Execution Version ASSET PURCHASE AGREEMENT between SPECIALTY SURGICAL INSTRUMENTATION INC., as the Buyer and BOVIE MEDICAL CORPORATION, as the Seller Dated as of July 9, 2018
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Execution Version ASSET PURCHASE AGREEMENT between SPECIALTY SURGICAL INSTRUMENTATION INC., as the Buyer and BOVIE MEDICAL CORPORATION, as the Seller Dated as of July 9, 2018
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ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT, dated as of July 9, 2018 (this βAgreementβ), between Specialty Surgical Instrumentation Inc., a Tennessee corporation (the βBuyerβ), and Bovie Medical Corporation, a Delaware corporation (the βSellerβ). RECITALS WHEREAS, the Seller and its Affiliates are engaged in the business of developing, manufacturing and marketing non-helium based electrosurgical products and technologies and related medical products used in doctorβs offices, surgery centers and hospitals worldwide including desiccators, Standard Generators, electrodes, electrosurgical pencils, grounding pads and various ancillary products, cauteries, and other related products inclusive of third-party distributed products (such as medical lighting, smoke evacuation, cryotherapy and colposcopes) (the βBusinessβ). For the avoidance of doubt, the Business does not include (i) generators with a plasma feature as the primary feature (e.g., the Bovie Ultimate Generator), such as helium plasma, that may include secondary features of a Standard Generator that exist currently in the Sellerβs commercially available generators; or (ii) the original equipment manufacturing business and operations of the Seller and its Affiliates using (x) third-party (other than the Buyerβs and its Affiliatesβ) 510(k) approvals for an unique feature or (y) Excluded Intellectual Property, in the case of (x) or (y), for the sole purpose of developing an unique generator that includes specialty capabilities (such as the ability to work with plasma, vessel sealing or saline radiofrequency devices) whereby the unique generator can only operate with a tip or device that is developed only for such unique generator (such plasma based generator or any such unique generator with special capabilities referred to herein is a βSpecialty Generatorβ); WHEREAS, the Seller wishes to sell to the Buyer, and the Buyer wishes to purchase from the Seller, the Purchased Assets and the Business, and in connection therewith the Buyer is willing to assume certain liabilities and obligations of the Seller relating thereto, all upon the terms and subject to the conditions set forth herein; and WHEREAS, the Board of Directors of the Seller (the βSeller Boardβ) has unanimously (a) determined that this Agreement and the transactions contemplated by this Agreement are fair to and in the best interests of the Seller and its stockholders, (b) declared it advisable to enter into this Agreement and approved the execution, delivery, and performance of this Agreement, (c) approved and declared advisable the transactions contemplated by this Agreement, and (d) resolved to recommend approval by the Sellerβs stockholders of the transactions contemplated by this Agreement (the βSeller Board Recommendationβ). AGREEMENT NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, the receipt and sufficiency of which are hereby acknowledged and agreed, intending to be legally bound hereby, the parties agree as follows:
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any of its ERISA Affiliates or under which the Seller or any of its ERISA Affiliates may incur any liability and (iii) covers or has covered any employee or former employee of the Seller or any of its ERISA Affiliates (with respect to their relationship with such entities). βXxxx of Saleβ means a xxxx of sale transferring to the Buyer all of the tangible personal property owned or held by the Seller as of the Closing Date that is included in the Purchased Assets in the form attached hereto as Exhibit B. βBusiness Dayβ means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in New York, New York. βBusiness Employeeβ means any employee of the Seller who is actively employed in and devotes a majority of his or her working time to the Business as of the Closing Date or who is on an approved leave of absence, is reasonably expected to return to work within six months after the Closing Date and is specified on Section 3.9(a) of the Seller Disclosure Letter. βBusiness Recordsβ means all books, records, ledgers and files or other similar information of the Seller or any of its Affiliates (in any form or medium, including, without limitation, all information in electronic form and whether stored on discs, tapes, drives, servers or other, and including e-mail communications) related to, used or held for use in connection with the Business, including all client lists, vendor lists, correspondence, mailing lists, revenue records, invoices, advertising materials, brochures, records of operation, standard forms of documents, manuals of operations or business procedures, photographs, blueprints, research files and materials, data books, employment records related to the Transferring Employees, Intellectual Property disclosures and information, media materials and plates, accounting records and litigation files (but excluding the organization documents, minute and stock record books and corporate seal of the Seller). βConfidentiality Agreementβ means that certain letter agreement, dated April 4, 2018, between RoundTable Healthcare Management IV, L.L.C. and the Seller, as amended pursuant to the terms of Section 5.8(a). βContractβ means any contract, agreement, arrangement or understanding, whether written or oral and whether express or implied. βcontrol,β including the terms βcontrolled byβ and βunder common control with,β means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by Contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person. βData Siteβ means the electronic data site established by or at the request of the Seller in connection with the transactions contemplated hereby. βEmployee Plansβ means all Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans. 3
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βEncumbranceβ means any charge, claim, limitation, condition, equitable interest, mortgage, lien, option, pledge, security interest, easement, encroachment, right of first refusal, adverse claim or restriction of any kind, including any restriction on or transfer or other assignment, as security or otherwise, of or relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other attribute of ownership. βEnterprise-Wide Contractβ means any material Contract that is both (i) used in or relating to the operation of the Business as currently conducted and (ii) used in or relating to the Sellerβs or its Affiliatesβ Retained Business, but excluding all leases of Leased Real Property. βERISA Affiliateβ means any Person that is (or at any relevant time was) a member of a βcontrolled group of corporationsβ with or under βcommon controlβ with the Seller as defined in Section 414(b) or (c) of the Code or that is otherwise (or at any relevant time was) required to be treated, together with the Seller, as a single employer under Sections 414(m) or (o) of the Code. βExchange Actβ means the United States Securities Exchange Act of 1934, as amended. βExcluded Contractsβ means those Contracts set forth in Section 1.1(e) of the Seller Disclosure Letter. βFinancing Source Related Partiesβ means the entities that have committed to provide the Financing, or to cause to provide, or otherwise entered into agreements in connection with, the Financing, their respective Affiliates and controlling persons and each of such entitiesβ and their Affiliatesβ and controlling personsβ respective officers, directors, employees, agents, advisors and representatives, together with each of their respective successors and assigns. βFinished Goodsβ means, as of any date of determination, the Products related to, used or held for use in connection with the Business that (i) have been completed, tested and transferred into finished goods inventory on the records of the Seller as of such date of determination, (ii) do not have an expiration date within 12 months of such date of determination, (iii) are not held on consignment, and (iv) are not opened, damaged, obsolete or of a faulty quality and are in a quantity consistent with the Ordinary Course of the Business, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value in accordance with the Sellerβs internal policies. Section 1.1(d) of the Seller Disclosure Letter sets forth the Finished Goods as of June 30, 2018. βFinished Goods Inventory Targetβ means $4,500,000. βGAAPβ means United States generally accepted accounting principles and practices. βGenerator Supply Agreementβ means the manufacture and supply agreement to be entered into as of the Closing Date by and between the Seller and/or one or more of its Affiliates and the Buyer and/or one or more of its Affiliates in the form attached hereto as Exhibit E. 4
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βGenerator Supply Agreement Credit Amountβ means an amount (which may not be less than zero) equal to the Finished Goods Inventory Target minus the Finished Goods Inventory Amount as finally determined pursuant to Section 2.8. βGovernmental Authorityβ means any United States or non-United States federal, national, supranational, state, provincial, local or similar government, governmental, regulatory or administrative authority, branch, agency or commission or any court, tribunal, arbitral or judicial body (including any grand jury). βHealth Care Lawsβ means Laws pertaining to the regulation of health care products and services, including: the federal Anti-Kickback Statute (42 U.S.C. Β§ 1320a-7b(b)); the Civil Monetary Penalties Law (42 U.S.C. Β§ 1320a-7a); the civil False Claims Act (31 U.S.C. §§ 3729 et seq.); the criminal False Claims Act (18 U.S.C. Β§ 287); the False Statements Statute (42 U.S.C. Β§ 1320a-7b(a)); the Physician Self-Referral Law (42 U.S.C. Β§ 1395nn); the Criminal Health Care Fraud Statute (18 U.S.C. Β§ 1347); the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, as the same may be amended, modified or supplemented from time to time, including any successor statutes thereto (βHIPAAβ) and any state laws governing the privacy and security of health information; the exclusion laws (42 U.S.C. Β§ 1320a-7); the Federal Food, Drug, and Cosmetic Act (21 U.S.C. §§ 301 et seq.) and its implementing regulations; the Federal Trade Commission Act (15 U.S.C. §§ 41 et seq.); the Medicare and Medicaid statutes (Title XVIII and Title XIX of the Social Security Act); Section 6002 of the Patient Protection and Affordable Care Act (42 U.S.C. Β§ 1320a-7h) and its implementing regulations; any comparable foreign, federal or state laws governing the identity, classification, design, research, investigation, development, testing, clearance, approval, manufacturing, safety surveillance, processing, handling, packaging, labeling, distribution, storage, import, export, advertising, promotion, marketing or sale of a health care product or service; and any comparable state laws related to: (i) interactions with health care professionals, customers and referral sources in a position to prescribe, recommend, purchase or use health care products or services and any law requiring tracking or reporting to any Governmental Authority of any such interactions; (ii) false statements to any Governmental Authority or false claims for payment for a health care product or service by a commercial payor, Governmental Authority or any entity accepting, processing or paying claims on behalf of a Governmental Authority; (iii) the billing, coding, coverage, payment or reimbursement of a health care product or service by a government or private payor, or the purchase of any health care product or service by or on behalf of any Governmental Authority, and the pricing, price reporting, discounting or rebating of such health care product or service; and (iv) provision of free goods or sample products to customers, health care providers or individuals. βHealthcare Regulatory Authorityβ means any Governmental Authority that regulates or has jurisdiction over any federal, state, local, municipal or foreign Health Care Law, including but not limited to the U.S. Food and Drug Administration (βFDAβ) and the U.S. Centers for Medicare & Medicaid Services, the U.S. Department of Health and Human Services, Office of Inspector General, the U.S. Federal Trade Commission, the U.S. Department of Justice with respect to enforcement of Health Care Laws, the European Medicines Agency, EU Notified Bodies and EU national authorities, Health Canada, the U.K. Medicines and Healthcare Products 5
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Regulatory Agency, the Brazilian Health Surveillance Agency and the Australian Therapeutic Goods Agency. βIndebtednessβ means, without duplication (but before taking account of the consummation of the transactions contemplated hereby), (i) the unpaid principal amount of accrued interest, premiums, penalties and other fees, expenses (if any), and other payment obligations and amounts due (including such amounts that would become due as a result of the consummation of the transactions contemplated by this Agreement) that would be required to be paid by a borrower to a lender pursuant to a customary payoff letter, in each case, in respect of all indebtedness for borrowed money of the Business or the Seller or any of its Affiliates in connection with the Business, including indebtedness evidenced by notes, debentures, bonds or other similar instruments, and all obligations with respect to interest-rate hedging, swaps or similar financial arrangements (valued at the termination value thereof and net of all payments owed to the Business or the Seller in connection with the Business); (ii) all obligations under capitalized leases and any leases that are properly treated as capitalized leases in accordance with GAAP with respect to which the Business or the Seller or any of its Affiliates is liable; (iii) any amounts for the deferred purchase price of goods and services, including any earn out liabilities associated with past acquisitions; (iv) all liabilities with respect to any current or former employee, officer or director of the Business that arise before or on the Closing Date, including all liabilities with respect to any Employee Plan, all accrued salary, deferred compensation and vacation obligations, all workersβ compensation claims, any liability in respect of accrued but unpaid bonuses for the prior fiscal year and for the period commencing on the first day of the fiscal year and ending on the Closing Date, and any employment Taxes payable by the Business or the Seller or any of its Affiliates in connection with the Business with respect to the foregoing; (v) unpaid management fees; (vi) all deposits and monies received in advance; (vii) all indebtedness relating to or arising under any conditional sale or other title retention agreement with respect to property acquired by the Business or the Seller or any of its Affiliates in connection with the Business; and (viii) all obligations of the type referred to in clauses (i) through (vii) of other Persons for the payment of which the Business or the Seller or any of its Affiliates in connection with the Business is responsible or liable, as obligor, guarantor, surety or otherwise, including any guarantee of such obligations. βIntellectual Propertyβ means all intellectual property rights arising from or associated with the following, whether protected, created or arising under the laws of the United States or any other jurisdiction: (i) trade names, trademarks and service marks (registered and unregistered), domain names and other Internet addresses or identifiers, trade dress and similar rights and applications (including intent to use applications and similar reservations of marks and all goodwill associated therewith) to register any of the foregoing (collectively, βMarksβ); (ii) patents and patent applications (collectively, βPatentsβ); (iii) copyrights (registered and unregistered) and applications for registration (collectively, βCopyrightsβ); (iv) trade secrets, know-how, inventions, methods, processes and processing instructions, technical data, specifications, research and development information, technology, product roadmaps, customer lists and any other information, in each case to the extent any of the foregoing derives economic value (actual or potential) from not being generally known to other persons who can obtain economic value from its disclosure or use, excluding any Copyrights or Patents that may cover or protect any of the foregoing (collectively, βTrade Secretsβ); and (v) moral rights, publicity rights, 6
