ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (“Agreement”) is entered into as of August
4,
2006
by and
among Novatrix Biomedical, Inc., a California corporation (the “Purchaser”);
Integrated Surgical Systems, Inc., a Delaware corporation (“Seller”). Certain
capitalized terms used in this Agreement are defined on Exhibit A (“Certain
Definitions”).
RECITALS
The
Seller wishes to provide for the sale of substantially all of the Assets of
the
Seller to the Purchaser on the terms set forth in this Agreement.
The
parties to this Agreement, intending to be legally bound, agree as
follows:
AGREEMENT
SECTION
1. SALE
OF ASSETS; RELATED TRANSACTIONS.
1.1. Sale
of Assets. The
Seller shall cause to be sold, assigned, transferred, conveyed and delivered
to
the Purchaser, at the Closing (as defined below), good and valid title to the
Assets (as defined below), free of any Encumbrances, on the terms and subject
to
the conditions set forth in this Agreement. For purposes of this Agreement,
“Assets” shall mean and include: all of the properties, rights, interests and
other tangible and intangible assets of the Seller (wherever located and whether
or not required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles), including any assets acquired by
the
Seller during the Pre-Closing Period. Without limiting the generality of the
foregoing, the Assets shall include:
(a) all
accounts receivable, notes receivable and other receivables of the Seller
(including all accounts receivable identified in Part 2.8 of the Disclosure
Schedule and all accounts receivable of the Seller that have arisen since August
4, 2006;
(b) all
inventories and work-in-progress of the Seller, and all rights to collect from
customers (and to retain) all fees and other amounts payable, or that may become
payable, to the Seller with respect to services performed on behalf of the
Seller on or prior to the Closing Date;
(c) all
equipment, materials, prototypes, tools, supplies, vehicles, furniture,
fixtures, improvements and other tangible Assets of the Seller (including the
tangible Assets identified in Part 2.10 of the Disclosure
Schedule);
(d) all
advertising and promotional materials possessed by the Seller;
(e) all
Proprietary Assets and goodwill of the Seller (including the right to use the
names “ROBODOC” and “ORTHODOC” and variations thereof, and the Proprietary
Assets identified in Part 2.12 of the Disclosure Schedule);
(f) all
rights of the Seller under the Seller Contracts (including the Seller Contracts
identified in Part 2.13 of the Disclosure Schedule);
(g) all
Governmental Authorizations held
by
the Seller (including the Governmental Authorizations identified in Part 2.16
of
the Disclosure Schedule);
(h) all
claims (including claims for past infringement of Proprietary Assets) and causes
of action of the Seller against other Persons (regardless of whether or not
such
claims and causes of action have been asserted by the Seller), and all rights
of
indemnity, warranty rights, tights of contribution, rights to refunds, rights
of
reimbursement and other rights of recovery possessed by the Seller (regardless
of whether such rights are currently exercisable).
1.2. Purchase
Price.
(a) As
consideration for the sale of the Assets to the Purchaser:
(i) at
the
Closing, the Purchaser shall pay to the Seller, in cash, an amount equal to
$2,000,000;
(ii) Purchaser
shall pay to Seller an additional $2,000,000 by wire transfer of immediately
available funds to an account or accounts designated by Seller upon the earlier
to occur of (i) completion of the milestone set forth in Schedule 1.2(a)(ii)
or
(ii) March 1, 2008.
(iii) Purchaser
agrees to continue to fund an additional three million three hundred thousand
dollars ($3,300,000) as working capital in Purchaser’s business for the
development of the Products, unless Seller otherwise agrees in
writing.
1.3. Sales
Taxes. The
Seller shall bear and pay, and shall reimburse the Purchaser and the Purchaser’s
affiliates for, any sales taxes, use taxes, transfer taxes, documentary charges,
recording fees or similar taxes, charges, fees or expenses that may become
payable in connection with the sale of the Assets to the Purchaser or in
connection with any of the other Transactions.
1.4. Closing.
(a) The
closing of the sale of the Assets to the Purchaser (the “Closing”) shall take
place at the offices of Xxxxx & Xxxxxxxxxxx, LLP, 000 Xxxx X Xxxxxx, Xxxxx
0000, at 10:00 a.m. on the date which is five (5) business days following the
satisfaction of all of the conditions set forth in Sections 6 and 7 hereof,
or
at such other time or place as may be agreed to by the parties. For purposes
of
this Agreement, “Scheduled Closing Time” shall mean the time and date as of
which the Closing is required to take place pursuant to this Section 1.4(a);
and
“Closing Date” shall mean the time and date as of which the Closing actually
takes place.
(b) At
the
Closing:
(i) the
Seller shall execute and deliver to the Purchaser such bills of sale,
endorsements, assignments and other documents as may (in the reasonable judgment
of the Purchaser or its counsel) be necessary or appropriate to assign, convey,
transfer and deliver to the Purchaser good and valid title to the Assets free
of
any Encumbrances;
(ii) the
Purchaser shall pay to the Seller two million dollars ($2,000,000) in cash
by
wire transfer of immediately available funds to an account or accounts
designated by Seller;
(iii) the
Seller shall execute and deliver to the Purchaser a certificate (the “Closing
Certificate”) setting forth the representations and warranties of the Seller
that (A) each of the representations and warranties made by the Seller in this
Agreement was accurate in all respects as of the date of this Agreement, (B)
except as expressly set forth in the Closing Certificate, each of the
representations and warranties made by the Seller in this Agreement is accurate
in all respects as of the Closing Date as if made on the Closing Date, (C)
each
of the covenants and obligations that the Seller is required to have complied
with and performed in all respects, and (D) except as expressly set forth in
the
Closing Certificate, each of the Conditions set forth in Section 6.4 and 6.5
has
been satisfied in all respects.
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SECTION
2. REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
represents and warrants to the Purchaser, as follows:
2.1. Due
Organization; No Subsidiaries; Etc.
(a) Seller
is
a corporation duly organized, under the laws of the State of Delaware and has
all necessary corporate power and authority:
(i) to
conduct its business in the manner in which its business is currently being
conducted and in the manner in which its business is proposed to be
conducted;
(ii) to
own
and use its Assets in the manner in which its Assets are currently owned and
used and in the manner in which its Assets are proposed to be owned and used;
and
(iii) to
perform its obligations under all Seller Contracts.
(b) Seller
is
not, and none of the Seller has ever been, required to be qualified, authorized,
registered or licensed to do business as a foreign corporation in any
jurisdiction other than the jurisdictions identified in Part 2.1 of the
Disclosure Schedule.
(c) Part
2.1
of the Disclosure Schedule accurately sets forth (i) the names of the members
of
Seller’s board of directors, (ii) the names of the members of each committee of
Seller’s board of directors, and (iii) the names and titles of Seller’s
officers.
(d) Seller
has no subsidiaries, and Seller has never owned, beneficially or otherwise,
any
shares or other securities of, or any direct or indirect interest of any nature
in, any Entity other than the Prior Subsidiary. The Prior Subsidiary was validly
dissolved on December 23, 2003, in full compliance with all applicable Legal
Requirements. Except as set forth in Part 2.1 of the Disclosure Schedule, the
Prior Subsidiary conducted no business and had no Liabilities prior to their
dissolution. Seller has delivered to the Purchaser accurate and complete copies
of the certificates of dissolution and all other documents relating to the
dissolution of the Prior Subsidiary.
2.2. Reserved.
2.3. Capitalization,
Etc. Except
as
set forth in Part 2.3 of the Disclosure Schedule, there is no: (a)
outstanding subscription,
option, call, warrant or right (whether or not currently
exercisable)
to
acquire any shares of the capital stock or other securities of the Seller;
(b)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of the capital stock or other securities
of
the Seller; or (c) Contract under which the Seller is or may become obligated
to
sell or otherwise issue any shares of its capital stock or any other securities.
2.4. Financial
Statements.
(a) Seller
has delivered to the Purchaser the following financial statements and notes
(collectively, the “Seller Financial Statements”):
(i) the
audited balance sheets of Seller as of December 31, 2001 to December 31, 2004,
of Seller and the Prior Subsidiary as of December 31, 2002, and the related
audited, consolidated statements of operations, changes in Stockholders’ equity
and cash flows of Seller for the year then ended, together with the notes
thereto and the unqualified report and certification of
____________________________________ relating thereto; and
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(ii) the
unaudited balance sheets of Seller from January 1, 2005 through May 31, 2006
(the “Unaudited Interim Balance Sheet”), and the related unaudited statements of
operations, changes in Stockholders’ equity and cash flows of
Seller.
(b) All
of
the Seller Financial Statements are accurate and complete in all material
respects, and the dollar amount of each line item included in the Seller
Financial Statements is accurate in all material respects. The financial
statements and notes referred to in Section 2.4(a)(i) present fairly the
consolidated financial position of Seller as of December 31, 2004, and the
consolidated results of operations, changes in Stockholders’ equity and cash
flows of Seller for the period then ended. The financial statements and notes
referred to in 2.4(a)(iii) present fairly the financial position of Seller
as of
the respective dates thereof and the results of operations, changes in
Stockholders’ equity and cash flows of Seller for the periods covered thereby.
The Seller Financial Statements have been prepared in accordance with generally
accepted accounting principles, applied on a consistent basis throughout the
periods covered.
2.5. Absence
of Changes. Except
as
set forth in Part 2.5 of the Disclosure Schedule, since May 31,
2006:
(a) there
have not been any material adverse changes and no material event has occurred
that would materially adversely effect the Assets or Seller’s business or
financial condition;
(b) there
has
not been any material loss, damage or destruction to, or any interruption in
the
use of, any of Seller’s Assets (whether or not covered by
insurance);
(c) Seller
has not purchased or otherwise acquired any other asset from any other person,
except for supplies acquired by the Seller in the Ordinary Course of
Business;
(d) Seller
has not leased or licensed any asset from any other Person;
(e) Seller
has not made any capital expenditure;
(f) Seller
has not sold or otherwise transferred, and has not leased or licensed, any
asset
to any other Person except for products sold by Seller from its inventory in
the
Ordinary Course of Business;
(g) Seller
has not written off as uncollectible, or established any extraordinary reserve
with respect to, any account receivable or other indebtedness;
(h) Seller
has not pledged or hypothecated any of its Assets or otherwise permitted any
of
its Assets to become subject to any Encumbrance;
(i) Seller
has not made any loan or advance to any other Person;
(j) Seller
has not (i) established or adopted any Employee Benefit Plan, or (ii) paid
any
bonus or made any profit-sharing or similar payment to, or increased the amount
of the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or
employees;
(k) no
Contract by which Seller or any of the Assets owned or used by Seller is or
was
bound, or under which Seller has or had any rights or interest has been amended
or terminated;
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(l) Seller
has not incurred, assumed or otherwise become subject to any Liability, other
than accounts payable (of the type required to be reflected as current
liabilities in the “liabilities” column of a balance sheet prepared in
accordance with GAAP) incurred by Seller in the Ordinary Course of
Business;
(m) Seller
has not discharged any Encumbrance or discharged or paid any indebtedness or
other Liability, except for accounts payable that: (i) are reflected as current
liabilities in the “liabilities” column of the Unaudited Interim Balance Sheet
or have been incurred by Seller since May 31, 2006, in the Ordinary Course
of
Business, and (ii) have been discharged or paid in the Ordinary Course of
Business;
(n) Seller
has not changed any of its methods of accounting or accounting practices in
any
respect;
(o) Seller
has not entered into any transaction or taken any other action outside the
Ordinary Course of Business; and
(p) Seller
has not agreed, committed or offered (in writing or otherwise), and has not
attempted, to take any of the actions referred to in clauses “(c)” through “(p)”
above.
2.6. Title
to Assets.
(a) Seller
owns, and has good, valid and marketable title to, all Assets purported to
be
owned by it, including:
(i) all
Assets reflected on the Unaudited Interim Balance Sheet (except for inventory
sold by Seller since May 31, 2006, in the Ordinary Course of
Business);
(ii) all
Assets acquired by Seller since May 31, 2006 (except for inventory sold by
Seller since June 30, 2006, in the Ordinary Course of Business);
(iii) all
Assets referred to in Parts 2.8, 2.9, 2.10 and 2.12 of the Disclosure
Schedule-and all of Seller’s rights under Seller Contracts; and
(iv) all
other
Assets reflected in Seller’s books and records as being owned by
Seller.
Except
as
set forth in Part 2.6 of the Disclosure Schedule, all of said Assets are owned
by Seller free and clear of any Encumbrances.
(b) Part
2.6
of the Disclosure Schedule identifies all Assets that are being leased or
licensed to Seller. The Assets will collectively constitute, as of the Closing
Date, all of the properties, rights, interest, and other tangible and intangible
Assets necessary to enable the Seller to conduct its business in the manner
in
which such business is currently being conducted and in the manner in which
such
business is proposed to be conducted.
