "employee benefit plans"
within the meaning of Section 3(3) of ERISA, and deferred compensation,
stock option, stock purchase, stock appreciation rights, stock based,
incentive and bonus plans maintained for the benefit of or contributed to
by Seller or any of its subsidiaries for the benefit of any Business
Employee or former employee of the Business (the "PLANS"). True and
complete copies of all Plans, including, but not limited to, any trust
instruments and insurance contracts forming a part of any Plans, and all
amendments thereto have been made available to Buyer Group.
(b) Attached as Schedule 3.13(b) of the Disclosure Schedules is a
complete and accurate list of all of the names of the employees in the
Division (the "DIVISION EMPLOYEES"), each Division Employee's position and
the entity which employees such Division Employee.
(c) Except as set forth on Schedule 3.13(c) of the Disclosure
Schedules, no Title IV Plan is a "multiemployer pension plan," as defined
in section 3(37) of ERISA, nor is any Title IV Plan a plan described in
section 4063(a) of ERISA. With respect to any Title IV Plan that is a
"multiemployer pension plan," (i) neither Seller nor any ERISA Affiliate
(as defined below) has made or suffered a "complete withdrawal" or a
"partial withdrawal," as such terms are respectively defined in sections
4203 and 4205 of ERISA, and (ii) no event has occurred that presents a
material risk of a partial withdrawal. If any Title IV Plan is a
"multiemployer pension plan," the aggregate withdrawal liability of Seller
and its ERISA Affiliates, computed as if a complete withdrawal by Seller
and the ERISA Affiliates had occurred under each such Plan on the date
hereof, would not exceed $100,000. An "ERISA AFFILIATE" shall be considered
to be any trade or business, whether or not incorporated, that together
with Seller would be deemed a "single employer" within the meaning of
section 4001(b) of ERISA.
SECTION 3.14 ENVIRONMENTAL MATTERS
Except (i) as set forth in Schedule 3.14 of the Disclosure Schedule
and (ii) with respect to the Condensa Matter and the Stanford Industrial
Park Matter:
(a) Seller and Seller Subsidiaries hold all material permits,
licenses and other authorizations which are required under applicable
Environmental Laws (as defined in subsection (i)) relating to its Business
as it is currently being conducted ("ENVIRONMENTAL PERMITS") and Seller and
its subsidiaries are in compliance in all material respects with the terms
and conditions of the Environmental Permits. All such Environmental Permits
are valid and in full force and effect and no action is pending to revoke
any Environmental Permit. To the extent required by applicable
Environmental Laws, Seller and Seller Subsidiaries, with respect to the
Business, have filed (or will have filed by the Closing Date) all
applications necessary to renew or obtain any necessary permits, licenses
or authorizations in a timely fashion so as to allow Seller and its
subsidiaries to continue to operate their businesses as they are currently
being conducted in compliance with applicable Environmental Laws. Seller
has no knowledge of any circumstance which could cause any Environmental
Permit to be revoked, modified, or rendered non-renewable upon payment of
the permit fee.
(b) Seller and its subsidiaries have been and are in compliance in
all material respects with applicable Environmental Laws with respect to
the operation of the Business.
(c) Seller has made available to Buyer or Buyer's agents or delivered
to Buyer or Buyer's agents true and complete copies of all Phase 1 and
Phase 2 environmental assessments that are in Seller or Seller's
subsidiaries' possession that have been written in the last five years
relating to the Leased Real Property or any other property or facility
previously owned, operated or leased by Seller or its subsidiaries with
respect to the Business (the "FORMER REAL PROPERTY"). Seller has listed, on
Schedule 3.14(c) of the Disclosure Schedules, all of the permits, licenses,
and other authorizations required by Environmental Laws that have been
issued to Seller and Seller Subsidiaries with respect to the operation of
the Business or the ownership, operation and use of the Real Property.
(d) Seller and its subsidiaries have not received written notice of
any civil, criminal or administrative action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter
relating to the Seller, its subsidiaries, the Business, the Real Property
or any other property or facility previously owned, operated or leased by
Seller or its Subsidiaries with respect to the Business (the "FORMER REAL
PROPERTY"), relating in any way to the Environmental Laws ("ENVIRONMENTAL
CLAIMS") and to the knowledge of Seller and its subsidiaries, no such
Environmental Claim is threatened.
(e) Seller and its subsidiaries are not aware of any facts which
could result in any environmental liability which could reasonably be
expected to result in a Material Adverse Effect on the Business.
(f) Seller and its subsidiaries have not, and to the best of the
Seller's or its subsidiaries' knowledge, no other person has, Released,
discharged, or otherwise disposed, of any Hazardous Substances (as defined
in subsection (i)) on, beneath or adjacent to the Real Property or the
former real property, except for Releases of Hazardous Substances subject
to a permit or authorization pursuant to applicable Environmental Law or
for Releases, discharges or disposals that are not likely to result in a
material claim against Seller, its subsidiaries, Parent, or Buyer.
(g) No employee of Seller or its subsidiaries in the course of his or
her employment with Seller or its subsidiaries with respect to the Business
has been exposed to any Hazardous Substances during the course of his or
her employment that could reasonably be expected to result in any material
liability to Seller, its subsidiaries, Parent or Buyer.
(h) With respect to the Business, Seller and Seller Subsidiaries have
not entered into any agreement that may require them to pay to, reimburse,
guarantee, pledge, defend, indemnify or hold harmless any person from or
against any liabilities or costs arising out of or related to the
generation, manufacture, use, transportation or disposal of Hazardous
Substances, or otherwise arising in connection with or under Environmental
Laws, excluding (1) credit agreements and (2) leases.
(i) For purposes of this Agreement:
(i) "ENVIRONMENTAL LAWS" shall mean all foreign, federal,
state and local laws, regulations, rules and ordinances relating to
pollution or protection of the environment or human health and safety,
including, without limitation, laws relating to Releases or threatened
Releases of Hazardous Substances into the indoor or outdoor environment
(including, without limitation, ambient air, surface water, groundwater,
land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances and all laws and regulations
with regard to record keeping, notification, disclosure and reporting
requirements respecting Hazardous Substances, and all laws relating to
endangered or threatened species of fish, wildlife and plants and the
management or use of natural resources, each as amended to date.
(ii) "HAZARDOUS SUBSTANCES" shall mean (a) any petrochemical
or petroleum products, radioactive materials, asbestos in any form that is
or could become friable, urea formaldehyde foam insulation, transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls, and radon gas; (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances,"
"contaminants" or "pollutants" or words of similar meaning and regulatory
effect; or (c) any other chemical, material or substance, exposure to which
is prohibited, limited, or regulated by any applicable Environmental Law.
(iii) "RELEASE" shall mean any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment
(including, without limitation, ambient air, surface water, groundwater,
and surface or subsurface strata) or into or out of any property including
the movement of Hazardous Substances through or in the air, soil, surface
water, groundwater or property.
SECTION 3.15 INSURANCE
(a) Schedule 3.15(a) of the Disclosure Schedules contains a complete
and correct list and an accurate summary (including the name of the insurer
or if self-insured), whether such policy is an "occurrence" or "claims
made" policy, premiums, coverage, deductibles and expiration dates, broker
and carrier) of all insurance policies related to the Business currently
maintained by Seller or any of its subsidiaries on which Seller or any of
its subsidiaries is a named insured or beneficiary (the "POLICIES"). Seller
has made available to Buyer complete and correct copies of all Policies
together with (i) all riders and amendments thereto and (ii) if completed,
the applications for each Policy. Such Policies, as are current, are in
full force and effect, all premiums due thereon have been paid, and Seller
and its subsidiaries have complied in all material respects with the
provisions of such Policies, and all such Policies either specifically
include Seller or one Seller Subsidiaries as a named insured or include
omnibus named insured language which generally includes Seller or one of
its subsidiaries.
(b) Neither Seller nor any of its subsidiaries has received written
notice of revocation, cancellation or limitation with respect to any of the
Policies.
(c) Neither Seller nor any of its subsidiaries has taken or, to
Seller's knowledge failed to take, any action that would enable the
insurers under any Policy to avoid liability for claims arising out of
occurrences prior to the Closing Date.
(d) To the Seller's knowledge, Seller and the Seller Subsidiaries are
in compliance, in all material respects, with all warranties contained in
any of the Policies.
(e) Schedule 3.15(e) of the Disclosure Schedules lists all claims
related to the Business made during the twenty four months immediately
preceding the date hereof under any of the Policies in excess of $80,000
per claim.
SECTION 3.16 LABOR MATTERS
(a) Except as set forth on Schedule 3.16 of the Disclosure Schedules,
(a) neither Seller nor any of the Seller Subsidiaries is a party to any
labor agreement with any labor organization, group or association with
respect to Business Employees; (b) there is no labor strike, dispute,
slowdown, stoppage or lockout actually pending (for which notice has been
provided), or to the knowledge of Seller, threatened against or affecting
the Business; (c) there is no unfair labor practice charge or complaint
against Seller or any of the Seller Subsidiaries (relating to any Business
Employees) pending or, to the knowledge of Seller, threatened before the
National Labor Relations Board or any similar foreign agency; (d) there is
no pending grievance nor any pending arbitration proceeding arising out of
or under any collective bargaining agreements relating to the Business
Employees; (e) no material charges with respect to or relating to Seller or
the Seller Subsidiaries are pending before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices with respect to any Business
Employees; and (f) neither Seller nor any of the Seller Subsidiaries have
received notice of the intent of any federal, state or foreign governmental
authority responsible for the enforcement of labor or employment laws to
conduct an investigation with respect to or relating to the Business
Employees and no such investigation is in progress.
(b) To the knowledge of Seller, as of the date hereof, no current key
employee of the Business has taken any action or announced he or she will
take any action to terminate his or her employment relationship with
Seller.
(c) Since the enactment of Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act"), the Seller and its Subsidiaries
have not effectuated a "plant closing," "mass layoff" or "employment loss"
(as defined in the WARN Act).
SECTION 3.17 SUPPLIERS
Schedule 3.17 of the Disclosure Schedules sets forth a list of the
Business' 20 largest suppliers in terms of purchases and, to Seller's
knowledge, suppliers who are the only source for the product or component
supplied by them to the Business during the calendar year 2000
(collectively the "KEY SUPPLIERS"), showing the approximate total purchases
by or behalf of the Business from each such supplier during such period. No
material adverse change has occurred in the business relationship of Seller
with any Key Supplier since December 31, 2000 and prior to the date hereof
and, to Seller's knowledge, no events have occurred that could reasonably
be expected to result in a material adverse change to such relationship.
Since December 31, 2000 and prior to the date hereof, no Key Supplier has
declined to renew any contract with Seller in connection with the Business.
SECTION 3.18 CUSTOMERS
Schedule 3.18 of the Disclosure Schedules sets forth a true and
complete list of the Business' top 20 customers during the calendar year
2000, showing the approximate total sales by or on behalf of the Business
to each such customer during such period. No material adverse change has
occurred in the business relationship of Seller with any such customer
since December 31, 2000 and prior to the date hereof and, to Seller's
knowledge, no events have occurred that could reasonably be expected to
result in a material adverse change to such relationship. Since December
31, 2000 and prior to the date hereof, no customer has declined to renew
any contract with Seller in connection with the Business.
SECTION 3.19 ASSETS, LICENSES AND PERMITS NECESSARY TO THE BUSINESS;
EQUIPMENT
(a) Except as set forth on Schedule 3.19(a) of the Disclosure
Schedules, following the Closing, by means of the transfer of the Assets,
the licenses set forth in Section 5.14 hereof, the Supply Agreement and the
transition services to be provided in accordance with Exhibit K, Buyer
Group will own, license or otherwise have the right to use all the assets
necessary to carry on the Business in substantially the same manner as
presently conducted.
(b) Schedule 3.19(b) of the Disclosure Schedules lists all material
Permits and Licenses (i) pursuant to which Seller and the Seller
Subsidiaries currently operate the Business and (ii) which are required for
the operation of the Business or the holding of any interest in the Assets.
Except as set forth on Schedule 3.19(b) of the Disclosure Schedules, all
Permits and Licenses are in full force and effect and to the extent
currently used in the operation of the Business are transferable to Buyer
Group or may be obtained by Buyer in the ordinary course.
SECTION 3.20 TRANSACTIONS WITH AFFILIATES
(a) Except as set forth on Schedule 3.20(a) of the Disclosure
Schedules, (i) no affiliate of Seller (other than the Seller Subsidiaries),
is an employee, consultant, competitor, customer, distributor, supplier or
vendor of, or is party to any contractual obligations with Seller relating
to the Business and (ii) no officer or director of Seller is an affiliate
of any competitor, customer, distributor, supplier or vendor of the
Business. Except as set forth on Schedule 3.20(a) of the Disclosure
Schedules, none of the Assets are owned by an affiliate of Seller
(excluding any Seller Subsidiary) or subject to any license or similar
arrangement allowing use thereof by an affiliate (excluding any Seller
Subsidiary).
(b) Schedule 3.20(b) of the Disclosure Schedules, the Supply
Agreement and the transition services listed on Exhibit K contain all the
material services provided for, and material products manufactured by or
sold to, the Business by Seller, its divisions and its subsidiaries during
the twelve months immediately prior to the date hereof.
(c) Set forth in Schedule 3.20(c) of the Disclosure Schedules is the
jurisdiction of incorporation of each Non-U.S. Company.
SECTION 3.21 CERTAIN FEES
Except for any broker, finder or investment banker whose fee and
commission is the sole responsibility of Seller, there is no broker, finder
or investment banker entitled to any brokerage, finder's or other fee or
commission, or to the reimbursement of any of its expenses, in connection
with the transactions contemplated hereby based upon arrangements made by
Seller or on Seller's behalf.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER GROUP
Buyer Group hereby represents and warrants, jointly and severally, to
Seller as follows:
SECTION 4.1 ORGANIZATION
Each of Parent and Buyer is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation.
Each of Parent and Buyer is duly qualified or licensed to do business in
each jurisdiction in which it owns, leases or operates its property or
where the nature of the business conducted by such party makes such
qualification necessary.
SECTION 4.2 AUTHORIZATION
Each of Parent and Buyer has the corporate power and authority to
execute and deliver this Agreement and the Ancillary Agreements (to which
it is a party), and consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements (to which it is a party), the issuance of the Notes and the
Parent Stock issuable upon conversion of the Notes by Parent and Buyer and
the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by the Boards of Directors of Parent and
Buyer, as applicable, and no other corporate proceedings, including,
without limitation, a vote of the Parent's stockholders, on the part of
Parent or Buyer is necessary to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements (to which it is
a party) or the consummation of the transactions contemplated hereby or
thereby, including, without limitation, the issuance of the Notes and the
Parent stock issuable upon conversion of the Notes. This Agreement and the
Ancillary Agreements (to which it is a party) have been duly executed and
delivered by each of Parent and Buyer and constitute, and, in the case of
Ancillary Agreements not contemplated to be executed concurrently herewith,
will constitute, valid and binding agreements of Parent and Buyer, as
applicable, enforceable against Parent and Buyer, as applicable, in
accordance with their respective terms, except as such enforceability may
be limited by principles of public policy and subject to the laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and to rules of law governing specific performance, injunctive
relief and other equitable remedies.