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data base rights and any other proprietary or intellectual property rights of any kind or nature that do not comprise or are not protected by Marks, Patents, Copyrights or Trade Secrets. βInventoryβ means all inventory, including raw and packing materials, work-in- progress, finished goods, supplies, parts and similar items related to, used or held for use in connection with the Business. Section 1.1(g) of the Seller Disclosure Letter sets forth the Inventory as of June 30, 2018. βIT Assetsβ means computers, computer software utilized on the computers or otherwise (including any necessary licenses, consents and authorizations), firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines and all other information technology equipment, as well as all associated documentation. βKnowledge of the Sellerβ means the actual knowledge (and not the constructive or imputed knowledge) of any Person listed on Section 1.1(c) of the Seller Disclosure Letter and the knowledge such Persons would have acquired after reasonable inquiry. βLawβ means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any Governmental Authority. βLeased Real Propertyβ means all real property leased, subleased or licensed to the Seller or any of its Affiliates or which the Seller or any of its Affiliates otherwise has a right or option to use or occupy, and related to, used or held for use in connection with the Business, together with all structures, facilities, fixtures, systems, improvements and items of property (other than items of property that constitute Purchased Assets hereunder) previously or hereafter located thereon, or attached or appurtenant thereto, and all easements, rights and appurtenances relating to the foregoing. βLoan Agreementβ means the Loan Agreement, dated March 20, 2014, by and between The Bank of Tampa and the Seller, as amended. βMaterial Adverse Effectβ means any event, change, circumstance, occurrence, effect or state of facts or effect (each, an βEffectβ) that, individually or in the aggregate, together with all other Effects, (i) is or would reasonably be expected to be materially adverse to the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Business, taken as a whole or (ii) materially impairs the ability of the Seller to consummate, or prevents or materially delays, any of the transactions contemplated by this Agreement or the Ancillary Agreements or would reasonably be expected to do so; provided, however, that in the case of clause (i) only, Material Adverse Effect shall not include any event, change, circumstance, occurrence, effect or state of facts arising after the date hereof to the extent resulting from (A) changes in general economic, political, credit or market conditions or changes generally affecting the industry of the Business, (B) the outbreak of war or acts of terrorism (or the escalation thereof), (C) changes in Law or GAAP first proposed after the date hereof, (D) the announcement or pendency of this Agreement or the transactions contemplated by this Agreement, (E) any failure by the Business, in and of itself, to meet internal or analyst projections or forecasts for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in 7
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determining whether there has been or would reasonably be expected to be, a Material Adverse Effect), (F) any action taken as required by the express terms of this Agreement, at the request of the Buyer or with the Buyerβs prior written consent or (G) any decline in the trading price or change in the trading volume of Shares on NYSE American (it being understood that the facts or occurrences giving rise to or contributing to such decline in the trading price or change in the trading volume may be deemed to constitute, or be taken into account in determining whether there has been or would be, a Material Adverse Effect); provided further, that with respect to clauses (A), (B) and (C), the impact of the Effect is not disproportionately adverse to the business, assets, liabilities, conditions (financial or otherwise) or results of operations of the Business, taken as a whole, in comparison to other participants in the same industry in which the Business operates. βMultiemployer Planβ means any βmultiemployer plan,β as defined in Section 4001(a)(3) of ERISA, (i) that the Seller or any of its ERISA Affiliates maintains, administers, contributes to or is required to contribute to, or under which the Seller or any of its ERISA Affiliates may incur any liability and (ii) that covers or has covered any employee or former employee of the Seller or any of its ERISA Affiliates (with respect to their relationship with such entities) or for which the Seller may be responsible. βOrdinary Course of Businessβ means the ordinary course of business of the Business consistent with the past custom and practice (including with respect to quantity and frequency) of the Business for the 12-month period ending on the date hereof. βOwned Real Propertyβ means all real property owned by the Seller or any of its Affiliates and related to, used or held for use in connection with the Business, together with all structures, facilities, fixtures, systems, improvements and items of property (other than items of property that constitute Purchased Assets hereunder) previously or hereafter located thereon, or attached or appurtenant thereto, and all easements, rights and appurtenances relating to the foregoing. βPension Planβ means any βemployee pension benefit planβ as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (i) that the Seller or any of its ERISA Affiliates maintains, administers, contributes to or is required to contribute to, or, within the five years prior to the date of this Agreement, maintained, administered, contributed to or was required to contribute to, or under which any such entity may incur any liability and (ii) that covers or has covered any employee or former employee of the Seller or any of its ERISA Affiliates (with respect to their relationship with such entities) or for which the Seller may be responsible. βPermitsβ means all permits, licenses, franchises, approvals, certificates, consents, waivers, concessions, exemptions, orders, 510(k)s, CEs, registrations, notices or other authorizations issued to, or required to be obtained or maintained by, the Seller or any of its Affiliates by a Governmental Authority with respect to the conduct or operation of the Business as currently conducted or the ownership or use of the Purchased Assets, and all pending applications therefor and amendments, modifications and renewals thereof, including those set forth on Section 3.7 of the Seller Disclosure Letter. 8
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βPermitted Encumbrancesβ means (i) real estate taxes, assessments and other governmental levies, fees or charges imposed with respect to Leased Real Property or Owned Real Property which are not yet past due and payable or which are being contested in good faith by appropriate proceedings and for which adequate reserves have been reserved for in the Financial Statements in accordance with GAAP, (ii) mechanicsβ liens and similar liens for labor, materials or supplies provided with respect to such Leased Real Property or Owned Real Property incurred in the Ordinary Course of Business for amounts which are not yet past due and payable or which are being contested in good faith and for which adequate reserves have been recorded in the Financial Statements in accordance with GAAP, (iii) zoning and building codes and other land use regulations and codes regulating the use or occupancy of such Leased Real Property or owned Real Property or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such Leased Real Property or Owned Real Property which do not or would not materially impair the use, value or occupancy of such Leased Real Property or Owned Real Property or the operation of the business thereof, (iv) easements, covenants, conditions, restrictions and other similar matters of record affecting title of such Leased Real Property or Owned Real Property which do not or would not materially impair the use, value or occupancy of such Leased Real Property or Owned Real Property, (v) statutory liens for current Taxes imposed with respect to any Excluded Assets which are not yet past due and payable or the amount or validity of which are being contested in good faith by appropriate proceedings and for which adequate reserves have been reserved for in the Financial Statements in accordance with GAAP, and (vi) liens disclosed on Section 1.1(f) of the Seller Disclosure Letter. βPersonβ means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing. βPersonal Propertyβ means all machinery, equipment, furniture, furnishings, rolling stock, tools, office supplies, vehicles, computer hardware and other tangible personal property owned or leased by the Seller or any of its Affiliates and related to, used or held for use in connection with the Business. βPost-Closing Tax Periodβ means any Tax period ending after the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period beginning immediately after the Closing Date. βPre-Closing Tax Periodβ means any Tax period ending on or before the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period ending on the Closing Date. βPrepaid Itemsβ means all credits, cash reserves, prepaid expenses, advance payments, security deposits, escrows, prepaid Taxes and other prepaid items of the Seller or any of its Affiliates arising from or related to the Business. βProductsβ means those products designed, researched, investigated, developed, manufactured, distributed, marketed or sold by the Seller or its Affiliates or the Business which 9
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are subject to Health Care Laws, including but not limited to βdevicesβ as that term is defined in Section 201(h) of the Federal Food, Drug, and Cosmetic Act or similar terms of other jurisdictions. βPurchase Priceβ means $97,000,000. βRecallβ means any field notifications, field corrections, market withdrawals or replacements, recalls, warnings, βdear doctorβ letters, investigator notices, safety notices, or safety alerts relating to an alleged lack of safety, efficacy or regulatory compliance of any product manufactured, distributed, or marketed by or on behalf of the Seller or the Business. βReceivablesβ means all receivables (including accounts receivable, loans receivable and advances) arising from or related to the Business. βRelated Party,β with respect to any specified Person, means: (i) any Affiliate of such specified Person, or any director, officer, general partner or managing member of such Affiliate; (ii) any Person who serves or within the past five years has served as a director, officer, partner, member or in a similar capacity of such specified Person; (iii) any immediate family member of a Person described in clauses (i) or (ii); or (iv) any other Person who holds, individually or together with any Affiliate of such other Person (including any Person described in clauses (i) or (ii)), immediate family member(s) of such Person and Affiliates of such immediate family members, more than 5% of the outstanding equity or ownership interests of such specified Person. βRepresentativesβ means, with respect to any Person, the officers, directors, principals, members, partners, direct and indirect equityholders, managers, consultants, employees, agents, auditors, advisors, bankers and other representatives of such Person. βRetained Businessβ means the (a) original equipment manufacturing business and operations of the Seller and its Affiliates using (i) third-party (other than the Buyerβs and its Affiliatesβ) 510(k) approvals for an unique feature or (ii) Excluded Intellectual Property, in each case, for the sole purpose of developing Specialty Generators, (b) advanced energy business and operations of the Seller and its Affiliates, including the Renuvion brand, in each case other than the Business and (c) the Excluded Assets. βRetained IP License Agreementβ means the patent license agreement providing for the grant of a royalty-free, perpetual license for the Buyer and/or one or more of its Affiliates to use certain Excluded Intellectual Property, to be entered into as of the Closing Date by and between the Seller and/or one or more of its Affiliates and the Buyer and/or one or more of its Affiliates in the form attached hereto as Exhibit C. βRetentionβ means the retention amount under the R&W Insurance Policy. βR&W Insurance Policyβ means that certain representation and warranty insurance policy issued by Xxxxxxx USA Services, Inc. with respect to the representations and warranties of the Seller under this Agreement purchased by the Buyer in connection with the execution and delivery of this Agreement, as amended, supplemented or replaced. 10
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βR&W Insurance Policy Costβ means the premium amount and any other costs, fees or expenses (including surplus taxes and underwriting fees) of or payable for the R&W Insurance Policy. βReturnβ means any return, declaration, report, statement, information statement and other document filed or required to be filed with respect to Taxes. βRightsβ means all claims, causes of action, rights of recovery and rights of set- off against any Person arising from or related to the Business, the Purchased Assets or the Assumed Liabilities, including: (i) all rights under any Assumed Contract, including all rights to receive payment for products sold and services rendered thereunder, to receive goods and services thereunder, to assert claims and to take other actions in respect of breaches, defaults and other violations thereof; (ii) all rights under or in respect of any Transferred Intellectual Property, including all rights to xxx and recover damages for past, present and future infringement, dilution, misappropriation, violation, unlawful imitation or breach thereof, and all rights of priority and protection of interests therein under the laws of any jurisdiction; and (iii) all rights under all guarantees, warranties, indemnities and insurance policies arising from or related to the Business, the Purchased Assets or the Assumed Liabilities. βSECβ means the U.S. Securities and Exchange Commission. βSharesβ means the outstanding shares of common stock, par value $0.001, of the Seller. βStandard Generatorsβ means any generator other than a Specialty Generator. βStraddle Periodβ means any Tax period beginning on or prior to and ending after the Closing Date. βSubsidiaryβ means, with respect to any Person, any other Person controlled by such first Person, directly or indirectly, through one or more intermediaries. βTaxesβ means: (i) all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, registration, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever (including any amounts resulting from the failure to file any Return), together with any interest and any penalties, additions to tax or additional amounts with respect thereto; (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law; and (iii) any liability for the payment of amounts described in clauses (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person. βTransaction Expensesβ means the aggregate amount of any and all fees and expenses incurred by or on behalf of, or paid or to be paid directly by, the Seller or any of its Affiliates or any Person that the Seller pays or reimburses or is otherwise legally obligated to pay 11
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(g) any liability arising from or related to any compliance or noncompliance on or prior to the Closing Date with any Law applicable to the Seller, any of its Affiliates, the Business or the Purchased Assets or which arises from facts, circumstances, events, conditions or actions that occurred or existed on or prior to the Closing; (h) any liability arising from or related to any Action against the Seller, any of its Affiliates, the Business or the Purchased Assets pending as of the Closing Date or based upon any action, event, circumstance, condition or action arising or that occurred or existed as of or prior to the Closing Date; (i) any liability arising from or related to any Action with respect to any Excluded Assets, whether arising prior to, on or after the Closing Date; (j) any Transaction Expenses; (k) any liabilities or obligations of the Seller arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, the Ancillary Agreements, the Accessories Supply Agreement, the Generator Supply Agreement, the Retained IP License Agreement and the transactions contemplated hereby and thereby, including, without limitation, fees and expenses of counsel, accountants, consultants, advisers and others; (l) any liability of the Seller or its Affiliates for warranty claims for Products manufactured or sold prior to the Closing Date; (m) any liability to indemnify, reimburse or advance amounts to any present or former Representative of the Seller or any of its Affiliates (including with respect to any breach of fiduciary obligations by any such party); (n) all accounts payable or other accrued and unpaid current expenses arising out of or relating to the operation or conduct of the Business outstanding as of the Closing Date; and (o) any liability or obligation relating to an Excluded Asset, the Retained Business or any other business of the Seller or its Affiliates other than the Business, whether arising prior to or after the Closing Date. Section 2.5 Consideration. In full consideration for the sale, assignment, transfer, conveyance and delivery of the Purchased Assets to the Buyer, at the Closing, the Buyer shall (a) pay to the Seller, by wire transfer to a bank account designated in writing by the Seller to the Buyer at least two Business Days prior to the Closing Date, an amount equal to the Purchase Price in immediately available funds in United States dollars, and (b) assume the Assumed Liabilities. Section 2.6 Closing. The sale and purchase of the Purchased Assets and the assumption of the Assumed Liabilities contemplated by this Agreement shall take place at a closing (the βClosingβ) to be held by electronic exchange of documents at 10:00 a.m., New York time on the second Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver of all conditions to the obligations of the parties set forth in Article VI 18