2.7. Bank
Accounts. Part
2.7
of the Disclosure Schedule accurately sets forth, with respect to each account
maintained by or for the benefit of Seller at any bank or other financial
institution:
(a) the
name
and location of the institution at which such account is
maintained;
(b) the
name
in which such account is maintained and the account number of such
account;
(c) a
description of such account and the purpose for which such account is
used;
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(d) the
current balance in such account;
(e) the
rate
of interest being earned on the funds in such account; and
(f) the
names
of all individuals authorized to draw on or make withdrawals from such
account.
There
are
no safe deposit boxes or similar arrangements maintained by or for the benefit
of Seller.
2.8. Receivables;
Major Customers.
(a) Part
2.8
of the Disclosure Schedule provides an accurate and complete breakdown and
aging
of all accounts receivable, notes receivable and other receivables of Seller
as
of May 31, 2006.
(b) Except
as
set forth in Part 2.8 of the Disclosure Schedule, all existing accounts
receivable of Seller (including those accounts receivable reflected on the
Unaudited Interim Balance Sheet that have not yet been collected and those
accounts receivable that have arisen since May 31, 2006, and have not yet been
collected):
(i) represent
valid obligations of customers of Seller arising from bona fide transactions
entered into in the Ordinary Course of Business; and
(ii) are
current and are collectable under the rules of GAAP in full (without any
counterclaim or setoff) on or before the Closing Date.
(c) Part
2.8
of the Disclosure Schedule accurately identifies, and provides in all material
respects an accurate and complete breakdown of the revenues received from,
each
customer or other Person that accounted for: (i) more than $10,000 of the
consolidated gross revenues of Seller, (ii) more than $10,000 of Seller’s gross
revenues in the Seller through December 31, 2006, or (iii) more than $25,000
of
Seller’s gross revenues through December 31, 2006, Seller has not received any
notice or other communication (in writing or otherwise), and has not received
any other information, indicating that any customer or other Person identified
in Part 2.8 of the Disclosure Schedule may cease dealing with Seller. Seller
has
represented that there are currently no unfilled orders.
2.9. Inventory.
Part
2.9
of the Disclosure Schedule provides an accurate and complete breakdown in all
material respects of all inventories (including raw materials, work in process
and finished goods) of Seller as of June 30, 2006. All of Seller’s existing
inventory (including all inventory that is reflected on the Unaudited Interim
Balance Sheet and that has not been disposed of by Seller since May 31,
2006.
(a) is
of
such quality and quantity as to be usable and saleable by Seller in the Ordinary
Course of Business;
(b) has
been
priced at the lower of cost or market value using the “last-in. first-out”
method; and
(c) is
free
of any defect or deficiency.
The
inventory levels maintained by Seller (i) are not excessive in light of Seller’s
normal operating requirements, and (ii) are adequate for the conduct of Seller’s
operations in the Ordinary Course of Business.
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2.10. Equipment,
Etc.
(a) Part
2.10
of the Disclosure Schedule accurately identifies all equipment, furniture,
fixtures, improvements and other tangible Assets (other than inventory) owned
by
Seller, and accurately sets forth the date of acquisition, original cost and
book value of each of said Assets. Part 2.10 also accurately identifies all
tangible Assets leased to Seller.
(b) Each
asset identified or required to be identified in Part 2.10 of the Disclosure
Schedule:
(i) is
structurally sound, free of defects and deficiencies and in good condition
and
repair (ordinary wear and tear excepted);
(ii) complies
in all respects with, and is being operated and otherwise used in full
compliance with, all applicable Legal Requirements; and
(iii) is
adequate for the uses to which it is being put.
The
Assets identified in Part 2.10 of the Disclosure Schedule are adequate for
the
conduct of Seller’s business in the manner in which such business is currently
being conducted and in the manner in which such business is proposed to be
conducted.
2.11. Real
Property. Seller
does not own any real property or any interest in real property, except for
the
leaseholds created under the real property leases identified in Part 2.13 of
the
Disclosure Schedule. Part 2.11 of the Disclosure Schedule provides an accurate
and complete description in all material respects of the premises covered by
said leases and the facilities located on such premises. Seller enjoys peaceful
and undisturbed possession of such premises.
2.12. Proprietary
Assets.
(a) Disclosure
Schedule 2.12 identifies and provides a brief description of all Proprietary
Assets: (i) owned by the Seller, and (ii) owned by any other Person and that
is
licensed to or used by the Seller (except for any Proprietary Asset that is
licensed to Seller under any third party software license that: (1) is generally
available to the public, and (2) imposes no future monetary obligation on the
Seller) and identifies the license agreement or other agreement under which
such
Proprietary Asset is being licensed to or used by the Seller. Except as set
forth on Part 2.12 of the Disclosure Schedule, the Seller has good and valid
title to all of the Proprietary Assets and the Assets are free of any
Encumbrances, and, Seller’s Knowledge, has a valid right to use and otherwise
exploit, and to license others to use and otherwise exploit, all Proprietary
Assets identified in Disclosure Schedule 2.12. Except as otherwise identified
in
Disclosure Schedule 2.12, the Seller is not obligated to make any payment to
any
Person for the use or other exploitation of any Proprietary Asset and Seller
is
free to use, modify, copy, distribute, sell, license or otherwise exploit each
of the Seller Proprietary Assets on an exclusive basis (other than Proprietary
Assets consisting of software licensed to the Seller under third party licenses
generally available to the public, with respect to which the Seller’s rights are
not exclusive).
(b) The
Seller has taken all reasonable measures and precautions necessary to protect
and maintain the confidentiality and secrecy of all Seller Proprietary Assets
(except Seller
Proprietary Assets whose value would be unimpaired by public disclosure) and
otherwise to
maintain and protect the value of all Seller Proprietary Assets. The Seller
has
not disclosed or delivered or permitted to be disclosed or delivered to any
Person, and no Person (other than the Seller)
has access to or has any rights with respect to, the source code, or any portion
or aspect of
the
source code, of any Seller Proprietary Asset.
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(c) All
patents, trademarks, service marks and copyrights that are registered with
any
Governmental Body and held by the Seller are valid and subsisting. To Seller’s
Knowledge, None of the Seller Proprietary Assets infringes or conflicts with
any
Proprietary Asset owned or used by any other Person. To the best of Seller’s
Knowledge, the Seller is not infringing, misappropriating or making any unlawful
use of, and the Seller has not at any time infringed, misappropriated or made
any unlawful use of, or received any notice or other communication of any
actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Proprietary Asset owned or used by any other Person. To
Seller’s Knowledge, no other Person is infringing, misappropriating or making
any unlawful use of, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Seller Proprietary Asset.
(d) The
Proprietary Assets constitute all the Proprietary Assets necessary to enable
the
Seller to conduct its business in the manner in which such business is being
conducted and in the manner in which such business is proposed to be conducted.
The Seller has not licensed any of the Seller Proprietary Assets to any Person
on an exclusive basis. The Seller has not entered into any covenant not to
compete or Contract limiting its ability to exploit fully any of the Seller
Proprietary Assets or to transact business in any market or geographical area
or
with any Person. The Seller has, and the Purchaser will acquire at the Closing,
the right to use all of Sellers trademarks and copyrights listed in Disclosure
Schedule 2.12 and variations thereof.
(e) Except
as
set forth in Disclosure Schedule 2.12, the Seller has not entered into and
is
not bound by any Contract under which any Person has the right to distribute
or
license any Proprietary Asset. The Seller has not disclosed or delivered to
any
Person, or permitted the disclosure or delivery to any Person, of the source
code, or any portion or
aspect
of the source code, or any proprietary information or algorithm contained in
any
source
code, of
any Proprietary Asset. No event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or could reasonably
be expected to, result in the
disclosure or delivery to any Person of the source code, or any portion or
aspect of the source
code, or
any
proprietary
information or algorithm contained in any source code, of any Proprietary
Asset.
(f) Except
as
set forth in Part 2.12 of the Disclosure Schedule, to Seller’s Knowledge, there
is no Proprietary Asset that is owned by or licensed to Seller or that is
otherwise used or useful in connection with Seller’s business.
(g) Seller
represents and warrants that it has full right, title and interest in and to
all
Proprietary Assets listed in Part 2.12 of the Disclosure Schedule, including
any
and all referenced documents thereto. Seller has taken all reasonable measures
and precautions necessary to protect the confidentiality and value of each
Proprietary Asset identified or required to be identified in Part 2.12 of the
Disclosure Schedule.
(h) To
Seller’s Knowledge, Seller is not infringing, and none of the Seller has at any
time infringed or received any notice or other communication (in writing or
otherwise) of any actual, alleged, possible or potential infringement of, any
Proprietary Asset owned or used by any other Person. To Seller’s Knowledge, no
other Person is infringing, and no Proprietary Asset owned or used by any other
Person infringes or conflicts with, any Proprietary Asset owned or used by
Seller.
(i) The
Proprietary Assets identified in Part 2.12 of the Disclosure Schedule constitute
all of the Proprietary Assets necessary to enable Seller to conduct its business
in the manner in which its business is currently being conducted and in the
manner in which its business is proposed to be conducted.
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2.13. Contracts.
(a) Seller
has provided to Purchaser through its due diligence all material contracts,
except for the Seller Contracts identified in Part 2.13 of the Disclosure
Schedule, including all amendments thereto. Each Seller Contract is valid and
in
full force and effect, and is enforceable by Seller in accordance with its
terms.
(b) Except
as
set forth in Part 2.13 of the Disclosure Schedule, and except where no material
adverse effect on the Assets or Seller’s business or financial condition would
be likely to occur individually or in the aggregate (an “MAE”): (i) no Person
has violated or breached, or declared or committed any default under, any Seller
Contract; (ii) no event has occurred, and no circumstance or condition exists,
that might (with or without notice or lapse of time): (A) result in a violation
or breach of any of the provisions of any Seller Contract, (B) give any Person
the right to declare a default or exercise any remedy under any Seller Contract,
(C) give any Person the right to accelerate the maturity or performance of
any
Seller Contract, or (D) give any Person the right to cancel, terminate or modify
any Seller Contract; (iii) Seller has not received any notice or other
communication (in writing or otherwise) regarding any actual, alleged, possible
or potential violation or breach of, or default under, any Seller Contract;
and
(iv) Seller has not waived any of its rights under any Seller
Contract.
(c) To
the
Seller’s Knowledge, each Person against which Seller has or may acquire any
rights under any Seller Contract is solvent and is able to satisfy all of such
Person’s current and future monetary obligations and other obligations and
Liabilities to Seller.
(d) Except
as
set forth in Part 2.13 of the Disclosure Schedule and to Seller’s Knowledge,
Seller has never guaranteed or otherwise agreed to cause, insure or become
liable for, and Seller has ever pledged any of its Assets to secure, the
performance or payment of any obligation or other Liability of any other
Person.
(e) Except
as
set forth in Part 2.15 of the Disclosure Schedule, the performance of the Seller
Contracts will not result in any violation of or failure to comply with any
Legal Requirements.
(f) No
Person
is renegotiating, or has the right to renegotiate, any amount paid or payable
to
Seller under any Seller Contract or any other term or provision of any Seller
Contract.
(g) The
Seller has no knowledge of any basis upon which any party to any Seller
Contracts may object to: (i) the assignment to the Purchaser of any right under
such Seller Contract, or (ii) the delegation to or performance by the Purchaser
of any obligation under such Seller Contract.
(h) The
Contracts identified in Part 2.13 of the Disclosure Schedule and the Excluded
Contracts collectively constitute all of the Contracts necessary to enable
Seller to conduct its business in the manner in which its business is currently
being conducted and in the manner in which its business is proposed to be
conducted.
(i) Part
2.13
of the Disclosure Schedule identifies and provides an accurate and complete
description, in all material respects of each proposed Contract as to which
any
bid, offer, written proposal, term sheet or similar document has been submitted
or received by Seller.
2.14. Liabilities;
Major Suppliers.
(a) Except
as
set forth in Part 2.14 of the Disclosure Schedule, Seller has no material
Liabilities, except for: (i) liabilities identified as such in the “liabilities”
column of the Unaudited Interim Balance Sheet; (ii) accounts payable (of the
type required to be reflected as current liabilities in the “liabilities” column
of a balance sheet prepared in accordance with GAAP) incurred by Seller in
the
Ordinary Course of Business since May 31, 2006; and (iii) Seller’s obligations
under the Contracts listed in Part 2.13 of the Disclosure Schedule and under
Excluded Contracts, to the extent that the existence of such obligations is
ascertainable solely by reference to such Contracts.
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(b) Part
2.14
of the Disclosure Schedule: (i) provides an accurate and complete breakdown
and
aging in all material respects of Seller’s accounts payable as of June 30, 2006;
(ii) provides an accurate and complete breakdown of all customer deposits and
other deposits held by Seller in all material respects as of the date of this
Agreement; and (iii) Provides an accurate and complete breakdown in all material
respects of all notes payable and other indebtedness of the Seller as of the
date of this Agreement.