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS
(a) Except for applicable requirements of the HSR Act, or antitrust
or other regulatory laws of jurisdictions other than the United States, and
except as set forth on Schedule 4.3(a) of the disclosure schedules being
delivered to Buyer Group by Seller herewith (the "BUYER DISCLOSURE
SCHEDULES"), there are no governmental approvals or consents required for
the execution, delivery or performance of this Agreement or the
consummation by Buyer Group of the transactions contemplated hereby or by
the Ancillary Agreements.
(b) Except as set forth on Schedule 4.3(b) of Buyer Disclosure
Schedules, neither the execution, delivery or performance of this Agreement
and the Ancillary Agreements, the issuance of the Note and the Parent
Stock, nor the consummation by Buyer Group of the transactions contemplated
hereby and thereby will (a) conflict with or result in any breach or
violation of any provision of the articles of association and bylaws of
Parent or the certificate of incorporation or by-laws of Buyer; (b) require
any filing or registration with, or notice or declaration to, or the
obtaining of any permit, license, authorization, consent or approval of,
any governmental or regulatory authority whether within or outside the
United States; (c) violate, conflict with or result in a default (or any
event which, with notice or lapse of time or both, would constitute a
default) under, or result in any termination, cancellation or acceleration,
or give rise to any such right of termination, cancellation or acceleration
under, any of the terms, conditions or provisions of any Contract to which
either Parent or Buyer is a party or by which Parent or Buyer or any of
their respective assets is subject or by which any of them may be bound; or
that would materially impair the Parent's or Buyer's ability to consummate
the transactions contemplated hereby and in the Ancillary Agreements; (d)
violate any order, injunction, decree, statute, rule or regulation
applicable to Parent or Buyer or that would materially impair the Parent's
or Buyer's ability to consummate the transactions contemplated hereby and
in the Ancillary Agreements; or (e) result in the creation or imposition of
any material Lien upon any properties, assets or business of Parent or
Buyer that would adversely affect the ability of Buyer Group to consummate
the transactions contemplated by this Agreement and the Ancillary
Agreements or have a Material Adverse Effect on Buyer.
SECTION 4.4 FINANCING
Buyer has received commitment letters, copies of which are attached
hereto as Exhibit L (the "FINANCING LETTERS"), from lenders, pursuant to
which such lenders have agreed (subject to the conditions expressed
therein) to provide to Buyer, at the Closing, sufficient funds to pay the
Closing Cash Purchase Price, any expenses to be incurred by Buyer in
connection with this Agreement and all other amounts payable by Buyer at
the Closing, to perform its obligations hereunder following the Closing
(the "FINANCING").
SECTION 4.5 SEC REPORTS
(a) Parent has timely filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other
information incorporated therein) with the SEC since January 1, 1999 (the
"PARENT SEC DOCUMENTS"). As of their respective dates, the Parent SEC
Documents, including any Parent SEC Documents filed after the date of this
Agreement until the Closing, complied or will comply in all material
respects with the requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") and the regulations
enacted thereunder, as applicable, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
Documents, and none of the Parent SEC Documents when filed 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. Except to the extent that information contained in any Parent
SEC Document has been revised or superseded by a later filed Parent SEC
Document, none of the Parent SEC Documents contains any untrue statement of
a material fact or omits 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 were made, not misleading.
(b) The financial statements of Parent included in the Parent SEC
Documents filed since January 1, 1999 and in any Parent SEC Documents filed
after the date of this Agreement until the Closing (including any related
notes) complied or will comply as to form in all material respects, as of
their respective dates of filing with the rules and regulations of the SEC
with respect thereto and have been or will have been prepared in accordance
with GAAP 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 Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated
balance sheets, results of their operations and cash flows for the periods
indicated (subject, in the case of unaudited statements, to normal
recurring year end audit adjustments which were not or are not expected to
be material in amount). The balance sheet of Parent dated September 30,
2000 contained in Parent's quarterly report on Form 10-Q for the period
ended September 30, 2000 is hereinafter referred to as the (the "PARENT
BALANCE SHEET").
(c) Parent has furnished to Seller a complete, and correct copy of
any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant
to the Securities Act or the Exchange Act.
SECTION 4.6 ISSUANCE OF PARENT STOCK
The Parent Stock is duly authorized, validly issued and fully paid
and non-assessable, has the rights and privileges set forth in Parent's
articles of association and, except as expressly provided herein, is being
issued free and clear of all Liens, voting trusts, proxies, calls or
commitments of any kind. Assuming the accuracy of the representations and
warranties set forth in Section 5.19, the offer, sale and issuance by
Parent to Seller of the Note and the Parent Stock will be exempt from the
registration requirement of Section 5 of the Securities Act and will be
registered or qualified (or will be exempt from registration and
qualification) under the registration, permit or qualification requirements
of all applicable state securities laws.
SECTION 4.7 CERTAIN FEES
Except for any broker, finder or investment banker whose fee and
commission is the sole responsibility of Buyer Group, there is no broker,
finder or investment banker entitled to any brokerage, finder's or other
fee or commission, or to the reimbursement of any of its expenses, in
connection with the transactions contemplated hereby based upon
arrangements made by Buyer Group or on Buyer Group's behalf.
SECTION 4.8 ABSENCE OF UNDISCLOSED LIABILITIES
Except (i) liabilities reflected on the Parent Balance Sheet; (ii)
liabilities or obligations disclosed in Parent SEC Documents filed prior to
the date hereof; (iii) liabilities and obligations incurred in the ordinary
course of business since September 30, 2000; (iv) as otherwise disclosed
herein or on Schedule 4.8 of the Buyer Disclosure Schedules and (v) such
liabilities and obligations as would not have a Material Adverse Effect,
Parent does not have any liabilities or obligations (whether direct,
indirect, accrued or contingent).
SECTION 4.9 ABSENCE OF CERTAIN CHANGES
Except as set forth on Schedule 4.9 of the Buyer Disclosure Schedules
or as otherwise contemplated by this Agreement and except as disclosed in
Parent SEC Documents filed prior to the date hereof, since September 30,
2000:
(a) Parent has carried on the its business and operations in the
ordinary course and there has not been any Material Adverse Effect; and
(b) Neither Buyer nor Parent have:
(i) sold, assigned, licensed, transferred, conveyed or
otherwise disposed of any of material assets, except in the ordinary course
of business;
(ii) made any change in any present accounting methods and
practices, except as required by GAAP;
(iii) licensed any material intellectual property to or from
any third party pursuant to an arrangement other than in the ordinary
course of business;
(iv) canceled or compromised any debt or claim or waived or
released any material rights relating to its business; or
(v) entered into any agreement to do any of the foregoing.
SECTION 4.10 LITIGATION
Except as set forth on Schedule 4.10 of the Buyer Disclosure
Schedules or as disclosed in the Parent SEC Documents filed prior to the
date hereof, as of the date hereof, there are no Cases pending, or, to
Buyer's knowledge, threatened, against Buyer or any of its subsidiaries or
any of their properties, assets and business operations, before any court,
governmental or regulatory authority, except where any such Cases,
individually or in the aggregate, do not have a Material Adverse Effect.
Neither Buyer nor any of its subsidiaries is subject to any unsatisfied
judgments, orders or decrees entered in any Cases.
SECTION 4.11 INTELLECTUAL PROPERTY
Except as set forth on Schedules 4.10 or 4.11 of the Buyer Disclosure
Schedules or as otherwise disclosed in any Parent SEC Documents filed prior
to the date hereof:
(a) To the knowledge of Buyer Group, Buyer Group has such ownership
of, or other rights by licenses, as the case may be, in and to such
Intellectual Property as is necessary to permit Buyer Group to operate its
business (including that of its subsidiaries), as currently conducted;
(b) There are no pending proceedings or litigation before any court,
tribunal (including the United States Patent and Trademarks Office) or
equivalent authority anywhere in the world or any other adverse claims, or,
to the knowledge of Buyer Group, no such proceedings, litigation or any
other adverse claims are threatened, by any person against the use by Buyer
Group or any of its subsidiaries any Intellectual Property of Buyer Group;
(c) Neither Buyer Group nor any of its subsidiaries has received
notice from any person claiming that the operation of Buyer Group's
business or any act, product, technology or service (including products,
technology or services currently under development) of Buyer Group
infringes or misappropriates any Intellectual Property of any person or
constitutes unfair competition or trade practices under the laws of any
jurisdiction;
(d) To the knowledge of Buyer Group, the operation of the business of
Buyer Group as it is currently conducted, including but not limited to the
design, development, use, import, branding, advertising, promotion,
marketing, manufacture and sale of the products, technology or services
(including products, technology or services currently under development) of
Buyer Group and its subsidiaries does not, in any material respect,
infringe or misappropriate the Intellectual Property of any other person,
violate the rights of any person (including rights to privacy or
publicity), or constitute unfair competition or trade practices under the
laws of any jurisdiction;
(e) Each of Buyer Group and its subsidiaries has taken such steps
that are reasonably necessary to protect material confidential information
and trade secrets of Buyer Group's business.
ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF THE BUSINESS
Seller agrees that during the period from the date of this Agreement
to the Closing Date, except (i) as otherwise contemplated by this Agreement
or the transactions contemplated hereby, (ii) for those matters set forth
in Schedule 5.1 of the Disclosure Schedules, or (iii) as consented to by
Buyer or Parent, it shall, and shall cause the Seller Subsidiaries to:
(a) conduct the Business in the ordinary course and, to the extent
consistent therewith, use commercially reasonable efforts to preserve
intact the Assets, use commercially reasonable efforts to keep available
the services of the Business Employees and preserve relationships with
those persons having business dealings with the Business as of the date
hereof; and
(b) not, with respect to the Business,
(i) sell, assign, sublease, license, transfer, convey or
otherwise dispose of any of the assets primarily related to the Business,
except in the ordinary course of business;
(ii) terminate, modify, transfer or amend any of the
Contracts, except in the ordinary course of business;
(iii) to the extent it is primarily related to the Business,
purchase any business;
(iv) enter into any new agreement related solely to the
Business other than renewals of existing agreements or otherwise in the
ordinary course of business consistent with past practice;
(v) Except to the extent specifically provided in Schedule
3.6(a)(v) of the Disclosure Schedule, increase in any manner the
compensation of any of the Business Employees, except for such increases to
Business Employees whether in the United States or otherwise (other than
members of senior management) in the ordinary course of business (including
annual reviews) or in accordance with the terms of any employment contract
or collective bargaining agreement as currently in effect (other than
incentives to sales persons in the ordinary course);
(vi) adopt, grant, extend or increase the rate or terms of
any bonus (other than incentives to sales persons in the ordinary course),
insurance, pension or other employee benefit plan, payment or arrangement
made to, for or with any of the Business Employees, except increases
required by any applicable law, rule or regulation;
(vii) make any change in any of the Business' present
accounting methods and practices, except as required by GAAP;
(viii) license (other than in connection with the sale of
products by virtue of such sale) any of the Transferred Intellectual
Property to any third party or license any of the Licensed Intellectual
Property or Licensed Trademarks to any third party for use in the Business,
except to the extent it otherwise would have been permitted under the terms
of the license agreements referred to in Section 5.14 had such agreement
been in effect;
(ix) make or authorize any capital expenditures other than
in accordance with the Business' annual plan or other than capital
expenditures not exceeding $100,000 individually or $500,000 in the
aggregate;
(x) make any loans, advances (other than advances in the
ordinary course of business) or capital contributions to, or investment in,
any other person other than pursuant to preexisting commitments;
(xi) subject any of the Assets to any Lien other than
Permitted Encumbrances;
(xii) cancel or compromise any debt or claim or waive or
release any rights of the Business, other than debts, claims and rights
which are not Assets or which are primarily related to the Retained
Business;
(xiii) modify practices with respect to the collection of
Receivables or the maintenance of inventory levels; or
(xiv) enter into any agreement to do any of (i) through
(xiii).
SECTION 5.2 ACCESS TO INFORMATION
(a) Between the date of this Agreement and the Closing Date, Seller
shall, subject to any restrictions as to confidentiality applicable to
Seller whether by law, agreement or contract, (i) give Buyer Group and its
authorized representatives reasonable access to all books, records, work
papers, personnel, offices and other facilities and properties of the
Business and its accountants; (ii) permit Buyer Group and its authorized
representatives to make such copies and inspections thereof (to the extent
related to the Business) as any of them may reasonably request; (iii)
subject to the required consents of any property owners, if any, permit
Buyer Group and its authorized representatives to conduct a reasonable
environmental investigation of the Business and the Real Property,
including, at the discretion of the Buyer Group, to collect reasonable
samples of soil, groundwater, surface water, other environmental media and
suspect asbestos-containing building materials; provided that Seller shall
have the right to review and comment on any scope of work for such
investigation, shall be given copies of all draft and final reports and
test results and shall have the right to take split samples of any samples
taken; and (iv) cause the officers of Seller to furnish Buyer Group and its
authorized representatives with such financial and operating data and other
information related to the Business and properties of the Business,
excluding, however, such data and other information related primarily to
the Retained Business, as any of them may from time to time reasonably
request; provided, however, that any such access shall be upon reasonable
notice and conducted during normal business hours under the supervision of
Seller's personnel and in such a manner as to maintain the confidentiality
of this Agreement and the transactions contemplated hereby and not
interfere unreasonably with the normal operations of the Business, except
as otherwise contemplated by this Agreement.
(b) Both Buyer Group and Seller agree that authorized representatives
of each shall meet at the request of either Buyer Group or Seller in order
to discuss any material changes in the information set forth in the
Disclosure Schedules or the Buyer Disclosure Schedules.
(c) Except to the extent that the Closing shall have occurred (and
subject to Section 5.11 hereof), Buyer Group shall keep confidential and
shall cause its and their partners, management, officers, directors,
employees and advisors to keep confidential all nonpublic information
related to the Business and Seller, except as required by order of a court
having competent jurisdiction, in which case Buyer Group shall notify
Seller to allow Seller a reasonable amount of time to prepare appropriate
motions or to otherwise intervene with such court to block such disclosure,
and except for information that becomes public other than as a result of a
breach of this Section 5.2. Seller shall use its reasonable efforts to
enforce any confidentiality agreements relating to the Business on Buyer's
behalf at Buyer's request and cost.
SECTION 5.3 CONSENTS AND APPROVALS
(a) Except as otherwise provided herein, each of the parties shall
use its commercially reasonable efforts to make all necessary filings with
governmental authorities required to consummate the transactions
contemplated hereby prior to the Closing.