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notes thereto) and (iii) fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of the Seller as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein and subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments that will not, individually or in the aggregate, be material. (b) Except as and to the extent adequately accrued or reserved against in the audited consolidated balance sheet of the Seller as at December 31, 2017 (such balance sheet, together with all related notes thereto, the βBalance Sheetβ), the Seller does not have any liability or obligation of any nature arising out of, relating to or affecting the Business, whether accrued, absolute, contingent or otherwise, whether known or unknown and whether or not required by GAAP to be reflected in a consolidated balance sheet of the Seller or disclosed in the notes thereto, except for liabilities and obligations, incurred in the Ordinary Course of Business (none of which is a liability for breach of contract, breach of warranty, tort, infringement, violation of Law or Action) since the date of the Balance Sheet, that are not, individually or in the aggregate, material to the Business. (c) The books of account and financial records of the Seller pertaining to the Business are true and correct in all material respects and have been prepared and are maintained in accordance with sound accounting practice. (d) The Seller has filed or furnished, as applicable, all forms, statements, certifications, reports and documents required to be filed or furnished by it with or to the SEC pursuant to the Exchange Act since July 1, 2015 (the βApplicable Dateβ) (collectively, the forms, statements, reports and documents filed with or furnished to the SEC since the Applicable Date, and those filed with or furnished to the SEC subsequent to the date of this Agreement, including any amendments thereto, the βSeller Reportsβ). Each of the Seller Reports was prepared in all material respects in accordance with the applicable requirements of the Exchange Act and the rules and regulations thereunder and complied in all material respects with then applicable accounting standards. Each of the Seller Reports, at the time of its filing or being furnished complied in all material respects or, if not yet filed or furnished, will comply in all material respects with the applicable requirements of the Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002 (the βXxxxxxxx-Xxxxx Actβ), and any rules and regulations promulgated thereunder applicable to the Seller Reports. As of their respective dates (or, if amended prior to the date of this Agreement, as of the date of such amendment), the Seller Reports did not, and any Seller Reports filed with or furnished to the SEC subsequent to the date of this Agreement will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. None of the Seller Reports is the subject of an ongoing or outstanding Action by the SEC. There are no outstanding or unresolved comments in comment letters received by the Seller from the SEC or its staff. There has been no correspondence between the SEC and the Seller between the Applicable Date and the date of this Agreement that is not available on the SECβs Electronic Data Gathering Analysis and Retrieval database. 24
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(b) Section 3.9(b) of the Seller Disclosure Letter set forth a true and complete list of all Employee Plans that cover any Business Employee. True and complete copies of each of the following documents have been delivered by the Seller to the Buyer: (i) each Welfare Plan, Pension Plan and Multiemployer Plan that covers any Business Employee (and, if applicable, related trust agreements) and all amendments thereto, all written interpretations thereof and written descriptions thereof which have been distributed to the Sellerβs employees or participants or beneficiaries in such plan and all annuity contracts or other funding instruments; (ii) each Benefit Arrangement that covers any Business Employee, including written interpretations thereof and written descriptions thereof which have been distributed to any Business Employee or his or her beneficiaries in such Benefit Arrangement and a reasonably detailed description of any such Benefit Arrangement that is not in writing; and (iii) the most recent determination letter issued by the Internal Revenue Service with respect to each Pension Plan that covers any Business Employee. (c) To the Knowledge of the Seller, there are no pending or threatened claims of breaches of fiduciary duty or prohibited transactions with respect to any Employee Plan covering any Business Employees or any reasonable basis therefor. (d) Except as set forth on Section 3.9(d) of the Seller Disclosure Letter, there have been no statements or communications made or materials provided to any current or former Business Employee that provide for or could reasonably be construed as a contract or promise by the Buyer or its Affiliates to provide for any pension, welfare, or other compensation or benefit to any such current or former Business Employee, whether before or after retirement or separate from employment. (e) All contributions, premiums and payments that are due for each Employee Plan have been made within the time periods prescribed by the terms of such plan and applicable Law. (f) Each Benefit Arrangement that provides deferred compensation subject to Section 409A or 457A of the Code has complied in all material respects with applicable guidance under Section 409A and/or 457A of the Code in form and operation. (g) No Purchased Asset is subject to any lien under ERISA or Section 412 of the Code. (h) Except as set forth in Section 3.9(g) of the Seller Disclosure Letter: (i) none of the Pension Plans that covers any Business Employee who is a resident of the United States is a Multiemployer Plan or a Pension Plan that is subject to either Title IV of ERISA or Section 412 of the Code; 27
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any filing, examination, issuance, post registration and maintenance fees, annuities and the like and fraud or the failure to disclose any known material prior art or other material facts in connection with the prosecution of patent applications). (f) The development, manufacture, sale, distribution or other commercial exploitation of products, and the provision of any services, by or on behalf of the Business or the Seller in connection with the Business, and all of the other activities or operations of the Business or the Seller in connection with the Business, have not infringed upon, misappropriated, violated, diluted or constituted the unauthorized use of, any Intellectual Property of any third- party, and the Seller has not received any notice or claim asserting or suggesting that any such infringement, misappropriation, violation, dilution or unauthorized use is or may be occurring or has or may have occurred, nor to the Knowledge of the Seller, is there a reasonable basis therefor. Except as set forth on Section 3.13 of the Seller Disclosure Letter, no Transferred Intellectual Property is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use or licensing thereof by the Seller or the Business. To the Knowledge of the Seller, no third-party is misappropriating, infringing, diluting or violating any Transferred Intellectual Property in a material respect. (g) The Seller has not transferred ownership of, or granted any exclusive license with respect to, any Transferred Intellectual Property. Upon the consummation of the Closing, the Buyer shall succeed to all of the Sellerβs rights and interest in or under all Transferred Intellectual Property and all other Intellectual Property used or held for use by the Seller in connection with the conduct of the Business that is necessary for the conduct of the Business as currently conducted, and all of the Sellerβs rights under all Transferred Intellectual Property and all such other Intellectual Property shall be exercisable by the Buyer in all material respects to the same extent as by the Seller prior to the Closing. Except as listed on Section 3.13 of the Seller Disclosure Letter, no loss or expiration of any of the Transferred Intellectual Property or any other Intellectual Property used or held for use by the Seller in connection with the conduct of the Business is threatened, pending or reasonably foreseeable. (h) The Excluded Intellectual Property set forth on Section 2.2(c) of the Seller Disclosure Letter (the βLicensed Excluded IPβ) constitutes the sole Excluded Intellectual Property that is or may be necessary to the conduct of the Business as currently conducted. The Seller exclusively owns, free and clear of any Encumbrances, the Licensed Excluded IP, and has the full and unrestricted right and authority to grant the licenses set forth in Section 5.22 hereunder. The Seller has not granted any license, covenant, option or other right to any third- party under any of the Licensed Excluded IP, nor is the use or exploitation of any Licensed Excluded IP (either by the Seller or any licensee of the Seller) restricted by the terms of any settlement agreement or other Contract. Neither (i) the Licensed Excluded IP, (ii) the license grant by the Seller to the Buyer of the Licensed Excluded IP as set forth in Section 5.22 hereunder, nor (iii) the use, development, sale or other exploitation of the Licensed Excluded IP in the conduct of the Business as currently conducted, conflicts with, infringes, misappropriates, violates or otherwise constitutes unauthorized use of or will conflict with, infringe, misappropriate, violate or otherwise constitute unauthorized use of any Intellectual Property or other proprietary right of any third-party. 31
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perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by the Buyer of this Agreement and each of the Ancillary Agreements to which it will be a party and the consummation by the Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action. This Agreement has been, and upon their execution each of the Ancillary Agreements to which the Buyer will be a party will have been, duly executed and delivered by the Buyer and, assuming due execution and delivery by each of the other parties hereto and thereto, this Agreement constitutes, and upon their execution each of the Ancillary Agreements to which the Buyer will be a party will constitute, the legal, valid and binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms, subject to the Bankruptcy and Equity Exception. Section 4.3 No Conflict; Required Filings and Consents. (a) The execution, delivery and performance by the Buyer of this Agreement and each of the Ancillary Agreements to which the Buyer will be a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) conflict with or violate the certificate of incorporation or bylaws of the Buyer; (ii) conflict with or violate, or give any Governmental Authority the right to challenge any of the transactions contemplated hereby under any Law applicable to the Buyer; or (iii) result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under or require any consent of any Person pursuant to, any note, bond, mortgage, indenture, agreement, lease, license, permit, franchise, instrument, obligation or other Contract to which the Buyer is a party; except in the case of clause (iii), for any such conflicts, violations, breaches, defaults or other occurrences that do not, individually or in the aggregate, materially impair the ability of the Buyer to consummate, or prevent or materially delay, any of the transactions contemplated by this Agreement or the Ancillary Agreements. (b) The Buyer is not required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by the Buyer of this Agreement and each of the Ancillary Agreements to which it will be party or the consummation of the transactions contemplated hereby or thereby, except for any filings required to be made under the HSR Act. Section 4.4 Financing. At the Closing, subject to the terms and conditions of the Financing Commitments and subject to the satisfaction of the conditions contained in Sections 6.1 and 6.3, assuming the accuracy of the Sellerβs representations and warranties set forth in Article III and assuming compliance by the Seller with the covenants set forth herein, the Buyer will have on the Closing Date sufficient available funds to pay the consideration specified in Section 2.5 and to make all other necessary payments by it in connection with the transactions contemplated by this Agreement. Concurrently with the execution and delivery of this 41
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Agreement, the Buyer has received and accepted (i) an executed equity commitment letter, dated as of the date of this Agreement, from RoundTable Healthcare Partners IV, L.P. and RoundTable Healthcare Investors IV, L.P. (βRoundTableβ), pursuant to which RoundTable has agreed, subject to the terms and conditions thereof, to provide equity financing in an aggregate amount set forth therein (as amended, restated, modified, supplemented, replaced or extended from time to time after the date of this Agreement in compliance with Section 5.21, the βEquity Financing Commitmentβ), (ii) an executed commitment letter, dated as of the date of this Agreement (as amended, restated, modified, supplemented, replaced or extended from time to time after the date of this Agreement in compliance with Section 5.21, the βSenior Debt Financing Commitmentsβ), from Capital One, National Association and CIBC Bank USA (collectively with any other additional lead arrangers, bookrunners, managers, arrangers, agents, co-agents or lenders who become party to the Senior Debt Financing Commitments, the βSenior Lendersβ), pursuant to which the Senior Lenders have agreed, subject to the terms and conditions thereof, to provide the debt amounts set forth therein and (iii) an executed commitment letter, dated as of the date of this Agreement (as amended, restated, modified, supplemented, replaced or extended from time to time after the date of this Agreement in compliance with Section 5.21, together with the Senior Debt Financing Commitments, the βDebt Financing Commitmentsβ and together with the Equity Financing Commitment, the βFinancing Commitmentsβ), from RoundTable Healthcare Capital Partners III, L.P. (the βSubordinated Lenderβ), pursuant to which the Subordinated Lender have agreed, subject to the terms and conditions thereof, to provide the debt amounts set forth therein. The Buyer has delivered to the Seller true, complete and correct copies of the executed Financing Commitments and copies of the fee letters related to the Senior Debt Financing Commitments (with only fee amounts, pricing caps, market flex and other economic terms redacted). As used in this Agreement, βDebt Financing Sourceβ means any entity that has committed to provide or otherwise entered into agreements with the Buyer in connection with the Debt Financing, Alternative Financing or other financings in connection with the transactions contemplated by this Agreement, including the parties to the Debt Financing Commitments and any joinder agreements or credit agreements related thereto. Section 4.5 Brokers. No broker, finder or investment banker is entitled to any brokerage, finderβs or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Buyer or its Affiliates. Section 4.6 Ownership of Seller Common Stock. The Buyer is not, and at no time during the last three years has been, an βinterested stockholderβ of the Seller as defined in Section 203 of the General Corporation Law of the State of Delaware (the βDGCLβ). Section 4.7 Certain Information. None of the information supplied or to be supplied by or on behalf of the Buyer specifically for inclusion or incorporation by reference in the Proxy Statement will, at the time it is first published, distributed or disseminated to the Sellerβs stockholders, at the time of any amendments or supplements thereto and at the time of the Seller Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Buyer does not make any representation or warranty with respect to statements included or incorporated by reference in the Proxy Statement based on information supplied in writing by or 42