(c) Except
as
set forth in Part 2.14 of the Disclosure Schedule, Seller has not paid, and
Seller is not and will not become liable for the payment of, any fees, costs
or
expenses of the type referred to in Section 11.1(a).
(d) Part
2.14
of the Disclosure Schedule accurately identifies, and provides an accurate
and
complete breakdown in all material respects of all of the accounts payable
as of
June 13, 2006.
2.15. Compliance
With Legal Requirements.
(a) Except
as
set forth in Part 2.15 of the Disclosure Schedule: (i) Seller is in all material
respects, in full compliance with each Legal Requirement that is applicable
to
it or to the conduct of its business or the ownership or use of any of its
Assets; (ii) no event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) constitute or result
directly or indirectly in a violation by Seller of, or a failure on the part
of
Seller to comply with, any Legal Requirement; and (iii) Seller has not received,
at any time, any notice or other communication (in writing or otherwise) from
any Governmental Body or any other Person regarding: (1) any material actual,
alleged, possible or potential violation of, or failure to comply with, any
Legal Requirement, or (2) any material actual, alleged, possible or potential
obligation on the part of Seller to undertake, or to bear all or any portion
of
the cost of, any cleanup or any remedial, corrective or response action of
any
nature.
(b) Seller
has delivered to the Purchaser an accurate and complete copy of each report,
study, survey or other document to which Seller has access that addresses or
otherwise relates to the compliance of Seller with, or the applicability to
Seller of, any Legal Requirement.
(c) To
the
Seller’s Knowledge, no Governmental Body has proposed or is considering any
Legal Requirement that, if adopted or otherwise put into effect, (i) may have
an
adverse effect on the Assets or Seller’s business or financial condition or on
the ability of Seller to comply with or perform any covenant or obligation
under
any of the Transactional Agreements, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the
Transactions.
2.16. Governmental
Authorizations.
(a) Part
2.16
of the Disclosure Schedule identifies: (i) each Governmental Authorization
that
is held by Seller; and (ii) each other Governmental Authorization that, to
Seller’s Knowledge, is held by any employee of the Seller or any independent
contractor and relates to or is useful in connection with Seller’s
business.
(b) Seller
has delivered to the Purchaser accurate and complete copies of all of the
Governmental Authorizations identified in Part 2.16 of the Disclosure Schedule,
including all renewals thereof and all amendments thereto. Each Governmental
Authorization identified or required to be identified in Part 2.16 of the
Disclosure Schedule is valid and in full force and effect.
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(c) Except
as
set forth in Part 2.16 of the Disclosure Schedule: (i) To Seller’s Knowledge,
its employees and independent contractors are, and the Seller and their
respective employees have at all times been, in full compliance with all of
the
terms and requirements of each Governmental Authorization identified or required
to be identified in Part 2.16 of the Disclosure Schedule; (ii) no event has
occurred, and no condition or circumstance exists, that might (with or without
notice or lapse of time) (A) constitute or result directly or indirectly in
a
violation of or a failure to comply with any term or requirement of any
Governmental Authorization identified or required to be identified in Part
2.16
of the Disclosure Schedule, or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation, termination or modification
of
any Governmental Authorization identified or required to be identified in Part
2.16 of the Disclosure Schedule; (iii) Seller has never received, and, of CFO
,
no employee of Seller has ever received, any notice or other communication
(in
writing or otherwise) from any Governmental Body or any other Person regarding:
(A) any actual, alleged, possible or potential violation of or failure to comply
with any term or requirement of any Governmental Authorization, or (B) any
actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Authorization;
and
(iv) all applications required to have been filed for the renewal of the
Governmental Authorizations required to be identified in Part 2.16 of the
Disclosure Schedule have been duly filed on a timely basis with the appropriate
Governmental Bodies, and each other notice or filing required to have been
given
or made with respect to such Governmental Authorizations has been duly given
or
made on a timely basis with the appropriate Governmental Body, except, with
respect to (i), (ii) or (iii) above, where an MAE would not be likely to
occur.
(d) The
Governmental Authorizations identified in Part 2.16 of the Disclosure Schedule
constitute all of the Governmental Authorizations necessary: (i) to enable
Seller to conduct its business in the manner in which its business is currently
being conducted and in the manner in which its business is proposed to be
conducted, and (ii) to permit Seller to own and use its Assets in the manner
in
which they are currently owned and used and in the manner in which they are
proposed to be owned and used.
2.17. Tax
Matters.
(a) Each
Tax
required to have been paid by Seller (whether pursuant to any Tax Return or
otherwise) has been duly paid in full or on a timely basis. Any Tax required
to
have been withheld or collected by Seller has been duly withheld and collected;
and (to the extent required) each such Tax has been paid to the appropriate
Governmental Body.
(b) Part
2.17
of the Disclosure Schedule accurately identifies each examination or audit
of
any Tax Returns of the Seller that has been conducted since December 31, 2002.
The Seller has delivered to the Purchaser accurate and complete copies of all
audit reports and similar documents (to which the Seller has access) relating
to
such Tax Returns.
(c) Except
as
set forth in Part 2.17 of the Disclosure Schedule, to Seller’s Knowledge, no
claim or other
Proceeding is pending or has been threatened against or with respect to the
Seller in respect
of any
Tax. There are no unsatisfied Liabilities for Taxes (including liabilities
for
interest, additions to tax and penalties thereon and related expenses) with
respect to any notice of deficiency
or similar document received by the Seller. The Seller has not entered into
or
become
bound by
any agreement or
consent pursuant to Section 341(f) of the Code.
(d) There
is
no agreement, plan, arrangement or other Contract covering any employee or
independent contractor or former employee or independent contractor of the
Seller that, individually or collectively, could give rise directly or
indirectly to the payment of any amount that would not be deductible pursuant
to
Section 280G or Section 162 of the Code.
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(e) The
Seller has delivered to (or made available for inspection by) the Purchaser
accurate and complete copies of all material Tax Returns that have been filed
on
behalf of or with respect to the Seller for taxable years 2001, 2002 and 2003.
The information contained in such Tax
Returns
is accurate and complete in all material respects.
2.18. Employee
and Labor Matters.
(a) Part
2.18
of the Disclosure Schedule accurately sets forth, with respect to each employee
of Seller (including any employee of Seller who is on a leave of absence or
on
layoff status): (i) the name of such employee and the date as of which such
employee was originally hired by Seller or one of the Prior Subsidiary; (ii)
such employee’s title, and a description of such employee’s duties and
responsibilities; (iii) the aggregate dollar amount of the compensation
(including wages, salary, commissions, director’s fees, fringe benefits,
bonuses, profit-sharing payments and other payments or benefits of any type)
received by such employee from Seller with respect to services performed in;
(iv) such employee’s annualized compensation as of the date of this Agreement;
(v) each Current Benefit Plan in which such employee participates or is eligible
to participate; and (vi) any Governmental Authorization that is held by such
employee and that relates to or is useful in connection with Seller’s
business.
(b) Except
as
set forth in Part 2.18 of the Disclosure Schedule, Seller is not a party to
or
bound by, and none of the Seller’s employees have ever been a party to or bound
by, any employment agreement or any union contract, collective bargaining
agreement or similar Contract.
(c) The
employment of the employees of the Seller is terminable by Seller at will and
no
employee is entitled to any severance pay or other benefits following
resignation or termination, except as provided by law. The Seller has delivered
to the Purchaser accurate and complete copies of all employee manuals and
handbooks, disclosure materials, policy statements and other materials relating
to the employment of the current and former employees of each of the
Seller.
(d) To
the
Seller’s Knowledge: (i) no employee of Seller intend to terminate his
employment; (ii) no employee of Seller has received an offer to join a business
that may be competitive with Seller’s business; and (iii) no employee of Seller
is a party to or is bound by any confidentiality agreement, noncompetition
agreement or other Contract (with any Person) that may have any material adverse
effect on (A) the performance by such employee of any of his duties or
responsibilities as an employee of Seller, or (B) Seller’s business or
operations.
(e) Seller
is
not engaged, and none of the Seller has ever been engaged, in any unfair labor
practice of any nature. There has never been any slowdown, work stoppage, labor
dispute or union organizing activity, or any similar activity or dispute,
affecting Seller or any of their employees. There is not now pending, and to
Seller’s Knowledge, no Person has threatened to commence, any such slowdown,
work stoppage, labor dispute or union organizing activity or any similar
activity or dispute. No event has occurred, and no condition or circumstance
exists, that might directly or indirectly give rise to or provide a basis for
the commencement of any such slowdown, work stoppage, labor dispute or union
organizing activity or any similar activity or dispute.
(f) Part
2.18
of the Disclosure Schedule sets forth the name of, and a general description
of
the services performed by, each independent contractor to whom the Seller has
made any payments since December 31, 2004.
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2.19. Benefit
Plans; ERISA.
(a) Part
2.19
of the Disclosure Schedule identifies and provides an accurate and complete
description of each Current Benefit Plan and each Past Benefit Plan. None of
the
Seller has ever established, adopted, maintained, sponsored, contributed to,
participated in or incurred any Liability with respect to any Employee Benefit
Plan, except for the Company Plans identified in Part 2.19 of the Disclosure
Schedule; and none of the Seller has ever provided or made available any fringe
benefit or other benefit of any nature to any of its employees, except as set
forth in Part 2.19 of the Disclosure Schedule.
(b) No
Company Plan: (i) provides or provided any benefit guaranteed by the Pension
Benefit Guaranty Corporation; (ii) is or was a “multiemployer plan” as defined
in Section 4001(a)(3) of ERISA; or (iii) is or was subject to the minimum
funding standards of Section 412 of the Code or Section 302 of
ERISA.
There
is
no Person that (by reason of common control or otherwise) is or has at any
time
been treated together with Seller or any of the Prior Subsidiary as a single
employer within the meaning of Section 414 of the Code.
(c) Seller
has delivered to the Purchaser, with respect to each Company Plan: (i) an
accurate and complete copy of such Company Plan and all amendments thereto
(including any amendment that is scheduled to take effect in the future); (ii)
an accurate and complete copy of each Contract (including any trust agreement,
funding agreement, service provider agreement, insurance agreement, investment
management agreement or record keeping agreement) relating to such Company
Plan;
(iii) an accurate and complete copy of any description, summary, notification,
report or other document that has been furnished to any employee of Seller
with
respect to such Company Plan; (iv) an accurate and complete copy of any form,
report, registration statement or other document that has been filed with or
submitted to any Governmental Body with respect to such Company Plan; and (v)
an
accurate and complete copy of any determination letter, notice or other document
that has been issued by, or that has been received by Seller from, any
Governmental Body with respect to such Company Plan.
(d) Except
as
set for in Section 2.19 of the Disclosure Schedule and except where an MAE
would
not be likely to occur, each Current Benefit Plan is being operated and
administered in full compliance with the provisions thereof, and each Company
Plan has at all times been operated and administered in full compliance with
the
provisions thereof. Each contribution or other payment that is required to
have
been accrued or made under or with respect to any Company Plan has been duly
accrued and made on a timely basis. Each Current Benefit Plan complies and
is
being operated and administered in full compliance with, and each Company Plan
has at all times complied and been operated and administered in full compliance
with, all applicable reporting, disclosure and other requirements of ERISA
and
the Code and all other applicable Legal Requirements in all material respects.
None of the Seller has ever incurred any Liability to the Internal Revenue
Service or any other Governmental Body with respect to any Company Plan; and
no
event has occurred, and no condition or circumstance exists, that might (with
or
without notice or lapse of time) give rise directly or indirectly to any such
Liability. The Seller, and no Person that is or was an administrator or
fiduciary of any Company Plan (or any such administrator or fiduciary), has
engaged in any transaction or has otherwise acted or failed to act in a manner
that has subjected or may subject Seller to any Liability for breach of any
fiduciary duty or any other duty. No Company Plan, and no Person that is or
was
an administrator or fiduciary of any Company Plan (or any such administrator
or
fiduciary): (i) has engaged in a “prohibited transaction” within the meaning of
Section 406 of ERISA or Section 4975 of the Code; (ii) has failed to perform
any
of the responsibilities or obligations imposed upon fiduciaries under Title
I of
ERISA; or (iii) has taken any action that (A) may subject such Company Plan
or
such Person to any Tax, penalty or Liability relating to any “prohibited
transaction,” or (B) may directly or indirectly give rise to or serve as a basis
for the assertion (by any employee or by any other Person) of any claim under,
on behalf of or with respect to such Company Plan.