(b) (i) Each of Seller and Buyer (or each of their ultimate parent
entities as defined in the rules promulgated under the HSR Act) has filed
or caused to be filed or will file or cause to be filed, with the Federal
Trade Commission and the Antitrust Division of the United States Department
of Justice, the notification and documentary material required under the
HSR Act in connection with the consummation of the transactions
contemplated by this Agreement. In addition, each of Seller and Buyer Group
shall promptly take all action necessary to make any filings required under
any other state or foreign antitrust law; and
(ii) Seller and Buyer Group shall promptly file any
additional information requested under the HSR Act as soon as practicable
after receipt of any request for additional information. Buyer Group and
Seller shall use their commercially reasonable efforts to obtain early
termination of the applicable waiting period, to the extent required, with
the applicable regulatory authorities, including under the HSR Act. The
parties hereto will coordinate and cooperate with one another in exchanging
such information and providing such reasonable assistance as may be
requested in connection with such filings.
(c) Buyer Group shall promptly file and use all commercially
reasonable efforts to obtain the approvals of the Investment Center and the
Chief Scientist in the Israeli Industry and Trade Ministry. Seller agrees
to use all commercially reasonable efforts to assist Buyer Group if and to
the extent reasonably required to obtain such approvals.
SECTION 5.4 REASONABLE EFFORTS
(a) Each of Seller, Buyer and Parent shall cooperate, and 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
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.
(b) As soon as practicable after the date hereof, but in no event
later than 52 days following Closing, Seller shall prepare or cause to be
prepared, with Parent's assistance and cooperation, the financial
information related to the Assets (other than pro forma financial
information) required to be filed by Parent following the Closing as part
of a Current Report on Form 8-K (the "FORM 8-K") or in connection with the
filing of a registration statement under the Securities Act (including the
preparation of audited financial statements related to the Assets) and will
assist Parent in the preparation of the pro forma financial information
related to the Assets with respect to the transactions contemplated by this
Agreement. In addition, Seller's obligation to provide audited financial
information pursuant to this subsection (b) shall be conditioned upon
Parent signing any customary management representation letter requested by
Seller's auditors.
SECTION 5.5 PUBLIC ANNOUNCEMENTS
Except as otherwise agreed to by both Parent and Seller, no party
shall issue any report, statement or press release or otherwise make any
public statements with respect to this Agreement and the transactions
contemplated hereby, except (i) following the Closing to the extent
reasonably required by Parent in connection with the operation of the
Business and in a manner consistent with prior public releases by Parent
and Seller in accordance with the provisions of this Section 5.5 or (ii) as
in the reasonable judgment of such party may be required by law or in
connection with the obligations of the Exchange Act or the NASDAQ Stock
Market, in which case Seller and Parent will use their commercially
reasonable efforts to reach mutual agreement as to the language of any such
report, statement or press release prior to the issuance thereof.
SECTION 5.6 SUPPLEMENTAL DISCLOSURE
(a) Seller shall give prompt notice to Parent of any representation
or warranty made by it contained in this Agreement becoming untrue or
inaccurate, or any failure of the Seller to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement, in such case, such that the
conditions set forth in Section 6.3(a) or Section 6.3(b) would not be
satisfied.
(b) Parent shall give prompt notice to the Company of any
representation or warranty made by it or Buyer contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Buyer to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in
each case, such that the conditions set forth in Section 6.2(a) or Section
6.2(b) would not be satisfied.
SECTION 5.7 TRANSFERS NOT EFFECTED AS OF CLOSING
Nothing herein shall be deemed to require the conveyance, assignment
or transfer of any Asset that by its terms or by operation of Law cannot be
freely conveyed, assigned, transferred or assumed. To the extent the
parties hereto have been unable to obtain any governmental or any third
party consents or approvals required for the transfer of any Asset and to
the extent not otherwise prohibited by the terms of any Asset, Seller shall
continue to be bound by the terms of such applicable Asset and Buyer Group
shall pay, perform and discharge fully all of the obligations of Seller or
any of its affiliates thereunder from and after the Closing. Seller shall,
without consideration therefor, pay, assign and remit to Buyer Group
promptly all monies, rights and other consideration received in respect of
such performance. Seller shall exercise or exploit its rights in respect of
such Assets only as reasonably directed by Buyer Group and at Buyer Group's
expense. Subject to and in accordance with Section 5.3, for not more than a
hundred and eighty (180) days following the Closing Date, the parties
hereto shall continue to use their commercially reasonable efforts to
obtain all such unobtained consents or approvals at the earliest
practicable date. If and when any such consents or approvals shall be
obtained, then Seller shall promptly assign its rights and obligations
thereunder to Buyer without payment of consideration and Buyer shall,
without the payment of any consideration therefor, assume such rights and
obligations. The parties shall execute such good and sufficient instruments
as may be necessary to evidence such assignment and assumption.
SECTION 5.8 RETENTION
Seller shall permit, and shall cause their representatives to permit,
the representatives of Buyer to meet with the Business Employees along with
representatives of Seller, at Seller's discretion, and to distribute to
such individuals such forms and other documents relating to their retention
as Buyer may reasonably determine with the prior approval of such documents
by Seller, which shall not be unreasonably withheld; provided, however,
that any such access shall be conducted in such a manner as not to
interfere unreasonably with the normal operations of the Business, as
reasonably determined by Seller.
SECTION 5.9 PROHIBITION ON SOLICITATION AND HIRING
(a) To the fullest extent permitted by applicable law, during the
period prior to the Closing, Seller shall not, and it shall not permit any
of its subsidiaries to, hire or retain as an employee or consultant, or
offer to hire or retain as an employee or consultant, or solicit the
services of the Business Employees for any position unrelated to the
Business except for the persons set forth on Schedule 5.9 of the Disclosure
Schedules.
(b) To the fullest extent permitted by law, during the 12-month
period immediately following the Closing Date, Seller shall not, and Seller
shall ensure that its subsidiaries do not hire or retain as an employee or
consultant, or offer to hire or retain as an employee or consultant, or
solicit the services of any Buyer Employee who is employed by the Business
on the date hereof (other than employees whose employment has been
terminated by Buyer Group after the Closing); provided, however, that
nothing in this Section 5.9 shall prevent Seller or any of its subsidiaries
after the Closing Date from publishing any general advertisement or similar
notice in any newspaper or other publication of general circulation.
(c) To the fullest extent permitted by applicable law, during the
period prior to the Closing, the Buyer Group shall not, and it shall not
permit any of its subsidiaries to, hire or retain as an employee or
consultant, or offer to hire or retain as an employee or consultant, or
solicit the services of any individual who is an employee or consultant of
Seller, aside from the Business Employees pursuant to the terms of this
Agreement.
(d) To the fullest extent permitted by law, during the 12-month
period immediately following the Closing Date, the Buyer Group shall not,
and the Buyer Group shall ensure that its subsidiaries do not hire or
retain as an employee or consultant, or offer to hire or retain as an
employee or consultant, or solicit the services of any individual who is an
employee or consultant of Seller immediately following the Closing Date;
provided, however, that nothing in this Section 5.9 shall prevent the Buyer
Group or any of its Subsidiaries after the Closing Date from publishing any
general advertisement or similar notice in any newspaper or other
publication of general circulation.
SECTION 5.10 NO NEGOTIATION
Seller shall ensure that, during the period prior to the Closing,
neither Seller nor any of its representatives, directly or indirectly: (i)
solicits or encourages the initiation of any inquiry, proposal or offer
from any person (other than Buyer or Parent) relating to any Acquisition
Transaction (as defined below); (ii) participates in any discussions or
negotiations with, or provides any non-public information to, any person
(other than Buyer or Parent) relating to any proposed Acquisition
Transaction. For purposes of this Section 5.10, "Acquisition Transaction"
shall mean any transaction involving the sale or other disposition of all
or a substantial portion of the Business or Assets (other than as permitted
pursuant to Section 5.1); provided, however, that nothing in this Section
5.10 shall prohibit any transaction, discussions, negotiations or sharing
of information (including with respect to the Assets or the Business)
regarding (x) (A) the acquisition of ownership or control of all or any
portion of the capital stock or other securities of Seller, (B) the
acquisition of all or substantially all of the assets of Seller, (C) any
merger, consolidation, business combination, share exchange, reorganization
or similar transaction involving Seller as long as in connection with any
such transaction the buyer or acquiring person agrees in writing to (in the
case of an asset transaction), or agrees in writing to cause Seller so
acquired to, comply with its obligations hereunder or (y) the sale of
products or services of the Business.
SECTION 5.11 CONFIDENTIALITY
(a) From and after the Closing Date and continuing until the Seller
Survival Date (as hereinafter defined), Seller agrees, to hold and treat
all Buyer Confidential Information (as hereinafter defined) with at least
the same degree of skill and care that it would exercise in similar
circumstances with respect to its own confidential information of similar
nature in carrying out its own business, to prevent the unauthorized
disclosure to, or access by, third parties of the Buyer Confidential
Information and agree not to reveal, report, publish, disclose or transfer
any Buyer Confidential Information to any person or entity (other than
Buyer and Parent) except in the ordinary course of Seller's business
consistent with past practice or as permitted hereunder. For the purposes
of this Agreement, "BUYER CONFIDENTIAL INFORMATION" means any material
non-public information relating to or in connection with Buyer or the
Division, including but not limited to, the Transferred Intellectual
Property that is a trade secret or otherwise proprietary by virtue of its
confidential nature provided, however, that Buyer Confidential Information
shall not be deemed to include (i) information that was already publicly
known and in the public domain prior to the time of its initial disclosure
to Seller or any of its Subsidiaries or (ii) information that is or becomes
available to Seller or any of its Subsidiaries on a non-confidential basis
from a non-confidential source; provided, further, Seller and its
Subsidiaries may reveal, report, publish, disclose or transfer any Buyer
Confidential Information pursuant to a subpoena or order issued by a court
of competent jurisdiction or by a judicial or administrative or legislative
body or committee. For purposes of this Agreement, the "SELLER SURVIVAL
DATE" means four (4) years following the Closing Date in respect of all
Buyer Confidential Information.
(b) From and after the Closing Date and continuing until the Buyer
Survival Date (as hereinafter defined), Buyer Group agrees, to hold and
treat all Seller Confidential Information (as hereinafter defined) with at
least the same degree of skill and care that it would exercise in similar
circumstances with respect to its own confidential information of similar
nature in carrying out its own business, to prevent the unauthorized
disclosure to, or access by, third parties of the Seller Confidential
Information and agree not to reveal, report, publish, disclose or transfer
any Seller Confidential Information to any person or entity (other than
Seller or the Seller's Subsidiaries) except in the ordinary course of
Buyer's business consistent with past practice or as permitted hereunder.
For the purposes of this Agreement, "SELLER CONFIDENTIAL INFORMATION" means
any material non-public information relating to or in connection with
Seller, the Retained Business and the Excluded Assets, including but not
limited to, the Retained Intellectual Property hereto that is a trade
secret or otherwise proprietary by virtue of it confidential nature;
provided, however, that Seller Confidential Information shall not be deemed
to include (i) information that was already publicly known and in the
public domain prior to the time of its initial disclosure to Buyer or any
of its Subsidiaries or (ii) information that is or becomes available to
Buyer or any of its Subsidiaries on a non-confidential basis from a
non-confidential source; provided, further, Buyer and its Subsidiaries may
reveal, report, publish, disclose or transfer any Seller Confidential
Information pursuant to a subpoena or order issued by a court of competent
jurisdiction or by a judicial or administrative or legislative body or
committee. For purposes of this Agreement, the "BUYER SURVIVAL DATE " means
four (4) years following the Closing Date in respect of all Seller
Confidential Information.
SECTION 5.12 NON-COMPETITION
(a) For a period of six (6) years from the Closing, Seller shall not,
and shall cause each of its subsidiaries not to, directly or indirectly,
operate or own any interest in (other than (i) a passive interest of less
than five (5) percent of a company, (ii) Seller's interest in Parent, and
(iii) Seller's ownership interest in Lambda Physik, AG), engage in, or
assist any other entity to engage in (other than in a manner consistent
with a supplier of components to such other entity) a Competitive Business
in any location anywhere in the world. A "Competitive Business" shall mean
the development, manufacturing, marketing, selling, support, enhancement
and/or provision of maintenance and/or other services for medical laser
systems and light based medical systems used for ophthalmic, aesthetic,
dental, surgical, veterinary, ENT, gynecology, orthopedic, pediatric,
urology, photo dynamic therapy (PDT), dermatology or plastic surgery,
applications and any other applications addressed (whether by products sold
or under development as of the Closing) by the Division (the foregoing,
subject to the following provisos, collectively the "Field"); provided,
however, that nothing in this Section 5.12 shall limit Seller, its
subsidiaries or related entities from developing, manufacturing,
supporting, selling, licensing, enhancing or providing maintenance and
other services for or with respect to components or subsystems (including
laser and optical subsystems or components), which are contained in or
otherwise support such laser based medical system and light based medical
system products, including, without limitation, those products and services
which are the subject of the Supply Agreement, the Retained Business, or
which Seller supplies or has supplied to any original equipment
manufacturers or other customers of Seller but not to customers of Buyer or
sales representatives of Buyer for such laser based medical system and
light based medical system products. In addition, Seller agrees (i) for a
period of six years from the Closing Date, not to sell, transfer or supply
to any person or entity any optical fibers made by the Division for the
Division as of the Closing, or a direct substitute thereof, and (ii) for a
period of three years from the Closing Date, not to sell, transfer or
supply to any third party laser diode stacks for use in hair removal or
acne treatment applications.
SECTION 5.13 BOARD REPRESENTATION
(a) From the Closing Date and so long as Seller continues to be the
beneficial owner of at least ten (10) percent of the issued and outstanding
Parent Securities, Parent shall take all necessary actions so that Parent
shall nominate one individual selected by Seller pursuant to subsection (b)
below (the "SELLER DIRECTOR") and Parent shall recommend to its
stockholders in writing and include such recommendation in all stockholder
proxy materials or other communications relating to the election of
directors, and shall use all commercially reasonable efforts to ensure,
that the Seller Director be elected to Parent's board of directors at any
and all meetings of or pursuant to any and all written actions by Parent's
stockholders. Parent's obligations hereunder shall terminate to the extent
that Seller makes, or in any way participates, directly or indirectly,
either individually or as a member of a 13D Group, in any "solicitation" or
"proxies" (as such terms are defined in Regulation 14A promulgated under
the Securities Exchange Act of 1934) in opposition to the Board of
Directors of Parent. Furthermore, upon the occurrence of any such event,
Seller shall cause its designee to resign from the board of directors of
Parent. For purposes of this Section 5.13, "13D GROUP" shall mean any group
of persons formed for the purpose of acquiring, holding, voting or
disposing of Parent Securities which would be required under Section 13(d)
of the Exchange Act, and the rules and regulations promulgated thereunder,
to file a statement on Schedule 13D pursuant to Rule 13d-1(a) of the rules
and regulations promulgated under the Exchange Act or a Schedule 13G of the
rules and regulations promulgated under the Exchange Act pursuant to Rule
13d-1(c) of the rules and regulations promulgated under the Exchange Act
with the SEC as a "person" within the meaning of Section 13(d)(3) of the
Exchange Act if such group beneficially owned Parent Securities
representing more than 5% of any class of Parent Securities then
outstanding.