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on behalf of the Seller or its Affiliates specifically for inclusion or incorporation by reference therein. ARTICLE V COVENANTS Section 5.1 Conduct of Business Prior to the Closing. Between the date of this Agreement and the Closing Date or the termination date if earlier terminated, unless the Buyer shall otherwise agree in writing, the Seller shall use commercially reasonable efforts to cause the Business to be conducted only in the Ordinary Course of Business, and shall preserve substantially intact the organization of the Business, keep available the services of the current Business Employees and preserve the current relationships of the Business with customers, suppliers and other persons with which the Business has significant business relations. Without limiting the generality of the foregoing, between the date of this Agreement and the Closing Date or the termination date if earlier terminated, the Seller shall not do or propose to do, directly or indirectly, and shall cause its Affiliates not to do, any of the following in connection with the Business or the Purchased Assets without the prior written consent of the Buyer: (a) issue, sell, pledge, dispose of or otherwise subject to any Encumbrance any Purchased Assets, other than sales or transfers of Inventory for fair market value in the Ordinary Course of Business; (b) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any loans or advances, in each case affecting the Business or the Purchased Assets, except for any indebtedness that is an Excluded Liability; (c) amend, waive, modify in any material respect or in a manner adverse to the Business or the Purchased Assets or consent to the termination of any Assumed Contract, or amend, waive, modify in any material respect or in a manner adverse to the Business or the Purchased Assets or consent to the termination of any of the Sellerβs rights thereunder, or enter into any Contract in connection with the Business or the Purchased Assets other than in the Ordinary Course of Business that, together with any other Assumed Contracts entered into in accordance with this clause, would not be material to the Business or the Purchased Assets, taken as a whole; (d) authorize, or make any commitment with respect to, any single capital expenditure for the Business that is in excess of $50,000 or capital expenditures which are, in the aggregate, in excess of $150,000 for the Business taken as a whole; (e) acquire any corporation, partnership, limited liability company, other business organization or division thereof or any material amount of assets, or enter into any joint venture, strategic alliance, exclusive dealing, noncompetition or similar contract or arrangement in each case with respect to or affecting the Business; (f) enter into any lease of personal property or any renewals thereof in connection with the Business involving a term of more than one year or rental obligation exceeding $10,000 per year in any single case; 43
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(g) except as may be required by applicable Law or any Employee Plan or except in the Ordinary Course of Business, (A) enter into or increase the benefits provided under any employment agreement with any Business Employee, (B) make or grant, or permit any of their respective Affiliates to make or grant, any bonus or increase the rate or terms of compensation or benefits of any Business Employee, or (C) enter into, amend or terminate any Employee Plan; (h) enter into any Contract with any Related Party of the Seller in connection with or affecting the Business or the Purchased Assets; (i) make any change in any method of accounting or accounting practice or policy affecting the financial statements of the Business, except as required by GAAP; (j) make, revoke or modify any Tax election with respect to the Business or the Purchased Assets, settle or compromise any Tax liability with respect to the Business or the Purchased Assets, or amend any Return relating to the Business or the Purchased Assets other than on a basis consistent with past practice; (k) pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) relating to the Business or the Purchased Assets, other than the payment, discharge or satisfaction, in the Ordinary Course of Business, of liabilities reflected or reserved against on the Balance Sheet or subsequently incurred in the Ordinary Course of Business; (l) cancel, compromise, waive or release any right or claim relating to the Business or the Purchased Assets, other than in the Ordinary Course of Business that, together with any other rights or claims cancelled, compromised, waived or released would not be material to the Business or the Purchased Assets, taken as a whole; (m) permit the lapse of any existing policy of insurance relating to the Business or the Purchased Assets; (n) permit the lapse of any right relating to Transferred Intellectual Property or any material right relating to any other intangible asset used or held for use in connection with the Business; (o) accelerate the collection of or discount any Receivables, delay the payment of liabilities that would become Assumed Liabilities or defer expenses, reduce Inventories or otherwise increase cash on hand in connection with the Business, except in the Ordinary Course of Business; (p) use any Purchased Assets to pay any Transaction Expenses; (q) commence or settle any Action for an amount in excess of $25,000 individually or $100,000 in the aggregate relating to the Business, the Purchased Assets or the Assumed Liabilities; or 44
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solicitation by search firms not specifically directed at Buyer Employees or (B) the Seller or any of its Affiliates from soliciting, recruiting or hiring any Buyer Employee who has ceased to be employed or retained by the Seller, the Buyer or any of their respective Affiliates for at least 12 months. For purposes of this Section 5.3, βBuyer Employeesβ means, collectively, officers, directors and employees of the Buyer and its Affiliates who work or are engaged in connection with the Business, and persons acting under any management, service, consulting, distribution, dealer or similar contract in connection with the Business or the Purchased Assets; or (iii) approach or seek Competing Business from any Customer (as hereinafter defined), refer Competing Business from any Customer to any Person or be paid commissions based on Competing Business sales received from any Customer by any Person. For purposes of this Section 5.3, the term βCustomerβ means any Person to which the Seller, the Buyer or any of their respective Affiliates provided products or services during the 36-month period prior to the time at which any determination shall be made that any such Person is a Customer; provided, that the foregoing shall not prohibit any referral of business by the Seller to the Buyer. (b) The Seller acknowledges that the covenants of the Seller set forth in this Section 5.3 are an essential element of this Agreement and that any breach by the Seller of any provision of this Section 5.3 will result in irreparable injury to the Buyer. The Seller acknowledges that in the event of such a breach, in addition to all other remedies available at law, the Buyer shall be entitled to equitable relief, including injunctive relief, and an equitable accounting of all earnings, profits or other benefits arising therefrom, as well as such other damages as may be appropriate. The Seller has independently consulted with its counsel and after such consultation agrees that the covenants set forth in this Section 5.3 are reasonable and proper to protect the legitimate interest of the Buyer. (c) For a period of 10 years following the Closing, each party shall not, and shall cause its Affiliates not to, directly or indirectly through any Person or contractual arrangement, disparage the other party or any of its Affiliates in any way that would reasonably be expected to adversely affect the goodwill, reputation or business relationships of the other party or any of its Affiliates with the public generally, or with any of their respective customers, suppliers or employees. (d) If a court of competent jurisdiction determines that the character, duration or geographical scope of the provisions of this Section 5.3 are unreasonable, it is the intention and the agreement of the parties that these provisions shall be construed by the court in such a manner as to impose only those restrictions on the Sellerβs conduct that are reasonable in light of the circumstances and as are necessary to assure to the Buyer the benefits of this Agreement. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants of this Section 5.3 because taken together they are more extensive than necessary to assure to the Buyer the intended benefits of this Agreement, it is expressly understood and agreed by the parties that the provisions hereof that, if eliminated, would permit the remaining separate provisions to be enforced in such proceeding, shall be deemed eliminated, for the purposes of such proceeding, from this Agreement. 47
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provided that for purposes of the covenants of this Section 5.7(b), defined benefit pension plans, retiree welfare benefits, long term incentive compensation and equity compensation shall be disregarded. For purposes of this Agreement, any Business Employee who is not at work on the Closing Date due to a short-term absence (including due to vacation, holiday, jury duty, illness, authorized short-term leave of absence or short-term disability) shall be deemed to be βactively at workβ; provided, that any such individuals that are on authorized short-term leave of absence or short-term disability shall not be deemed to constitute βTransferring Employeesβ until such time as they return to active employment and the Seller shall be responsible for all liabilities with respect to such employees until they become Transferring Employees. The Seller shall terminate the employment of all Transferring Employees immediately prior to the Closing (or, as applicable, upon their return to active employment) and shall cooperate with and use its commercially reasonable efforts to assist the Buyer in its efforts to secure satisfactory employment arrangements with those employees of the Seller to whom the Buyer makes offers of employment. (c) The Seller shall comply with the requirements of the WARN Act or any similar state, provincial or local law with respect to any βplant closingβ or βmass layoff,β as those terms are defined in the WARN Act or such other applicable law, which may result from the Sellerβs termination of the employment of any of its employees in connection with the transactions contemplated hereby through the Closing Date. (d) The Seller and its ERISA Affiliates shall comply with the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (βCOBRAβ), as set forth in Section 4980B of the Code and Part 6 of Title I of ERISA, with respect to any employee, former employee or beneficiary of any such employee or former employee who is covered under any group health plan, as defined in Section 5000(b)(1) of the Code (a βGroup Health Planβ), maintained by the Seller and its ERISA Affiliates as of the Closing Date or whose βqualifying eventβ within the meaning of Section 4980B(f) of the Code occurs on or prior to the Closing Date, whether pursuant to the provisions of COBRA or otherwise. The Buyer shall comply with the provisions of COBRA with respect to Transferring Employees who are covered under any Group Health Plan maintained by the Buyer after the Closing Date. (e) The Buyer shall use commercially reasonable efforts to (i) waive all limitations as to pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to Transferring Employees under the plans and arrangements established or maintained by the Buyer (the βBuyer Welfare Plansβ), other than limitations or waiting periods that are already in effect with respect to such employees and that have not been satisfied as of the Closing Date under the corresponding Employee Plan and (ii) provide each Transferring Employee with credit under the Buyer Welfare Plans for any co- payments and deductibles paid under the corresponding Employee Plans prior to the Closing Date in satisfying any applicable deductible or out-of-pocket requirements for the year in which the Closing Date occurs. (f) For purposes of determining eligibility to participate, vesting and determination of the level of benefits (but not accrual or entitlement to benefits other than severance benefit and vacation accrual where length of service is relevant) for Transferring Employees under all employee benefit plans and arrangements of the Buyer, the Buyer shall 50
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recognize service with the Seller to the same extent recognized under the corresponding Employee Plans as in effect immediately prior to the Closing Date. (g) The Seller shall cash out the accrued vacation and paid time-off of all Transferring Employees no later than promptly following their termination of employment. (h) Nothing contained in this Agreement shall create any third-party beneficiary rights in any Transferring Employee, any beneficiary or dependents thereof, or any collective bargaining representative thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to any Transferring Employee by the Buyer or under any benefit plan that the Buyer may maintain. (i) Nothing contained in this Agreement shall confer upon any Transferring Employee any right with respect to continued employment by the Buyer, nor shall anything herein interfere with the right of the Buyer to terminate the employment of any Transferring Employee at any time, with or without cause, following the effective date of his or her employment with the Buyer, or restrict the Buyer in the exercise of its independent business judgment in modifying any of the terms and conditions of the employment of the Transferring Employees. Section 5.8 Confidentiality. (a) The Buyer acknowledges that the information being provided to it by or on behalf of the Seller in connection with the transactions contemplated hereby is subject to the terms of the Confidentiality Agreement, which shall continue in full force and effect until the Closing Date, at which time such Confidentiality Agreement and the obligations thereunder shall terminate. If for any reason this Agreement is terminated prior to the Closing Date, the Confidentiality Agreement shall nonetheless continue in full force and effect in accordance with its terms. (b) For a period of five years following the Closing Date, the Seller shall not, and the Seller shall cause its Affiliates and the respective Representatives of the Seller and its Affiliates not to, use for its or their own benefit or divulge or convey to any third-party, any Confidential Information; provided, however, that the Seller or its Affiliates may furnish such portion (and only such portion) of the Confidential Information as the Seller or such Affiliate reasonably determines it is legally obligated to disclose if: (i) it receives a request to disclose all or any part of the Confidential Information under the terms of a subpoena, civil investigative demand or order issued by a Governmental Authority; (ii) to the extent not inconsistent with such request, it notifies the Buyer of the existence, terms and circumstances surrounding such request and consults with the Buyer on the advisability of taking steps available under applicable Law to resist or narrow such request; (iii) it exercises its commercially reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to the disclosed Confidential Information; and (iv) disclosure of such Confidential Information is required to prevent the Seller or such Affiliate from being held in contempt or becoming subject to any other penalty under applicable Law. For purposes of this Agreement, βConfidential Informationβ consists of all information and data relating to the Business (including Intellectual Property, customer and supplier lists, pricing information, marketing plans, market studies, client 51
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development plans, business acquisition plans and all other information or data), the Purchased Assets or the transactions contemplated hereby, except for data or information that is or becomes available to the public other than as a result of a breach of this Section. (c) Effective as of the Closing, the Seller hereby assigns to the Buyer all of the Sellerβs right, title and interest in and to any confidentiality agreements entered into by the Seller (or its Affiliates or Representatives) and each Person (other than the Buyer and its Affiliates and Representatives) who entered into any such agreement or to whom Confidential Information was provided in connection with any transaction involving the acquisition or purchase of all or any material portion of the Business or the Purchased Assets. From and after the Closing, the Seller will, at the Buyerβs sole cost and expense, take all actions reasonably requested by the Buyer in order to assist in enforcing the rights so assigned. The Seller shall use its commercially reasonable efforts to cause any such Person to return to the Seller any documents, files, data or other materials constituting Confidential Information that was provided to such Person in connection with the consideration of any such transaction. Section 5.9 Consents and Filings. (a) The Seller and the Buyer shall use their respective commercially reasonable efforts to take, or cause to be taken, all appropriate action to do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements as promptly as practicable, including to (a) obtain from Governmental Authorities and other Persons all consents, approvals, authorizations, qualifications and orders as are required for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements and (b) promptly make all necessary filings, and thereafter make any other required submissions, with respect to this Agreement required under the HSR Act or any other applicable Law. In furtherance and not in limitation of the foregoing, the Seller shall permit the Buyer to reasonably participate in the defense and settlement of any claim, suit or cause of action relating to this Agreement or the transactions contemplated hereby, and the Seller shall not settle or compromise any such claim, suit or cause of action without the Buyerβs written consent. Notwithstanding anything herein to the contrary, the Buyer shall not be required by this Section to take or agree to undertake any action, including entering into any consent decree, hold separate order or other arrangement, that would (i) require the divestiture of any assets of the Buyer or any of its Affiliates or any portion of the Business or the Purchased Assets or (ii) limit the Buyerβs freedom of action with respect to, or its ability to consolidate and control, the Business or the Purchased Assets or any of the Buyerβs or its Affiliatesβ other assets or businesses; provided, that the Seller may not, without the prior written consent of the Buyer, become subject to, consent to, or offer or agree to, or otherwise take any action with respect to, any requirement, condition, limitation, Contract or order to (A) sell, license, assign, transfer, divest, hold separate or otherwise dispose of any Purchased Asset, the Business or any portion thereof, (B) conduct, restrict, operate, invest or otherwise change the Purchased Assets, the Business or any portion thereof in any manner, or (C) impose any restriction, requirement or limitation on the operation of the Business or portion of the Business. (b) Nothing in this Agreement or the Ancillary Agreements shall be construed as an agreement to assign any Assumed Contract, Permit, Right or other Purchased Asset that by 52