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(e) No
inaccurate or misleading representation, statement or other communication has
been made or directed (in writing or otherwise) to any current or former
employee of Seller (i) with respect to such employee’s participation,
eligibility for benefits, vesting, benefit accrual or coverage under any Company
Plan or with respect to any other matter relating to any Company Plan, or (ii)
with respect to any proposal or intention on the part of Seller to establish
or
sponsor any Employee Benefit Plan or to provide or make available any fringe
benefit or other benefit of any nature.
(f) Except
as
set forth in Part 2.19 of the Disclosure Schedule, Seller has not advised any
of
its employees (in writing or otherwise) that it intends or expects to establish
or sponsor any Employee Benefit Plan or to provide or make available any fringe
benefit or other benefit of any nature in the future.
2.20. Environmental
Matters.
(a) Seller
is
not liable or to Seller’s Knowledge potentially liable for any response cost or
natural resource damages under Section 107(a) of CERCLA, or under any other
so-called “superfund” or “superlien” law or similar Legal Requirement, at or
with respect to any site.
(b) The
Seller has never received any notice or other communication (in writing or
otherwise) from any Governmental Body or other Person regarding any actual,
alleged, possible or potential Liability arising from or relating to the
presence, generation, manufacture, production, transportation, importation,
use,
treatment, refinement, processing, handling, storage, discharge, release,
emission or disposal of any Hazardous Material. No Person has ever commenced
or
to Seller’s Knowledge threatened to commence any contribution action or other
Proceeding against Seller in connection with any such actual, alleged, possible
or potential Liability; and to Seller’s Knowledge, no event has occurred, and no
condition or circumstance exists, that may directly or indirectly give rise
to,
or result in Seller becoming subject to, any such Liability.
(c) Except
as
set forth in Part 2.20 of the Disclosure Schedule, none of the Seller has ever
generated, manufactured, produced, transported, imported, used, treated,
refined, processed, handled, stored, discharged, released or disposed of any
Hazardous Material (whether lawfully or unlawfully). Except as set forth in
Part
2.20 of the Disclosure Schedule, none of the Seller has ever permitted
(knowingly or otherwise) any Hazardous Material to be generated, manufactured,
produced, used, treated, refined, processed, handled, stored, discharged,
released or disposed of (whether lawfully or unlawfully): (i) on or beneath
the
surface of any real property that is, or that has at any time been, owned by,
leased to, controlled by or used by Seller; (ii) in or into any surface water,
groundwater, soil or air associated with or adjacent to any such real property;
or (iii) in or into any well, pit, pond, lagoon, impoundment, ditch, landfill,
building, structure, facility, improvement, installation, equipment, pipe,
pipeline, vehicle or storage container that is or was located on or beneath
the
surface of any such real property or that is or has at any time been owned
by,
leased to, controlled by or used by Seller.
(d) To
Seller’s Knowledge, all property that is owned by, leased to, controlled by or
used by Seller, and all surface water, groundwater, soil and air associated
with
or adjacent to such property: (i) is in clean and healthful condition; is free
of any Hazardous Material and any harmful chemical or physical conditions;
and
(ii) is free of any environmental contamination of any nature.
(e) Each
storage tank or other storage container that is or has been owned by, leased
to,
controlled by or used by Seller, or that is located on or beneath the surface
of
any real property owned by, leased to, controlled by or used by Seller: (i)
is
in sound condition; and (i) has been demonstrated by accepted testing
methodologies to be free of any corrosion or leaks.
-14-
2.21. Sale
of Products; Performance of Services.
To
Seller’s Knowledge:
(a) Each
product that has been sold by Seller to any Person: (i) conformed and complied
in all material respects with the terms and requirements of any applicable
warranty or other Contract and with all applicable Legal Requirements; and
(ii)
was free of any material design defects, construction defects or other defects
or deficiencies at the time of sale.
(b) All
repair services and other services that have been performed by the Seller were,
in all material respects, performed properly and in full conformity with the
terms and requirements of all applicable warranties and other Contracts and
with
all applicable Legal Requirements.
(c) Seller
will not incur or otherwise become subject to any material Liability arising
directly or indirectly from any product manufactured or sold, or any repair
services or other services performed by, Seller on or at any time prior to
the
Closing Date.
(d) Except
as
set forth in Schedule 2.21 of the Disclosure Schedule, no product manufactured
or sold by Seller has been the subject of any recall or other similar action;
and no event has occurred, and no condition or circumstance exists, that might
(with or without notice or lapse of time) directly or indirectly give rise
to or
serve as a basis for any such recall or other similar action relating to any
such product.
(e) Except
as
set forth in Part 2.21 of the Disclosure Schedule, no customer or other Person
has ever asserted or threatened to assert any claim against Seller (i) under
or
based upon any warranty provided by or on behalf of Seller, or (ii) under or
based upon any other warranty relating to any product sold by Seller or any
services performed by Seller. To Seller’s Knowledge, no event has occurred, and
no condition or circumstance exists, that might (with or without notice or
lapse
of time) directly or indirectly give rise to or serve as a basis for the
assertion of any such claim.
2.22. Insurance.
(a) Part
2.22
of the Disclosure Schedule accurately sets forth, with respect to each insurance
policy maintained by or at the expense of, or for the direct or indirect benefit
of, Seller: (i) the name of the insurance carrier that issued such policy and
the policy number of such policy; (ii) whether such policy is a “claims made” or
an “occurrences” policy; (ii) a description of the coverage provided by such
policy and the material terms and provisions of such policy (including all
applicable coverage limits, deductible amounts and co-insurance arrangements
and
any non-customary exclusions from coverage); (iv) the annual premium payable
with respect to such policy, and the cash value (if any) of such policy; and
(v)
a description of any claims pending, and any claims that have been asserted
in
the past, with respect to such policy. Part 2.22 of the Disclosure Schedule
also
identifies: (1) each pending application for insurance that has been submitted
by or on behalf of Seller, (2) each self-insurance or risk-sharing arrangement
affecting Seller or, any of its Assets, and (3) all material risks (of the
type
customarily insured by comparable entities) for which the Seller does not
maintain insurance coverage. Seller has delivered to the Purchaser accurate
and
complete copies of all of the insurance policies identified in Part 2.22 of
the
Disclosure Schedule (including all renewals thereof and endorsements thereto)
and all of the pending applications identified in Part 2.22 of the Disclosure
Schedule.
(b) Each
of
the policies identified in Part 2.22 of the Disclosure Schedule is valid,
enforceable and in full force and effect, and has been issued by an insurance
carrier that, to Seller’s Knowledge, is solvent, financially sound and
reputable. All of the information contained in the applications submitted in
connection with said policies was (at the times said applications were
submitted) accurate and complete in all material respects, and all premiums
and
other amounts owing with respect to said policies have been paid in full on
a
timely basis. The nature, scope and dollar amounts of the insurance coverage
provided by said policies are sufficient to adequately insure Seller’s business,
Assets, operations, key employees, services and potential liabilities; and
said
insurance coverage is at least as comprehensive as the insurance coverage
customarily maintained by Comparable Entities.
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(c) Except
as
set forth in Part 2.22 of the Disclosure Schedule, there is no pending claim
under or based upon any of the policies identified in Part 2.22 of the
Disclosure Schedule; and no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any such claim.
(d) None
of
the Seller has received: (i) any notice or other communication (in writing
or
otherwise) regarding the actual or possible cancellation or invalidation of
any
of the policies identified in Part 2.22 of the Disclosure Schedule or regarding
any actual or possible adjustment in the amount of the premiums payable with
respect to any of said policies; (ii) any notice or other communication (in
writing or otherwise) regarding any actual or possible refusal of coverage
under, or any actual or possible rejection of any claim under, any of the
policies identified in Part 2.22 of the Disclosure Schedule; or (iii) any
indication that the issuer of any of the policies identified in Part 2.22 of
the
Disclosure Schedule may be unwilling or unable to perform any of its obligations
thereunder.
2.23. Related
Party Transactions. Except
as
set forth in Part 2.23 of the Disclosure Schedule and to Seller’s
Knowledge:
(a) no
Related Party has, and no Related Party has at any time since June 30, 2006,
had, any direct or indirect interest of any nature in any asset used in or
otherwise relating to the business of any of Seller;
(b) no
Related Party is, or has at any time since June
30,
2006 been,
nor
will any Related Party be indebted to Seller;
(c) since
June 30, 2006, no Related Party has entered into, or will be entering into
up
until the time of the Closing, or has had any direct or indirect financial
interest in, any Contract, transaction or business dealing of any nature
involving Seller;
(d) no
Related Party is competing or will be competing up until the time of the
Closing, or has at any time since June 30, 2006 competed, directly or
indirectly, with Seller in any market served by Seller;
(e) no
Related Party has any claim or right against Seller; and
(f) no
event
has occurred, and no condition or circumstance exists, that might (with or
without notice or lapse of time) directly or indirectly give rise to or serve
as
a basis for any claim or right in favor of any Related Party against
Seller.
2.24. Certain
Payments, Etc. Seller,
and to Seller’s Knowledge, no officer, employee, or other Person associated with
or acting for or on behalf of Seller, has at any time, directly or
indirectly:
(a) used
any
corporate funds: (i) to make any unlawful political contribution or gift or
for
any other unlawful purpose relating to any political activity, (ii) to make
any
unlawful payment to any governmental official or employee, or (iii) to establish
or maintain any unlawful or unrecorded fund or account of any
nature;
(b) made
any
false or fictitious entry, or failed to make any entry that should have been
made, in any of the books of account or other records of Seller;
-16-
(c) made
any
payoff, influence payment, bribe, rebate, kickback or unlawful payment to any
Person;
(d) performed
any favor or given any gift which was not deductible for federal income tax
purposes;
(e) made
any
payment (whether or not lawful) to any Person, or provided (whether lawfully
or
unlawfully) any favor or anything of value (whether in the form of property
or
services, or in any other form) to any Person, for the purpose of obtaining
or
paying for (i) favorable treatment in securing business, or (ii) any other
special concession; or
(f) agreed,
committed, offered or attempted to take any of the actions described in clauses
“(a)” through “(e)” above.
2.25. Proceedings;
Orders.
(a) Except
as
set forth in Part 2.25 of the Disclosure Schedule and to Seller’s Knowledge,
there is no pending Proceeding, and no Person has threatened to commence any
Proceeding: (i) that involves Seller or that otherwise relates to or might
affect Seller’s business or any of the Assets owned or used by Seller (whether
or not Seller is named as a party thereto); or (ii) that challenges, or that
may
have the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the Transactions.
(b) Except
as
set forth in Part 2.25 of the Disclosure Schedule, no event has occurred, and
no
claim, dispute or other condition or circumstance exists, that might directly
or
indirectly give rise to or serve as a basis for the commencement of any such
Proceeding.
(c) Except
as
set forth in Part 2.25 of the Disclosure Schedule, no Proceeding has ever been
commenced by or against Seller; and no Proceeding otherwise involving or
relating to Seller has been pending or to Seller’s Knowledge threatened at any
time.
(d) Seller
has delivered to the Purchaser accurate and complete copies of all pleadings,
correspondence and other written materials to which Seller has access that
relate to the Proceedings identified in Part 2.25 of the Disclosure Schedule.
(e) There
is
no Order to which Seller or any of the Assets owned or used by Seller, is
subject to any Order that relates to Seller’s business or to any of the Assets
owned or used by Seller.
(f) To
Seller’s Knowledge, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxxxxxx and Xxxxx Xxxxx are not
subject to any Order that prohibits them from engaging in or continuing any
conduct, activity or practice relating to Seller’s business.
(g) There
is
no proposed Order that, if issued or otherwise put into effect: (i) would have
any material adverse effect on the Assets or Seller’s business or financial
condition,, or on the ability of Seller to comply with or perform any covenant
or obligation under any of the Transactional Agreements, or (ii) would, to
Seller’s Knowledge, have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the Transactions.
2.26. Authority;
Binding Nature of Agreements.
(a) Subject
to Stockholder approval, Seller has the absolute and unrestricted right, power
and authority to enter into and to perform its obligations under this Agreement;
and the execution, delivery and performance by Seller of this Agreement have
been duly authorized by all necessary action on the part of Seller and its
Stockholders, board of directors and officers. This Agreement constitutes the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as the same may be limited by applicable
bankruptcy or insolvency laws.