(b) The Seller Director shall be determined by Seller and shall be an
individual who is either (i) an officer or member of the board of directors
of Seller or its subsidiaries, or (ii) reasonably acceptable to Parent.
(c) Notwithstanding any provision of this Section 5.13, any violation
of the provisions of this Section 5.13 by Buyer shall suspend during the
period of any such violation the limitations and restrictions on Seller set
forth in Section 5.18(c).
SECTION 5.14 INTELLECTUAL PROPERTY LICENSES
(a) Seller License.
(i) Effective as of Closing, Seller shall grant Buyer Group
a perpetual, irrevocable, worldwide, royalty-free, non-exclusive license
under the Licensed Intellectual Property (as defined below) including
Seller's rights therein, to use such Intellectual Property in developing,
manufacturing, have manufactured for Buyer Group, marketing and selling the
product and types of products manufactured by the Business. Such use shall
be limited to the fields of business in which the Business is engaged as of
the Closing, has previously been engaged, or is reasonably likely to be
engaged following the Closing. The foregoing notwithstanding: (A) for a
period of six (6) years following the Closing, Seller may not license any
Patents included in the Licensed Intellectual Property to any party for use
in the Field, except in connection with a license or transfer by Seller of
all or substantially all of its Patent portfolio to such third party and
(B) any transfer by Seller of each Patents shall impose the same
restrictions as set forth in "(A)" on the transferee of such Patents.
(ii) "LICENSED INTELLECTUAL PROPERTY" means that
Intellectual Property owned by Seller that is not included in the Assets
but which is currently used in, or that would be necessary to the operation
of the Business following the Closing, excluding any Intellectual Property
in the form of components covered by the Supply Agreement or the rights in
such Components; provided, however, that the Licensed Intellectual Property
shall include only such Patents of the Seller as are set forth on such
Schedule 5.14(a)(ii) of the Disclosure Schedules as such Schedule may be
amended as set forth in Section 5.14(e).
(b) Buyer License. Effective as of Closing, Buyer Group shall grant
to Seller, under all rights acquired hereunder by Buyer Group in the
Transferred Intellectual Property, a perpetual, irrevocable, worldwide,
royalty-free, non-exclusive license, to use and exploit such Intellectual
Property in all fields (including in developing, making, marketing, using
and selling the products and components manufactured by Seller or any of
its subsidiaries for, or on behalf of, the Retained Business) other than in
the Field.
(c) Trademark License. Subject to Section 5.14(c)(iv) below, Seller
hereby grants to Buyer, effective as of the Closing, a non-transferable,
non-exclusive, royalty free transitional right and license, in each
jurisdiction where Seller has such rights, to use the Coherent name and
logo (the "LICENSED TRADEMARKS") in connection with the Business solely as
follows:
(i) for a period of 180 days following the Closing, to xxxx
Licensed Products (as defined below) with the Licensed Trademarks using the
tooling acquired from Buyer hereunder in the same manner that such products
were marked by Seller with the Licensed Trademarks using such tooling;
(ii) for a period of 365 days following the Closing, to sell
and distribute Licensed Products marked with the Licensed Trademarks in
accordance with Section 5.14(c)(i) above; and
(iii) for a period of 730 days following the Closing, to use
the Licensed Trademarks on marketing and related materials associated with
the Licensed Products.
(iv) The trademark licenses granted to Buyer pursuant to
subsection (c) above shall be subject to the following:
(1) Within thirty (30) days of the Closing, Buyer
shall include on all Licensed Products and materials on which it includes a
Licensed Trademark, Buyer's own Trademarks to identify the relationship
between Buyer and Seller in a manner at least as prominent as the Licensed
Trademarks are used on such Licensed Product or material.
(2) Buyer shall use the Licensed Trademarks only on
products of Buyer that are Licensed Products. For the purposes this Section
5.14(c), a "LICENSED PRODUCT" means a product made by Buyer that is
substantially the same as a product previously sold by Seller or which is
otherwise based on a product design acquired by Buyer from Seller
hereunder.
(3) All goodwill associated with or that arises from
Buyer's use of the Licensed Trademarks shall inure to the sole benefit of
Seller.
(4) Buyer shall not use Licensed Trademarks in a
manner that is disparaging to, or that otherwise would harm the goodwill
associated with, the Licensed Trademarks.
(5) The quality of the goods and services with which
Buyer uses the Licensed Trademarks shall be at least as high as the quality
of the good and services with which the Seller or its licensees has used
the Licensed Trademarks.
(d) Inventory. Buyer shall be permitted to market, sell, transfer or
otherwise use within 365 days following the Closing any inventory on hand
or on order prior to Closing.
(e) Changes to Licensed Intellectual Property. (i) Seller agrees that
if at any time prior to the sixth (6th) anniversary of the Closing, it is
reasonably determined that a Patent, issued to Seller which has, or which
is entitled to, a filing date in the United States prior to the Closing,
would have been infringed by a laser based medical system or a light based
medical system, sold by or under development by the Division as of the
Closing and such Patent is not infringed by any component of such laser
based medical system or a light based medical system, then such Patent
shall be added to Schedule 5.14(a)(ii) of the Disclosure Schedules and
considered "Licensed Intellectual Property." Without limiting the
foregoing, Seller shall not to xxx Buyer for patent infringement under a
Patent that should have been included under the Licensed Intellectual
Property in accordance with the foregoing but which was not actually
included on such Schedule in accordance herewith if the inclusion of such
Patent on such schedule would have licensed Buyer to engage in the activity
claimed by Seller to infringe such Patent.
(ii) If a Patent is issued to Seller prior to the sixth (6th)
anniversary of the Closing and a claim of such Patent is infringed by a
laser based medical system or a light based medical system of Buyer in the
Field and such claim is not directly infringed by any component of such
laser based medical system or a light based medical system, then such claim
shall be added to Schedule 5.14(a)(ii) and licensed to Buyer accordingly.
For the purposes of clarification, the foregoing is not intended to include
any claim that covers, and the license granted to Buyer as a result of the
foregoing shall not extend to, the making, using, selling or importing of
any component of a laser based medical system or a light based medical
system. Nothing in this Section 5.14(e)(ii) shall modify or limit Seller's
obligations under Section 5.12.
(f) Website Link. Seller agrees that upon the request of Buyer,
Seller shall include on Seller's Internet site a link to Buyer's home page
in a prominent location. Seller and Buyer shall cooperate in good faith to
determine the appropriate location and form of such link. Seller shall
include such link for a period of two (2) years from the Closing.
(g) It is understood and agreed by the parties that the portion of
the purchase price, if any, allocable to the intellectual property licenses
described in this Section 5.14 will be paid free and clear of, and without
reduction for, any applicable withholding or similar taxes.
(h) All rights of Buyer Group under this Section 5.14 shall be
transferable and assignable to any affiliate of Buyer Group, Parent or
Buyer and any person that acquires all or substantially all of the assets
or any segment of the business of Buyer Group, Buyer, Parent or any of
Parent's Subsidiaries to which this Section 5.14 relates.
(i) It is understood and agreed by the parties hereto that,
notwithstanding anything to the contrary set forth herein, except as may be
limited by Section 5.12, nothing set forth in this Agreement or any other
agreement between the parties entered into pursuant hereto, shall prohibit,
and Buyer Group has acquired no exclusive rights hereunder or thereunder
that would prohibit, Seller from making laser or light-based components,
including diode stacks and fibers, for any applications, including medical
applications.
SECTION 5.15 SANTA XXXXX AND OTHER SUBLEASES
(a) At the Closing, Buyer and Seller shall enter into a sublease,
substantially in the form of Exhibit I, pursuant to which the Seller shall
lease to the Buyer certain of the Santa Xxxxx facilities as set forth in
Exhibit I, on the terms and conditions, including rental payments, as set
forth therein (the "SANTA XXXXX SUBLEASE AGREEMENT").
(b) At the Closing, Seller shall assign to Parent, Buyer or any
subsidiaries of Parent designated by Parent, the leases for the facilities
located in the following countries (unless an assignment is not permitted
in which case Seller shall sublease such facility to such person): (i)
Japan (for the Nagoya, Fukuoka and Sendai facilities and for the Star
Medical facility in Tokyo); (ii) Hong Kong (for the property located in
Kowloon); (iii) China (for the properties located in Beijing, Guangzhou,
Shanghai and Sichuan); (iv) the Austrian, Swedish and Mexican facilities;
and (v) the Pleasanton facilities, on the terms set forth in the Form of
Lease Assignment and Assumption Agreement attached hereto as Exhibit B (or
on such other form as may be appropriate in the applicable jurisdiction),
or, in the case of a sublease, on terms mutually satisfactory to Seller and
Buyer; provided, however, that Seller is able to obtain consent (to the
extent required) from the relevant landlord after commercially reasonable
efforts and provided that such consents may be obtained at no cost to
Seller and Parent. It is the intent that any subleases entered into
pursuant to this subsection (b) be entered into on terms and conditions
(including financial terms) consistent with the existing lease. Seller
shall make commercially reasonable efforts, at no cost to Seller, to ensure
that Buyer, Parent, and any subsidiaries of Parent designated by Parent
have the benefit of each assignment/sublease listed in this subsection
above for its complete term.
(c) At the Closing, Seller shall enter into subleases for (or at
Seller's discretion, separate direct leases with landlord for) the portions
of the following facilities used for the Business: (i) Tokyo (excluding the
Star Medical facility addressed in subsection (b) above), (ii) Osaka, and
(iii) as set forth in subsection (e) below, Germany; provided, however,
that Seller is able to obtain consent (to the extent required) from the
relevant landlord after commercially reasonable efforts and provided that
such consents and be obtained at no cost to Seller and Buyer. It is the
intent that any subleases entered into pursuant to this subsection (c) be
entered into on terms and conditions (including financial terms) consistent
with the existing lease.
(d) Seller agrees and shall make commercially reasonable efforts, at
no cost to Seller, to ensure that any Business Employees working at such
facilities as of the Closing Date are entitled to remain at the facilities
located in the following countries for a period of up to 90 days following
the Closing (at no cost to Buyer for base rent or operating expenses): (i)
the United Kingdom - for the property in Xxx; and (ii) France -Orsay Cedex.
(e) Parent shall have the right to, at its sole discretion, but
subject to the consent of the relevant landlord, either enter into a
sublease agreement either directly or through a Parent Subsidiary with the
current tenant related to the portion of the facilities located at
Xxxxxxxxxxxxx 0x, X-00000 Xxxxxxx, Xxxxxxx, currently occupied by the
Division or vacate such portion of the facilities; provided that Parent
shall notify Seller at least fifteen days prior to the Closing of its
decision; provided, further, however, that to the extent Parent shall
determine it will vacate this facility, then Seller agrees and shall make
commercially reasonable efforts to ensure that any Business Employees are
entitled to remain at the facility until the earlier of (x) such date on
which Seller's lease of such facility expires, or (y) such date which is 90
days from the Closing, at the same cost to Buyer Group as Seller was paying
immediately prior to Closing. Seller shall use its commercially reasonable
efforts, at no cost to Seller, to assist Parent in implementing any of the
arrangements mentioned in the preceding sentence.
(f) On or prior to the Closing, Seller shall make commercially
reasonable efforts, at no cost to Seller, to negotiate an extension of the
lease relating to Suites 115 and 120 at 0000 Xxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxxx, on terms reasonably satisfactory to Buyer; so long as the
applicable landlord releases Seller and its subsidiaries from any and all
liabilities arising from the date of the Closing.
SECTION 5.16 INSURANCE CLAIMS
Following the Closing, Seller will take commercially reasonable
actions to pursue claims under the Policies at the request and expense of
Buyer with respect to matters relating to the ownership, use or operation
of the Assets or the Business prior to the Closing and will remit any
amounts recovered to Buyer with respect to such claims. In addition, in the
event that any property employed in the Business is condemned by a
governmental authority prior to Closing, Seller (effective as of the
Closing) shall appoint Buyer, as its agent, to pursue any claims it may
have against such governmental authority with respect to such property.
SECTION 5.17 FURTHER ACTIONS
(a) From and after the Closing Date, Seller shall cooperate with
Buyer Group and Buyer Group's affiliates and representatives, and shall
execute and deliver such documents and take such other actions as Buyer
Group may reasonably request, for the purpose of evidencing the
transactions contemplated by this Agreement and the Ancillary Agreements
and putting Buyer in possession and control of all of the Assets. From and
after the Closing Date, Seller shall promptly remit to Buyer any actual
funds that are received by Seller and that are included in, or that
represent payment of Receivables included in, the Assets, promptly
following such actual funds being cleared by Seller's banking institution.
(b) From and after the Closing Date, Buyer Group shall cooperate with
Seller and Seller's affiliates and representatives, and shall execute and
deliver such documents and take such other actions as Seller may reasonably
request, for the purposes of evidencing the transactions contemplated by
this Agreement and having Buyer Group assume the Assumed Liabilities.
(c) Notwithstanding the foregoing, Buyer shall be responsible for and
shall bear all costs associated with the filing and recording any
assignment of any Transferred Intellectual Property.
SECTION 5.18 RESTRICTIONS ON TRANSFER; STANDSTILL
(a) Seller shall not and shall cause its controlled affiliates not
to, knowingly, directly or indirectly, offer, sell, transfer, assign or
otherwise dispose of (or make any exchange, gift, assignment or pledge of)
(collectively, "TRANSFER") more than 2,700,000 shares of Parent Stock (as
such number shall be adjusted to reflect stock dividends, stock splits or
similar transactions) to any single person or group of affiliates;
provided, that Seller may transfer Parent Stock in an open market
transaction through a "broker" or directly with a "market maker" (as such
are defined in the Securities Act) in which the identity of the buyer is
not disclosed without regard to the foregoing limitation on the amount of
Parent Stock that may be sold.