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its terms or pursuant to applicable Law is not capable of being sold, assigned, transferred or delivered without the consent or waiver of a third-party or Governmental Authority unless and until such consent or waiver shall be given. The Seller shall use its reasonable best efforts, and the Buyer shall cooperate reasonably with the Seller, to obtain such consents and waivers and to resolve the impediments to the sale, assignment, transfer or delivery contemplated by this Agreement or the Ancillary Agreements and to obtain any other consents and waivers necessary to convey to the Buyer all of the Purchased Assets. In the event any such consents or waivers are not obtained prior to the Closing Date, the Seller shall continue to use its commercially reasonable efforts to obtain the relevant consents or waivers until such consents or waivers are obtained, and the Seller will cooperate with the Buyer in any lawful and economically feasible arrangement to provide that the Buyer shall receive the interest of the Seller in the benefits under any such Assumed Contract, Permit, Right or other Purchased Asset, including performance by the Seller, if economically feasible, as agent; provided, that the Buyer shall undertake to pay or satisfy the corresponding liabilities for the enjoyment of such benefit to the extent the Buyer would have been responsible therefor hereunder if such consents or waivers had been obtained. Nothing in this Section 5.9(b) shall affect the Buyerβs right to terminate this Agreement under Section 8.1 in the event that any consent or waiver as described herein is not obtained. Section 5.10 Public Announcements. Each of the Seller and the Buyer shall, to the extent reasonably practicable, consult with each other before issuing, and give each other a reasonable opportunity to review and comment upon, any press release or other public statements with respect to this Agreement and the other transactions contemplated hereby and shall not issue any such press release or make any public announcement prior to such consultation and review, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system or any disclosure by the Buyer or any of its Affiliates in connection with the Financing. Section 5.11 Further Assurances; Wrong Pockets. (a) The Seller shall, and shall cause its Affiliates to, execute and deliver such further instruments of conveyance and transfer and take such additional action as the Buyer may reasonably request to effect, consummate, confirm or evidence the sale and transfer to the Buyer of the Purchased Assets and the other transactions contemplated by this Agreement. The Buyer shall, and shall cause its Affiliates to, execute and deliver such further instruments of assumption and take such additional action as the Seller may reasonably request to effect, consummate, confirm or evidence the transactions contemplated hereby, including the assumption by the Buyer of the Assumed Liabilities. (b) Without limiting the generality of the foregoing, if at any time following the Closing it becomes apparent that any Purchased Asset (including any Contract) that should have been transferred to the Buyer pursuant to this Agreement was not so transferred, or any Excluded Asset was inadvertently transferred to the Buyer, the Seller shall, and shall cause its applicable Affiliates to, or the Buyer shall, and shall cause its Subsidiaries to, as applicable, in each case as promptly as practicable, (i) transfer all rights, title and interest in (A) such Purchased Asset to the Buyer or as the Buyer may direct, or (B) such Excluded Asset to the Seller or as the Seller may direct, as applicable, in each case for no additional consideration; and 53
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(ii) hold its right, title and interest in and to such Purchased Asset or Excluded Asset, as applicable, in trust for the applicable transferee until such time as such transfer is completed. Section 5.12 Intercompany Arrangements; Enterprise-Wide Contracts. (a) Except as set forth in Section 5.12(a) of the Seller Disclosure Letter and except for this Agreement and the Ancillary Agreements, all intercompany and intracompany accounts, indebtedness, transactions or Contracts relating to the Business, on the one hand, and the Seller and its Affiliates (other than the Business), on the other hand, shall be cancelled, settled, offset, capitalized or otherwise eliminated, without any consideration or further obligation or liability to any party and without the need for any further documentation, prior to the Closing. (b) The Seller and the Buyer recognize and acknowledge that the Enterprise- Wide Contracts set forth in Section 5.12(b) of the Seller Disclosure Letter relate to both the Business and the Retained Business. All Enterprise-Wide Contracts shall be retained by the Seller. Following the date hereof, the Seller and the Buyer shall use their respective commercially reasonable efforts to negotiate a new Contract for the benefit of the Buyer and its Affiliates with respect to the matters covered by such Enterprise-Wide Contracts. The terms and conditions of any Contract or arrangement applicable to the Business entered into pursuant to this Section 5.12 shall be reasonably acceptable to the Buyer. In the event that the Seller and the Buyer are not able to obtain any such new Contract, then the Seller shall cause the Transition Services Agreement to include, as a Service (as defined in the Transition Services Agreement), for such time as is reasonably necessary for the Business to obtain a new Contract covering such products and services, which period shall be set forth in the Transition Services Agreement, either (x) the products and services provided under such Contract or (y) reasonable alternative arrangements which permit the Buyer to continue operating the Business in substantially the same manner as currently conducted. Section 5.13 Insurance; Risk of Loss. (a) In the event the Buyer provides written notice to the Seller of a claim asserted in connection with the Business after the Closing arising out of an occurrence taking place on or prior to the Closing or with respect to facts, circumstances or conditions that arose or existed on or prior to the Closing (βPost-Closing Claimsβ), the Seller shall use commercially reasonable efforts to obtain recoveries under any applicable occurrence-based insurance policies maintained by the Seller that covered the Business to the extent such insurance coverage exists and provides coverage and shall pay to the Buyer any net proceeds recovered thereunder; provided, that the Buyer shall (i) be responsible for the satisfaction or payment of any and all associated self-retentions, deductibles, costs and expenses with respect to any Post-Closing Claim and (ii) the Buyer shall reasonably cooperate with the Seller with respect to the tendering of any such claims including providing notices, information and backup materials as may be necessary in connection therewith. (b) The Seller agrees that with respect to any act, omission, event or occurrence that results in a material liability relating to any Purchased Asset that first occurs, and that the Seller first becomes aware of, during the period beginning on the date hereof and ending 54
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as of the Closing that is covered by insurance policies under which the applicable Purchased Asset is insured prior to the Closing, (i) the Seller shall promptly notify the Buyer of the occurrence of such event, and (ii) the Seller shall promptly make claims under such policies in respect of such act, omission, event, occurrence or liability, subject to the terms and conditions of such policies, and, to the extent any insurance proceeds are received by the Seller in respect of such claims, then the Seller shall (but conditioned upon the occurrence of the Closing), promptly after the Sellerβs receipt thereof, remit to the Buyer the amount of such proceeds (net of any deductibles or expenses), less any amounts thereof actually paid to third parties who perform repairs or other similar work in connection with restoring the applicable Purchased Asset to its prior condition. Section 5.14 Name Change and Use of Names. (a) The Seller will use commercially reasonable efforts to change the name of the Seller and its Subsidiaries to a name that does not include or relate to and is not based on or likely to be confused with the name βBovie Medicalβ as soon as practicable after the Closing, but in any event effective no later than one year following of the Closing. As soon as practicable after the Closing, but in no event later than two years following the Closing, except as set forth in Section 5.14(b), the Seller will, and will cause its Affiliates to, cease using any trademark, brand name, trade name, corporate name, domain name or other indication of source or origin, that includes, is based on, relates to or is likely to be confused with or is confusingly similar to the term βBovie Medicalβ or any other similar terms or derivatives thereof (provided, that any such use by Seller and its Affiliates up until such time shall be solely in connection with the operation of the Retained Business). (b) The Seller acknowledges that, as of the Closing, the Buyer is the owner of all right, title and interest in and to all Marks that are included in the Transferred Intellectual Property (the βTransferred Marksβ) and that, except as expressly provided in the immediately following sentence, any and all rights of the Seller or its Affiliates to use the Transferred Marks shall terminate as of the Closing. The Seller shall be entitled to use the Sellerβs stocks of signs, letterheads, invoice stock, advertisements and promotional materials, inventory and other documents and materials containing any Transferred Marks that exist during the period ending two years following the Closing (βExisting Stockβ), solely in connection with the operation of the Retained Business until the earlier of (i) the time that such Existing Stock is depleted and (ii) 30 months following the Closing, after which period the Seller shall, and shall cause its Affiliates to, remove or obliterate all Transferred Marks from such Existing Stock or cease using and destroy such Existing Stock. The Seller shall ensure that all use by the Seller or its Affiliates of the Transferred Marks pursuant to this Section 5.14(b) shall only be in connection with goods and services of a level of quality equal to or greater than the quality of goods and services with respect to which the Transferred Marks were used by the Seller prior to the Closing, and any such use shall not be in a manner that might damage or tarnish the reputation of the Buyer, the Business or the goodwill associated with the Transferred Marks. Any and all goodwill generated by the use of the Transferred Marks by the Seller or its Affiliates after the Closing pursuant to this Section 5.14(b) shall inure solely to the benefit of the Buyer. Section 5.15 Release of Guarantees. The Seller and the Buyer agree to cooperate and use their respective commercially reasonable efforts to obtain the release of the Seller or its 55
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Affiliates that are a party to or otherwise have liability with respect to any guarantees, performance bonds, bid bonds and other similar agreements set forth on Section 5.15 of the Seller Disclosure Letter, correct and complete copies of which have been made available to the Buyer (the βSeller Guaranteesβ) on or prior to the date hereof, in each case solely to the extent related to the Business. The Seller and its Affiliates shall keep each Seller Guarantee in place and in full force and effect until the date the Buyerβs replacement arrangement is in full force and effect and accepted by the relevant counterparty. In the event any of the Seller Guarantees are not released prior to or at the Closing, the Buyer will indemnify and hold the Seller and its Affiliates that are a party to or otherwise have liability with respect to each such Seller Guarantee harmless for any and all payments required to be made under, and the costs and expenses incurred in connection with, such Seller Guarantee by the Seller or its Affiliates that are a party to or otherwise have liability with respect to such Seller Guarantee until such Seller Guarantee is released. Section 5.16 Release. Effective as of the Closing, the Seller, on behalf of itself and its Affiliates, forever irrevocably waives, releases, remises and discharges the Buyer and its Affiliates and their respective predecessors, successors, Affiliates, direct and indirect equityholders, directors, officers, managers, members, partners, employees, consultants, attorneys, agents and assigns from any indebtedness, obligation, liability, claim, suit, judgment, demand, loss, damage, deficiency, cost, expense, fee, fine, penalty, responsibility or obligation of any kind or nature, whether known or unknown, express or implied, primary or secondary, direct or indirect, absolute, accrued, contingent or otherwise and whether due or to become due that the Seller or its Affiliates may currently have, or may have in the future, arising from the operation of the Business prior to, on or after the Closing Date (so long as the events giving rise to such claim occurred on or prior to the Closing), except for the Sellerβs or any of its Affiliatesβ rights under this Agreement or the Ancillary Agreements. Section 5.17 No Solicitation; Recommendation of the Transactions. (a) Notwithstanding any other provision of this Agreement to the contrary, but subject to Section 5.17(b), during the period beginning on the date of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Closing Date: (i) the Seller will cease and cause to be terminated any discussions or negotiations with any Person and its Representatives that would be prohibited by this Section 5.17(a), request the prompt return or destruction of all non-public information concerning the Seller or the Sellerβs Subsidiaries furnished to any Person with respect to any Acquisition Proposal or potential Acquisition Proposal and will; (A) cease providing any further information with respect to the Seller or any Acquisition Proposal or potential Acquisition Proposal to any Person or its Representatives; and (B) terminate all access granted to any such Person and its Representatives to any physical or electronic data room. 56
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(ii) the Seller and the Sellerβs Subsidiaries shall not, and shall not instruct, authorize or permit any of their respective Representatives to, directly or indirectly: (A) solicit, initiate, facilitate, assist, induce or knowingly encourage any inquiries regarding, or the making, submission or announcement of any proposal, offer or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal; (B) furnish to any Person (other than to the Buyer or any designees of the Buyer) any non-public information relating to the Seller or any of the Sellerβs Subsidiaries or afford to any Person access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Seller or any of the Sellerβs Subsidiaries (other than the Buyer or any designees of the Buyer), in any such case with the intent to induce the making, submission or announcement of, or to encourage, facilitate or assist, any proposal, offer or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal; (C) participate or engage in discussions or negotiations with any Person with respect to any proposal, offer or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal (other than informing such Persons of the provisions contained in this Section 5.17); (D) approve, endorse or recommend any proposal, offer or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal; (E) approve, endorse, recommend, or execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement constituting or relating to an Acquisition Proposal or any proposal, offer or inquiry that is intended to or would reasonably be expected to lead to an Acquisition Proposal (other than an Acceptable Confidentiality Agreement) (an βAlternative Acquisition Agreementβ); (F) terminate, waive, amend, release or modify any provision of any confidentiality or standstill agreement or Takeover Provisions to which the Seller or any of its Affiliates or Representatives is a party with respect to any proposal, offer or inquiry that constitutes, or is reasonably expected to lead to, an Acquisition Proposal, or otherwise fail to enforce any of the foregoing, except at any time prior to the receipt of the Seller Stockholder Approval solely to the extent (1) the Seller Board determines in good faith, after consultation with outside legal counsel, that the failure to take such action would be a breach of the directorsβ fiduciary duties under applicable Law and (2) the scope of such action is limited to allowing such Person to make an unsolicited confidential Acquisition Proposal to the Seller Board in accordance with and not in violation of this Section 5.17; or (G) resolve, agree or propose to do any of the foregoing. (b) Notwithstanding anything to the contrary contained in this Section 5.17, if at any time following the date of this Agreement and prior to the receipt of the Seller Stockholder Approval: 57