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2.27. Non-Contravention;
Consents. Except
as
set forth in Part 2.27 of the Disclosure Schedule, neither the execution and
delivery of any of the Transactional Agreements, nor the consummation or
performance of any of the Transactions, will directly or indirectly materially
(with or without notice or lapse of time):
(a) contravene,
conflict with or result in a violation of (i) any of the provisions of Seller’s
certificate of incorporation or bylaws, or (ii) any resolution adopted Seller’s
board of directors or any committee of Seller’s board of directors;
(b) contravene,
conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Transactions or to exercise
any
remedy or obtain any relief under, any Legal Requirement or any Order to which
Seller, or any of the Assets owned or used by Seller, is subject;
(c) cause
Seller, the Purchaser or any affiliate of the Purchaser to become subject to,
or
to become liable for the payment of, any Tax;
(d) contravene,
conflict with or result in a violation of any of the terms or requirements
of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by Seller
or
any of its employees or that otherwise relates to Seller’s business or to any of
the Assets owned or used by Seller;
(e) contravene,
conflict with or result in a violation or breach of, or result in a default
under, any provision of any Seller Contract;
(f) give
any
Person the right to (i) declare a default or exercise any remedy under any
Seller Contract, (ii) accelerate the maturity or performance of any Seller
Contract, or (iii) cancel, terminate or modify any Seller Contract;
or
(g) result
in
the imposition or creation of any Encumbrance upon or with respect to any asset
owned or used by Seller.
Except
as
set forth in Part 2.27 of the Disclosure Schedule, Seller has made all filings
with or given the necessary notices to, or to obtain any Consent from, any
Person in connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the
Transactions.
2.28. Brokers.
Seller
has not agreed or become obligated to pay, or has taken any action that might
result in any Person claiming to be entitled to receive, any brokerage
commission, finder’s fee or similar commission or fee in connection with any of
the Transactions.
2.29. Full
Disclosure.
(a) None
of
the Transactional Agreements contains or will contain any material untrue
statement of fact; and none of the Transactional Agreements omits or will omit
to state any material fact necessary to make any of the representations,
warranties or other statements or information contained therein not
misleading.
(b) Except
as
set forth in Part 2.30 of the Disclosure Schedule, there is no fact within
the
Knowledge of Seller (other than publicly known facts relating exclusively to
political or economic matters of general applicability that will adversely
affect all Comparable Entities) that: (i) may have any material adverse effect
on the Assets or Seller’s business or financial condition, or on the ability of
Seller to comply with or perform any covenant or obligation under any of the
Transactional Agreements, or (ii) may have the effect of preventing, delaying,
making illegal or otherwise interfering with any of the
Transactions.
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(c) All
of
the information set forth in the Disclosure Schedule, and all other information
regarding the Seller and the Assets and the Seller’s business and financial
condition that has been furnished to the Purchaser or any of its Representatives
by or on behalf of Seller or any of Seller’s Representatives, is accurate and
complete in all respects.
(d) Seller
has provided the Purchaser and the Purchaser’s Representatives with full and
complete access to all of Seller’s records and other documents and data and to
all records and other documents and data of the Prior Subsidiary.
SECTION
3. REPRESENTATIONS
AND WARRANTIES OF PURCHASER
The
Purchaser represents and warrants to Seller as follows:
3.1. Authority;
Binding Nature of Agreement.
Purchaser
has the absolute and unrestricted right, power and authority to enter into
and
to perform its obligations under this Agreement; and the execution, delivery
and
performance by Purchaser of this Agreement have been duly authorized by all
necessary action on the part of Purchaser and its board of directors and
officers. This Agreement constitutes the legal, valid and binding obligation
of
Purchaser, enforceable against Purchaser in accordance with its terms, except
as
the same may be limited by applicable bankruptcy or insolvency
laws;
3.2. Brokers.
The
Purchaser has not agreed or become obligated to pay, and has not taken any
action that might result in any Person claiming to be entitled to receive,
any
brokerage commission, finder’s fee or similar commission or fee in connection
with any of the Transactions.
SECTION
4. PRE-CLOSING
COVENANTS
4.1. Access
and Investigation. Seller
shall ensure will use commercially reasonable efforts to ensure that, at all
times during the pre-closing period:
(a) Seller
and its Representatives provide the Purchaser and its Representatives with
free
and complete access during normal business hours to personnel and Assets and
to
all existing books, records, Tax Returns, work papers and other documents and
information relating to the Seller;
(b) Seller
and its Representatives provide the Purchaser and its Representatives with
such
copies of existing books, records, Tax Returns, work papers and other documents
and information relating to the Seller as the Purchaser may request in good
faith; and
(c) Seller
and its Representatives compile and provide the Purchaser and its
Representations with such additional financial, operating and other data and
information regarding the Seller as the Purchaser may request in good
faith.
4.2. Operation
of Business. Seller
shall ensure that, during the Pre-Closing Period:
(a) Seller
conducts its operations exclusively in the Ordinary Course of Business and
in
the same manner as such operations have been conducted prior to the date of
this
Agreement;
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(b) Seller
preserves intact its current business organization, keeps available the services
of its current officers and employees and maintains its relations and good
will
with all suppliers, customers, landlords, creditors, licensors, licensees,
employees and other Persons having business relationships with
Seller;
(c) Seller
to
use all reasonable efforts and within a reasonable time to execute all necessary
documents to put into place all reasonable and necessary insurance policies
as
required under Section 2.22(b) prior to Closing;
(d) Seller’s
officers confer with the Purchaser regularly to the Purchaser concerning the
status of the Assets or Seller’s business or financial condition;
(e) Seller
immediately notifies the Purchaser of any inquiry, proposal or offer from any
Person relating to any Acquisition Transaction;
(f) Seller
and its officers use commercially reasonable efforts to cause the Company to
operate profitably and to maximize its net income;
(g) Seller
does not form any subsidiary or acquire any equity interest or other interest
in
any other Entity;
(h) Seller
does not enter into or permit any of the Assets owned or used by Seller to
become bound by any Contract, except for any Excluded Contract;
(i) Seller
does not incur, assume or otherwise become subject to any Liability, except
for
current liabilities (of the type required to be reflected in the “liabilities”
column of a balance sheet prepared in accordance with GAAP) incurred in the
Ordinary Course of Business;
(j) Seller
does not enter into any transaction or take any other action of the type
referred to in Section 2.5;
(k) Seller
does not enter into any transaction or take any other action outside the
Ordinary Course of Business;
(l) Seller
does not enter into any transaction or take any other action that might cause
or
constitute a Breach of any representation or warranty made by Seller in this
Agreement or in the Closing Certificate; and
(m) Seller
does not agree, commit or offer (in writing or otherwise), and does not attempt,
to take any of the actions described in clauses “(i)” through “(v)” of this
Section 4.2.
4.3. Filings
and Consents. Seller
shall ensure that:
(a) as
soon
as possible after the date of this Agreement, Seller files with the appropriate
Governmental Bodies the notification form required to be filed by Seller with
respect to the Transactions, together with a request for early termination
of
the applicable waiting period;
(b) after
consultation with the Purchaser, Seller promptly makes any additional filing
required to be made by Seller under th and promptly furnishes to the appropriate
Governmental Bodies such additional information as may be requested under the
(c) each
other filing or notice required to be made or given (pursuant to any applicable
Legal Requirement, Order or Contract, or otherwise) by Seller in connection
with
the execution and delivery of any of the Transactional Agreements or in
connection with the consummation or performance of any of the Transactions
(including each of the filings and notices identified in Part 2.28 of the
Disclosure Schedule) is made or given as soon as possible after the date of
this
Agreement;
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(d) each
Consent required to be obtained (pursuant to any applicable Legal Requirement,
Order or Contract, or otherwise) by Seller in connection with the execution
and
delivery of any of the Transactional Agreements or in connection with the
consummation or performance of any of the Transactions (including each of the
Consents identified in Part 2.28 of the Disclosure Schedule) is obtained as
soon
as possible after the date of this Agreement and remains in full force and
effect through the Closing Date;
(e) Seller
promptly delivers to the Purchaser a copy of each filing made, each notice
given
and each Consent obtained by Seller during the Pre-Closing Period;
and
(f) during
the Pre-Closing Period, Seller and its Representatives cooperate with the
Purchaser and with the Purchaser’s Representatives, and prepare and make
available such documents and take such other actions as the Purchaser may
request in good faith, in connection with any filing, notice or Consent that
the
Purchaser is required or elects to make, give or obtain.
4.4. Notification;
Updates to Disclosure Schedule.
(a) During
the Pre-Closing Period, Seller shall promptly notify the Purchaser in writing
of: (i) the discovery by Seller of any event, condition, fact or circumstance
that occurred or existed on or prior to the date of this Agreement and that
caused or constitutes a Breach of any representation or warranty made by Seller
in this Agreement; (ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a Breach of any representation or warranty made by Seller in this
Agreement if (A) such representation or warranty had been made as of the time
of
the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any Breach
of
any covenant or obligation of Seller: and (iv) any event, condition, fact or
circumstance that may make the timely satisfaction of any of the conditions
set
forth in Section 6 or Section 7 impossible or unlikely.
(b) If
any
event, condition, fact or circumstance that is required to be disclosed pursuant
to Section 4.4(a) requires any change in the Disclosure Schedule, or if any
such
event, condition, fact or circumstance would require such a change assuming
the
Disclosure Schedule were dated as of the date of the occurrence, existence
or
discovery of such event, condition, fact or circumstance, then Seller shall
promptly deliver to the Purchaser an update to the Disclosure Schedule
specifying such change. No such update shall be deemed to supplement or amend
the Disclosure Schedule for the purpose of (i) determining the accuracy of
any
of the representations and warranties made by Seller in this Agreement or in
the
Closing Certificate, or (ii) determining whether any of the conditions set
forth
in Section 6 has been satisfied.
4.5. No
Negotiation.
Seller
shall ensure that, during the Pre-Closing Period, neither Seller nor any of
Seller’s Representatives directly or indirectly:
(a) solicits
or encourages the initiation of any inquiry, proposal or offer from any Person
(other than the Purchaser) relating to any Acquisition Transaction;
(b) participates
in any discussions or negotiations with, or provides any non-public information
to, any Person (other than the Purchaser) relating to any Acquisition Proposal;
or
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(c) except
as
otherwise required by applicable law, rule or regulation or through the exercise
of appropriate fiduciary duty, considers the merits of any unsolicited inquiry,
proposal or offer from any Person (other than the Purchaser) relating to any
Acquisition Transaction.
4.6. Best
Efforts; Stockholder Approval.
Both
parties shall use their best efforts to mutually cooperate with each other
and
ensure that all closing conditions are satisfied on a timely basis. The Board
of
Directors of Seller shall recommend to the Stockholders that the Stockholders
approve the Transaction and take any other action reasonably necessary to
effectuate such approval.
4.7. Employment
Offers.
Purchaser and Seller shall mutually negotiate in good faith the terms and
conditions of employment with Purchaser for each of Xxxxxx Xxxxxxx, Xxxxxx
Xxxxxxxxxxx, and Xxxx Xxxxx.
4.8. Confidentiality.
Purchaser
and Seller shall ensure that, during the Pre-Closing Period:
(a) Purchaser,
Seller and their respective Representatives keep strictly confidential the
existence and terms of this Agreement;
(b) neither
party nor any of its Representatives issues or disseminates any press release
or
other publicity or otherwise makes any disclosure of any nature (to any of
Seller’s suppliers, customers, landlords, creditors or employees or to any other
Person) regarding any of the Transactions, except in each Parties reasonable
discretion and to the extent that either party is required by law, rule or
regulation to make any such disclosure regarding the Transactions:
and
(c) if
either
party is required by law to make any disclosure regarding the Transactions,
the
disclosing party shall advise the non-disclosing party, the nature and content
of the intended disclosure within a reasonable time either before or after
such
disclosure.
SECTION
5. RESERVED
SECTION
6. CONDITIONS
PRECEDENT TO PURCHASER’S OBLIGATION TO CLOSE
The
Purchaser’s obligation to purchase the Assets and to take the other actions
required to be taken by the Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part, in accordance
with Section 11.10):
6.1. Accuracy
of Representations.
(a) Each
of
the Specified Representations shall have been accurate in all material respects
as of the date of this Agreement, and shall be accurate in all respects as
of
the Scheduled Closing Time as if made at the Scheduled Closing Time, without
giving effect to any update to the Disclosure Schedule.
(b) All
of
the other representations and warranties made by Seller in this Agreement
(considered collectively), and each of said representations and warranties
(considered individually), shall have been accurate in all material respects
as
of the date of this Agreement, and shall be accurate in all material respects
as
of the Scheduled Closing Time as if made at the Scheduled Closing Time, without
giving effect to any update to the Disclosure Schedule.
6.2. Performance
of Obligations.
(a) Seller
shall have executed and delivered each of the agreements required to be executed
and delivered by Seller pursuant to Section 1.4(b).
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(b) All
of
the other covenants and obligations that Seller is required to comply with
or to
perform at or prior to the Closing (considered collectively), and each of said
covenants and obligations (considered individually), shall have been duly
complied with and performed in all material respects.
6.3. Consents.
Each
of
the Consents identified in Part 2.28 of the Disclosure Schedule shall have
been
obtained and shall be in full force and effect.
6.4. Additional
Documents.
Purchaser shall have received the following documents:
(a) an
opinion letter from law firm of Snow Xxxxxx Xxxxxx P.C. dated the Closing Date,
in the form of Exhibit E;.