(b) Seller agrees that for the period commencing with the Closing and
ending on the sixth anniversary of the Closing (the "STANDSTILL PERIOD"),
neither it nor any of its controlled affiliates shall, without the prior
written consent of Parent: acquire, offer to acquire, or agree to acquire,
directly or indirectly, by purchase or otherwise become the beneficial
owner (as such term is defined under the Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of (A) any voting securities or direct or
indirect rights to acquire any voting securities of Parent or any
subsidiary thereof, or of any successor to or person in control of Parent
in an amount which, when added to any other voting securities then held by
Seller and its controlled affiliates (including, without limitation, the
Parent Stock), would cause the total amount of voting securities held by
Seller and its controlled affiliates to exceed twenty three percent (23%)
of the outstanding voting stock of Parent (the "THRESHOLD AMOUNT"), or (B)
all or a significant portion of assets of Parent or of any such successor
or controlling person; provided, however, that nothing contained in this
subsection (b) shall prohibit Seller from presenting and discussing with
Parent's board of directors a proposal to acquire all or substantially all
of the assets of Parent or a controlling equity interest in Parent. The
foregoing notwithstanding, the limitations set forth in this subsection (b)
shall not apply if and for so long as (i) an event of default on the Note
has occurred and is continuing, (ii) a bona fide tender or exchange offer
for voting stock of Parent has been commenced but not withdrawn, (iii) a
blockage of payment obligations of Parent under the Note, in accordance
with its terms, is in effect, (iv) a material breach by Parent of the
Registration Rights Agreement has occurred and not been cured or (v) Parent
has publicly announced a proposed transaction with a third party that would
have, if consummated, the effect of a change of control of Parent (but, in
the case of clause (v), only to the extent necessary to permit Seller to
submit a proposal for a competing transaction or to purchase Ordinary
Shares pursuant to an offer made available to all shareholders) (any such
time during which the Standstill Period be suspended is hereinafter
referred to as "FREE PERIOD"). To the extent Seller shall have acquired any
additional stock or other securities convertible into stock of Parent
during a Free Period, the percentage of stock held by Seller immediately
after the end of such Free Period has ended, if greater than 23% of the
then outstanding stock of Parent, shall become the Threshold Amount.
(c) To the fullest extent permitted under applicable law, Seller
agrees that for a period commencing with the Closing and ending on the
eighth anniversary of the Closing, Seller will cause all of Parent Stock
held by Seller or its controlled affiliates to be voted at any meeting of
shareholders of the Parent or at any adjournment thereof or in any other
circumstances upon which the vote of the shareholders of Parent is sought
and to be voted in the same manner and proportion as the remaining
outstanding voting shares of Parent Stock are voted in each such instance;
provided, however, that Seller may, or may cause its affiliates to, vote
the Parent Stock held by them in accordance with Parent's board of
directors' recommendation. The provisions of this subsection (c) shall not
apply during any Free Period.
(d) During the Standstill Period, Parent shall not adopt any
stockholders' rights plan ("poison pill") or similar device which would
restrict Seller from holding less than twenty-three percent (23%) of the
outstanding voting stock of Parent or such greater percentage as may be
established pursuant to the last sentence of subsection (c) above.
SECTION 5.19 ACQUISITION OF THE NOTE AND PARENT STOCK FOR INVESTMENT;
ABILITY TO EVALUATE AND BEAR RISK; RESTRICTIONS ON TRANSFER
(a) Each of Seller and its controlled affiliates hereby represents
and warrants that it is acquiring the Note and the Parent Stock (together,
the "PARENT SECURITIES"), not with a view toward, or for sale in connection
with, any distribution in violation of the Securities Act of 1933, as
amended ("SECURITIES Act"). Seller acknowledges and agrees that the Parent
Securities may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the
Securities Act and any applicable state securities laws, except pursuant to
an exemption from such registration under the Securities Act and such laws.
Accordingly, Seller will refrain from transferring or otherwise disposing
of any of the Parent Securities, or any interest therein, without
registration under the Securities Act and any applicable state securities
laws, except pursuant to an exemption from such registration under the
Securities Act and such laws.
(b) Each of Seller and its controlled affiliates acknowledges that,
it (i) will be able to bear the economic risk of holding the Parent
Securities for an indefinite period, (ii) can afford to suffer the complete
loss of its investment in the Parent Securities, and (iii) has knowledge
and experience in financial and business matters such that it is capable of
evaluating the risks of the investment in the Parent Securities. Seller
acknowledges that it is an "accredited investor" as defined in Rule 501 of
Regulation D under the Securities Act.
(c) The Note and certificates representing shares of Parent Stock
deliverable to Seller, its controlled affiliates or any transferee of
Seller, and any certificates subsequently issued with respect thereto or in
substitution therefor (including any shares issued or issuable in respect
of any such shares upon any stock split, stock dividend, recapitalization
or similar event) shall bear the following legend:
THE SECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND APPLICABLE
STATE LAW, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM (IN EACH CASE BASED UPON AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT
REGISTRATION UNDER THE SECURITIES ACT IS NOT REQUIRED OR A
"NO-ACTION" OR INTERPRETATIVE LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION TO THE SAME EFFECT).
(d) The certificates representing shares of Parent Stock held by the
Seller or any of Seller's affiliates, including any shares issued to the
Seller with respect thereto upon any stock split, stock dividend,
recapitalization or similar event shall bear the following legend,
provided, however, that such legend shall not be placed on certificates
issued to transferees of the Seller's shares pursuant to this Agreement.
THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON
COMPLIANCE WITH, THE PROVISIONS OF AN AGREEMENT DATED AS OF
FEBRUARY 25, 2001. A COPY OF THE ABOVE REFERENCED AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
(e) Such certificates shall also bear any legend required by any
federal, state, local or foreign law governing such securities. If, and to
the extent Parent Securities held by Seller will no longer be subject to
the restrictions described in the legend set forth above, upon the request
of Seller, Parent shall promptly cause its transfer agent to remove the
legend set forth above from the certificates evidencing the Parent
Securities or issue to Seller new certificates therefor free of such
legend.
SECTION 5.20 INTENTIONALLY OMITTED
SECTION 5.21 NON-CONTROLLED AFFILIATES
Seller shall use its reasonable best efforts, consistent with
applicable law, (including, if permitted under applicable law, voting its
shares of stock) to cause Lambda Physik AG to (i) comply with the covenants
applicable to Seller's subsidiaries and affiliates in this Agreement,
including, but not limited to, Section 5.11, Section 5.12 and Section 5.18
and (ii) not to take any action or omit to take any action that will result
in or will be reasonably likely to result in a breach of any such
covenants.
SECTION 5.22 CONDUCT BY BUYER GROUP
Buyer Group agrees that from the date of this Agreement to the
Closing Date it shall, except as otherwise permitted by the written consent
of Seller, (i) conduct its business in the ordinary course, and to the
extent consistent therewith, use commercially reasonable efforts to
preserve intact its business, use commercially reasonable efforts to
preserve relationships with those persons having business dealings with it
as of the date hereof; (ii) use its reasonable best efforts to obtain the
funding from the lenders set forth in the Commitment Letters (the
"Lenders") and the other financial commitments set forth in the Commitment
Letters (including satisfying the conditions necessary to such funding),
(iii) provide Seller copies of all information delivered to the Lenders in
connection with the transactions contemplated by the Commitment Letters,
and (iv) not take any action without the prior written consent of Seller,
which is intended to cause Buyer Group not to satisfy the conditions set
forth in the Commitment Letters. Notwithstanding anything contained herein
to the contrary, Buyer Group may take any action deemed, in the good faith
judgment of management of the Buyer Group to be in the best interest of
Buyer Group, the primary purpose of which is to prepare Buyer Group for the
consummation of the transactions contemplated herein and in the Ancillary
Agreements and the integration of the Assets and the Business in to Buyer
Group's operations.
SECTION 5.23 COOPERATION IN LITIGATION
After the Closing, Buyer Group will provide reasonable access to
Seller, its advisors, consultants and employees, at Seller's expense (other
than with respect to Buyer Group's in-house assistance) to any Assets
(including any documents, records and files), which Seller may reasonably
request in order to pursue, defend or engage in the litigation listed on
Schedule 3.9(a) of the Disclosure Schedules. Buyer shall also provide
reasonable cooperation in making available employees of the Business.
SECTION 5.24 COOPERATION IN TRANSITION
Seller shall and shall cause its subsidiaries to use its reasonable
best efforts to assist Buyer Group following the Closing to facilitate an
orderly transition of the Business at Buyer Group's expense (except with
respect to Seller's in-house assistance) by, among other things, providing
the services that may be reasonably requested by Buyer Group, including,
without limitation, by providing the services listed on Exhibit K hereto on
the terms set forth on Exhibit K; it being understood and agreed that with
respect to the services set forth in Schedule 3.20(b), the parties will
negotiate in good faith the terms under which such services will be
provided.
SECTION 5.25 NOTIFICATION AND OTHER REQUIREMENTS
Seller shall and shall cause its subsidiaries to use their reasonable
best efforts to timely provide, file, execute or submit any document
required to be provided, filed, executed or submitted by Seller to or with
any applicable labor or employment governmental authority (whether in the
United States or otherwise) for any notification or similar requirement in
connection with the transactions contemplated in this Agreement and the
Ancillary Agreements, including but not limited to, worker council
notifications, where applicable.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS
The respective obligation of each party to consummate the
transactions contemplated herein is subject to the satisfaction at or prior
to the Closing of the following conditions precedent:
(a) No statute, rule or regulation shall have been enacted, entered,
promulgated or enforced by any court or governmental authority that
prohibits or restricts the consummation of the transactions contemplated
hereby, other than suits, actions or proceedings that are unlikely to have
a reasonable chance of prevailing;
(b) There shall not be in effect any judgment, order, injunction or
decree of any court of competent jurisdiction enjoining the consummation of
the transactions contemplated hereby;
(c) There shall not be any suit, action, or other proceeding pending
by any governmental authority or administrative agency or commission that
seeks to enjoin or otherwise prevent consummation of the transactions
contemplated hereby other than suits, actions or proceedings that are
unlikely to prevail;
(d) Any waiting periods, including any extension thereof, applicable
to the transactions contemplated by this Agreement under applicable
antitrust or trade regulation laws and regulations, including, without
limitation, under the HSR Act, shall have expired or been terminated and
all other material governmental authorizations or approvals required in
connection with the transactions contemplated by this Agreement, including
but not limited to, the approvals set forth in Section 5.3(c) hereof, shall
have been obtained or given;
(e) Buyer shall have received the Financing under the Financing
Letters, upon the terms set forth in the Financing Letters on the date
hereof or under such other terms as may be reasonably satisfactory to
Buyer; and
(f) The transactions contemplated by each of the Ancillary Agreements
relating to the transfer of the Assets by Non-U.S. Companies shall be or
have been consummated simultaneously with or immediately prior to the
Closing.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated
hereby are further subject to the satisfaction (or waiver) at or prior to
the Closing of the following conditions:
(a) The representations and warranties of Buyer Group contained
herein shall be true in all respects on and as of the Closing Date with the
same force and effect as though made on and as of such date, except where
the failure to be true and correct would have a Material Adverse Effect on
Buyer Group (it being understood that, for purposes of determining the
accuracy of such representations and warranties all qualifications based on
the word "material" or similar phrases contained in such representations
and warranties shall be disregarded);
(b) Buyer and Parent shall have performed and complied with in all
material respects their agreements, obligations and covenants under this
Agreement required to be performed or complied with by them at or prior to
the Closing pursuant to the terms hereof;
(c) Buyer and Parent shall have delivered to Seller a certificate as
to the satisfaction of the conditions set forth in subsections (a) and (b)
above, dated as of the Closing and executed by an officer of each entity;
(d) Each of the documents referred to in Section 1.5 shall have
executed by Buyer Group or its affiliates, as applicable, and delivered to
the Seller;
(e) No event shall have occurred and no condition or circumstance
shall exist that would reasonably be expected to give rise to any Material
Adverse Effect on Buyer Group; and
(f) Buyer shall have obtained all consents and approvals set forth on
Schedule 4.3(a) of Buyer Disclosure Schedules.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF BUYER GROUP
The obligations of Buyer and Parent to consummate the transactions
contemplated hereby are further subject to the satisfaction (or waiver) at
or prior to the Closing of the following conditions:
(a) The representations and warranties of Seller contained herein
shall be true in all respects on and as of the Closing Date with the same
force and effect as though made on and as of such date, except where the
failure to be true and correct would have a Material Adverse Effect on the
Business (it being understood that, for purposes of determining the
accuracy of such representations and warranties all qualifications based on
the word "material" or similar phrases contained in such representations
and warranties shall be disregarded);
(b) Seller shall have performed and complied with in all material
respects its agreements, obligations and covenants under this Agreement
required to be performed or complied with by it at or prior to the Closing
pursuant to the terms hereof;
(c) Seller shall have delivered to Buyer Group a certificate as to
the satisfaction of the conditions contained in subsections (a) and (b)
above, dated as of the Closing and executed by an officer of Seller;
(d) Seller shall have obtained all consents and approvals set forth
on Schedule 6.3(d) of the Disclosure Schedules, as well as any other
consents and approvals (including the transfer of environmental permits)
the failure of which to obtain, either individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Business;
(e) Each of the documents referred to in Section 1.4 shall have been
executed by Seller or its affiliates, as applicable, and delivered to
Buyer;
(f) Seller shall have delivered a consent from the landlord of each
Lease listed on Schedule 6.3(f) of the Disclosure Schedules to the
assignment of, or sublease with respect to, such Lease to Buyer Group as
contemplated by Section 5.15; and
(g) No event shall have occurred and no condition or circumstance
shall exist that would reasonably be expected to give rise to any Material
Adverse Effect on the Business.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
SECTION 7.1 SURVIVAL OF REPRESENTATIONS
All representations and warranties made in this Agreement shall
survive the Closing for a period of twelve (12) months or if later, until
May 31, 2002, but, except as provided in Section 8.2, shall not survive any
termination of this Agreement; provided, however, that notwithstanding the
foregoing, (i) the representations and warranties contained in Section 3.8
shall survive indefinitely, (ii) the representation and warranties
contained in Section 3.14 shall survive for a period of thirty-six (36)
months, (iii) the representations and warranties contained in Section
3.19(a) and (b) shall survive for a period of 24 months and (iv) the
representations and warranties contained in Section 3.12 shall survive
until six months after the expiration of the applicable statute of
limitations (as the same may be extended) (each, an "INDEMNITY PERIOD").
This Section 7.1 shall not limit any covenant or agreement of the parties
that contemplates performance after the Closing.
SECTION 7.2 SELLER'S AGREEMENT TO INDEMNIFY
(a) Subject to the terms and conditions set forth herein, from and
after the Closing, Seller shall indemnify and hold harmless Buyer and
Parent and their respective directors, officers, employees, affiliates,
controlling persons, agents, representatives and their successors and
assigns (collectively, "BUYER Indemnities") from and against all liability,
demands, claims, actions or causes of action, assessments, losses, damages,
costs and expenses (including, without limitation, reasonable attorneys'
and accountants' fees and expenses) (collectively, "BUYER DAMAGES")
asserted against or incurred by any Buyer Indemnities as a result of or
arising out of (i) a breach of any representation or warranty contained in
Article III of this Agreement, (ii) Excluded Liabilities, or (iii) a breach
of any agreement or covenant of Seller or any of the Seller Subsidiaries in
this Agreement or in any of the Non-U.S. Agreements. In the event of any
breach of any representation or warranty for which indemnification is owed
hereunder, the determination of the amount of any Buyer Damages resulting
therefrom shall take into account all Buyer Damages resulting from the
items giving rise to the breach without regard to any materiality
qualification contained in the breached representation or warranty, to the
extent the materiality qualification would otherwise apply to items giving
rise to the breach.
(b) Seller's obligations to indemnify Buyer Indemnities pursuant to
subsection (a) above contained in this Agreement are subject to the
following limitations:
(i) No indemnification shall be made by Seller with respect
to any claim for breach of any representation or warranty contained in
Article III of this Agreement unless and until the aggregate amount of
Buyer Damages under all claims for breach of any representation or warranty
contained in Article III of this Agreement exceeds an amount equal to
$250,000 and, in such event, indemnification shall be made by Seller for
the full amount of Buyer Damages;
(ii) No indemnification shall be made by Seller for any
breach of any representation or warranty contained in Article III or a
breach of any agreement or covenant of Seller in this Agreement in excess
of $70,000,000 in the aggregate;
(iii) Any claims for indemnification relating to a breach of
a representation or warranty contained in Article III shall be satisfied
first by reducing the principal amount of the Note then held by Seller, if
any, and thereafter, through a cash payment by Seller. In the event the
Note is reduced in accordance herewith, Seller shall surrender to Buyer the
Note so Buyer may effect such reduction and promptly, but in no event more
than five (5) business days, reissue a new Note in the correct principal
amount. In addition, with respect to a claim for a breach of a
representation or warranty giving rise to Buyer Damages contemplating
payments (cash or otherwise) by Buyer Group, Seller shall be obligated to
indemnify Buyer Group only if and when such payment is actually made by
Buyer Group;
(iv) The amount of any Buyer Damages shall be reduced by any
amount actually received by a Buyer Indemnities with respect thereto under
any insurance coverage (other than self insurance or retrospective or other
similar insurance) or from any other party alleged to be responsible
therefor. Buyer Indemnitees shall use commercially reasonable efforts to
collect any amounts available under such insurance coverage and from such
other party alleged to have responsibility, provided, however, that in no
event shall the indemnity obligations hereunder be conditioned upon such
efforts to collect insurance or the success thereof. If a Buyer Indemnitee
receives an amount under insurance coverage or from such other party with
respect to Buyer Damages at any time subsequent to any indemnification
provided by Seller pursuant to this Section 7.2, then such Buyer Indemnitee
shall promptly reimburse Seller, for any payment made or expense incurred
by Seller in connection with providing such indemnification up to such
amount received by Buyer Indemnitee, but net of any expenses incurred by
such Buyer Indemnitee in collecting such amount; and
(c) Seller shall be obligated to indemnify Buyer Indemnitees only for
those claims giving rise to Buyer Damages as to which Buyer Indemnitees
have given Seller written notice thereof prior to the end of the Indemnity
Period in the event that the Indemnity Period applies to such Buyer
Damages.
SECTION 7.3 BUYER GROUP'S AGREEMENT TO INDEMNIFY
(a) Subject to the terms and conditions set forth herein, from and
after the Closing, Parent and Buyer, jointly and severally, shall indemnify
and hold harmless Seller and its directors, officers, employees,
affiliates, controlling persons, agents, representatives and their
successors and assigns (collectively, the "SELLER INDEMNITEES") from and
against all liability, demands, claims, actions or causes of action,
assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively, "SELLER
DAMAGES") asserted against or incurred by any Seller Indemnitee as a result
of or arising out of (i) the Assumed Liabilities, (ii) a breach of any
representation or warranty contained in Article IV of this Agreement or
(iii) a breach of any agreement or covenant of Buyer or Parent in this
Agreement or any of the Ancillary Agreements. In the event of any breach of
any representation or warranty for which indemnification is owed hereunder,
the determination of the amount of any Seller Damages resulting therefrom
shall take into account all Seller Damages resulting from the items giving
rise to the breach without regard to any materiality qualification
contained in the breached representation or warranty, to the extent the
materiality qualification would otherwise apply to items giving rise to the
breach.
(b) Buyer Group's obligations to indemnify Seller Indemnitees
pursuant to clause (ii) of subsection (a) above are subject to the
following limitations:
(i) No indemnification for breach of any representation or
warranty contained in Article IV of this Agreement shall be made by Buyer
Group with respect to any claim unless the aggregate amount of Seller
Damages under all claims for breaches of representations and warranties
contained in Article IV of this Agreement exceeds an amount equal to
$250,000 and, in such event, indemnification shall be made by Buyer Group
for the full amount of Seller Damages;
(ii) No indemnification shall be made by Buyer or Parent for
any breach of any representation and warranty contained in Article IV or a
breach of any agreement or covenant of Buyer or Parent in this Agreement in
excess of $52,500,000 in the aggregate;
(iii) The amount of any Seller Damages shall be reduced by
any amount actually received by a Seller Indemnitee with respect thereto
under any insurance coverage (other than self insurance or retrospective or
other such insurance) or from any other party alleged to be responsible
therefor. Seller Indemnitees shall use commercially reasonable efforts to
collect any amounts available under such insurance coverage and from such
other party alleged to have responsibility, provided, however, that in no
event shall the indemnity obligations hereunder be conditioned upon such
efforts to collect insurance or the success thereof. If a Seller Indemnitee
receives an amount under insurance coverage or from such other party with
respect to Seller Damages at any time subsequent to any indemnification
provided by Buyer Group pursuant to this Section 7.3, then such Seller
Indemnitee shall promptly reimburse Buyer Group for any payment made or
expense incurred by Buyer Group in connection with providing such
indemnification up to such amount received by the Seller Indemnitee, but
net of any expenses incurred by such Seller Indemnitee in collecting such
amount; and
(iv) Buyer Group shall be obligated to indemnify the Seller
Indemnitees only for those claims giving rise to Seller Damages and to
which the Seller Indemnitees have given Buyer Group written notice thereof
prior to the end of the Indemnity Period in the event that the Indemnity
Period applies to such Seller Damages.
SECTION 7.4 THIRD PARTY INDEMNIFICATION
The obligations of any indemnifying party to indemnify any
indemnified party under this Article VII with respect to Buyer Damages or
Seller Damages, as the case may be, resulting from the assertion of
liability by third parties (a "CLAIM"), will be subject to the following
terms and conditions:
(a) Any party against whom any Claim is asserted will give the party
required to provide indemnity hereunder written notice of any such Claim
promptly after learning of such Claim, and the indemnifying party may at
its option and at its sole cost and expense undertake the defense thereof
by representatives of its own choosing. Failure to give prompt notice of a
Claim hereunder shall not affect the indemnifying party's obligations under
this Section 7.4, except to the extent that the indemnifying party is
materially prejudiced by such failure to give prompt notice (whether as a
result of failure of substantive defenses or otherwise). If the
indemnifying party, within thirty (30) days after notice of any such Claim,
fails to assume the defense of such Claim, the indemnified party against
whom such claim has been made will (upon further notice to the indemnifying
party) have the right to undertake the defense, compromise or settlement of
such claim on behalf of and for the account and risk, and at the expense,
of the indemnifying party, subject to the right of the indemnifying party
to assume the defense of such Claim at any time prior to settlement,
compromise or final determination thereof. Notwithstanding the foregoing,
if the indemnifying party undertakes defense of such claim, the indemnified
party shall be entitled to participate in (but not control) the defense of
the claim with counsel of its own choosing at its own expense.
(b) Notwithstanding anything in this Section 7.4 to the contrary, (i)
the indemnified party shall not settle a claim for which it is indemnified
without the prior written consent of the indemnifying party, which consent
shall not be unreasonably withheld, and (ii) the indemnifying party shall
not enter into any settlement or compromise of any action, suit or
proceeding or consent to the entry of any judgment for other than monetary
damages to be borne by the indemnifying party without the prior written
consent of the indemnified party, which consent shall not be unreasonably
withheld.
SECTION 7.5 EXCLUSIVE REMEDY; SEPARATE REMEDIES
This indemnification provided for in this Article VII shall be the
exclusive remedy for breaches of representations and warranties contained
in this Agreement provided that no party hereto shall be deemed to have
waived any right of recourse (whether a claim under this Article VII or
otherwise) arising from fraud or intentional misconduct of any other party
hereto. Any claims, disputes or complaints arising from or in connection
with the supply of products pursuant to the Supply Agreement shall be
brought by the parties thereto under and in accordance therewith. Any
claims, disputes and complaints arising from or in connection with the
Registration Rights Agreement shall be brought by the parties thereto
thereunder and in accordance therewith. In no event shall any party hereto
or thereto have or be deemed to have the right to assert any such claims,
disputes or complaints in connection with the transactions contemplated by
the Supply Agreement or the Registration Rights Agreement under the
indemnification provisions of this Agreement.
SECTION 7.6 TRANSFER TAXES; ALLOCATION OF PURCHASE PRICE
(a) Seller shall be responsible for and shall pay, or cause its
subsidiaries to pay, all sales, use, transfer, stamp duty, recording, value
added, business consumption and other similar taxes and fees, including,
without limitation, all bulk sales taxes, in each case including interest,
penalties or additions attributable thereto ("TRANSFER TAXES"), arising out
of or in connection with the transactions contemplated by this Agreement
and the Non-U.S. Agreements; provided, however, that to the extent that any
member of the Buyer Group can obtain a refund, credit or other offset or
benefit with respect to such Transfer Taxes, Buyer Group shall diligently
and in good faith pursue such refund, credit or other offset of the
Transfer Tax so paid with the appropriate taxing authority and shall pay
over to Seller the amount of any Transfer Tax so refunded, credited or
otherwise offset within ten (10) business days of receiving such refund,
credit or offset. The party that has the primary responsibility under
applicable law for the payment of any particular Transfer Tax shall prepare
and file the relevant Tax Return, pay the Transfer Taxes shown on such Tax
Return, notify the other party in writing of the Transfer Taxes shown on
such Tax Return and how such Transfer Taxes were calculated and provide a
copy of such Tax Return and proof of payment, and if the filing party is a
member of Buyer Group, Seller shall reimburse such member of Buyer Group
for the amount of such Transfer Taxes paid by Buyer in immediately
available funds within 10 days of receipt of such notice. The parties shall
cooperate with each other to the extent reasonably requested and legally
permitted to minimize any Transfer Taxes. Buyer Group shall disclose to
Seller the status of any claim for refund, credit or other offset, and
Seller shall have the right, to the extent permitted by law, to fully
participate in the procedure with respect to any such claim.
(b) Seller and Buyer shall cooperate in good faith to allocate the
Closing Cash Purchase Price and the value of the Parent Stock, the Note and
Assumed Liabilities, each to the extent properly taken into account under
Section 1060 of the Code and the regulations promulgated thereunder, among
the Assets being sold hereunder (the "ALLOCATION") within fifteen days of
execution of this Agreement. In the event that Seller and Buyer are unable
to agree upon the Allocation, they shall hire an Independent Accounting
Firm, mutually acceptable to each, to perform such Allocation, whose
findings shall be binding upon each of Seller and Buyer. The costs of such
Independent Accounting Firm shall be shared equally by Seller and Buyer.
(c) Promptly after the Final Statement shall be agreed and accepted
among the parties hereto, Buyer and Seller shall allocate any adjustment to
the Cash Purchase Price or the principal amount of the Note made pursuant
to Section 1.8 hereof among the Assets, and such adjustment shall be deemed
to amend the Allocation for all purposes. Buyer and Seller shall further
allocate any additional amounts paid pursuant to the Earn-Out among the
Assets, and any such further allocation shall be deemed to amend the
Allocation for all purposes. Any further adjustments made pursuant to this
Section 7.6(c) shall be made in accordance with Section 1060 of the Code
and the regulations promulgated thereunder.
(d) Seller and Buyer Group (i) shall be bound by the Allocation, and
any amendments thereto, (ii) shall prepare and file all Tax Returns
(including, without limitation, Federal Form 8594) and financial statements
in a manner consistent with the Allocation, and any amendments thereto, and
(iii) shall take no position, and shall cause its affiliates to take no
position, inconsistent with the Allocation, or any amendment thereto, on
any Tax Return, in any proceeding before any taxing authority or otherwise.
In the event that the Allocation, or any amendment thereto, is disputed by
any taxing authority, the party receiving notice of such dispute shall
promptly notify and consult with the other party concerning resolution of
such dispute.
(e) No later than thirty (30) days prior to the filing of their
respective Federal Forms 8594 relating to the transactions contemplated by
this Agreement, each party shall deliver to the other party a copy of its
Federal Form 8594.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION OF AGREEMENT
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Seller and Parent;
(b) by Parent, upon written notice to Seller, if there has been a
violation or breach by Seller of any of the agreements, representations or
warranties contained in this Agreement which if not cured would cause the
conditions set forth in Section 6.3(a) or (b) to not be satisfied; which
breach or violation cannot be or has not been cured by the date thirty (30)
days after receipt by Seller of notice specifying in reasonable detail the
nature of such breach, (it being understood that Parent may not terminate
this Agreement pursuant to this subsection (b) if it or Buyer shall have
breached any of their respective representations, warranties or covenants
hereunder in any material respect);
(c) by Seller, upon written notice to Parent, if there has been a
violation or breach by Parent or Buyer of any of the agreements,
representations or warranties contained in this Agreement which if not
cured would cause the conditions set forth in Section 6.2(a) or (b) to not
be satisfied; which breach or violation cannot be or has not been cured by
the date thirty (30) days after receipt by Parent of notice from Seller
specifying in reasonable detail the nature of such breach, (it being
understood that Seller may not terminate this Agreement pursuant to this
subsection (c) if it shall have breached any of its representations,
warranties or covenants hereunder in any material respect);
(d) by either Parent or Seller if the Closing shall not have occurred
on or before May 15, 2001 (which date shall be extended to July 15, 2001,
if the Closing shall not have occurred as of the result of a failure to
satisfy the conditions set forth in Section 6.1(d) (the "END DATE"));
provided, however, that the right to terminate this Agreement pursuant to
this subsection (d) shall not be available to (i) Seller, if Seller has
breached any of its representations, warranties or covenants hereunder in
any material respect and such breach has been the cause or resulted in the
failure of the Closing to occur on or before the End Date or (ii) Buyer
Group, if Buyer or Parent has breached their respective representations,
warranties or covenants hereunder in any material respect and such breach
has been the cause of or resulted in the failure of the Closing to occur on
or before the End Date;
(e) by Seller or Parent if any court of competent jurisdiction or
other competent governmental authority shall have issued a statute, rule,
regulation, order, decree or injunction or taken any other action
permanently restraining, enjoining or otherwise prohibit the transactions
contemplated by this Agreement and such statute, rule, regulation, order,
decree or injunction or other action shall have become final and
non-appealable.
SECTION 8.2 PROCEDURE FOR AND EFFECT OF TERMINATION
(a) In the event of termination of this Agreement and abandonment of
the transactions contemplated hereby by the parties hereto pursuant to
Section 8.1 hereof, written notice thereof shall be given by a party so
terminating to the other party and this Agreement shall forthwith terminate
and be of no further effect, and the transactions contemplated hereby shall
be abandoned without further action by Seller or Buyer Group.
(b) Notwithstanding the foregoing, termination of this Agreement and
abandonment of the transactions contemplated hereby by the parties pursuant
to Section 8.1(b) or (c) shall not in any way limit or restrict the rights
and remedies of any party hereto against any other party hereto with
respect to any willful violation or breach of the representations,
warranties, agreements or other provisions of this Agreement prior to
termination hereof and Section 5.5, Section 5.10 and Section 5.12 shall
survive termination of this Agreement. In the event of termination of this
Agreement by Parent, Buyer or Seller as provided above in Section 8.1(a),
this Agreement shall forthwith become void and there shall be no liability
on the part of Buyer Group or Seller (or their respective officers or
directors), except based upon obligations set forth in Section 9.1 hereof
and in the immediately preceding sentence, and except that Buyer Group
shall thereupon promptly return or destroy (and cause its agents and
representatives to return or destroy) to Seller all documents (and copies
thereof) furnished to Buyer Group by Seller, and Buyer and Parent shall
continue to adhere to the Confidentiality Agreement.
SECTION 8.3 AMENDMENT, EXTENSION AND WAIVER
At any time prior to the Closing Date, the parties hereto may (a)
amend this Agreement, (b) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (c) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (d) waive compliance with any of the
agreements or conditions contained herein. Except as provided in Section
5.6 or Seller's amendment to Schedule 3.9 of the Disclosure Schedule, this
Agreement may not be amended except by an instrument in writing signed on
behalf of all of the parties hereto. Any agreement on the part of a party
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
SECTION 8.4 BUYER TERMINATION FEE
If the Closing shall not have occurred on or before the End Date to
the extent that each and all conditions of Seller and Buyer Group to
consummate the transaction contemplated hereby set forth in either Sections
6.1 and 6.3, other than Section 6.1(e), have been satisfied or waived and
the condition set forth in Section 6.1(e) is not satisfied for any reason
and, as a result thereof, the Agreement is terminated by either Parent or
Seller, then Buyer Group shall promptly pay to Seller by wire transfer to
such bank account(s) specified by Seller in Section 1.2(a)(i) or such other
bank account as specified by Seller, in immediately available United States
funds, U.S. $750,000.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 FEES AND EXPENSES
Whether or not the transactions contemplated herein are consummated
pursuant hereto, except as otherwise provided herein, each of Seller, on
the one hand, and Buyer Group, on the other hand, shall pay all fees and
expenses incurred by, or on behalf of, such party in connection with, or in
anticipation of, this Agreement and the consummation of the transactions
contemplated hereby. Each of Seller, on the one hand, and Buyer Group, on
the other hand, shall indemnify and hold harmless the other party from and
against any and all claims or liabilities for financial advisory and
finders' fees incurred by reason of any action taken by such party or
otherwise arising out of the transactions contemplated by this Agreement by
any person claiming to have been engaged by such party.
SECTION 9.2 FURTHER ASSURANCES; GUARANTEE
(a) From time to time after the Closing Date, at the request of
either party hereto and at the expense of the party so requesting, each of
the parties hereto shall execute and deliver to such requesting party such
documents and take such other action as such requesting party may
reasonably request in order to consummate more effectively the transactions
contemplated hereby.
(b) Each of Seller and Parent hereby guarantees the timely
performance by any subsidiary or affiliate of Seller and Parent,
respectively, of all obligations of Seller and Buyer Group hereunder,
respectively, including without limitation, the execution and performance
of their respective obligations under this Agreement and the Ancillary
Agreements.
SECTION 9.3 NOTICES
All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing
and may be given by any of the following methods: (a) personal delivery;
(b) facsimile transmission; (c) registered or certified mail, postage
prepaid, return receipt requested; or (d) internationally recognized
overnight delivery service. Notices shall be sent to the appropriate party
at its address or facsimile number given below (or at such other address or
facsimile number for such party as shall be specified by notice given
hereunder):
(a) If to Buyer Group to:
ESC Medical Systems Ltd.
X.X. Xxx 000
Xxxxxxx, Xxxxxx 00000
Fax: x000-0-000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
(b) If to Seller to:
Coherent, Inc.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
with copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxx
All such notices, requests, demands, waivers and communications shall
be deemed received (i) in the case of personal delivery, upon actual
receipt thereof by the addressee, (ii) in the case of overnight delivery,
on the day following delivery to the nationally-recognized overnight
delivery service, (iii) in the case of mail, upon receipt of the return
receipt, or (iv) in the case of a facsimile transmission, upon transmission
thereof by the sender and issuance by the transmitting machine of a
confirmation slip that the number of pages constituting the notice have
been transmitted without error. In the case of notices sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice
to the addressee at the address provided for above. However, such mailing
shall in no way alter the time at which the facsimile notice is deemed
received.
SECTION 9.4 SEVERABILITY
Should any provision of this Agreement for any reason be declared
invalid or unenforceable, such decision shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which
remaining provisions shall remain in full force and effect and the
application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable shall be valid and enforced to the fullest extent permitted
by law.
SECTION 9.5 BINDING EFFECT; ASSIGNMENT
This Agreement and all of the provisions hereof shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, directly or
indirectly, including, without limitation, by operation of law, by any
party hereto without the prior written consent of the other parties hereto,
provided, however, that Buyer Group may (a) assign any or all of its rights
and interests hereunder and under the Ancillary Agreements to one or more
of its lenders as collateral security, and (b) designate one or more of its
affiliates to perform its obligations hereunder.
SECTION 9.6 NO THIRD PARTY BENEFICIARIES
This Agreement is solely for the benefit of Seller, and its
successors and permitted assigns, with respect to the obligations of Buyer
and Parent under this Agreement, and for the benefit of Buyer and Parent,
and their respective successors and permitted assigns, with respect to the
obligations of Seller under this Agreement, and this Agreement shall not be
deemed to confer upon or give to any other third party any remedy, claim
liability, reimbursement, cause of action or other right.
SECTION 9.7 DEFINITIONS AND INTERPRETATION
(a) As used in this Agreement, "BUSINESS" means the business
conducted by Seller's Medical Group (the "DIVISION"), including, without
limitation, (i) Seller's medical laser systems and medical light-based
systems business as conducted by the Division, (ii) the design,
development, manufacture, marketing, selling, maintenance and support of
components, accessories and subsystems therefor which are manufactured by
the Division, and (iii) the assembly, marketing, selling, maintenance and
support (but not the manufacture) of components, accessories and subsystems
therefor purchased by the Division from Seller's other divisions or from
third parties. In any case, the Business shall not include the Retained
Business.
(b) As used in this Agreement, "RETAINED BUSINESS" means the business
conducted by Seller's other divisions, including, without limitation, (i)
the design, development, manufacture, marketing, selling, maintenance and
support of any components, accessories and subsystems supplied to the
Division by any other division of Seller or to be supplied to Buyer under
the Supply Agreement (other than the assembly, marketing, resale,
maintenance and support by the Division of components, accessories and
subsystems purchased by the Division from Seller's other divisions), (ii)
the design, development, manufacture, assembly, marketing, selling,
maintenance and support of fibers and diode stacks manufactured by other
divisions of Seller, (iii) the marketing, resale, maintenance and support
of fibers manufactured by the Division for other divisions of Seller, and
(iv) manufacturing processes performed by other divisions of the Seller
even if performed on components provided by the Division.
(c) The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of
this Agreement.
(d) As used in this Agreement, an "AFFILIATE" of, or a person
"AFFILIATED" with, a specified person, is a person directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with, the person specified; provided that, without
prejudice to Section 5.21, with respect to Seller, Lambda Physik AG shall
not be deemed included in the term "affiliate" or "affiliated".
(e) As used in this Agreement, a "GOVERNMENTAL AUTHORITY" shall mean
any governmental or regulatory authority, domestic or foreign.
(f) As used in this Agreement, the term "PERSON" shall mean and
include an individual, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(g) As used in this Agreement, the term "KNOWLEDGE" shall mean with
respect to a corporation, the actual knowledge of the persons listed on
Schedule 9.7(e) of the Disclosure Schedule(1).
---------------------
1 Subject to review of list by Buyer Group.
(h) As used in this Agreement, the term "SUBSIDIARY" shall mean with
respect to the referenced entity, any other entity (i) of which fifty (50)
percent or more of either the equity interests in, or the voting control
of, such entity is, directly or indirectly, beneficially owned by the
referenced entity, (ii) of which the referenced entity has the ability to
(A) elect fifty (50) percent or more of the directors or members of the
governing board of such entity or (B) appoint either the general partner of
a general partnership or limited partnership or the managing member of a
limited liability company or (iii) that the referenced entity otherwise
controls; provided, however, that with respect to Seller, "subsidiary"
shall refer only to those entities that are primarily related to the
Business; and provided, further, however, that, without prejudice to
Section 5.21, with respect to Seller, Lambda Physik AG shall not be deemed
included in the term "subsidiary".
SECTION 9.8 JURISDICTION AND CONSENT TO SERVICE
Each of Seller, Buyer and Parent (a) agrees that any suit, action or
proceeding arising out of or relating to this Agreement shall be brought in
the state or federal courts of California or New York; (b) consents to the
non-exclusive (as between the courts in California and New York)
jurisdiction of each such court in any suit, action or proceeding relating
to or arising out of this Agreement; (c) waives any objection that it may
have to the laying of venue in any such suit, action or proceeding in any
such court; and (d) agrees that service of any court paper may be made in
such manner as may be provided under applicable laws or court rules
governing service of process.
SECTION 9.9 ENTIRE AGREEMENT
This Agreement, the Confidentiality Agreement, the Disclosure
Schedules, the Buyer Disclosure Schedules and the Ancillary Agreements and
the exhibits and other writings referred to herein or therein or delivered
pursuant hereto or thereto that form a part hereof or thereof constitute
the entire agreement among the parties with respect to their subject matter
and supersede all other prior agreements and understandings, both written
and oral, between the parties or any of them with respect to their subject
matter (including the memorandum of understanding); provided, however, that
if there shall be any inconsistency between this Agreement and any of the
Non-U.S. Agreements, this Agreement shall govern.
SECTION 9.10 DESCRIPTIVE HEADINGS
The descriptive headings herein are inserted for convenience of
reference only and shall in no way be construed to define, limit, describe,
explain, modify, amplify, or add to the interpretation, construction or
meaning of any provision of, or scope or intent of, this Agreement nor in
any way affect this Agreement.
SECTION 9.11 GOVERNING LAW
This Agreement will be governed by, and construed and enforced in
accordance with, the laws of the State of New York (regardless of the laws
that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
SECTION 9.12 COUNTERPARTS
This Agreement may be executed simultaneously in counterparts, each
of which will be deemed an original but all of which together will
constitute one and the same instrument.
SECTION 9.13 SPECIFIC PERFORMANCE
The parties hereto agree that if the provisions contained in Section
5.9, Section 5.10, Section 5.11, Section 5.12, Section 5.13 and Section
5.18 were not performed in accordance with their specific terms or were
otherwise breached, irreparable damage would occur, no adequate remedy at
law would exist and damages would be difficult to determine, and that the
parties shall be entitled to specific performance of the terms thereof and
immediate injunctive relief, without the necessity of proving the
inadequacy of money damages as a remedy and without the necessity of
posting any bond or other security, in addition to any other remedy at law
or equity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
ESC MEDICAL SYSTEMS LTD.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
ENERGY SYSTEMS HOLDINGS INC.
By: /s/ Xxxxx Xxxxxx
--------------------------------
Name: Xxxxx Xxxxxx
Title: Director
COHERENT, INC.
By: /s/ Xxxxxxx Couillaud
--------------------------------
Name: Xxxxxxx Couillaud
Title: President and
Chief Executive Officer
TABLE OF CONTENTS
PAGE
ARTICLE I TRANSFER OF ASSETS AND LIABILITIES..............................1
SECTION 1.1 ASSETS TO BE SOLD; ASSUMPTION OF
LIABILITIES; TRANSFER OF NON-U. S. ASSETS...............1
SECTION 1.2 PURCHASE PRICE..........................................5
SECTION 1.3 CLOSING.................................................6
SECTION 1.4 DELIVERIES BY SELLER....................................6
SECTION 1.5 DELIVERIES BY BUYER GROUP...............................7
SECTION 1.6 PREPARATION OF FINAL STATEMENT..........................8
SECTION 1.7 EARN-OUT PAYMENT CALCULATION............................9
SECTION 1.8 POST-CLOSING PURCHASE PRICE ADJUSTMENT.................12
SECTION 1.9 INTERCOMPANY LIABILITIES...............................12
ARTICLE II RELATED MATTERS...............................................12
SECTION 2.1 BOOKS AND RECORDS OF SELLER............................12
SECTION 2.2 MAIL HANDLING..........................................12
SECTION 2.3 EMPLOYEES AND EMPLOYEE BENEFITS........................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.....................15
SECTION 3.1 ORGANIZATION...........................................15
SECTION 3.2 AUTHORIZATION..........................................15
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS..................15
SECTION 3.4 FINANCIAL STATEMENTS...................................16
SECTION 3.5 ABSENCE OF UNDISCLOSED LIABILITIES.....................16
SECTION 3.6 ABSENCE OF CERTAIN CHANGES.............................16
SECTION 3.7 INTELLECTUAL PROPERTY..................................17
SECTION 3.8 TITLE, OWNERSHIP AND RELATED MATTERS...................19
SECTION 3.9 LITIGATION; PRODUCT LIABILITY..........................20
SECTION 3.10 COMPLIANCE WITH APPLICABLE LAW........................20
SECTION 3.11 CERTAIN CONTRACTS AND ARRANGEMENTS....................21
SECTION 3.12 TAXES.................................................22
SECTION 3.13 EMPLOYEE BENEFIT PLANS; ERISA; EMPLOYEES..............23
SECTION 3.14 ENVIRONMENTAL MATTERS.................................23
SECTION 3.15 INSURANCE.............................................25
SECTION 3.16 LABOR MATTERS.........................................25
SECTION 3.17 SUPPLIERS.............................................26
SECTION 3.18 CUSTOMERS.............................................26
SECTION 3.19 ASSETS, LICENSES AND PERMITS NECESSARY TO
THE BUSINESS; EQUIPMENT................................26
SECTION 3.20 TRANSACTIONS WITH AFFILIATES..........................26
SECTION 3.21 CERTAIN FEES..........................................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER GROUP.................27
SECTION 4.1 ORGANIZATION...........................................27
SECTION 4.2 AUTHORIZATION..........................................27
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS..................27
SECTION 4.4 FINANCING..............................................28
SECTION 4.5 SEC REPORTS............................................28
SECTION 4.6 ISSUANCE OF PARENT STOCK...............................29
SECTION 4.7 CERTAIN FEES...........................................29
SECTION 4.8 ABSENCE OF UNDISCLOSED LIABILITIES.....................29
SECTION 4.9 ABSENCE OF CERTAIN CHANGES.............................29
SECTION 4.10 LITIGATION............................................30
SECTION 4.11 INTELLECTUAL PROPERTY.................................30
ARTICLE V COVENANTS......................................................30
SECTION 5.1 CONDUCT OF THE BUSINESS................................30
SECTION 5.2 ACCESS TO INFORMATION..................................31
SECTION 5.3 CONSENTS AND APPROVALS.................................32
SECTION 5.4 REASONABLE EFFORTS.....................................32
SECTION 5.5 PUBLIC ANNOUNCEMENTS...................................33
SECTION 5.6 SUPPLEMENTAL DISCLOSURE................................33
SECTION 5.7 TRANSFERS NOT EFFECTED AS OF CLOSING...................33
SECTION 5.8 RETENTION..............................................33
SECTION 5.9 PROHIBITION ON SOLICITATION AND HIRING.................34
SECTION 5.10 NO NEGOTIATION........................................34
SECTION 5.11 CONFIDENTIALITY.......................................34
SECTION 5.12 NON-COMPETITION.......................................35
SECTION 5.13 BOARD REPRESENTATION..................................36
SECTION 5.14 INTELLECTUAL PROPERTY LICENSES........................36
SECTION 5.15 SANTA XXXXX AND OTHER SUBLEASES.......................38
SECTION 5.16 INSURANCE CLAIMS......................................39
SECTION 5.17 FURTHER ACTIONS.......................................39
SECTION 5.18 RESTRICTIONS ON TRANSFER; STANDSTILL..................40
SECTION 5.19 ACQUISITION OF THE NOTE AND PARENT STOCK
FOR INVESTMENT; ABILITY TO EVALUATE AND
BEAR RISK; RESTRICTIONS ON TRANSFER...................40
SECTION 5.20 INTENTIONALLY OMITTED.................................41
SECTION 5.21 NON-CONTROLLED AFFILIATES.............................41
SECTION 5.22 CONDUCT BY BUYER GROUP................................42
SECTION 5.23 COOPERATION IN LITIGATION.............................42
SECTION 5.24 COOPERATION IN TRANSITION.............................42
SECTION 5.25 NOTIFICATION AND OTHER REQUIREMENTS...................42
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES......................42
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.................42
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF SELLER....................43
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF BUYER GROUP...............43
ARTICLE VII SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS................44
SECTION 7.1 SURVIVAL OF REPRESENTATIONS............................44
SECTION 7.2 SELLER'S AGREEMENT TO INDEMNIFY........................44
SECTION 7.3 BUYER GROUP'S AGREEMENT TO INDEMNIFY...................45
SECTION 7.4 THIRD PARTY INDEMNIFICATION............................46
SECTION 7.5 EXCLUSIVE REMEDY; SEPARATE REMEDIES....................47
SECTION 7.6 TRANSFER TAXES; ALLOCATION OF PURCHASE PRICE...........47
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER...........................48
SECTION 8.1 TERMINATION OF AGREEMENT...............................48
SECTION 8.2 PROCEDURE FOR AND EFFECT OF TERMINATION................48
SECTION 8.3 AMENDMENT, EXTENSION AND WAIVER........................49
SECTION 8.4 BUYER TERMINATION FEE..................................49
ARTICLE IX MISCELLANEOUS.................................................49
SECTION 9.1 FEES AND EXPENSES......................................49
SECTION 9.2 FURTHER ASSURANCES; GUARANTEE..........................49
SECTION 9.3 NOTICES................................................50
SECTION 9.4 SEVERABILITY...........................................51
SECTION 9.5 BINDING EFFECT; ASSIGNMENT.............................51
SECTION 9.6 NO THIRD PARTY BENEFICIARIES...........................51
SECTION 9.7 DEFINITIONS AND INTERPRETATION.........................51
SECTION 9.8 JURISDICTION AND CONSENT TO SERVICE....................52
SECTION 9.9 ENTIRE AGREEMENT.......................................52
SECTION 9.10 DESCRIPTIVE HEADINGS..................................52
SECTION 9.11 GOVERNING LAW.........................................52
SECTION 9.12 COUNTERPARTS..........................................53
SECTION 9.13 SPECIFIC PERFORMANCE..................................53
EXHIBITS
Exhibit A Xxxx of Sale
Exhibit B Assignment of Leases
Exhibit C Intellectual Property Assignment
Exhibit D Instrument of Assumption
Exhibit E Form of Note
Exhibit G Supply Agreement
Exhibit H Fiber Supply Agreement
Exhibit I Registration Rights Agreement
Exhibit J Santa Xxxxx Sublease Agreement
Exhibit K Transition Services
Exhibit L Financing Letters
Exhibit N Severance Terms
SCHEDULES
Schedule 1.1(a)(i) Contracts
Schedule 1.1(a)(iv) Transferred Intellectual Property
Schedule 1.1(a)(vi) Leased Real Property
Schedule 1.1(a)(ix) Permits Related to the Business
Schedule 1.1(c)(vii) Excluded Intellectual Property
Schedule 1.1(c)(xii) Permits Related to the Retained Business
Schedule 1.1(c)(xiii) Excluded Assets from Star Agreement
Schedule 1.1(c)(xiv) Retained Causes of Action
Schedule 1.1(c)(xvi) Excluded Assets
Schedule 1.1(e) Excluded Liabilities
Schedule 1.2(a)(i) Bank Accounts
Schedule 1.6(c) Net Tangible Book Value of the Business Definition
Exception
Schedule 1.6(d) Final Statement Amount
Schedule 1.7(d) Dispute Resolution Procedure
Schedule 2.3(a) Employees on Approved Leave of Absence
Schedule 2.3(e) Loans to Certain Employees
Schedule 3.1 United States Subsidiaries of Seller
Schedule 3.3(a) Required Governmental approvals or Consents
Schedule 3.3(b) No Violations
Schedule 3.4 Financial Statements
Schedule 3.5 Absence of Undisclosed Seller Liabilities
Schedule 3.6 Absence of Certain Changes
Schedule 3.6(a)(v) Compensation Increases
Schedule 3.6(c) Other Claims
Schedule 3.7(a) Transferred Intellectual Property
Schedule 3.7(b) Other Items Regarding Transferred Intellectual Property
Schedule 3.8(a) Permitted Encumbrances
Schedule 3.8(b) Exceptions to Leased Real Property
Schedule 3.8(c) Leased Real Property
Schedule 3.8(e) Assets Subject to Liens
Schedule 3.9(a) Litigation
Schedule 3.9(b) Product Liability; Non-Uniform Warranties
Schedule 3.10(a) Material Non-Compliance with Laws
Schedule 3.10(b) Missing Governmental Licenses
Schedule 3.11 Certain Contracts and Arrangements
Schedule 3.11(c) Estimate of Costs Upon Termination of Distribution
Agreements
Schedule 3.12 Material Tax Elections and Other Tax Items
Schedule 3.13(a) Seller Benefit and Compensation Plans
Schedule 3.13(b) Division Employees and Other Related Information
Schedule 3.13(c) ERISA Information
Schedule 3.14(c) Environmental Documents
Schedule 3.15(a) Insurance Policies
Schedule 3.15(e) Insurance Claims During Last 2 Years
Schedule 3.16 Notification Requirements for Labor Matters
Schedule 3.17 Suppliers
Schedule 3.18 Customers
Schedule 3.19(a) Assets Necessary to Business
Schedule 3.19(b) Permits and Licenses Necessary to Business
Schedule 3.20(a) Affiliates
Schedule 3.20(b) Transactions
Schedule 3.20(c) Jurisdictions of Incorporation and Business
Schedule 4.3(a) Governmental Approvals and Consents of Buyer
Schedule 4.3(b) Consents and Approvals
Schedule 4.8 Absence of Undisclosed Buyer Liabilities
Schedule 4.9 Absence of Certain Buyer Changes
Schedule 4.10 Litigation
Schedule 4.11 Buyer Intellectual Property
Schedule 5.1 Conduct of the Business
Schedule 5.9 Persons not subject to non-hire
Schedule 5.14(a) Licensed Trademarks
Schedule 6.3(d) Seller Consents and Approvals
Schedule 6.3(f) Landlords' Consents and Approvals
Schedule 9.7(e) People included in knowledge definition
INDEX OF DEFINED TERMS
13D GROUP................................................................36
AFFILIATE................................................................51
AFFILIATED...............................................................51
AGREEMENT.................................................................1
ALLOCATION...............................................................47
ANCILLARY AGREEMENTS......................................................7
ASSETS....................................................................1
ASSIGNMENT OF LEASES......................................................2
ASSUMED LIABILITIES.......................................................4
BALANCE SHEETS...........................................................16
XXXX OF SALE..............................................................2
BOOKS AND RECORDS.........................................................1
BUSINESS.................................................................51
BUSINESS EMPLOYEES.......................................................17
BUYER.....................................................................1
BUYER CONFIDENTIAL INFORMATION...........................................35
BUYER DAMAGES............................................................44
BUYER DISCLOSURE SCHEDULES...............................................27
BUYER GROUP...............................................................1
BUYER INDEMNITIES........................................................44
BUYER PLANS..............................................................13
BUYER SURVIVAL DATE......................................................35
CASES....................................................................20
CLAIM....................................................................46
CLOSING...................................................................6
CLOSING CASH PURCHASE PRICE...............................................6
CLOSING DATE..............................................................6
CODE......................................................................7
COMPETITIVE BUSINESS.....................................................35
CONDENSA MATTERS..........................................................5
CONTINUING EMPLOYEES.....................................................13
CONTRACTS.................................................................1
COPYRIGHTS...............................................................18
CURRENT BALANCE SHEET.....................................................9
DISCLOSURE SCHEDULES.....................................................15
DISPUTE PERIOD............................................................8
DIVISION.................................................................51
DIVISION EMPLOYEES.......................................................23
DOMAIN NAMES.............................................................18
DTSC......................................................................5
EARN-OUT..................................................................9
EARN-OUT PERIOD..........................................................11
EARN-OUT RESOLUTION PERIOD...............................................11
EARN-OUT STATEMENT........................................................9
END DATE.................................................................48
ENVIRONMENTAL CLAIMS.....................................................24
ENVIRONMENTAL LAWS.......................................................24
ENVIRONMENTAL PERMITS....................................................23
ERISA....................................................................13
ERISA AFFILIATE..........................................................23
ESC SAVINGS PLAN.........................................................14
EXCHANGE ACT.............................................................28
EXCLUDED ASSETS...........................................................3
EXCLUDED INTELLECTUAL PROPERTY............................................3
EXCLUDED LIABILITIES......................................................4
EXCLUDED REAL PROPERTY....................................................3
FIBER SUPPLY AGREEMENT....................................................7
FINAL CASH PURCHASE PRICE.................................................6
FINAL STATEMENT........................................................8, 9
FINANCIAL STATEMENTS.....................................................16
FINANCING................................................................28
FINANCING LETTERS........................................................28
FOREIGN CONVEYANCE DOCUMENTS..............................................2
FORM 8-K.................................................................33
FORMER REAL PROPERTY.....................................................24
FREE PERIOD..............................................................40
GAAP......................................................................9
GOVERNMENTAL AUTHORITY...................................................52
HAZARDOUS SUBSTANCES.....................................................25
HSR ACT..................................................................15
INDEMNITY PERIOD.........................................................44
INDEPENDENT ACCOUNTING FIRM...............................................9
INSTRUMENT OF ASSUMPTION..................................................4
INTELLECTUAL PROPERTY....................................................17
INTELLECTUAL PROPERTY ASSIGNMENT..........................................3
INTERIM STATEMENTS.......................................................10
KEY SUPPLIERS............................................................26
KNOWLEDGE................................................................52
LEASED REAL PROPERTY......................................................2
LEASES...................................................................19
LENDERS..................................................................42
LICENSED INTELLECTUAL PROPERTY...........................................36
LICENSED PRODUCTS........................................................37
LICENSED TRADEMARKS......................................................37
LICENSES.................................................................20
LIENS....................................................................19
LOCAL JURISDICTION CASH CONSIDERATION.....................................6
MATERIAL ADVERSE EFFECT..................................................17
MULTIPLE TRANSFERS........................................................3
NET TANGIBLE BOOK VALUE OF THE BUSINESS...................................9
NON-U.S. AGREEMENTS.......................................................5
NON-U.S. COMPANIES........................................................5
OFFEREE..................................................................13
OPHTHALMIC EARN-OUT REVENUE..............................................11
OTHER INSTRUMENTS.........................................................3
PARENT....................................................................1
PARENT BALANCE SHEET.....................................................28
PARENT SEC DOCUMENTS.....................................................28
PARENT SECURITIES........................................................40
PARENT STOCK..............................................................6
PARENT SUBSIDIARIES.......................................................1
PATENTS..................................................................18
PERMITS...................................................................2
PERMITTED ENCUMBRANCES...................................................19
PERSON...................................................................52
PLANS....................................................................23
POLICIES.................................................................25
QUALIFYING CONDITIONS....................................................13
REAL PROPERTY LAWS.......................................................20
RECEIVABLES...............................................................1
REGISTERED INTELLECTUAL PROPERTY.........................................18
REGISTRATION RIGHTS AGREEMENT.............................................7
RELEASE..................................................................25
RELOCATION REQUEST.......................................................13
RESOLUTION PERIOD.........................................................9
RETAINED BUSINESS........................................................51
RETENTION PLAN...........................................................14
SANTA XXXXX SUBLEASE AGREEMENT...........................................38
SECURITIES ACT...........................................................40
SELLER....................................................................1
SELLER CONFIDENTIAL INFORMATION..........................................35
SELLER DAMAGES...........................................................45
SELLER DIRECTOR..........................................................36
SELLER INDEMNITEES.......................................................45
SELLER SAVINGS PLAN......................................................14
SELLER SUBSIDIARIES......................................................15
SELLER SURVIVAL DATE.....................................................35
SOFTWARE.................................................................18
SOLD OPHTHALMIC BUSINESS.................................................10
STANDSTILL PERIOD........................................................40
STANFORD INDUSTRIAL PARK MATTER...........................................5
STAR......................................................................2
STAR AGREEMENT............................................................2
SUBSIDIARY...............................................................52
SUPPLY AGREEMENT..........................................................7
TARGET AMOUNT.............................................................8
TAX RETURN...............................................................23
TAXES....................................................................23
THE NOTE..................................................................6
THRESHOLD AMOUNT.........................................................40
TOTAL PURCHASE PRICE......................................................6
TRADE SECRETS............................................................18
TRADEMARKS...............................................................18
TRANSFER.................................................................40
TRANSFER TAXES...........................................................47
TRANSFERRED INTELLECTUAL PROPERTY.........................................2
TRANSFERRED REGISTERED INTELLECTUAL PROPERTY.............................18
URLS.....................................................................18