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(i) the Seller receives a written Acquisition Proposal that the Seller Board believes in good faith to be bona fide and such Acquisition Proposal has not been withdrawn; (ii) such Acquisition Proposal was unsolicited and did not otherwise result from a breach of this Section 5.17; (iii) the Seller Board determines in good faith (after consultation with outside legal counsel and its financial advisor) that such Acquisition Proposal constitutes or is reasonably likely to lead to a Superior Proposal; and (iv) the Seller Board determines in good faith (after consultation with outside legal counsel) that the failure to take the actions referred to in clause (A) or (B) below would be a breach of the directorsβ fiduciary duties to the stockholders of the Seller under applicable Law, then the Seller may: (A) furnish information with respect to the Seller and its Subsidiaries to the Person making such Acquisition Proposal pursuant to an Acceptable Confidentiality Agreement; provided, that (I) the Seller shall provide the Buyer a non-redacted copy of each confidentiality agreement the Seller has executed in accordance with this Section 5.17 and (II) that any non-public information provided to any such Person shall have been previously provided to the Buyer or shall be provided to the Buyer prior to or concurrently with the time it is provided to such Person; (B) participate in discussions or negotiations with the Person making such Acquisition Proposal regarding such Acquisition Proposal. Notwithstanding the foregoing, the Seller shall not provide (and shall not instruct, authorize or permit any of its Representatives to provide) any commercially or competitively sensitive non-public information in connection with the actions permitted by this Section 5.17(b), except in accordance with βclean roomβ or other similar procedures designed to limit any adverse effect of the sharing of such information on the Seller. (c) Except as expressly provided by Section 5.17(d), at any time after the execution and delivery of this Agreement, neither the Seller Board nor any committee thereof shall: (i) withhold or withdraw (or publicly propose or resolve to withhold or withdraw) or, in any manner adverse to the Buyer, qualify, amend or modify (or publicly propose or resolve to qualify, amend or modify), the Seller Board Recommendation; (ii) fail to include the Seller Board Recommendation in the Proxy Statement; (iii) fail to publicly reaffirm the Seller Board Recommendation within five Business Days after the Buyer so requests in writing or, if the Seller 58
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Stockholders Meeting is scheduled to be held within five Business Days of such request, within one Business Day after such request and in any event, prior to the date of the Seller Stockholders Meeting (provided, that the Buyer may not make such a request on more than three occasions unless any such request relates to the announcement or commencement of an Acquisition Proposal or any material change thereto); (iv) approve, adopt or recommend or propose (publicly or otherwise) to approve, adopt or recommend, or otherwise declare advisable the approval by the Seller stockholders of, an Acquisition Proposal; or (v) take or fail to take any formal action or make or fail to make any recommendation or public statement in connection with a tender offer or exchange offer other than a recommendation against such offer or a βstop, look and listenβ communication by the Seller Board pursuant to Rule 14D-9(f) of the Exchange Act (any action described in clauses (i) through (v), a βSeller Adverse Recommendation Changeβ). (d) Notwithstanding anything to the contrary in this Agreement, at any time prior to the receipt of the Seller Stockholder Approval: (i) if the Seller has received a bona fide written Acquisition Proposal after the date of this Agreement that was unsolicited and did not otherwise result from a breach of this Section 5.17 and that has not been withdrawn, subject to compliance with this Section 5.17(d) (A) the Seller Board may effect a Seller Adverse Recommendation Change with respect to such Acquisition Proposal or (B) the Seller Board may authorize the Seller to terminate this Agreement pursuant to Section 8.1(d)(ii) and substantially concurrently enter into a binding Alternative Acquisition Agreement, if and only if, prior to taking any such action: (A) the Seller Board shall have determined in good faith, after consultation with its independent financial advisor and outside legal counsel, that such Acquisition Proposal constitutes a Superior Proposal; (B) the Seller Board shall have determined in good faith, after consultation with outside legal counsel, that failure to take such action would be a breach of the directorsβ fiduciary duties to the stockholders of the Seller under applicable Law, taking into account all adjustments to the terms of this Agreement that may be offered by the Buyer pursuant to this Section 5.17; (C) the Seller shall have complied in all respects with its obligations under this Section 5.17; (D) the Seller shall have provided prior written notice (a βDetermination Noticeβ) to the Buyer at least five Business Days in advance (the βNotice Periodβ), to the effect that the Seller Board has received such a Superior Proposal and, absent any revision to the terms and conditions of this Agreement, the Seller Board has resolved to effect a Seller Adverse Recommendation Change or to terminate this Agreement pursuant to this Section 5.17(d)(i), which notice 59
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shall specify the basis for such Seller Adverse Recommendation Change or termination, including the identity of the Person making the Superior Proposal and the material terms and conditions thereof, and shall include copies of all relevant documents (including a copy of the proposed Alternative Acquisition Agreement) relating to such Superior Proposal (it being understood that any material revision, amendment, update or supplement to the terms and conditions of such Superior Proposal (including any change to the financial terms) shall be deemed to constitute a new Superior Proposal and shall require a new notice with an additional three Business Day period from the date of such notice); (E) prior to effecting such Seller Adverse Recommendation Change or termination, the Seller shall, and shall cause its financial and legal advisors to, during the Notice Period, negotiate with the Buyer and the Buyerβs Representatives in good faith (to the extent the Buyer desires to negotiate) to make such adjustments in the terms and conditions of this Agreement so that such Acquisition Proposal would cease to constitute a Superior Proposal; (F) at or following the end of such Notice Period, the Seller Board continues to determine in good faith, after consultation with an independent financial advisor and outside legal counsel, that such Acquisition Proposal continues to be a Superior Proposal and failure to take such action would continue to be a breach of the directorsβ fiduciary duties to the stockholders of the Seller under applicable Law (in each case taking into account any revisions to this Agreement made or proposed in writing by the Buyer); and (G) in the case that the Seller Board authorizes the Seller to terminate this Agreement to substantially concurrently enter into a binding Alternative Acquisition Agreement for such Superior Proposal, the Seller shall have validly terminated this Agreement in accordance with Section 8.1(d)(ii), including the payment of the Seller Termination Fee in accordance with Section 8.4(b)(i); or (ii) other than in connection with an Acquisition Proposal, the Seller Board may take any action prohibited by clauses (i), (ii) or (iii) of Section 5.17(c) (an βIntervening Event Change of Recommendationβ) in response to an Intervening Event if and only if, prior to taking any such action: (A) the Seller Board shall have determined in good faith, after consultation with outside legal counsel, that failure to take such action would be a breach of the directorsβ fiduciary duties to the stockholders of the Seller under applicable Law, taking into account all adjustments to the terms of this Agreement that may be offered by the Buyer pursuant to this Section 5.17; (B) the Seller shall have complied in all respects with its obligations under this Section 5.17; 60
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(C) the Seller shall have provided the Buyer with written notice of and information describing such Intervening Event promptly after becoming aware of it, and shall have continued to keep the Buyer reasonably informed of developments with respect to such Intervening Event; (D) the Seller shall have provided a Determination Notice to the Buyer for at least the Notice Period to the effect that the Seller Board has determined to effect an Intervening Event Change of Recommendation and that failure to take such action would be a breach of the directorsβ fiduciary duties to the stockholders of the Seller under applicable Law, taking into account all adjustments to the terms of this Agreement that may be offered by the Buyer pursuant to this Section 5.17, which notice shall specify the Intervening Event in reasonable detail; (E) prior to effecting such Intervening Event Change of Recommendation, the Seller shall, and shall cause its financial and legal advisors to, during the Notice Period, negotiate with the Buyer and its Representatives in good faith (to the extent the Buyer desires to negotiate) to make such adjustments in the terms and conditions of this Agreement in such a manner that such Intervening Event no longer necessitates such Intervening Event Change of Recommendation; and (F) at or following the end of such Notice Period, the Seller Board continues to determine in good faith, after consultation with outside legal counsel, that such Intervening Event continues to constitute an Intervening Event, such Intervening Event continues to necessitate an Intervening Event Change of Recommendation and failure to effect an Intervening Event Change of Recommendation in response to such Intervening Event would continue to be a breach of the directorsβ fiduciary duties to the stockholders of the Seller under applicable Law (in each case taking into account any revisions to this Agreement made or proposed in writing by the Buyer). (e) Nothing contained in this Section 5.17 shall be deemed to prohibit the Seller or the Seller Board from complying with its disclosure obligations under U.S. federal or state Law with respect to an Acquisition Proposal, including taking and disclosing to its stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act (or any substantially similar communication to stockholders); provided, that if such disclosure includes a Seller Adverse Recommendation Change, such disclosure shall be deemed to be a Seller Adverse Recommendation Change (it being understood that a βstop, look and listenβ communication of the type contemplated by Rule 14d-9(f) promulgated under the Exchange Act shall not in and of itself be deemed to be a Seller Adverse Recommendation Change), it being understood that any such statement or disclosure made by the Seller Board pursuant to this Section 5.17(e) must be subject to the terms and conditions of this Agreement and will not limit or otherwise affect the obligations of the Seller or the Seller Board and the rights of the Buyer under this Section 5.17, it being understood that nothing in the foregoing will be deemed to permit the Seller or the Seller Board to effect a Seller Adverse Recommendation Change other than in accordance with Section 5.17(d). (f) The Seller agrees that it will promptly (and, in any event, within 24 hours of receipt) notify the Buyer in writing if any inquiries, proposals or offers with respect to, 61
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constituting or that are reasonably expected to lead to an Acquisition Proposal are received by, any non-public information is requested from, or any discussions or negotiations are sought to be initiated or continued with, the Seller, any of its Affiliates or any of its Representatives indicating, in connection with such notice, the identity of the Person or group of Persons making such inquiry, indication, request for information or discussion, offer or proposal and the material terms and conditions of and facts surrounding any requests, inquiries, proposals or offers (including, if applicable, copies of any written requests, inquiries, proposals or offers, including proposed agreements) and thereafter shall keep the Buyer reasonably informed, on a prompt basis, of the status, terms and details (including, within 24 hours after the occurrence of any amendment, modification, development, discussion or negotiation) of any such Acquisition Proposal, request, inquiry, proposal or offer, including furnishing copies of any written inquiries, correspondence and draft documentation, and written summaries of any material oral inquiries or discussions (including any amendments thereto) and the status of any such discussions or negotiations. Without limiting the generality of the foregoing, the Seller shall (i) promptly (and in any event within 24 hours) notify the Buyer orally and in writing if it determines to begin providing information or to engage in discussions or negotiations concerning an Acquisition Proposal pursuant to this Section 5.17 and (ii) provide to the Buyer promptly and in any event within 24 hours after receipt or delivery thereof, copies of all draft agreements (and any other written material to the extent such material contains any financial terms, conditions or other material terms relating to any Acquisition Proposal) sent by or provided to the Seller or any of its Representatives in connection with any Acquisition Proposal. (g) The Seller agrees that any violation of the restrictions set forth in this Section 5.17 by any Representative of the Seller or any of its Subsidiaries shall be deemed to be a material breach of this Agreement by the Seller. (h) The Seller shall not, and shall cause its Subsidiaries not to, enter into any confidentiality agreement with any Person subsequent to the date of this Agreement that would restrict the Sellerβs ability to comply with any of the terms of this Section 5.17, and represents that neither it nor any of its Subsidiaries is a party to any such agreement. (i) The Seller shall not take any action to exempt any Person (other than the Buyer and its Affiliates) from the restrictions on βbusiness combinationsβ contained in Section 203 of the DGCL (or any similar provision of any other Takeover Provision) or otherwise cause such restrictions not to apply, or agree to do any of the foregoing, in each case unless such actions are taken substantially concurrently with a termination of this Agreement pursuant to Section 8.1(d)(ii). (j) For purposes of this Agreement: (i) βAcquisition Proposalβ means any proposal or offer with respect to any direct or indirect acquisition or purchase or license, in one transaction or a series of transactions, and whether through any merger, reorganization, consolidation, tender offer, self- tender, exchange offer, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution, joint venture, licensing or similar transaction, or otherwise, of (A) assets or businesses of the Seller and its Subsidiaries that generate 15% or more of the net revenues or net income (for the 12-month period ending on the 62