(b) a
letter
from _________________________________, dated as of a date not more than three
days prior to the Closing Date, in the form of Exhibit F;
(c) such
other documents as the Purchaser may reasonably request in good faith for the
purpose of (i) evidencing the accuracy of any representation or warranty made
by
Seller, (ii) evidencing the compliance by Seller , or the performance by Seller
of, any covenant or obligation set forth in this Agreement, (iii) evidencing
the
satisfaction of any condition set forth in this Section 6, or (iv) otherwise
facilitating the consummation or performance of any of the
Transactions.
6.5. No
Proceedings.
Since
the date of this Agreement, there shall not have been commenced or threatened
against the Purchaser, or against any Person affiliated with the Purchaser,
any
Proceeding (a) involving any challenge to, or seeking damages or other relief
in
connection with, any of the Transactions, or (b) that may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
Transactions.
6.6. No
Prohibition. Neither
the consummation nor the performance of any the Transactions will, directly
or
indirectly (with or without notice or lapse of time), contravene or conflict
with or result in a violation of, or cause the Purchaser or any Person
affiliated with the Purchaser to suffer any adverse consequence under, (a)
any
applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
that has been proposed by or before any Governmental Body.
SECTION
7. CONDITIONS
PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
The
Seller’s obligation to Sell the Assets and to take the other actions required to
be taken by the Seller at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may
be
waived by the Seller, in whole or in part, in writing):
7.1. Accuracy
of Representations. Each
of
said representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement and shall
be
accurate in all material respects as of the Scheduled Closing Time as if made
at
the Scheduled Closing Time.
7.2. Purchaser’s
Performance.
All
of
the covenants and obligations that the Purchaser is required to comply with
or
to perform pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of said covenants and obligations (considered
individually), shall have been complied with and performed in all material
respects.
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7.3. Additional
Documents.
Seller
shall have received the following documents:
(a) an
opinion letter from law firm of Xxxxx & Xxxxxxxxxxx, LLP dated the Closing
Date, in the form of Exhibit F;.
(b) such
other documents as the Seller may request in good faith for the purpose of
(i)
evidencing the accuracy of any representation or warranty made by Purchaser,
(ii) evidencing the compliance by Purchaser with, or the performance by
Purchaser of, any covenant or obligation set forth in this Agreement, (iii)
evidencing the satisfaction of any condition set forth in this Section 7, or
(iv) otherwise facilitating the consummation or performance of any of the
Transactions.
7.4 Stockholder
Approval.
Stockholders of Seller representing not less than a majority of the issued
and
outstanding shares of capital stock of Seller shall have approved this Agreement
and the transactions contemplated hereby at a meeting of stockholders of Seller
for which due notice has been provided.
SECTION
8. TERMINATION
8.1. Termination
Events. This
Agreement may be terminated prior to the Closing:
(a) by
the
Purchaser if (i) there is a material Breach of any representation, warranty,
covenant or obligation of Seller, or (ii) the Purchaser reasonably determines
that the timely satisfaction of any condition set forth in Section 6 has become
impossible, or impractical (other than as a result of any failure on the part
of
the Purchaser to comply with or perform its covenants and obligations under
this
Agreement);
(b) by
the
Seller if (i) there is a material Breach of any representation, warranty,
covenant or obligation of the Purchaser, or (ii) the Seller reasonably
determines that the timely satisfaction of any condition set forth in Section
7
has become impossible or impractical (other than as a result of any failure
on
the part of the Seller to comply with or perform its covenants and obligations
under this Agreement);
(c) by
the
Purchaser, at Purchaser’s sole discretion if the Closing has not taken place on
or before June 30, 2007, (other than as a result of any failure on the part
of
the Purchaser to comply with or perform its covenants and obligations under
this
Agreement);
(d) by
the
mutual consent of the Purchaser and the Seller.
8.2. Termination
Procedures. If
the
Purchaser wishes to terminate this Agreement pursuant to Section 8.1(a) or
Section 8.1(c), the Purchaser shall deliver to the Seller a written notice
stating that the Purchaser is terminating this Agreement and setting forth
a
brief description of the basis on which the Purchaser is terminating this
Agreement. If the Seller wishes to terminate this Agreement pursuant to Section
8.1(b), the Seller shall deliver to the Purchaser a written notice stating
that
the Seller is terminating this Agreement and setting forth a brief description
of the basis on which the Seller is terminating this Agreement.
8.3. License
Agreement.
In the
event that this Agreement is terminated by Purchaser pursuant to Section 8.1(c)
or by Seller for any reason other than pursuant to Section 8.1(b) or (d) hereof,
and provided that Purchaser is not in default of any provision of this
Agreement, Seller agrees to execute in favor of Purchaser an exclusive license
to use, manufacture, market and sell the ROBODOC Surgical Assist System and
ORTHODOC Pre-Surgical Planning Station, including any and all Licensed Software
as defined in the License Agreement annexed as Exhibit A to that certain Loan
Agreement and Secured Promissory Note of even date herewith by and between
the
parties.
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8.4. Termination
Fee.
(a) In
the
event that the Closing does not occur as a result of the material breach of
this
Agreement by Seller (that cannot be cured upon reasonable notice and an
opportunity to cure), then Seller shall, within thirty (30) days after
termination of this Agreement, pay to Purchaser, as liquidated damages and
not
as a penalty, an amount equal to $240,000.
(b) Seller
acknowledges that the termination fee pursuant to this Section 8.3(b) is an
integral part of the transactions contemplated by this Agreement, and that,
without such fee, Purchaser would not enter into this Agreement. Seller further
acknowledges that damages resulting from the failure to consummate the Closing
as a result of a breach by Seller hereto would be difficult to determine and
the
termination fee payable pursuant to clause (i) above is the parties’ best
estimate of such damages.
8.5. Effect
of Termination. If
this
Agreement is terminated pursuant to Section 8.1, all further obligations of
the
parties under this Agreement shall terminate; provided, however,
that:
(a) no
party
shall be relieved of any obligation or other Liability arising from any Breach
by such party of any provision of this Agreement; and
(b) the
parties shall, in all events, remain bound by and continue to be subject to
the
provisions set forth in Section 10; and
(c) all
parties shall, in all events, remain bound by and continue to be subject to
Section 4.8.
8.6. Nonexclusivity
of Termination Rights. The
termination rights provided in Section 8.1 shall not be deemed to be exclusive.
Accordingly, the exercise by any party of its right to terminate this Agreement
pursuant to Section 8.1 shall not be deemed to be an election of remedies and
shall not be deemed to prejudice, or to constitute or operate as a waiver of,
any other right or remedy that such party may be entitled to exercise (whether
under this Agreement, under any other Contract, under any statute, rule or
other
Legal Requirement, at common law, in equity or otherwise).
SECTION
9. INDEMNIFICATION,
ETC.
9.1. Survival
of Representations and Covenants.
(a) The
representations, warranties, covenants and obligations of each party to this
Agreement shall survive: (i) the Closing and the sale of the Assets to the
Purchaser; (ii) any sale or other disposition of any or all of the Assets by
the
Purchaser; and (iii) the death or dissolution of any party to this Agreement,
in
each case for a period of six (6) months from the date of the Closing,
provided that,
the
representations and warranties contained in Section 2.17 shall survive the
Closing for a period of six (6) years.
(b) In
the
event that a Claim Notice (as defined below) relating to any representation,
warranty, covenant or obligation is given to any party on or prior to the
applicable survival period set forth in subsection (a) above, then,
notwithstanding anything to the contrary contained in this Section 9.1, such
representation or warranty shall not so expire with respect to the specific
claim so asserted.
(c) For
purposes of this Agreement, a “Claim Notice” relating to a particular
representation, warranty, covenant or obligation shall be deemed to have been
given if any party, acting in good faith, delivers to the other party a written
notice stating that such party believes that there is or has been a possible
Breach of such representation, warranty, covenant or obligation and containing
(i) a brief description of the circumstances supporting such party’s belief that
there is or has been such a possible Breach, and (ii) a non-binding, preliminary
estimate of the aggregate dollar amount of the actual and potential Damages
that
have arisen and may arise as a direct or indirect result of such possible
Breach.
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(d) For
purposes of this Agreement, each statement or other item of information set
forth in the Disclosure Schedule or in any update to the Disclosure Schedule
shall be deemed to be a representation and warranty made by the Seller in this
Agreement.
9.2. Indemnification
By The Seller.
(a) The
Shareholders and the Seller, jointly and severally, shall hold harmless and
indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages that are directly or
indirectly suffered or incurred by any
of
the Indemnitees or
to
which any
of
the Indemnitees may otherwise
become subject
at any
time
(regardless of whether or not such Damages relate to any third-party claim)
and
that arise directly or indirectly from or as a direct or indirect
result of, or are directly or indirectly connected with:
(i) any
Breach of any of the representations or warranties made by the Seller
in
this Agreement (without giving effect to any update to the Disclosure
Schedule) or in the Closing Certificate or any of the other Transactional
Agreements;
(ii) any
Breach of any covenant or obligation of the Seller contained in any of the
Transactional Agreements;
(iii) any
Liability of the Seller arising prior to the Closing, other than the Assumed
Liabilities; or
(iv) any
Proceeding relating directly or indirectly to any Breach, alleged Breach,
Liability or matter of the type referred to in clause “(i),”
“(ii),”
or “(iii),” above
(including any Proceeding commenced by any party for the purpose of enforcing
any of its rights under this Section 9.2).
(b) The
Seller shall not be required to make any indemnification payment pursuant to
Section 9.2(a) until such time as the total amount of all Damages that have
been
directly or indirectly suffered or incurred by any one or more of the
Indemnitees, or to which any one or more of the Indemnitees has or have
otherwise become subject, exceeds $25,000. (If the total amount of such Damages
exceeds the $25,000, the Indemnitees shall be entitled to be indemnified against
and compensated and reimbursed for the entire amount of such Damages, and not
merely the portion of such Damages exceeding $25,000.)
9.3. Indemnification
By Purchaser.
(a) The
Purchaser shall hold harmless and indemnify the Seller from and against, and
shall compensate and reimburse the Seller for, any Damages that are directly
or
indirectly suffered or incurred by the Seller or to which the Seller may
otherwise become subject at any time (regardless of whether or not such Damages
relate to any third-party claim) and that arise directly or indirectly from
or
as a direct or indirect result of, or are directly or indirectly connected
with:
(i) any
failure on the part of the Purchaser to perform and discharge the Assumed
Liabilities on a timely basis;
(ii) any
Breach of any representation or warranty made by the Purchaser in this Agreement
or any of the Transactional Agreements;
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(iii) any
Breach of any covenant or obligation of the Purchaser contained in this
Agreement or any of the Transactional Agreements; or
(iv) any
Proceeding relating directly or indirectly to any failure or Breach of the
type
referred to in clause “(i)”, “(ii)” or “(iii)” above (including any Proceeding
commenced by the Seller for the purpose of enforcing its rights under this
Section 9.3).
(b) Subject
to Section 9.3(c), the Purchaser shall not be required to make any
indemnification payment pursuant to Section 9.3(a) for any Breach of any of
its
representations and warranties until such time as the total amount of all
Damages (including the Damages arising from such Breach and all other Damages
arising from any other Breaches of its representations or warranties) that
have
been directly or indirectly suffered or incurred by the Seller, or to which
the
Seller have otherwise become subject, exceeds $25,000 in the aggregate. (If
the
total amount of such Damages exceeds $25,000 in the aggregate, the Seller shall
be entitled to be indemnified against and compensated and reimbursed for the
entire amount of such Damages, and not merely the portion of such Damages
exceeding $25,000.)
(c) The
limitation on the indemnification obligations of the Purchaser that is set
forth
in Section 9.3(b) shall not apply to any Breach arising directly or indirectly
from any circumstance of which the Purchaser had knowledge on or prior to the
Closing Date.
9.4. Nonexclusivity
Of Indemnification Remedies. The
indemnification remedies and
other remedies
provided in this Section 9 shall not be
deemed
to be
exclusive. Accordingly,
the
exercise by any Person of any of its rights under this Section 9 shall not
be
deemed to be an election of remedies and shall not be deemed to prejudice,
or to
constitute or operate as a waiver of, any other right or remedy that such Person
may be entitled to exercise (whether under this Agreement, under any other
Contract, under any statute, rule or other Legal Requirement, at common law,
in
equity or otherwise).
(a) Defense
Of Third Party Claims.
In the
event of the assertion or commencement by any Person of any claim or Proceeding
(whether against the Purchaser, against any other Indemnitee or against any
other Person) with respect to which any of the Seller may become obligated
to
indemnify, hold harmless, compensate or reimburse any Indemnitee pursuant to
this Section 9, the Purchaser shall have the right, at its election, to assume
the defense of such claim or Proceeding at the sole expense of the Seller.