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last day of the Sellerβs most recently completed fiscal quarter) or that represent 15% or more of the total assets (based on fair market value) of the Seller and its Subsidiaries, taken as a whole, immediately prior to such transaction, or (B) 15% or more of any class of capital stock, other equity securities or voting power of the Seller, any of its Subsidiaries or any resulting parent company of the Seller, in each case other than the transactions contemplated by this Agreement. (ii) βSuperior Proposalβ means any unsolicited bona fide binding written Acquisition Proposal that is fully financed or has fully committed financing that the Seller Board determines in good faith (after consultation with outside counsel and its financial advisor), taking into account all legal, financial, regulatory and other aspects of the proposal and the Person making the proposal, is (A) more favorable to the stockholders of the Seller from a financial point of view than the transactions contemplated by this Agreement (including any adjustment to the terms and conditions proposed by the Buyer in response to such proposal) and (B) reasonably likely of being completed on the terms proposed on a timely basis; provided, that, for purposes of this definition of βSuperior Proposal,β references in the term βAcquisition Proposalβ to β15%β shall be deemed to be references to β50%β; and (iii) βIntervening Eventβ means any positive material development or material change in circumstances occurring or arising after the date of this Agreement with respect to the Seller that was (i) not known to or reasonably foreseeable by the Seller Board as of, or prior to, the date of this Agreement and (ii) does not relate to (A) any Acquisition Proposal or (B) the mere fact, in and of itself, that the Seller meets or exceeds any internal or published projections, forecasts, estimates or predictions of revenue, earnings or other financial or operating metrics for any period ending on or after the date of this Agreement, (C) any actions taken pursuant to this Agreement, (D) any changes in the price of the Shares, (E) any change that is the result of factors generally affecting the health care industry, or (F) the opportunity for the Seller to acquire (by merger, joint venture, partnership, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, or businesses or enter into any licensing, collaboration or similar arrangements, with any third-party. Section 5.18 Preparation of Proxy Statement; Stockholdersβ Meeting. (a) As promptly as practicable after the date of this Agreement (and in any event within 15 calendar days after the date hereof), the Seller shall (i) prepare and file a Proxy Statement with the SEC in preliminary form as required by the Exchange Act and (ii) in consultation with the Buyer, set a preliminary record date for the Seller Stockholders Meeting and commence a broker search pursuant to Section 14a-13 of the Exchange Act in connection therewith. The Seller shall ensure that the Proxy Statement complies in all material respects with the applicable provisions of the Exchange Act and the rules and regulations promulgated thereunder and satisfies all rules of NYSE American. The Seller shall use commercially reasonable efforts to have the Proxy Statement cleared by the SEC as promptly as practicable after the filing thereof. The Seller shall obtain and furnish the information required to be included in the Proxy Statement, shall provide the Buyer with any comments that may be received from the SEC or its staff with respect thereto, shall respond promptly to any such comments made by the SEC or its staff with respect to the Proxy Statement, and shall cause the Proxy Statement in definitive form to be mailed to the Sellerβs stockholders at the earliest practicable date. If at any time prior to obtaining the Seller Stockholder Approval, any 63
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information relating to the transactions contemplated by this Agreement, the Seller, the Buyer or any of their respective Affiliates, directors or officers should be discovered by the Seller or the Buyer that should be set forth in an amendment or supplement to the Proxy Statement so that such document would not contain any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly notify the other party hereto and the Seller shall promptly file with the SEC an appropriate amendment or supplement describing such information and, to the extent required by applicable Law, disseminate such amendment or supplement to the stockholders of the Seller. Notwithstanding the foregoing, prior to filing or mailing the Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, the Seller shall give the Buyer and its counsel a reasonable opportunity to review and comment on such document or response and shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Buyer and its counsel. (b) As promptly as practicable after the Proxy Statement is cleared by the SEC for mailing to the Sellerβs stockholders, the Seller shall duly call, give notice of, convene and hold a meeting of its stockholders (the βSeller Stockholders Meetingβ) for the purpose, among others, of obtaining the Seller Stockholder Approval and, if applicable, the advisory vote required by Rule 14a-21(c) under the Exchange Act in connection therewith (and such Seller Stockholders Meeting shall in any event be no later than forty-five calendar days after (i) the tenth calendar day after the preliminary Proxy Statement therefor has been filed with the SEC if by such date the SEC has not informed the Seller that it intends to review the Proxy Statement or (ii) if the SEC has, by the tenth calendar day after the preliminary Proxy Statement therefor has been filed with the SEC, informed the Seller that it intends to review the Proxy Statement, the date on which the SEC confirms that it has no further comments on the Proxy Statement). The Seller may postpone or adjourn the Seller Stockholders Meeting solely (i) with the consent of the Buyer; (ii) (A) due to the absence of a quorum or (B) if the Seller has not received proxies representing a sufficient number of Shares for the Seller Stockholder Approval, whether or not a quorum is present, to solicit additional proxies; or (iii) to allow reasonable additional time for the filing and mailing of any supplemental or amended disclosure which the Seller Board has determined in good faith after consultation with outside legal counsel is necessary under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the Sellerβs stockholders prior to the Seller Stockholders Meeting; provided, that the Seller may not postpone or adjourn the Seller Stockholders Meeting more than a total of two times pursuant to clause (ii)(A) and/or clause (ii)(B) of this Section. Notwithstanding the foregoing, the Seller shall, at the request of the Buyer, to the extent permitted by Law, adjourn the Seller Stockholders Meeting to a date specified by the Buyer for the absence of a quorum or if the Seller has not received proxies representing a sufficient number of Shares for the Seller Stockholder Approval; provided, that the Seller shall not be required to adjourn the Seller Stockholders Meeting more than one time pursuant to this sentence, and no such adjournment pursuant to this sentence shall be required to be for a period exceeding 10 Business Days. Except in the case of a Seller Adverse Recommendation Change specifically permitted by Section 5.17, the Seller, through the Seller Board, shall (i) recommend to its stockholders that they adopt this Agreement and the transactions contemplated hereby, (ii) include such recommendation in the Proxy Statement and (iii) publicly reaffirm such recommendation within 24 hours after a request to do so by the Buyer. Without limiting the generality of the foregoing, 64
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the Seller agrees that (x) except in the event of a Seller Adverse Recommendation Change specifically permitted by Section 5.17, the Seller shall use its commercially reasonable efforts to solicit proxies to obtain the Seller Stockholder Approval and (y) its obligations pursuant to this Section 5.18(b) shall not be affected by the commencement, public proposal, public disclosure or communication to the Seller or any other Person of any Acquisition Proposal or the occurrence of any Seller Adverse Recommendation Change. Section 5.19 Transaction Litigation. The Seller shall (a) give the Buyer the opportunity to participate in the defense, settlement and/or prosecution of any Transaction Litigation at the Buyerβs cost and expense, and (b) consult with the Buyer with respect to the defense, settlement and/or prosecution of any Transaction Litigation. The Seller shall not compromise, settle or come to an arrangement regarding, or agree to compromise, settle or come to an arrangement regarding, any Transaction Litigation without the Buyerβs prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Section 5.20 State Takeover Provisions. The Seller and the Seller Board shall (i) take all actions necessary to ensure that no Takeover Provision is or becomes applicable to this Agreement or the transactions contemplated by this Agreement and (ii) if any Takeover Provision is or becomes applicable to this Agreement or the transactions contemplated by this Agreement, take all actions necessary to ensure that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such Takeover Provision on this Agreement or the transactions contemplated by this Agreement. Section 5.21 Financing. (a) The Buyer shall not permit any amendment or modification to be made to, or any waiver of any provision or remedy under, or replace, (i) Equity Financing Commitment (the βEquity Financingβ), or (ii) the Debt Financing Commitments if, in the case of the Debt Financing Commitments, such amendment, modification, waiver or replacement (x) reduces the aggregate amount of the financing contemplated by the Debt Financing Commitments (the βDebt Financingβ and together with the Equity Financing, the βFinancingβ) to an amount committed below the amount that is required, together with other financial resources of the Buyer, including amounts available under the Equity Financing Commitment, cash, cash equivalents and marketable securities of the Buyer on the Closing Date, to finance the Purchase Price on the terms set forth herein or (y) imposes new or additional conditions or otherwise expands, amends or modifies any of the conditions to the receipt of the Debt Financing in a manner that would reasonably be expected to (A) materially delay or prevent the Closing or (B) materially delay, prevent or otherwise make materially less likely to occur the funding of the Debt Financing (or satisfaction of the conditions to obtaining the Debt Financing) and shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the Debt Financing on the terms and described in the Debt Financing Commitments (provided, however, that the Buyer may amend or replace the Debt Financing Commitments to add lenders, lead arrangers, bookrunners, syndication agents or similar entities who had not executed a Debt Financing Commitment as of the date hereof), including using commercially reasonable efforts to (i) maintain in effect the Debt Financing Commitments, (ii) satisfy on a timely basis all conditions applicable to the Buyer 65
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to obtaining the Debt Financing at the Closing set forth therein, (iii) enter into definitive agreements with respect thereto on the terms and conditions (including the flex provisions) contemplated by the Debt Financing Commitments (and provide copies thereof to the Seller upon reasonable request) and (iv) consummate the Debt Financing in accordance with the terms and conditions of the Debt Financing Commitments at or prior to the Closing. (b) In the event any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Debt Financing Commitments (including the flex provisions), the Buyer shall promptly notify the Seller and shall use commercially reasonable efforts to arrange to obtain alternative debt financing from alternative debt sources on terms and conditions no less favorable to the Buyer (in the reasonable judgment of the Buyer) and in an amount sufficient to consummate the transactions contemplated hereby promptly following the occurrence of such event (the βAlternative Financingβ). The Buyer shall promptly deliver to the Seller true, complete and correct copies of all agreements pursuant to which any such alternative source shall have committed to provide the Buyer with the Alternative Financing. For purposes of this Section 5.21, references to βDebt Financingβ shall include the financing contemplated by the Debt Financing Commitments as permitted by this Section 5.21 to be amended, modified or replaced and references to βDebt Financing Commitmentsβ shall include such documents as permitted by this Section 5.21 to be amended, modified or replaced, in each case from and after such amendment, modification or replacement. (c) Notwithstanding anything to the contrary contained in this Agreement, nothing contained in this Section 5.21 or elsewhere in this Agreement shall require, and in no event shall the βcommercially reasonable effortsβ of the Buyer be deemed or construed to require, the Buyer to (i) bring any litigation or any other enforcement action against the Debt Financing Sources in order to enforce its rights under the Debt Financing Commitments or otherwise, (ii) seek the Equity Financing from any source other than those counterparty to, or in any amount in excess of that contemplated by, the Equity Financing Commitment, (iii) seek or accept Debt Financing on terms less favorable in any material respect than the terms and conditions described in the Debt Financing Commitments (including the flex provisions) as determined in the reasonable judgment of the Buyer or (iv) pay any fees materially in excess of those contemplated by the Debt Financing Commitments (whether to secure a waiver of any conditions contained therein or otherwise). (d) In order to assist with the Debt Financing and at the Buyerβs expense, the Seller shall promptly provide its, and shall use reasonable best efforts to cause its Representatives to promptly provide their, reasonable best efforts assistance and cooperation as the Buyer and its Affiliates may reasonably request, including, but not limited to, (i) participating in presentations and meetings (including customary one-on-one meetings between senior management and representatives of the Seller and the Debt Financing Sources, prospective lenders in respect of the Debt Financing and rating agencies) and cooperating with the marketing efforts of the Buyer and the Debt Financing Sources, (ii) assisting with the preparation of materials for rating agency presentations, bank information memoranda, business projections, lender presentations and similar documents prepared in connection with the Debt Financing, including execution and delivery of customary representation letters in connection with bank information memoranda, (iii) furnishing the Buyer and the Debt Financing Sources with financial, due diligence material and other pertinent information regarding the Seller as may be 66
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(a) Representations and Warranties. (i) The representations and warranties of the Seller contained in Sections 3.24 and 3.25 shall be true and correct in all respects both when made and as of the Closing Date as if made on and as of the Closing Date, (ii) the representations and warranties of the Seller contained in Sections 3.1, 3.2 and 3.4 (without giving effect to any limitation or qualification as to βmaterialityβ (including the word βmaterialβ), or βMaterial Adverse Effectβ set forth therein) shall be true and correct in all material respects both when made and as of the Closing Date as if made on and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date, and (iii) all other representations and warranties of the Seller contained in Article III shall be true and correct both when made and as of the Closing Date as if made on and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date, except where the failure to be so true and correct (without giving effect to any limitation or qualification as to βmaterialityβ (including the word βmaterialβ), or βMaterial Adverse Effectβ set forth therein) would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect. (b) Covenants. The Seller shall have performed in all material respects all obligations and agreements and complied with all covenants required by this Agreement to be performed or complied with by it prior to or at the Closing. (c) Certificates. The Buyer shall have received from the Seller (i) a certificate to the effect set forth in Section 6.3(a), Section 6.3(b) and Section 6.3(c), signed by a duly authorized officer thereof and (ii) a certificate of non-foreign status from the Seller that is reasonably acceptable to the Buyer and in compliance with Treasury Regulations Section 1.1445-2. (d) Ancillary Agreements. The Buyer shall have received executed counterpart signature pages from the Seller to each of the Ancillary Agreements, the Retained IP License Agreement, the Accessories Supply Agreement and the Generator Supply Agreement. (e) Consents and Approvals. The authorizations, consents, orders and approvals set forth on Section 6.3(e) of the Seller Disclosure Letter shall have been received and shall be satisfactory in form and substance to the Buyer in its reasonable discretion. (f) Data Room. The Seller shall have delivered to the Buyer a USB Drive containing a true, complete and correct copy, as of 4:00 p.m., New York time, on the date that is two Business Days prior to the Closing, of the Data Site. (g) Payoff-Letter. The Seller shall have delivered to the Buyer a duly- executed pay-off letter evidencing the release of all Encumbrances arising in connection with or related to the Loan Agreement against the Purchased Assets. (h) No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any change, event or development or prospective change, event or development that, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect. 69