If
the
Purchaser so proceeds with the defense of any such claim or Proceeding on its
own:
(i) all
expenses relating to the defense of such claim or Proceeding (whether or not
incurred by the Purchaser) shall be borne and paid exclusively by the
Purchaser;
(ii) the
Seller shall make available to the Purchaser any documents and materials in
the
possession or control of any of the Seller that may be necessary to the defense
of such claim or Proceeding;
(iii) the
Purchaser shall keep the Seller informed of all material developments and events
relating to such claim or Proceeding; and
(iv) the
Purchaser shall have the right to settle, adjust or compromise such claim or
Proceeding with the consent of the Seller; provided, however, that the Seller
shall not unreasonably withhold such consent.
9.5. Exercise
of Remedies by Indemnitees Other Than Purchaser. No
Indemnitee (other than the Purchaser or any successor thereto or assign thereof)
shall be permitted to
assert
any indemnification claim or exercise any other remedy under this Agreement
unless the Purchaser (or any successor thereto or assign thereof) shall have
consented to the assertion of such indemnification claim or the exercise of
such
other remedy.
-27-
SECTION
10. CERTAIN
POST-CLOSING COVENANTS.
10.1. Further
Actions.
From and
after the Closing Date, the Seller shall cooperate with the Purchaser and the
Purchaser’s affiliates and Representatives, and shall execute and deliver such
documents and take such other actions as the Purchaser may reasonably request,
for the purpose of evidencing the Transactions and putting the Purchaser in
possession and control of all of the Assets.
10.2. Publicity.
Without
limiting the generality of anything contained in Section 4.7, Purchaser and
Seller shall ensure that, on and at all times after the Closing Date: (a) no
press release or other publicity concerning any of the Transactions is issued
or
otherwise disseminated by or on behalf of Purchaser and Seller without the
prior
written consent of the other party; (b) the terms of this Agreement and the
other Transactional Agreements are kept strictly confidential; and (c) no
disclosure shall be made to any other Person of any non-public document or
other
information that relates directly or indirectly to the business of the Seller,
the Purchaser or any affiliate of the either party.
SECTION
11. MISCELLANEOUS
PROVISIONS
11.1. Fees
and Expenses.
(a) Seller
shall bear and pay all fees, costs and expenses (including all legal fees and
expenses payable to the law firm of Snow Xxxxxx Xxxxxx P.C.) that have been
incurred or that are in the future incurred by, on behalf of or for the benefit
of Seller in connection with: (i) the negotiation, preparation and review of
any
term sheet or similar document relating to any of the Transactions; (ii) the
investigation and review conducted by the Purchaser and its Representatives
with
respect to Seller’s business (and the furnishing of information to the Purchaser
and its Representatives in connection with such investigation and review);
(iii)
the negotiation, preparation and review of this Agreement (including the
Disclosure Schedule), the other Transactional Agreements and all certificates,
opinions and other instruments and documents delivered or to be delivered in
connection with the Transactions; (iv) the preparation and submission of any
filing or notice required to be made or given in connection with any of the
Transactions, and the obtaining of any Consent required to be obtained in
connection with any of the Transactions; and (v) the consummation and
performance of the Transactions.
(b) Subject
to the provisions of Section 9 (including the indemnification and other
obligations of the Seller thereunder), the Purchaser shall bear and pay all
fees, costs and expenses (including all legal fees and expenses payable to
Xxxxx
& Xxxxxxxxxxx, LLP) that have been incurred or that are in the future
incurred by or on behalf of the Purchaser in connection with: (i) the
negotiation, preparation and review of any term sheet or similar document
relating to any of the Transactions; (ii) the investigation and review conducted
by the Purchaser and its Representatives with respect to Seller’s business;
(iii) the negotiation, preparation and review of this Agreement, the other
Transactional Agreements and all certificates, opinions and other instruments
and documents delivered or to be delivered in connection with the Transactions;
and (iv) the consummation and performance of the Transactions.
11.2. Attorneys’
Fees. If
any
legal action or other legal proceeding relating to any of the Transactional
Agreements or the enforcement of any provision of any of the Transactional
Agreements is brought against any party hereto, the prevailing party shall
be
entitled to recover reasonable attorneys’ fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be
entitled).
-28-
11.3. Notices.
Any
notice or other communication required or permitted to be delivered to any
party
under this Agreement shall be in writing and shall be deemed properly delivered,
given and received when delivered (by hand, by registered mail, by courier
or
express delivery service or by facsimile) to the address or facsimile number
set
forth beneath the name of such party below (or to such other address or
facsimile number as such party shall have specified in a written notice given
to
the other parties hereto):
If
to
Seller:
Integrated
Surgical Systems, Inc.
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0
Xxxxxxxxxx,
XX 00000
Phone:
(000) 000-0000
Fax:
(000) 000-0000
Copy
to:
Snow
Xxxxxx Xxxxxx P.C.
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx Xxxxxx, Esq.
Fax:
(000) 000-0000
if
to the
Purchaser:
Novatrix
Biomedical, Inc.
00000
Xxxxxx Xxxxxx Xx.
Xxxxxx,
XX 00000
Attention:
Xx. Xxxxxxx Xxxx
Fax: (000)
000-0000
With
Copy
to:
Xxxxx
& Xxxxxxxxxxx, LLP
000
Xxxx
X Xxxxxx, Xxxxx 0000
Xxx
Xxxxx, XX, 00000
Attention:
Xxxxxxx X. Xxxxx. Esq.
Fax:
(000) 000-0000
11.4. Time
of the Essence.
Time is
of the essence of this Agreement.
11.5. Headings.
The
underlined headings contained in this Agreement are for convenience of reference
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the construction or interpretation of this
Agreement.
11.6. Counterparts.
This
Agreement may be executed in several counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
11.7. Governing
Law; Venue.
(a) This
Agreement shall be construed in accordance with, and governed in all respects
by, the internal laws of the State of California (without giving effect to
principles of conflicts of laws).
-29-
(b) Any
legal
action or other legal proceeding relating to this Agreement or the enforcement
of any provision of this Agreement may be brought or otherwise commenced in
any
state or federal court located in the County of Orange, California. Each party
to this Agreement:
(i) expressly
and irrevocably consents and submits to the jurisdiction of each state and
federal court located in the County of Orange, California (and each appellate
court located in the State of California) in connection with any such legal
proceeding;
(ii) agrees
that each state and federal court located in the County of Orange, California
shall be deemed to be a convenient forum; and
(iii) agrees
not to assert (by way of motion, as a defense or otherwise), in any such legal
proceeding commenced in any state or federal court located in the County of
Orange, California, any claim that such party is not subject personally to
the
jurisdiction of such court, that such legal proceeding has been brought in
an
inconvenient forum, that the venue of such proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in or
by
such court.
(c) Seller
agrees that, if any Proceeding is commenced against any Indemnitee by any Person
in or before any court or other tribunal anywhere in the world, then such
Indemnitee may proceed against Seller, or any Stockholder of Seller, in such
court or other tribunal with respect to any indemnification claim or other
claim
arising directly or indirectly from or relating directly or indirectly to such
Proceeding or any of the matters alleged therein or any of the circumstances
giving rise thereto.
(d) The
Parties irrevocably waive the right to a jury trial in connection with any
legal
proceeding relating to this Agreement or the enforcement of any provision of
this Agreement.
11.8. Successors
and Assigns, Parties in Interest.
(a) This
Agreement shall be binding upon: Seller and the Purchaser and its successors
and
assigns (if any). This Agreement shall inure to the benefit of: Seller; the
Purchaser; the other Indemnitees (subject to Section 9.7); and the respective
successors and assigns (if any) of the foregoing.
(b) The
Purchaser may freely assign any or all of its rights under this Agreement
(including its indemnification rights under Section 9), in whole or in part,
to
any other Person without obtaining the prior written consent or approval of
any
other party hereto or of any other Person. Seller shall not be permitted to
assign any of their rights or delegate any of their obligations under this
Agreement without the Purchaser’s prior written consent.
(c) Except
for the provisions of Section 9 hereof, none of the provisions of this Agreement
is intended to provide any rights or remedies to any Person other than the
parties to this Agreement and their respective successors and assigns (if any).
Without limiting the generality of the foregoing: (i) no employee of the Seller
shall have any rights under this Agreement or any of the other Transactional
Agreements, and (ii) no creditor of the Seller shall have any rights under
this
Agreement or any of the other Transactional Agreements.
11.9. Remedies
Cumulative; Specific Performance. The
rights and remedies of the parties hereto shall be cumulative (and not
alternative). Seller agrees that:
(a) in
the
event of any Breach or threatened Breach by such Seller of any covenant,
obligation or other provision set forth in this Agreement, the Purchaser shall
be entitled (in addition to any other remedy that may be available to it) to
(i)
a decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (ii) an
injunction restraining such Breach or threatened Breach; and
-30-
(b) neither
the Purchaser nor any other Indemnitee shall be required to provide any bond
or
other security in connection with any such decree, order or injunction or in
connection with any related action or Proceeding.
11.10. Waiver.
(a) No
failure on the part of any Person to exercise any power, right, privilege or
remedy under this Agreement, and no delay on the part of any Person in
exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single
or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege
or
remedy.
(b) No
Person
shall be deemed to have waived any claim arising out of this Agreement, or
any
power, right, privilege or remedy under this Agreement, unless the waiver of
such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such Person; and
any
such waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
11.11. Amendments.
This
Agreement may not be amended, modified, altered or supplemented other than
by
means of a written instrument duly executed and delivered on behalf of the
Purchaser and the Seller.
11.12. Severability.
In
the
event that any provision of this Agreement, or the application of any such
provision to any Person or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void
or
unenforceable, shall not be impaired or otherwise affected and shall continue
to
be valid and enforceable to the fullest extent permitted by law.
11.13. Entire
Agreement. The
Transactional Agreements set forth the entire understanding of the parties
relating to the subject matter thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter thereof.
11.14. Construction.
(a) For
purposes of this Agreement, whenever the context requires: the singular number
shall include the plural, and vice versa; the masculine gender shall include
the
feminine and neuter genders; the feminine gender shall include the masculine
and
neuter genders; and the neuter gender shall include the masculine and feminine
genders.
(b) The
parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement.
(c) As
used
in this Agreement, the words “include” and “including and variations thereof,
shall not be deemed to be terms of limitation, but rather shall be deemed to
be
followed by the words “without limitation.”
(d) Except
as
otherwise indicated, all references in this Agreement to “Sections” and
“Exhibits” are intended to refer to Sections of this Agreement and Exhibits to
this Agreement.
-31-
The
parties hereto have caused this Agreement to be executed and delivered as of
August 4, 2006.
|
“PURCHASER”:
|
NOVATRIX
BIOMEDICAL, INC.,
a
California corporation
|
|
| |
|
|
| By: | /s/ Xxxxxxx Xxxx | |
|
Xxxxxxx
Xxxx, President
|
||
| By: | /s/ Xxxxxxx Xxxxxxxx | |
|
Xxxxxxx
Xxxxxxxx, Secretary
|
||
|
“SELLER”:
|
Integrated
Surgical Systems, Inc.
a
Delaware corporation
0000
Xxxxxxx Xxxx Xxxx, Xxxxx0
Xxxxxxxxxx,
XX 00000
|
|
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxx | |
|
Xxxxxx
Xxxxxxx, Director and Acting
CEO
|
||
-32-
EXHIBIT
A
CERTAIN
DEFINITIONS
For
purposes of the Agreement (including this Exhibit A):
Acquisition
Transaction. “Acquisition
Transaction” shall mean any transaction involving:
(a) the
sale
or other disposition of all or any portion of Seller’s business or Assets (other
than in the Ordinary Course of Business); or
(b) any
merger, consolidation, business combination, share exchange, reorganization
or
similar transaction involving Seller.
Agreement.
“Agreement” shall mean the Stock Purchase Agreement to which this Exhibit A is
attached (including the Disclosure Schedule), as it may be amended from time
to
time.
Best
Efforts.
“Best
Efforts” shall mean the efforts that a prudent Person desiring to achieve a
particular result would use in order to ensure that such result is achieved
as
expeditiously as possible.
Breach.
There
shall be deemed to be a “Breach” of a representation, warranty, covenant,
obligation or other provision if there is or has been (a) any material
inaccuracy in or material breach of, or any material failure to comply with
or
perform, such representation, warranty, covenant, obligation or other provision,
or (b) any material claim (by any Person) or other circumstance that is
inconsistent with such representation, warranty, covenant, obligation or other
provision; and the term “Breach” shall be deemed to refer to any such
inaccuracy, breach, failure, claim or circumstance.
CERCLA.
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act.
Closing.
“Closing” shall have the meaning specified in Section 1.3(a) of the
Agreement.
Closing
Certificate.
“Closing Certificate” shall have the meaning specified in Section 1.3(b)(v) of
the Agreement.
Closing
Date.
“Closing Date” shall have the meaning specified in Section 1.4(a) of the
Agreement.
Code.
“Code”
shall mean the Internal Revenue Code of 1986.
Seller.
“Seller” shall mean Seller and the Prior Subsidiary.
Company
Plan.
“Company Plan” shall mean any Current Benefit Plan or Past Benefit
Plan.
Comparable
Entities.
“Comparable Entities” shall mean Entities (other than Seller) that are engaged
in businesses similar to Seller’s business.
Consent.
“Consent” shall mean any approval, consent, ratification, permission, waiver or
authorization (including any Governmental Authorization).
Contract.
“Contract” shall mean any written, oral, implied or other agreement, contract,
understanding, arrangement, instrument, note, guaranty, indemnity,
representation, warranty, deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy, beneft plan, commitment, covenant,
assurance or undertaking of any nature.
-33-
Current
Benefit Plan. “Current
Benefit Plan” shall mean any Employee Benefit Plan that is currently in effect
and:
(a) that
was
established or adopted by Seller or any ERISA Affiliate or is maintained or
sponsored by Seller;
(b) in
which
Seller participates;
(c) with
respect to which Seller or any ERISA Affiliate is or may be required or
permitted to make any contribution; or
(d) with
respect to which Seller or any ERISA Affiliate is or may become subject to
any
Liability.
Damages.
“Damages” shall include any loss, damage, injury, decline in value, lost
opportunity, Liability, claim, demand, settlement, judgment, award, fine,
penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense
of
any nature.
Disclosure
Schedule.
“Disclosure Schedule” shall mean the schedules (dated as of the date of the
Agreement) together with the Due Diligence book delivered to the Purchaser
on
behalf of Seller, a copy of which is attached to the Agreement and incorporated
into the Agreement by reference.
Employee
Benefit Plan.
“Employee Benefit Plan” shall have the meaning specified in Section 3(3) of
ERISA.
Encumbrance.
“Encumbrance” shall mean any lien, pledge, hypothecation, charge, mortgage,
security interest, encumbrance, equity, trust, equitable interest, claim,
preference, right of possession, lease, tenancy, license, encroachment,
covenant, infringement, interference, Order, proxy, option, right of first
refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on
the
voting of any security, any restriction on the transfer of any security or
other
asset, any restriction on the receipt of any income derived from any asset,
any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any
asset).
Entity.
“Entity” shall mean any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, cooperative, foundation, society, political party,
union, company (including any limited liability company or joint stock company),
firm or other enterprise, association, organization or entity.
ERISA.
“ERISA”
shall mean the Employee Retirement Income Security Act of 1974.
ERISA
Affiliate. “ERISA
Affiliate” shall mean any Person that is, was or would be treated as a single
employer with Seller under Section 414 of the Code.
Excluded
Contract. “Excluded
Contract” shall mean any Seller Contract that:
(a) Seller
has entered into in the Ordinary Course of Business;
-34-
(b) is
identical in all material respects to one of the Standard Form
Agreements;
(c) has
a
term of less than 90 days or may be terminated by Seller (without penalty)
within 90 days after the delivery of a termination notice by Seller;
and
(d) does
not
contemplate or involve the payment of cash or other consideration in an amount
or having a value in excess of $10,000.
GAAP.
“GAAP”
shall mean generally accepted accounting principles, applied on a basis
consistent with the basis on which the Seller Financial Statements were
prepared.
Governmental
Authorization. “Governmental
Authorization” shall mean any:
(a) permit,
license, certificate, franchise, concession, approval, consent, ratification,
permission, clearance, confirmation, endorsement, waiver, certification,
designation, rating, registration, qualification or authorization that is,
has
been or may in the future be issued, granted, given or otherwise made available
by or under the authority of any Governmental Body or pursuant to any Legal
Requirement; or
(b) right
under any Contract with any Governmental Body.
Governmental
Body. “Governmental
Body” shall mean any:
(a) nation,
principality, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature;
(b) federal,
state, local, municipal, foreign or other government;
(c)
governmental or quasi-governmental authority of any nature (including any
governmental division, subdivision, department, agency, bureau, branch, office,
commission, council, board, instrumentality, officer, official, representative,
organization, unit, body or Entity and any court or other
tribunal);
(d) multi-national
organization or body; or
(e)
individual, Entity or body exercising, or entitled to exercise, any executive,
legislative, judicial, administrative, regulatory, police, military or taxing
authority or power of any nature.
Hazardous
Material.
“Hazardous Material” shall include:
(a) any
petroleum, waste oil, crude oil, asbestos, urea formaldehyde or polychlorinated
biphenyl;
(b) any
waste, gas or other substance or material that is explosive or
radioactive;
(c)
any
“hazardous substance,” “pollutant,” “contaminant,” “hazardous waste,” “regulated
substance,” “hazardous chemical” or “toxic chemical” as designated, listed or
defined (whether expressly or by reference) in any statute, regulation or other
Legal Requirement (including CERCLA, any other so-called “superfund” or
“superlien” law, the Resource Conservation Recovery Act, the Federal Water
Pollution Control Act, the Toxic Substances Control Act, the Emergency Planning
and Community Right-to-Know Act and the respective regulations promulgated
thereunder);
-35-
(d)
any
other substance or material (regardless of physical form) or form of energy
that
is subject to any Legal Requirement which regulates or establishes standards
of
conduct in connection with, or which otherwise relates to, the protection of
human health, plant life, animal life, natural resources, property or the
enjoyment of life or property from the presence in the environment of any solid,
liquid, gas, odor, noise or form of energy; and
(e)
any
compound, mixture, solution, product or other substance or material that
contains any substance or material referred to in clause “(a)”, “(b)”, “(c)” or
“(d)” above.
Indemnitees.
“Indemnitees”
shall mean the following Persons:
(a) the
Purchaser;
(b) the
Purchaser’s current and future affiliates;
(c) the
respective Representatives of the Persons referred to in clauses “(a)” and “(b)”
above; and
(d) the
respective successors and assigns of the Persons referred to in clauses “(a)”,
“(b)” and “(c)” above; provided, however, that (i) Seller shall not be entitled
to exercise any rights as an Indemnitee prior to the Closing, and (ii) the
Stockholders shall not be deemed to be “ Indemnitees.”
Knowledge.
An
individual shall be deemed to have “Knowledge” of a particular fact or other
matter if:
(a) such
individual is actually aware of such fact or other matter; or
(b) a
prudent
individual could be expected to discover or otherwise become aware of such
fact
or other matter in the normal course of conduct upon reasonable
inquiry.
Seller
shall be deemed to have “Knowledge” of a particular fact or other matter if any
executive officer of Seller has Knowledge of such fact or other
matter.
Legal
Requirement. “Legal
Requirement” shall mean any federal, state, local, municipal, foreign or other
law, statute, legislation, constitution, principle of common law, resolution,
ordinance, code, edict, decree, proclamation, treaty, convention, rule,
regulation, ruling, directive, pronouncement, requirement, specification,
determination, decision, opinion or interpretation that is, has been or may
in
the future be issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Body.
Liability.
“Liability”
shall mean any debt, obligation, duty or liability of any nature (including
any
unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect,
conditional, implied, vicarious, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation, duty or liability
would
be required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
Order.
“Order”
shall mean any:
(a) order,
judgment, injunction, edict, decree, ruling, pronouncement, determination,
decision, opinion, verdict, sentence, subpoena, writ or award that is, has
been
or may in the future be issued, made, entered, rendered or otherwise put into
effect by or under the authority of any court, administrative agency or other
Governmental Body or any arbitrator or arbitration panel; or
-36-
(b) Contract
with any Governmental Body that is, has been or may in the future be entered
into in connection with any Proceeding.
Ordinary
Course of Business.
An
action taken by or on behalf of Seller shall not be deemed to have been taken
in
the “Ordinary Course of Business” unless:
(a) such
action is consistent with Seller’s past practices and is taken in the ordinary
course of Seller’s normal day-to-day operations;
(b) such
action is not required to be authorized by Seller’s Stockholders, Seller’s board
of directors or any committee of Seller’s board of directors and does not
require any other separate or special authorization of any nature.
Past
Benefit Plan.
“Past
Benefit Plan” shall mean any Employee Benefit Plan (other than a Current Benefit
Plan):
(a) of
which
Seller or any ERISA Affiliate has ever been a “plan sponsor” (as defined in
Section 3(16)(B) of ERISA) or that otherwise has at any time been established,
adopted, maintained or sponsored by Seller or by any ERISA
Affiliate;
(b) in
which
Seller or any ERISA Affiliate has ever participated;
(c) with
respect to which Seller or any ERISA Affiliate has ever made, or has ever been
required or permitted to make, any contribution; or
(d) with
respect to which Seller or any ERISA Affiliate has ever been subject to any
Liability.
Person.
“Person” shall mean any individual, Entity or Governmental Body.
Pre-Closing
Period.
“Pre-Closing Period” shall mean the period commencing as of the date of the
Agreement and ending on the Closing Date.
Prior
Subsidiary. “Prior
Subsidiary” shall mean Innovative Medical Machine International, Lyon France.
This entity was dissolved in 2003.
Proceeding.
“Proceeding” shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding and any informal proceeding), prosecution, contest, hearing, inquiry,
inquest, audit, examination or investigation that is, has been or may in the
future be commenced, brought, conducted or heard by or before, or that otherwise
has involved or may involve, any Governmental Body or any arbitrator or
arbitration panel.
Proprietary
Asset.
“Proprietary Asset” shall mean any patent, patent application, trademark
(whether registered or unregistered and whether or not relating to a published
work), trademark application, trade name, fictitious business name, service
xxxx
(whether registered or unregistered), service xxxx application, copyright
(whether registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, franchise, system, computer software,
invention, design, blueprint, proprietary product, technology, proprietary
right
or other intellectual property right or intangible asset.
Purchase
Price.
“Purchase Price” shall have the meaning specified in Section 1.2 of the
Agreement.
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Purchaser.
“Purchaser” shall mean Purchaser Corporation, a Delaware
corporation.
Related
Party.
Each
individual who is, or who has at any time been, an officer of Seller shall
be
deemed to be a “Related Party”:
Representatives.
“Representatives” shall mean officers, directors, employees, attorneys,
accountants, advisors and representatives.
Scheduled
Closing Time.
“Scheduled Closing Time” shall have the meaning specified in Section 1.3(a) of
the Agreement.
Seller.
“Seller” shall mean Integrated Surgical Systems, Inc., a Delaware
corporation.
Seller
Material Contract.
“Seller
Material Contract” shall mean any Contract:
(a) to
which
Seller is a party;
(b) by
which
Seller or any of its material Assets is or may become bound or under which
Seller has, or may become subject to, any obligation; or
(c) under
which Seller has or may acquire any material right or interest.
Seller Financial
Statements. “Seller
Financial Statements” shall have the meaning specified in Section 2.4(a) of the
Agreement.
Seller
Returns. “Seller
Returns” shall have the meaning specified in Section 2.17(a) of the
Agreement.
Stockholders.
“Stockholders” shall mean all of the stockholders of Integrated Surgical
Systems, Inc., a Delaware corporation.
Specified
Representations. “Specified
Representations” shall mean the representations and warranties set forth in
Sections 2.1, 2.3, 2.4 and 2.27 of the Agreement.
Tax.
“Tax”
shall mean any tax (including any income tax, franchise tax, capital gains
tax,
estimated tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll
tax), levy, assessment, tariff, impost, imposition, toll, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), that is, has been or may in the future be (a)
imposed, assessed or collected by or under the authority of any Governmental
Body, or (b) payable pursuant to any tax-sharing agreement or similar
Contract.
Tax Return.
“Tax
Return” shall mean any return (including any information return), report,
statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information that is, has been or
may
in the future be filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
Transactional
Agreements.
“Transactional Agreements” shall mean:
|
(a)
|
the
Agreement;
|
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|
(b)
|
the
Noncompetition Agreement referred to in Section 1.3(b)(iii) of the
Agreement;
|
|
(c)
|
the
Employment Agreement referred to in Section 1.3(b)(iv) of the Agreement;
and
|
|
(d)
|
the
Closing Certificate.
|
Transactions.
“Transactions” shall mean
(a) the
execution and delivery of the respective Transactional Agreements, and
(b) all
of
the transactions contemplated by the respective Transactional Agreements,
including the performance by Seller and the Purchaser of their respective
obligations under the Transactional Agreements and the exercise by Seller and
the Purchaser of their respective rights under the Transactional
Agreements.
Unaudited
Interim Balance Sheet. “Unaudited
Interim Balance Sheet” shall have the meaning specified in Section 2.4(a)(ii) of
the Agreement.
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