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the Indemnifying Party may reasonably request, to the extent such information is reasonably available. The failure to deliver a Claim Notice, however, shall not release the Indemnifying Party from any of its obligations under this Article VII except to the extent that the Indemnifying Party is materially prejudiced by such failure. (b) If the Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party against any and all Losses that may result from a Third-Party Claim that is exclusively for civil monetary damages at Law pursuant to the terms of this Agreement, the Indemnifying Party shall have the right, upon written notice to the Indemnified Party within 15 days of receipt of a Claim Notice from the Indemnified Party in respect of such Third-Party Claim, to assume the defense thereof at the expense of the Indemnifying Party (which expenses shall not be applied against any indemnity limitation herein) with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party. Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to assume the defense of any Third-Party Claim that (i) seeks, in addition to or in lieu of monetary damages, any injunctive or other equitable relief, (ii) relates to or arises in connection with any criminal action, indictment, allegation or investigation, (iii) presents, under applicable standards of professional conduct, a conflict on any significant issue between the Indemnified Party and the Indemnifying Party or (iv) involves a material customer, supplier or distributor, and the Indemnified Party shall have the right to defend, at the expense of the Indemnifying Party, any such Third-Party Claim. The Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has failed to assume the defense thereof. If the Indemnifying Party does not expressly elect to assume the defense of such Third-Party Claim within the time period and otherwise in accordance with the first sentence of this Section 7.4(b), then the Indemnified Party shall have the sole right to assume the defense of and to settle such Third-Party Claim. If the Indemnifying Party assumes the defense of such Third-Party Claim, then the Indemnified Party shall have the right to employ separate counsel and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (i) the employment of such counsel shall have been specifically authorized in writing by the Indemnifying Party or (ii) the named parties to the Third-Party Claim (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party, and the Indemnified Party reasonably determines that representation by counsel to the Indemnifying Party of both the Indemnifying Party and such Indemnified Party may present such counsel with a conflict of interest. If the Indemnifying Party assumes the defense of any Third-Party Claim, then the Indemnified Party shall, at the Indemnifying Partyβs expense, cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party all witnesses, pertinent records, materials and information in the Indemnified Partyβs possession or under the Indemnified Partyβs control relating thereto as is reasonably required by the Indemnifying Party. If the Indemnifying Party assumes the defense of any Third-Party Claim, then the Indemnifying Party shall not, without the prior written consent of the Indemnified Party, enter into any settlement or compromise or consent to the entry of any judgment with respect to such Third- Party Claim if such settlement, compromise or judgment (i) involves a finding or admission of wrongdoing, (ii) does not include an unconditional written release by the claimant or plaintiff of the Indemnified Party from all liability in respect of such Third-Party Claim or (iii) imposes equitable remedies or any obligation on the Indemnified Party other than solely the payment of money damages for which the Indemnified Party will be indemnified hereunder. 72
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(c) An Indemnified Party seeking indemnification in respect of, arising out of or involving a Loss or a claim or demand hereunder that does not involve a Third-Party Claim being asserted against or sought to be collected from such Indemnified Party (a βDirect Claimβ) shall deliver a Claim Notice in respect thereof to the Indemnifying Party with reasonable promptness after becoming aware of facts supporting such Direct Claim, and shall provide the Indemnifying Party with such information with respect thereto as the Indemnifying Party may reasonably request, to the extent such information is reasonably available. The failure to deliver a Claim Notice, however, shall not release the Indemnifying Party from any of its obligations under this Article VII except to the extent that the Indemnifying Party is materially prejudiced by such failure and shall not relieve the Indemnifying Party from any other obligation or liability that it may have to the Indemnified Party or otherwise than pursuant to this Article VII. If the Indemnifying Party agrees that it has an indemnification obligation but asserts that it is obligated to pay a lesser amount than that claimed by the Indemnified Party, the Indemnifying Party shall pay such lesser amount promptly to the Indemnified Party, without prejudice to or waiver of the Indemnified Partyβs claim for the difference. (d) The indemnification required hereunder shall be made by prompt payment by the Indemnifying Party of the amount of actual Losses in connection therewith, as and when bills are received by the Indemnifying Party or Losses incurred have been notified to the Indemnifying Party. (e) The Indemnifying Party shall not be entitled to require that any action be made or brought against any other Person before action is brought or claim is made against it hereunder by the Indemnified Party. (f) Notwithstanding the provisions of Section 9.9, each Indemnifying Party hereby consents to the nonexclusive jurisdiction of any court in which an Action in respect of a Third-Party Claim is brought against any Indemnified Party for purposes of any claim that an Indemnified Party may have under this Agreement with respect to such Action or the matters alleged therein and agrees that process may be served on each Indemnifying Party with respect to such claim anywhere. Section 7.5 Remedies Not Affected by Investigation, Disclosure or Knowledge. If the transactions contemplated hereby are consummated, subject to the limitations set forth in this Agreement, the Buyer expressly reserves the right to seek indemnity or other remedy for any Losses arising out of or relating to any breach of any representation, warranty, agreement or covenant contained herein, notwithstanding any investigation by, disclosure to, knowledge or imputed knowledge of the Buyer or any of its Representatives in respect of any fact or circumstance that reveals the occurrence of any such breach, whether before or after the execution and delivery hereof. In furtherance of the foregoing, the Seller agrees that as knowledge or lack of reliance shall not be a defense in law or equity to any claim of breach of representation, warranty or covenant by the Seller herein, the Seller shall not in any proceeding concerning a breach or alleged breach of any representation, warranty or covenant herein, or any indemnity thereof, seek information concerning knowledge or reliance of the Buyer or any of its Representatives, through deposition, discovery or otherwise or seek to introduce evidence or argument in any proceeding regarding the knowledge or lack of reliance of the Buyer or any of 73
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Section 8.1(b)(iii) if the failure to obtain such Seller Stockholder Approval is proximately caused by any action or failure to act of the Seller that constitutes a breach of this Agreement; (c) by the Buyer: (i) if the Seller shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or agreements set forth in this Agreement (other than with respect to a breach of Section 5.17 or Section 5.18, as to which Section 8.1(c)(ii)(D) will apply), or if any representation or warranty of the Seller shall have become untrue in any material respect, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing at the Closing (A) would result in the failure of any of the conditions set forth in Section 6.1 or Section 6.3 and (B) cannot be or has not been cured by the earlier of (1) the Outside Date and (2) 30 days after the giving of written notice to the Seller of such breach or failure; provided, that the Buyer shall not have the right to terminate this Agreement pursuant to this Section 8.1(c)(i) if the Buyer is then in material breach of any of its covenants or agreements set forth in this Agreement such that Section 6.2(a) or Section 6.2(b) would not be satisfied; or (ii) if prior to the obtaining of the Seller Stockholder Approval, (A) the Buyer shall have received written notice from the Seller to the effect that the Seller intends to terminate this Agreement in accordance with Section 8.1(d)(ii), (B) the Seller Board or any committee thereof shall have effected a Seller Adverse Recommendation Change or an Intervening Event Change of Recommendation, (C) the Seller Board shall, within five Business Days of a tender or exchange offer relating to an Acquisition Proposal (whether or not a Superior Proposal) having been commenced, fail to publicly recommend against such tender or exchange offer, (D) the Seller Board shall have failed to publicly reaffirm its recommendation of the transactions contemplated by this Agreement after any Acquisition Proposal or any material modification thereto is first commenced, publicly announced, distributed or disseminated to the Sellerβs stockholders within five Business Days after the Buyer so requests in writing (or, if the Seller Stockholders Meeting is scheduled to be held within five Business Days of such request, within one Business Day after such request and in any event, prior to the date of the Seller Stockholders Meeting) or (E) the Seller shall have breached or be deemed to have breached in any material respect its obligations under Section 5.17 and Section 5.18; (d) by the Seller: (i) if the Buyer shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or agreements set forth in this Agreement, or if any representation or warranty of the Buyer shall have become untrue in any material respect, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing at the Closing (A) would result in the failure of any of the conditions set forth in Section 6.1 or Section 6.2 and (B) cannot be or has not been cured by the earlier of (1) the Outside Date and (2) 30 days after the giving of written notice to the Buyer of such breach or failure; provided, that the Seller shall not have the right to terminate this Agreement pursuant to this Section 8.1(d)(i) if it is then in material breach of any of its covenants or agreements set forth in this Agreement such that Section 6.3(a) or Section 6.3(b) would not be satisfied; 75
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(b) In the event that: (i) (A) an Acquisition Proposal (whether or not conditional) or intention to make an Acquisition Proposal (whether or not conditional) is made directly to the Sellerβs stockholders or is otherwise publicly disclosed or otherwise communicated to senior management of the Seller or the Seller Board, (B) this Agreement is terminated by the Seller or the Buyer pursuant to Section 8.1(b)(i) or Section 8.1(b)(iii) or by the Buyer pursuant to Section 8.1(c)(i), and (C) within 15 months after the date of such termination, the Seller enters into an agreement in respect of any Acquisition Proposal, or recommends or submits an Acquisition Proposal to its stockholders for adoption, or a transaction in respect of any Acquisition Proposal is consummated, which, in each case, need not be the same Acquisition Proposal that was made, disclosed or communicated prior to termination hereof (provided, that for purposes of this clause (C), each reference to β15%β in the definition of βAcquisition Proposalβ shall be deemed to be a reference to β50%β); (ii) this Agreement is terminated by the Buyer pursuant to Section 8.1(c)(ii); or (iii) this Agreement is terminated by the Seller pursuant to Section 8.1(d)(ii); then, in any such event, the Seller shall pay to the Buyer a fee of $4,850,000 (the βSeller Termination Feeβ) less the amount of Buyer Expenses previously paid to the Buyer (if any) pursuant to Section 8.4(c), it being understood that in no event shall the Seller be required to pay the Seller Termination Fee on more than one occasion; provided, that the payment by the Seller of the Seller Termination Fee pursuant to this Section 8.4 shall not relieve the Seller from any liability or damage resulting from a willful and material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement or fraud. (c) In the event that this Agreement is terminated by the Seller or the Buyer pursuant to Section 8.1(b)(iii) under circumstances in which the Seller Termination Fee is not then payable pursuant to Section 8.4(b)(i), then the Seller shall reimburse the Buyer and its Affiliates for all of their reasonable and documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to the Buyer and its Affiliates) actually incurred by the Buyer or on its behalf in connection with or related to the authorization, preparation, investigation, negotiation, execution and performance of this Agreement and the transactions contemplated hereby (the βBuyer Expensesβ), up to a maximum amount of $2,250,000; provided, that the payment by the Seller of the Buyer Expenses pursuant to this Section 8.4(c), (i) shall not relieve the Seller of any subsequent obligation to pay the Seller Termination Fee pursuant to Section 8.4(b) except that such obligation shall be reduced by the amount of the Buyer Expenses already paid to the Buyer by the Seller and (ii) shall not relieve the Seller from any liability or damage resulting from a willful and material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement or fraud. (d) Payment of the Seller Termination Fee shall be made by wire transfer of same day funds to the accounts designated by the Buyer (i) on the earliest of the execution of a 78
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Section 9.4 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by e-mail, upon written confirmation of receipt by e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next- day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice: (i) if to the Seller, to: Bovie Medical Corporation 0000 Xxxxxxxx Xxxx Xxxxxxxxxx, XX 00000 Attention: Chief Executive Officer E-mail: xxxxxxx.xxxxxxx@xxxxxxxx.xxx with a copy (which shall not constitute notice) to: Ruskin Moscou Faltischek, P.C. 0000 XXX Xxxxx, Xxxx Xxxxx, 00xx Xxxxx Xxxxxxxxx, XX 00000 Attention: Xxxx Xxxxxxx, Esq. E-mail: xxxxxxxx@xxxxx.xxx (ii) if to the Buyer, to: Specialty Surgical Instrumentation Inc. 0000 Xxxx Xx. Xxxxxxx, XX 00000 Attention: Xxxxx Xxxxxx, President and Chief Executive Officer Xxxxx X. Xxxxx, General Counsel E-mail: Xxxxx.xxxxxx@xxxxxxxxxxxxxxxx.xxx xxxxx.xxxxx@xxxxxxxxxxxxxxxx.xxx and RoundTable Healthcare Partners 000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000 Xxxx Xxxxxx, XX 00000 Attention: R. Xxxxx Xxxxxxxxx, Senior Partner E-mail: xxxxxxxxxx@xxxxxxxxxxxx.xxx with a copy (which shall not constitute notice) to: Xxxxxx, Xxxx & Xxxxxxxx LLP 000 Xxxx Xxxxxx 00
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Section 9.8 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware. Section 9.9 Submission to Jurisdiction. (a) Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its successors or assigns against the other party shall be brought and determined in the Court of Chancery of the State of Delaware, provided, that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then any such legal action or proceeding may be brought in any federal court located in the State of Delaware or any other Delaware state court, and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Notwithstanding the foregoing, the parties agree that disputes with respect to the matters referenced in Section 2.8 shall be resolved by the Independent Accounting Firm as provided therein. (b) Notwithstanding anything in this Agreement to the contrary, each of the parties hereto agrees that (i) it will not bring or support any Action, cause of action, claim, cross- claim or third-party claim of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, against the Debt Financing Sources in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including but not limited to any dispute arising out of or relating in any way to the Debt Financing or the definitive agreements executed in connection therewith or the performance thereof, in any forum other than the Supreme Court of the State of New York, County of New York, or, if under applicable law exclusive jurisdiction is vested in the federal courts, the United States District Court for the Southern District of New York (and, in each case, appellate courts thereof) and (ii) any such Action, cause of action, claim, cross-claim or third-party claim shall be governed by the laws of the State of New York. The Seller further agrees that (A) it shall not, and shall cause its 82
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IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. SPECIALTY SURGICAL INSTRUMENTATION INC. By: /s/ Xxxxx Xxxxxx Name: Xxxxx Xxxxxx Title: President and Chief Executive Officer BOVIE MEDICAL CORPORATION By: _/s/ Xxxxxxx X. Xxxxxxx II__________________ Name: Xxxxxxx X. Xxxxxxx XX Title: Chief Executive Officer and Director SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT