Exhibit 10.1
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
AMONG
COOPERSURGICAL ACQUISITION CORP.,
COOPERSURGICAL, INC.
AND
MEDAMICUS, INC.
DATED AS OF
APRIL 25, 2001
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TABLE OF CONTENTS
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PAGE
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ARTICLE I PURCHASE AND SALE OF ASSETS; SALES TAXES; DEFINITIONS................1
1.1 TRANSFER OF PURCHASED ASSETS.........................................1
1.2 ASSETS NOT BEING TRANSFERRED.........................................3
1.3 INSTRUMENTS OF CONVEYANCE AND TRANSFER, ETC..........................4
1.4 FURTHER ASSURANCES...................................................4
1.5 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC.................................4
1.6 POWER OF ATTORNEY; RIGHT OF ENDORSEMENT, ETC.........................5
1.7 SALES TAXES..........................................................5
1.8 DEFINED TERMS........................................................5
ARTICLE II ASSUMED LIABILITIES; EXCLUDED LIABILITIES...........................5
2.1 LIABILITIES BEING ASSUMED............................................5
2.2 LIABILITIES NOT BEING ASSUMED........................................6
ARTICLE III PURCHASE PRICE; PURCHASE PRICE ADJUSTMENT..........................8
3.1 PURCHASE PRICE.......................................................8
3.2 PURCHASE PRICE ADJUSTMENT--TANGIBLE NET ASSET ADJUSTMENT.............8
3.3 ADJUSTMENT TO PURCHASE PRICE--CONTINGENT PAYMENT....................10
3.4 ALLOCATION OF PURCHASE PRICE........................................11
ARTICLE IV CLOSING............................................................11
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................11
5.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER................11
5.2 AUTHORITY; NONCONTRAVENTION; CONSENTS...............................12
5.3 FINANCIAL STATEMENTS; SEC FILINGS...................................12
5.4 ROYALTIES...........................................................13
5.5 ABSENCE OF UNDISCLOSED LIABILITIES..................................13
5.6 ABSENCE OF CHANGES..................................................14
5.7 TAX MATTERS; CERTAIN DEFINITIONS....................................15
5.8 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS..........17
5.9 REAL PROPERTY--OWNED OR LEASED......................................17
5.10 INTELLECTUAL PROPERTY...............................................18
5.11 AGREEMENTS, NO DEFAULTS, ETC........................................19
5.12 LITIGATION, ETC.....................................................21
5.13 COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS.............................21
5.14 FDA AND OTHER COMPLIANCE............................................21
5.15 INSURANCE...........................................................22
5.16 LABOR RELATIONS: EMPLOYEES..........................................23
5.17 ERISA COMPLIANCE....................................................23
5.18 ENVIRONMENTAL MATTERS...............................................24
5.19 BROKERS.............................................................24
5.20 ACCOUNTS AND NOTES RECEIVABLE.......................................24
5.21 ACCOUNTS AND NOTES PAYABLE..........................................25
5.22 INVENTORIES.........................................................25
5.23 RELATED TRANSACTIONS................................................25
5.24 SUPPLIERS AND VENDORS...............................................25
5.25 CUSTOMERS...........................................................25
5.26 WARRANTIES OF PRODUCTS; PRODUCTS LIABILITY; REGULATORY COMPLIANCE...26
5.27 SUFFICIENCY OF ASSETS...............................................26
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5.28 DISCLOSURE..........................................................26
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................27
6.1 ORGANIZATION; CORPORATE AUTHORITY...................................27
6.2 CORPORATE ACTION; AUTHORITY; NO CONFLICT............................27
6.3 CONSENT.............................................................27
6.4 BROKERS.............................................................28
6.5 LITIGATION..........................................................28
ARTICLE VII CONDUCT AND TRANSACTIONS PRIOR TO AND AT CLOSING..................28
7.1 ACCESS TO INFORMATION...............................................28
7.2 CONDUCT OF THE COMPANY..............................................28
7.3 EFFORTS TO CONSUMMATE...............................................29
7.4 EXCLUSIVITY.........................................................29
7.5 PROPRIETARY INFORMATION.............................................30
7.6 PUBLIC ANNOUNCEMENTS................................................30
7.7 CONSENTS............................................................30
7.8 NOTICE OF PROSPECTIVE BREACH; SUPPLEMENT TO SCHEDULES...............31
7.9 EXCHANGE OF PROCEEDS................................................31
7.10 RELATED DOCUMENTS...................................................31
7.11 OFFER OF EMPLOYMENT.................................................31
ARTICLE VIII CLOSING CONDITIONS...............................................32
8.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER..........................32
8.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY............................34
ARTICLE IX INDEMNIFICATION....................................................36
9.1 INDEMNIFICATION GENERALLY; ETC......................................36
9.2 ASSERTION OF CLAIMS; RIGHT OF SETOFF................................37
9.3 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS............................38
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................39
9.5 LIMITATIONS ON INDEMNIFICATION......................................40
ARTICLE X TERMINATION; EFFECT OF TERMINATION..................................41
10.1 TERMINATION.........................................................41
10.2 TERMINATION PROCEDURES..............................................41
10.3 EFFECT OF TERMINATION...............................................42
ARTICLE XI MISCELLANEOUS PROVISION............................................42
11.1 NO THIRD PARTY BENEFICIARIES........................................42
11.2 ENTIRE AGREEMENT....................................................42
11.3 SUCCESSORS AND ASSIGNS..............................................42
11.4 AMENDMENT...........................................................42
11.5 EXTENSION; WAIVER...................................................43
11.6 FEES AND EXPENSES...................................................43
11.7 NOTICES.............................................................43
11.8 GOVERNING LAW; WAIVER OF JURY TRIAL.................................44
11.9 INTERPRETATION; CONSTRUCTION........................................45
11.10 INCORPORATION OF EXHIBITS AND SCHEDULES..........................46
11.11 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.....46
11.12 REMEDIES.........................................................46
11.13 SEVERABILITY.....................................................46
11.14 COUNTERPARTS; FACSIMILE SIGNATURES...............................47
11.15 GUARANTY.........................................................47
11.16 SURVIVAL.........................................................47
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ANNEX, SCHEDULES AND EXHIBITS
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ANNEX
Annex I - Certain Definitions
EXHIBITS
Exhibit A - Business and Products
Exhibit B - Tangible Personal Property
Exhibit C - Intellectual Property Rights
Exhibit D - Assigned Contracts
Exhibit E - Form of Xxxx of Sale
Exhibit F - Statement of Allocation
Exhibit G - Form of Opinion of Counsel to the Company
Exhibit H - Form of Non-Competition Agreement
Exhibit I - Form of Transition Agreement
Exhibit J - Form of License Agreement
Exhibit K - Form of Opinion of Counsel to the Purchaser
SCHEDULES
Schedule 2.1(b) - Warranty Obligations
Schedule 3.2 - Purchase Price Adjustment--Tangible Net Asset
Adjustment
Schedule 3.2(a) - Certain Prepaid Assets
Schedule 5.1 - Organization; Good Standing; Qualification and Power
Schedule 5.2(b) - Noncontravention
Schedule 5.2(c) - Consents
Schedule 5.3(a) - Financial Statements
Schedule 5.3(c) - Company SEC Reports
Schedule 5.5 - Absence of Undisclosed Liabilities
Schedule 5.6 - Absence of Changes
Schedule 5.7(a) - Tax Returns
Schedule 5.7(c) - Tax Matters
Schedule 5.8 - Title to Assets, Properties and Rights and Related
Matters
Schedule 5.9(a) - Description of Facilities
Schedule 5.9(b) - Condition, Ownership of Facilities
Schedule 5.10(a) - Intellectual Property Rights
Schedule 5.10(b) - Intellectual Property Applications, Filings, Etc.
Schedule 5.11 - Agreements, No Defaults, Etc.
Schedule 5.12 - Litigation, Etc.
Schedule 5.13 - Compliance; Governmental Authorizations
Schedule 5.14(a) - FDA Compliance
Schedule 5.14(b) - PMA, 510(k), QSRs, MDRs, Etc.
Schedule 5.14(c) - Corporate Compliance Program
Schedule 5.15(a) - Insurance Policies and Coverage
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Schedule 5.15(b) - Enforceability of Insurance Policies
Schedule 5.16 - Labor Relations: Employees
Schedule 5.17(a) - Company Employee Plans
Schedule 5.17(b) - ERISA Compliance
Schedule 5.18(b) - Environmental Matters
Schedule 5.19 - Brokers
Schedule 5.20 - Accounts and Notes Receivable
Schedule 5.21 - Accounts and Notes Payable
Schedule 5.23 - Related Transactions
Schedule 5.25 - Customers
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INDEX OF DEFINED TERMS
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The following capitalized terms, which may be used in more
than one Section or other location of this Agreement, are defined in the
following Sections or other locations:
TERM LOCATION
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AAA.......................................................................9.2(b)
Accountant's Determination................................................3.2(c)
Acquisition Expenses......................................................7.4(a)
Affiliate................................................................Annex I
Agreement................................................................11.9(a)
Another Transaction.......................................................7.4(a)
Asset Statement...........................................................3.2(a)
Assigned Contracts....................................................1.1(a)(ix)
Assumed Liabilities..........................................................2.1
Best Knowledge...........................................................11.9(a)
Xxxx of Sale.................................................................1.3
Business................................................................Preamble
Business Day.............................................................Annex I
Business Facilities.......................................................5.9(a)
CERCLA...................................................................Annex I
CERCLIS..................................................................Annex I
Claim....................................................................Annex I
Closing...............................................................Article IV
Closing Date..........................................................Article IV
COBRA.....................................................................2.2(j)
Code.....................................................................Annex I
Company..................................................................Caption
Company Employee Plans......................................................5.17
Company Indemnified Persons..............................................Annex I
Company Indemnifying Persons.............................................Annex I
Company Losses...........................................................Annex I
Company SEC Reports.......................................................5.3(c)
Contingent Payment........................................................3.3(a)
Contract.................................................................Annex I
Control..................................................................Annex I
Customer..................................................................3.3(a)
Employee Benefit Plan....................................................Annex I
Encumbrances.............................................................Annex I
Environmental, Health and Safety Laws....................................Annex I
ERISA Affiliate..........................................................Annex I
Examination Period........................................................3.2(b)
Exchange Act ............................................................Annex I
Exchange Proceeds ...........................................................7.9
Excluded Assets...........................................................1.2(b)
Excluded Liabilities.........................................................2.2
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Facilities............................................................1.1(a)(ii)
FDA......................................................................5.14(a)
Financial Statements......................................................5.3(a)
Fundamental Documents....................................................Annex I
GAAP......................................................................3.2(a)
Governmental Entity......................................................Annex I
Hazardous Materials......................................................Annex I
Indemnified Persons......................................................Annex I
Indemnifying Persons.....................................................Annex I
Intellectual Property Rights.............................................Annex I
Inventory............................................................1.1(a)(iii)
Latest Balance Sheet Date.................................................5.3(b)
Latest Company SEC Report.................................................5.3(c)
Law......................................................................Annex I
Lender....................................................................8.1(j)
Liability................................................................Annex I
License...............................................................8.1(i)(iv)
License Agreement.....................................................8.1(i)(iv)
Licensed Requisite Rights.............................................5.10(a)(i)
Litigation Expense.......................................................Annex I
Losses...................................................................Annex I
Material Adverse Change..................................................Annex I
MDRs...............................................................5.14(b)(viii)
Non-Competition Agreement..............................................8.1(i)(i)
Objection Notice..........................................................3.2(c)
Orders...................................................................Annex I
Owned Requisite Rights................................................5.10(a)(i)
Permits..................................................................Annex I
Permitted Encumbrances...................................................Annex I
Person...................................................................Annex I
PMA......................................................................5.14(a)
Pre-Closing Period...........................................................7.1
Proceedings..............................................................Annex I
Products...............................................................1.1(a)(i)
Purchase Price...............................................................3.1
Purchased Assets..........................................................1.1(b)
Purchaser................................................................Caption
Purchaser Indemnified Persons............................................Annex I
Purchaser Indemnifying Persons...........................................Annex I
Purchaser Losses.........................................................Annex I
QSRs..................................................................5.14(b)(v)
Related Documents.........................................................8.1(i)
Representative...........................................................Annex I
Requisite Rights......................................................5.10(a)(i)
Sale....................................................................Preamble
Second Payment............................................................3.1(b)
Securities Act...........................................................Annex I
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Settlement Agreement......................................................3.2(c)
Statement of Allocation......................................................3.4
Survival Date.............................................................9.4(c)
Tangible Net Assets.......................................................3.2(a)
Tangible Net Asset Adjustment.........................................3.2(d) (i)
Tangible Net Asset Target.................................................3.2(d)
Tax Return...............................................................Annex I
Taxes....................................................................Annex I
Third Party Claim............................................................9.3
Trademark Liability......................................................Annex I
Transaction Taxes............................................................1.7
Transition Agreement.................................................8.1(i)(iii)
Warranty Liability........................................................2.1(b)
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ASSET PURCHASE AGREEMENT
dated as of April 25, 2001, among
COOPERSURGICAL ACQUISITION CORP., a
Delaware corporation (the "Purchaser"),
COOPERSURGICAL, INC., a Delaware
corporation (the "Guarantor"), and MEDAMICUS,
INC., a Minnesota corporation (the "Company").
PREAMBLE
The Company is, among other things, engaged in the business of
developing, manufacturing and distributing the LuMax(TM) Incontinence Diagnostic
System product line including a variety of surgical and diagnostic instruments
and accessories, as more specifically described on Exhibit A hereto (the
"Business"). The Company desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Company, certain of the assets of the Company,
subject to the Purchaser's assumption of certain specified liabilities of the
Company, in each case related to the Business, on the terms and subject to the
conditions contained in this Agreement (the "Sale").
ACCORDINGLY, in consideration of the premises and the mutual
representations hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS; SALES TAXES; DEFINITIONS
1.1 TRANSFER OF PURCHASED ASSETS.
(a) On the terms and subject to the conditions contained in this
Agreement, at the Closing the Company shall sell, transfer, convey and assign to
the Purchaser, free and clear of all Encumbrances, and the Purchaser shall
purchase and acquire from the Company, all of the Company's right, title and
interest in, to and under the following assets, properties, interests in
properties and rights of the Company, whether real, personal or mixed, tangible
or intangible (other than the Excluded Assets), wherever located, as the same
shall exist immediately prior to the Closing:
(i) the products listed on Exhibit A hereto (the "Products");
(ii) all manufacturing, production, maintenance, packaging
and/or testing machinery and equipment, tools, dies, molds, jigs,
patterns, gauges (together with all spare and maintenance parts) used
in or relating to the Products and the Business which (A) are located
on, or normally located on but temporarily removed from or in transit
to the Plymouth, Minnesota facility of the Business (the "Facilities")
or (B) have been furnished to any supplier, subcontractor or other
Person in connection with the manufacture, sale or servicing of the
Products;
(iii) all inventory, raw materials, components,
work-in-progress, finished products, packaging materials and stores and
supplies existing as of the Closing relating to the Products and the
Business including, but not limited to, those (i) located on, or
normally located on but temporarily removed from, or in transit to, the
Facilities or (ii) furnished to any supplier, subcontractor or other
Person in connection with the manufacture, sale or servicing of any
Product or (iii) which are in transit to customers (collectively, the
"Inventory");
(iv) all other items of tangible personal property listed on
Exhibit B hereto;
(v) all accounts and notes receivable of the Business;
(vi) the fiber optic pressure technology patents identified on
Exhibit C hereto, subject to the License defined in Section 8.1(i)(iv)
of this Agreement, the name LuMax(TM) and the other names listed on
such schedule and the goodwill connected with such names, the Products
and the Business, and the other intellectual property relating to the
Products and the Business including know-how, proprietary processes and
information, computer software and the Intellectual Property Rights
identified on Exhibit C hereto;
(vii) all prepaid expenses, advances and deposits (other than
prepaid insurance premiums) relating to the Products and the Business;
(viii) subject to delivery provisions contained in the
Transition Agreement (as defined in Section 8.1(i)(iii)), the books,
records and files (including computer files and electronic media)
correspondence, supplies and customer records and information, blue
prints, drawings and other technical papers and specifications, records
and files concerning the Products including those related to the FDA
and other Governmental Entities, product research and test data,
quality control records, service manuals, service bulletins, training
materials, product bulletins, product information booklets, business
plans, inventory records, appraisals, maintenance and asset history and
depreciation records, accounting records, ledgers and books of original
entry that relate to the Business, sales, customer, vendor and purchase
history of the Business for the last four years in computer and other
formats, all technical manuals and other documents necessary to the use
of the Purchased Assets including the Requisite Rights, the production
of the Products by the Company and the conduct of the Business by the
Company (the Company having the right to retain copies);
(ix) all right, title, and interest of the Company in, to and
under (i) all contracts, licenses, commitments, purchase orders, sales
orders and other agreements relating to the Business which are
identified on Exhibit D hereto, (ii) all contracts, licenses,
commitments and other agreements related to the Business (but not
purchase orders and sales orders) which are entered into in the
ordinary course of business of the Business consistent with past
practice from the date of this Agreement to the Closing Date, which
have been disclosed by the Company in writing to the Purchaser and,
which the Purchaser, in its discretion, consents on or prior to the
Closing Date to include in the Assigned Contracts, and (iii) all
purchase orders and sales orders of the Business which
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are entered into in the ordinary course of business of the Business
consistent with past practice from the date of this Agreement to the
Closing Date (collectively, the "Assigned Contracts");
(x) all rights, choses in action and claims, known or unknown,
matured or unmatured, accrued or contingent, against third parties
(including all warranty and other contractual claims, whether express,
implied or otherwise), to the extent relating to any Purchased Asset or
any Assumed Liability;
(xi) all transferable federal, state, local and foreign
governmental Permits, authorizations and approvals relating to the
Products and the Business;
(xii) all purchase orders, forms, labels, shipping materials,
catalogs, brochures, art works, photographs and advertising, sales and
promotional materials relating to the Business;
(xiii) the telephone (000-000-0000) and fax numbers of the
Company (612-559-7548) used by the Business; and
(xiv) all other goodwill associated with the Business.
(b) For convenience of reference, the assets, properties, interests in
properties and rights that are to be sold, transferred, conveyed and assigned by
the Company to the Purchaser at the Closing pursuant to Section 1.1(a) are
collectively called the "Purchased Assets" in this Agreement.
(c) Anything contained in this Agreement to the contrary
notwithstanding, to the extent that any asset, property, interest in property or
right relating to, or used or held for use by, the Company in the conduct of, or
otherwise relating to, the operation of the Business is owned by any
shareholder, any subsidiary of the Company or any other Affiliate of the
Company, such asset, property, interest in property or right shall be deemed to
be a Purchased Asset for all purposes of this Agreement, and the Company shall
do, and shall cause any such subsidiary or Affiliate of the Company to do, all
things required to be done by the Company with respect thereto, including those
things set forth in Sections 1.3, 1.4 and 1.5.
1.2 ASSETS NOT BEING TRANSFERRED.
(a) Anything contained in Section 1.1 or elsewhere in this Agreement to
the contrary notwithstanding, the Purchased Assets exclude all assets which are
not specifically referred to in Section 1.1(a) including the following:
(i) all right, title, and interest of the Company in, to, and
under all Contracts which are not Assigned Contracts;
(ii) the minute books, ownership record books and Tax Returns,
Tax information and Tax records of the Company;
(iii) any assets relating to any Employee Benefit Plan;
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(iv) any Tax refunds; and
(v) all insurance claims not related to the Purchased Assets.
(b) For convenience of reference, any assets of the Company which are
not included in the Purchased Assets are collectively called the "Excluded
Assets" in this Agreement.
1.3 INSTRUMENTS OF CONVEYANCE AND TRANSFER, ETC.
At the Closing, the Company shall execute and deliver to the Purchaser
a xxxx of sale, assignment and assumption agreement in substantially the form of
Exhibit E hereto (the "Xxxx of Sale"), assignments of patents and trademarks and
such other deeds, endorsements, assignments and other good and sufficient
instruments of conveyance and transfer as shall be necessary or desirable to
transfer, convey and assign good and marketable title to the Purchased Assets to
the Purchaser free and clear of any and all Encumbrances. The Company shall take
all reasonable legal steps that may be necessary to put the Purchaser in
possession and operating control of the Purchased Assets.
1.4 FURTHER ASSURANCES.
The Company shall promptly pay or deliver to the Purchaser any
Purchased Asset which may be received by the Company after the Closing. The
Company shall, at any time and from time to time after the Closing, upon the
request of the Purchaser, do, execute, acknowledge and deliver, and cause to be
done, executed, acknowledged or delivered, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney or assurances as may be
reasonably required to transfer, assign, convey, grant and confirm to the
Purchaser, or to aid and assist in the collection of or reducing to possession
by the Purchaser, the Purchased Assets, or to vest in the Purchaser good and
marketable title to the Purchased Assets as herein provided.
1.5 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC.
Anything contained in this Agreement to the contrary notwithstanding,
this Agreement shall not constitute an agreement or an attempted agreement to
sell, transfer, sublease or assign any Assigned Contract (or any claim or right
or any benefit arising thereunder or resulting therefrom) if the attempted
transfer, sublease or assignment thereof, without the consent of any other party
thereto, would constitute a breach thereof or in any way affect the rights of
the Purchaser or the Company thereunder. The Company shall use its commercially
reasonable efforts to obtain the consent of the other party to any Assigned
Contract to the transfer, sublease or assignment thereof to the Purchaser in all
cases in which such consent is required for the transfer, sublease or assignment
of any such Assigned Contract. If any such consent is not obtained and the
Closing occurs, the Company shall use its commercially reasonable efforts to
provide for the Purchaser the benefits of such Assigned Contract, including (a)
adherence to reasonable procedures established by the Purchaser for the
immediate transfer to the Purchaser of any payments or other funds received by
the Company thereunder and (b) enforcement for the benefit of the Purchaser of
any and all rights of the Company thereunder against the other party or parties
thereto arising out of the breach or cancellation thereof by such other party or
parties or otherwise.
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1.6 POWER OF ATTORNEY; RIGHT OF ENDORSEMENT, ETC.
Effective as of the Closing, the Company hereby constitutes and
appoints the Purchaser as the true and lawful attorney of the Company, with full
power of substitution, in the name of the Purchaser or the Company, on behalf of
and for the benefit of the Purchaser, solely (a) to collect all Purchased
Assets, (b) to endorse, without recourse, checks, notes and other instruments in
connection with or attributable solely to the Purchased Assets and the Assumed
Liabilities, (c) to institute and prosecute all proceedings which the Purchaser
may deem proper in order to collect, assert or enforce any claim, right or title
in, to or under or otherwise attributable to the Purchased Assets and the
Assumed Liabilities, (d) to defend and compromise all actions, suits or
proceedings with respect to any of the Purchased Assets, as well as any Assigned
Contracts, or the Assumed Liabilities and (e) to do all such reasonable acts and
things with respect to the Purchased Assets, as well as any Assigned Contracts,
or the Assumed Liabilities as the Purchaser may deem advisable; provided,
however, that in the case of clause (c) and (d) above, the Purchaser shall
provide the Company with written notice prior to the taking of such actions. The
foregoing powers are coupled with an interest and shall not be revocable by the
Company directly or indirectly by the dissolution of the Company or in any other
manner. The Purchaser shall retain for its own account any amounts collected
pursuant to the foregoing powers with respect to the Purchased Assets and the
Assigned Contracts, and the Company shall promptly pay to the Purchaser any
amounts received by the Company after the Closing with respect to the Purchased
Assets and the Assigned Contracts.
1.7 SALES TAXES.
The Company shall pay any sales taxes, use taxes, transfer taxes,
documentary charges, recording fees or similar taxes, charges or fees that may
become payable in connection with the sale of the Purchased Assets to the
Purchaser (the "Transaction Taxes") and shall promptly after the Closing send
evidence to the Purchaser that such Transaction Taxes, if any, have been paid.
1.8 DEFINED TERMS.
Certain capitalized terms used in this Agreement are defined on Annex I
attached hereto.
ARTICLE II
ASSUMED LIABILITIES; EXCLUDED LIABILITIES
2.1 LIABILITIES BEING ASSUMED.
On the terms and subject to the conditions contained in this Agreement,
effective as of the Closing, and from and after the Closing, the Purchaser shall
pay or assume, perform and discharge when due, the following, and only the
following, Liabilities of the Company (collectively, the "Assumed Liabilities"):
(a) all Liabilities accruing from and after the Closing Date under the
Assigned Contracts in accordance with their respective terms, but in each case
only to the extent such Assigned Contracts have been effectively assigned and
transferred to the Purchaser pursuant to the provisions hereof;
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(b) all accrued warranty obligations to customers (including sales
return and allowance obligations) of the Company for Products sold by the
Company prior to the Closing Date arising in the ordinary course of the Business
pursuant to the standard warranty policy of the Company attached hereto as
Schedule 2.1(b), to the extent accrued on the Asset Statement (the "Warranty
Liability"); and
(c) all Liabilities relating to or arising out of the operation or
conduct of the Business from and after the Closing Date.
2.2 LIABILITIES NOT BEING ASSUMED.
Anything contained in this Agreement to the contrary notwithstanding,
the Purchaser is not assuming any Liabilities of the Company other than the
Assumed Liabilities, whether or not relating to the Purchased Assets or the
Business, all of which Liabilities shall at and after the Closing remain the
exclusive responsibility and obligation of the Company. Without limiting the
generality of the foregoing, the Purchaser is not assuming any of the following
Liabilities (collectively, the "Excluded Liabilities"):
(a) any Liability of the Company for accounts payable and expenses of
the Business;
(b) any Liability of the Company for expenses, Taxes or fees incident
to or arising out of the negotiation, preparation, approval or authorization of
this Agreement, the Related Documents or the consummation (or preparation for
the consummation) of the transactions contemplated hereby or thereby (including
all attorneys' and accountants' fees, and brokerage fees incurred by or imposed
upon the Company);
(c) any Liability of the Company under any Assigned Contract, arising
out of a breach or alleged breach thereof that occurred as of or prior to the
Closing and any Liability of the Company under any Contract which is not an
Assigned Contract, whether or not arising out of a breach or alleged breach
thereof;
(d) any Liability of the Company with respect to any Taxes;
(e) any Liability of the Company (A) arising by reason of any violation
or alleged violation of any Law or any requirement of any Governmental Entity,
(B) arising under any Environmental, Health and Safety Laws, including, without
limitation, those with respect to the Company's operation of any business or the
Purchased Assets (including, without limitation, any properties previously
owned, leased or occupied by the Company) or (C) arising by reason of any breach
or alleged breach by the Company of any Contract or Order, in any such case to
the extent such Liability results from or arises out of events, facts or
circumstances occurring or existing on or prior to the Closing, notwithstanding
that the date on which any Proceeding or Claim is commenced or made is after the
Closing;
(f) except for the Warranty Liability provided in Section 2.1(b), any
Liability for the return by any customer of the Company of any product
distributed by the Company on or prior to the Closing or any Liability or Claim
for any product or service sold or distributed or performed, as the case may be,
by the Company on or prior to the Closing including such
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Liability based on any express warranty, oral or written, or any implied
warranty arising due to the statements or conduct of the Company or the
Company's employees or agents;
(g) any Liability of the Company which the Purchaser may become liable
for as a result of or in connection with the failure by the Company to fully and
properly comply with any bulk sales or transfer laws applicable to the Sale;
(h) any Liability of the Company arising out of the injury to or death
of any person, or damage to or destruction of any property, whether based on
negligence, breach of warranty, strict liability, enterprise liability or any
other legal or equitable theory arising from or related to products (or parts or
components thereof) distributed or otherwise disposed of or for services
performed by the Company, to the extent any of such Liabilities result from or
arise out of events, facts or circumstances occurring or existing on or prior to
the Closing, notwithstanding that the date on which any Proceeding or Claim is
commenced or made is after the Closing;
(i) any Liability of the Company relating to any Proceeding arising out
of or in connection with the Company's conduct of the Business prior to the
Closing or any other conduct of the Company's officers, directors, employees,
stockholders, consultants, agents or advisors, whether or not disclosed on the
Schedules hereto;
(j) any Liability of the Company for severance pay or the like or
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (as
amended, "COBRA") with respect to any employee of the Company that does not
remain an employee of the Company upon completion of the transaction
contemplated by this Agreement;
(k) any Liability relating to a contractual obligation of the Company,
whether written or oral, for bonuses or like payments to any director, officer
or employee of the Company for the period ending on or prior to the Closing;
(l) any Liability relating to any Employee Benefit Plan;
(m) any Liability of the Company for worker's compensation based on an
event occurring prior to the Closing Date;
(n) any Liability of the Company which relates to the Excluded Assets;
and
(o) any other Liability of the Company not expressly assumed by the
Purchaser under Section 2.1.
The Company acknowledges that it is retaining the Excluded Liabilities,
and the Company shall pay, discharge and perform all the Excluded Liabilities.
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ARTICLE III
PURCHASE PRICE; PURCHASE PRICE ADJUSTMENT
3.1 PURCHASE PRICE.
Subject to Section 3.2, as the aggregate consideration for the sale of
the Purchased Assets to the Purchaser:
(a) At the Closing, the Purchaser shall (i) pay to the Company
$3,995,000 and (ii) assume the Assumed Liabilities.
(b) At the time specified in Section 3.2(e), the Purchaser shall pay to
the Company $235,000 (the "Second Payment") less the Tangible Net Asset
Adjustment up to the amount of such adjustment.
(c) On the first anniversary of the Closing Date, the Purchaser shall
pay to the Company $470,000, less all amounts claimed under this Agreement but
not theretofore paid to the Purchaser Indemnified Persons (such amounts to be
paid to the Company or the Purchaser Indemnified Person as claims are resolved).
(d) On the dates specified in Section 3.3, the Purchaser shall pay to
the Company the Contingent Payment as provided therein.
(e) All payments under this Agreement shall be made by wire transfer of
immediately available funds.
(f) The deferred portion of the Purchase Price shall be subject to
offset for claims under this Agreement by the Purchaser against the Company,
pursuant to the provisions of Article IX.
The "Purchase Price" means $4,700,000, as adjusted pursuant to Sections
3.2 and 3.3, plus the amount of the Assumed Liabilities.
3.2 PURCHASE PRICE ADJUSTMENT--TANGIBLE NET ASSET ADJUSTMENT.
(a) Preparation of Asset Statement. The Company shall prepare and
deliver to the Purchaser within 90 days of the Closing Date a written statement
which sets forth the value of the inventory, accounts receivable, fixed assets
and the prepaid assets listed on Schedule 3.2(a), in each case with respect to
the Business (collectively, the "Tangible Net Assets") as of the Closing Date
minus the Warranty Liability (the "Asset Statement"). The value of the inventory
shall be determined in accordance with generally accepted accounting principles
consistently applied by the Company ("GAAP"), as modified in accordance with the
methodology set forth on Schedule 3.2; provided, however, that for purposes of
the Asset Statement, the Company shall comply with the methodology set forth on
Schedule 3.2 with respect to the valuation of finished goods inventory only and
shall not be required to comply with such methodology with respect to the
valuation of raw materials and work in process; provided, further, however, that
the Company shall be required to comply with this Section 3.2 and Schedule 3.2
for purposes of
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preparing and delivering the Inventory Statement (as defined in the Transition
Agreement) pursuant to Section 5(b)(ii) of the Transition Agreement to value
Final Unfinished Inventory (as defined in the Transition Agreement).
(b) Review of the Statements. Promptly after the Asset Statement is
delivered to the Purchaser pursuant to Section 3.3(a), the Purchaser shall
examine the Asset Statement. The Company shall give the Purchaser and its
Representatives timely and reasonable access to such of the Company's working
papers, documents, financial information and other information used in the
preparation of the Asset Statement as the Purchaser requests in connection with
such examination. The Purchaser shall complete its examination of the Asset
Statement during the Examination Period. The "Examination Period" shall commence
upon delivery by the Company to the Purchaser of the Asset Statement and end on
the earliest of (i) thirty (30) days after such delivery, (ii) the date the
Purchaser delivers an Objection Notice to the Company and (iii) the date the
Purchaser notifies the Company that the Purchaser accepts the Asset Statement.
The Asset Statement as prepared by the Company and examined by the Purchaser
shall be conclusive and binding on the parties hereto for purposes of this
Agreement, subject to the resolution of any disputes in accordance with Section
3.2(c).
(c) Disputes. During the Examination Period the Purchaser may object to
any item or valuation contained in the Asset Statement by providing the Company
a written notice describing in reasonable detail the Purchaser 's objections
thereto (an "Objection Notice"). The Purchaser 's failure to deliver an
Objection Notice to the Company within thirty (30) days after the Company's
delivery of the Asset Statement to the Purchaser shall constitute the
Purchaser's binding acceptance of the Asset Statement and all matters identified
therein. If the Company and the Purchaser fail to resolve any objection
described on an Objection Notice within ten (10) days after the date the
Objection Notice is delivered to the Company, then, at the request of either
party, the Company and the Purchaser shall meet in an attempt to resolve an
objection described on the Objection Notice and reach a written agreement with
respect to such objections (the "Settlement Agreement"). If the parties enter
into a Settlement Agreement, the Asset Statement shall be deemed to be as agreed
therein. If the parties are unable to resolve the objection described on the
Objection Notice within twenty (20) days after receipt by the Company of such
Objection Notice, then the Company and the Purchaser shall select an independent
accounting firm of recognized national standing (or, if the parties cannot agree
upon a selection, they shall select such accounting firm by lot from among the
five largest accounting firms in the United States; provided, that, such
selected accounting firm shall not at the time of selection be performing
services for either the Purchaser or the Company) which shall resolve such
objection as promptly as practicable. A decision by the independent accounting
firm as to the resolution of such objection shall be (absent an agreement of the
parties regarding an error that is manifest) conclusive and binding upon the
parties for purposes of this Agreement (the "Accountant's Determination"). The
Accountant's Determination shall be (i) in writing, (ii) made in accordance with
GAAP as modified by the standards provided for in this Agreement for the Asset
Statement and (iii) nonappealable and incontestable by the Company and the
Purchaser and each of their respective Affiliates and successors and not subject
to collateral attack for any reason. All fees and costs payable to the
independent accounting firm referred to in this Section 3.3(c) shall be borne
50% by the Purchaser and 50% by the Company.
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(d) Payments. (i) If the value of the Tangible Net Assets minus the
Warranty Liability is in the aggregate less than the result of (x) $1,400,000
minus (y) any accumulated depreciation on the Tangible Net Assets from December
31, 2000 to the Closing Date (the "Tangible Net Asset Target") then the Purchase
Price shall be reduced by such deficit below the Tangible Net Asset Target (the
"Tangible Net Asset Adjustment"). The Tangible Net Asset Adjustment shall first
reduce the Second Payment, and any excess of such adjustment over the Second
Payment shall be paid by the Company to the Purchaser. If such value of the
Tangible Net Assets minus the Warranty Liability is in the aggregate greater
than the Tangible Net Asset Target, no Purchase Price adjustment shall occur.
(ii) The value referred to in clause (i) above shall be as
determined in the Asset Statement or, in the case of a dispute, as
determined in a Settlement Agreement or in the Accountant's
Determination.
(e) Schedule of Payments. Any payments required to be made pursuant to
Section 3.2(d) shall be made as follows: (i) if the Purchaser shall not have
delivered an Objection Notice to the Company in accordance with the provisions
of Section 3.2(c), then the payment required to be made pursuant to Section
3.2(d) shall be made no later than five (5) days after the end of the
Examination Period, and (ii) if the Purchaser shall have delivered an Objection
Notice to the Company in accordance with the provisions of Section 3.2(c), then
payment of any undisputed amounts shall be paid no later than five (5) days
after the end of the Examination Period, and the payment required to be made
pursuant to Section 3.2(d) with respect to any disputed amounts shall be made
within five (5) days after the resolution of the dispute, whether by the
Settlement Agreement or upon the Accountant's Determination as provided in
Section 3.2(c).
3.3 ADJUSTMENT TO PURCHASE PRICE--CONTINGENT PAYMENT
(a) The Purchase Price shall be increased by an amount, if any (the
"Contingent Payment"), equal to $2,500 multiplied by the number of monitors sold
by the Purchaser to Uromedica, Inc., headquartered in Reno, Nevada (the
"Customer") in excess of twenty-five (25) such monitors purchased by the
Customer during the period commencing the day following the Closing Date and
ending on the day preceding the eighteenth (18th) month anniversary of the
Closing Date. If the Closing occurs, the Purchaser shall use its commercially
reasonable efforts to maintain a good working relationship with the Customer
and, subject to the standard policies of the Purchaser pertaining to its
relationship with its customers, the Purchaser shall not unreasonably refuse to
sell as many monitors to the Customer as are ordered by the Customer.
(b) Within forty-five (45) days of the sixth (6th), twelfth (12th), and
eighteenth (18th) month anniversaries of the Closing Date, the Purchaser shall
provide to the Company a statement of the Purchaser's sales of such monitors to
the Customer during each six (6) month period following the Closing Date
accompanied by payment to the Company of the Contingent Payment then due, if
any. Sales by the Purchaser to the Customer of such monitors shall be determined
in accordance with GAAP, as consistently applied by the Purchaser.
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3.4 ALLOCATION OF PURCHASE PRICE.
The Purchase Price shall be allocated to the Purchased Assets in
accordance with the allocation set forth in Exhibit F hereto (the "Statement of
Allocation"). Within one hundred and twenty (120) days after the Closing, the
Company shall:
(a) complete and execute a Form 8594 Asset Acquisition Statement Under
Section 1060 of the Code, consistent with the Statement of Allocation;
(b) deliver a copy of such form to the Purchaser; and
(c) file a copy of such form with its respective Tax Returns, as the
case may be, for the period which includes the Closing Date.
ARTICLE IV
CLOSING
The closing of the sale of the Purchased Assets to the Purchaser, and
the transactions contemplated hereby, (the "Closing") shall take place at the
offices of X'Xxxxxxxx Graev & Karabell, LLP, 30 Rockefeller Plaza, New York, New
York, or through exchange of executed documents via U.S. mail, facsimile and/or
e-mail, on April 25, 2001 or such later date which is no later than two days
after the date that all closing conditions set forth in Sections 8.1 and 8.2
have been satisfied or waived or on such other date to which the Purchaser and
the Company mutually agree (the "Closing Date").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Purchaser to enter into and
perform its obligations under this Agreement and the Related Documents, the
Company hereby represents and warrants to the Purchaser as follows:
5.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER.
The Company is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and as presently
proposed to be conducted. The Company is duly licensed or qualified to transact
business and in good standing to do business in each jurisdiction in which the
nature of the Business, including ownership or leasing of properties related to
the Business, makes such qualification necessary, each of which jurisdictions is
set forth on Schedule 5.1. The Company has delivered to the Purchaser true and
complete copies of the Company's Fundamental Documents. Except as set forth on
Schedule 5.1, the Company does not hold, directly or indirectly, any equity
interest or debt obligations of any other Person that is related to
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the Business, other than accounts receivable arising in the ordinary course of
the Business consistent with past practice.
5.2 AUTHORITY; NONCONTRAVENTION; CONSENTS.
(a) The Company has all the requisite corporate power and authority to
enter into this Agreement and each Related Document to which it is a party and
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and each Related Document to which the Company is
a party and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action on the
part of the Company including, without limitation, approval, if required, by the
stockholders of the Company. This Agreement and each Related Document to which
the Company is a party has been or will be at or prior to the Closing duly and
validly executed and delivered by the Company and is or will be the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
(b) Neither the execution, delivery and performance of this Agreement
and each Related Document to which the Company is a party nor the consummation
by the Company of the transactions contemplated hereby or thereby nor compliance
by the Company with any provision hereof or thereof shall (i) conflict with, or
result in any violations of, or cause a default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation contained in or the loss of any
material benefit under, or result in the creation of any Encumbrance upon any of
the Purchased Assets under any term, condition or provision of (x) the Company's
Fundamental Documents or (y) except as set forth on Schedule 5.2(b), any
Contract to which the Company is a party or by which its properties or assets
are bound, or (ii) violate any Laws applicable to the Company or any of its
properties.
(c) Except as set forth on Schedule 5.2(c), no consent, approval, Order
or authorization of, registration, declaration or filing with, or notification
to any Governmental Entity or any other third Person is required in connection
with the execution, delivery and performance by the Company of this Agreement or
the Related Documents to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
5.3 FINANCIAL STATEMENTS; SEC FILINGS.
(a) Schedule 5.3(a) contains the unaudited balance sheets of the
Business as of December 31, 1999 and 2000 and the related statements of income,
stockholders' equity and cash flows for the 12-month periods then ended
(collectively, the "Financial Statements").
(b) Each of the Financial Statements (A) has been prepared in
accordance with the books and records of the Company (which are true and
complete in all material respects), which have been maintained in a manner
consistent with historical practice, (B) fairly presents the financial condition
and results of operations which it purports to present as of the dates thereof
and for the periods indicated thereon and (C) has been prepared in accordance
with GAAP
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applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or the notes thereto).
(c) Except as disclosed on Schedule 5.3(c), all forms, reports,
statements and other documents required to be filed by the Company with the SEC
since April 27, 1996 (excluding the exhibits filed therewith) (the "Company SEC
Reports") (i) were prepared in all material respects in accordance with the
applicable requirements of the Securities Act, or the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and which created a material adverse effect on the
Business. The Company SEC Report on Form 10-KSB with the SEC for the period
ending December 31, 2000 is referred to as the "Latest Company SEC Report".
(d) The financial statements (including, in each case, any related
notes or schedules thereto) contained in the Latest Company SEC Report were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated therein or in the notes thereto or,
in the case of unaudited interim financial statements, as permitted by Form
10-KSB of the SEC), and fairly presented in all material respects the financial
position of the Company as of the respective dates thereof and the results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments.
5.4 ROYALTIES.
The Company has no obligations to third Persons for royalties or other
payments based on the activities of the Business or on the sale of the Products.
5.5 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as set forth on Schedule 5.5, the Company has no Liability
required by GAAP to be disclosed in a financial statement, except for (i)
Liabilities reflected on the Latest Company SEC Report or the Financial
Statements, and (ii) Liabilities that have arisen since the date of the Latest
Company SEC Report in the ordinary course of business (none of which relates to
breach of contract, breach of warranty, tort, infringement, violation of Law, or
any action, suit or Proceeding (including any Liability under any Environmental,
Health and Safety Laws)). All reserves set forth on the Latest Company SEC
Report and the Financial Statements were and are adequate for the purposes
indicated therein at and after the Latest Company SEC Report. There are no loss
contingencies (as such term is used in Statement of Financial Accounting
Standards No. 5 issued by the Financial Accounting Standards Board in March
1975) that are not adequately provided for on the Latest Company SEC Report or
(except as indicated therein) the Financial Statements. Except as set forth on
Schedule 5.5, the Company has not, either expressly or by operation of law,
assumed or undertaken any Liability of any other Person, including, without
limitation, any obligation for corrective or remedial action relating to
Environmental, Health and Safety Laws.
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5.6 ABSENCE OF CHANGES.
Except as set forth on Schedule 5.6, since the Latest Company SEC
Report, the Company, solely as it relates to the Business or the Purchased
Assets, has been operated in the ordinary course, consistent with past practice,
and there has not been:
(a) any Material Adverse Change, whether or not covered by insurance;
(b) any change in the customers, suppliers or the personnel of the
Business other than such routine changes which occur in the ordinary course of
business, are consistent with past practice, and have not been, individually or
in the aggregate, adverse to the Business;
(c) any obligation, liability or indebtedness (whether absolute,
accrued, contingent or otherwise and whether due or to become due) incurred, or
any transaction, contract or commitment entered into, amended or terminated,
with respect to the Business, other than items incurred or entered into on an
arms-length basis in the ordinary course of business and consistent with past
practice;
(d) any acceleration, payment, discharge or satisfaction of any
Liability, obligation or claim, or Encumbrance of the Business by the Company
(whether fixed or contingent, matured or unmatured), except on an arms-length
basis in the ordinary course of business and consistent with past practice;
(e) any labor trouble, problem or grievance adversely affecting assets
or prospects of the Business, or, to the Best Knowledge of the Company, any
basis for the occurrence of any such trouble, problem or grievance;
(f) any license, sale, transfer, pledge, mortgage, or other disposition
of any tangible or intangible asset of the Business, except on an arms-length
basis in the ordinary course of business and consistent with past practice;
(g) any write-down or write-up of the value of any inventory of the
Business or any write-off as uncollectible of any accounts or notes receivable
of the Business, or any portion thereof, or any amendment or waiver or
termination of any claims or rights of value to the Business;
(h) any single capital expenditure or commitment therefor by the
Company with respect to the Business in excess of $5,000 for additions to
property, plant or equipment;
(i) any change in the tax or other accounting methods or practices
followed by the Company with respect to the Business or any change in
depreciation or amortization policies or rates previously adopted for the
Business;
(j) any change in the manner in which Products or services of the
Business are marketed (including, without limitation, any change in prices), or
any change in the manner in which the Company, with respect to the Business,
extends discounts or credit to customers or otherwise deals with customers;
-14-
(k) any forward purchase commitments for the Business in excess of the
requirements of the Company's historical practices or normal operating
inventories or needs, or at prices higher than current market prices;
(l) any forward sales commitments of the Company with respect to the
Business at prices lower than current market prices, or commitments with respect
to the Business for the sale of merchandise or services in excess of the ability
of the Company to fulfill the same at its normal profit margin;
(m) any failure to operate the Business in the ordinary course
consistent with past practice, including, but not limited to, any failure by the
Company to make capital expenditures or investments or any failure to pay trade
accounts payable or any other obligation or liability of the Company with
respect to the Business when due;
(n) any account of the Business in excess of $10,000 subsequent to the
date of the Latest Company SEC Report (i) which has become delinquent in its
payment, (ii) which has had asserted against it any claim, refusal to pay or
right of set-off, or has been made subject to provisions for retainage of
payments, (iii) the account debtor of which has refused or threatened to refuse
to pay for any reason, (iv) the account debtor of which has become insolvent or
bankrupt or (v) which has been pledged to any third Person;
(o) any agreement by or on behalf of the Company to make any charitable
contribution related to the Business or to incur for the Business any
nonbusiness expense in excess of $5,000 in the aggregate;
(p) any other transaction entered into by the Company other than in the
ordinary course of its business and consistent with past practice which has had
or might have an adverse effect on the Business; or
(q) any agreement, whether in writing or otherwise, to take any of the
actions specified in the foregoing clauses (a) through (p).
5.7 TAX MATTERS; CERTAIN DEFINITIONS.
(a) Except as set forth on Schedule 5.7(a), the Company and each other
Person included in any consolidated or combined Tax Return or part of an
affiliated group, within the meaning of Section 1504 of the Code, of which the
Company is or has been a member,
(i) has timely paid or caused to be paid all Taxes required to
be paid by it through the date hereof (including any Taxes shown due on
any Tax Return);
(ii) has filed or caused to be filed in a timely manner
(within any applicable extension periods) all Tax Returns required to
be filed by it with the appropriate Governmental Entitles in all
jurisdictions in which such Tax Returns are required to be filed; and
(iii) has not requested or caused to be requested any
extension of time within which to file any Tax Return, which Tax Return
has not since been filed.
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(b) The Tax Returns of the Company for the three most recent completed
tax years of the company were complete and correctly reflected in all material
respects the facts regarding the income, business, assets, operations,
activities and status of the Company and any other information required to be
shown therein.
(c) Except as set forth in Schedule 5.7(c):
(i) the Company has not been notified in writing by the
Internal Revenue Service or any other taxing authority that any issues
have been raised (and are currently pending) by the Internal Revenue
Service or any other taxing authority in connection with any Tax Return
of the Company, and no waivers of statutes of limitations have been
given or requested with respect to the Company;
(ii) there are no pending Tax audits of any Tax Returns of the
Company, and no unresolved questions or claims concerning the Company's
Tax Liability exist;
(iii) no Tax liens exist for any Taxes upon any of the
property or assets of the Company, other than liens for Taxes not yet
due, and no deficiency or addition to Taxes, interest or penalties for
any Taxes has been proposed, asserted or assessed against the Company
or any member of any affiliated or combined group of which the Company
was or is a member;
(iv) full and adequate provision has been made (A) on the
Latest Company SEC Report, and the books and records of the Company for
all Taxes payable by the Company for all periods prior to the Latest
Company SEC Report, and (B) on the books and records of the Company for
all Taxes payable by the Company for all periods beginning on or after
the Latest Company SEC Report;
(v) the Company has not and shall not incur any Tax Liability
or obligation, whether direct or indirect, from and after the Latest
Company SEC Report other than Taxes incurred in the ordinary course of
business and consistent with previous years and past practices;
(vi) the Company is not and has not (A) made an election to be
treated as a "consenting corporation" under Section 341(f) of the Code
or (B) been a "personal holding company" within the meaning of Section
542 of the Code;
(vii) the Company (including all predecessors thereof) has
complied in all material respects with all applicable Laws relating to
the collection or withholding of Taxes (such as sales Taxes or
withholding of Taxes from the wages of employees), and the Company has
not been and is not liable for any Taxes for failure to comply with
such Laws;
(viii) the Company is not and has not ever been a party to any
Tax sharing agreement with any Person;
(ix) the Company has not agreed to and is not required to make
any adjustments or changes to its accounting methods pursuant to
Section 481 of the Code,
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and the Internal Revenue Service has not proposed any such adjustments
or changes in the accounting methods of the Company;
(x) no claim has ever been made by any Taxing authority in a
jurisdiction in which the Company does not file Tax Returns that the
Company is or may be subject to taxation by that jurisdiction; and
(xi) the Company is not a foreign Person within the meaning of
ss.1.1445-2(b) of the rules and regulations promulgated under Section
1445 of the Code, and the Purchaser has been furnished with a true and
accurate certificate of the Company so stating which complies in all
material respects with ss.1.1445-2(b)(2) of such rules and regulations.
5.8 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
The Company has good title to the Intellectual Property Rights as
provided in Section 5.10 and to all Purchased Assets, reflected on the Latest
Company SEC Report or acquired after the date of the Latest Company SEC Report
(except inventory or other property sold or otherwise disposed of since the date
of the Latest Company SEC Report in the ordinary course of business and accounts
receivable and notes receivable paid in full subsequent to the Latest Company
SEC Report), free and clear of all Encumbrances, of any kind or character,
except for those Encumbrances set forth on Schedule 5.8 and Permitted
Encumbrances. There does not exist any condition which materially interferes
with the economic value or use of any such assets. Except as set forth on
Schedule 5.8 and other than for inventory and supplies in transit in the
ordinary course of business, all material tangible personal property included in
the Purchased Assets is located at the Facilities.
5.9 REAL PROPERTY--OWNED OR LEASED.
(a) Schedule 5.9(a) contains a list and brief description of the
Facilities, including the name of the lessor and any requirement of consent of
the lessor to consummate the transactions contemplated hereby. That portion of
the Facilities specified on Schedule 5.9(a) (the "Business Facilities")
constitutes all real properties used or occupied by the Company in connection
with the Business.
(b) Except as set forth on Schedule 5.9(b):
(i) the physical condition of the Business Facilities is
sufficient to permit the continued conduct of the Business as presently
conducted subject to the provision of usual and customary maintenance
and repair performed in the ordinary course with respect to similar
properties of like age and construction; and
(ii) the Company is the owner and holder of all the leasehold
estates purported to be granted by the lease of the Facilities and such
lease is in full force and effect and constitutes a valid and binding
obligation of the Company.
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5.10 INTELLECTUAL PROPERTY.
(a) Except in each case as set forth on Schedule 5.10(a):
(i) the Company owns, has the right to use, sell, license and
dispose of, and has the right to bring actions for the infringement of,
all Intellectual Property Rights referred to in Section 1.1(a)(vi) and
listed on Exhibit C hereto (collectively, the "Owned Requisite
Rights"), other than those Intellectual Property Rights for which the
Company has a valid license, all of which are listed on Schedule
5.10(a) (collectively, the "Licensed Requisite Rights"; and together
with the Owned Requisite Rights, the "Requisite Rights"), and such
rights to use, sell, license, dispose of and bring actions are
exclusive with respect to the Owned Requisite Rights;
(ii) the Requisite Rights are sufficient for the conduct of
the Business as currently conducted;
(iii) the Company has made timely and proper application for
issuance of letters patent in the United States for all patentable
inventions included within its Owned Requisite Rights;
(iv) there are no royalties, honoraria, fees or other payments
payable by the Company to any Person by reason of the ownership, use,
license, sale or disposition of the Owned Requisite Rights or Licensed
Requisite Rights;
(v) no activity, service or procedure currently conducted or
proposed to be conducted by the Company violates or as to business
proposed to be conducted shall violate any contract, instrument,
license, commitment, lease or similar document of the Company with any
third Person relating to any Requisite Rights, or infringe any
Intellectual Property Rights of any other Person;
(vi) the Company has taken the steps described on Schedule
5.10(a) designed to safeguard and maintain (i) the secrecy and
confidentiality of Confidential or Proprietary Information and (ii) the
proprietary rights of the Company in all of its Owned Requisite Rights;
(vii) the Company has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual
Property Rights of any Person or committed any acts of unfair
competition with respect to the Business, and the Company has not
received from any Person in the past five years any written notice,
charge, complaint, claim or assertion thereof, and no such claim is
impliedly threatened by an offer to license from another Person under a
claim of use; and
(viii) the Company has not sent to any Person in the past five
years, or otherwise communicated to any Person, any written notice,
charge, complaint, claim or other assertion of any present, impending
or threatened infringement by or misappropriation of, or other conflict
with, any Requisite Rights by such other Person or any acts of unfair
competition by such other Person, nor, to the Best Knowledge of the
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Company, is any such infringement, misappropriation, conflict or act of
unfair competition occurring or threatened.
(b) Schedule 5.10(b) contains a true and complete list of all
applications, filings and other formal actions made or taken pursuant to any
Laws by the Company to perfect or protect its interest in the Requisite Rights,
including, without limitation, all patents, patent applications, trademarks,
trademark applications, servicemarks and servicemark applications.
5.11 AGREEMENTS, NO DEFAULTS, ETC.
(a) Schedule 5.11 contains a true and complete list and brief
description of all written and oral Contracts to which the Company is a party
which were entered into or made in the ordinary course of business of the
Business or which relate to the Business and are described in clauses (i)
through (xvii) of the next sentence of this Section 5.11. Except as set forth on
Schedule 5.11, the Company with respect to the Business is not a party to any of
the following:
(i) distributorship, dealer, sales, advertising, agency,
manufacturer's representative or other Contract relating to the payment
of a commission;
(ii) collective bargaining agreement or other Contract with or
commitment to any labor union or proposed labor union;
(iii) continuing Contract for the future purchase of products,
material, supplies, equipment or services which is not immediately
terminable by the Company without cost, forfeiture or other liability
at or at any time after the Closing;
(iv) Contract for future sales which is not immediately
terminable by the Company without cost or other liability at or at any
time after the Closing;
(v) Contract or commitment for the borrowing of money, for a
line of credit or for a leasing transaction of a type required to be
capitalized in accordance with Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board;
(vi) Contract or commitment for charitable contributions in
excess of $1,000;
(vii) Contract or commitment for capital expenditures;
(viii) agreement or arrangement for the sale of any assets,
properties or rights other than the sale of services or Products in the
ordinary course of business at normal profit margins;
(ix) lease or other agreement with respect to the Business
pursuant to which it is a lessee of or holds or operates any machinery,
equipment, motor vehicles, office furniture, fixtures, products,
merchandise or similar personal property owned by any other Person;
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(x) Contract with respect to the lending or investing of
funds;
(xi) Contract or indemnification with respect to any form of
intangible property, including any Requisite Rights or confidential
information;
(xii) Contract which restricts the Company from engaging in
any aspect of the Business anywhere in the world;
(xiii) Contract or group of related Contracts with the same
Person (excluding purchase orders entered into in the ordinary course
of business which are to be completed within three months of entering
into such purchase orders) for the purchase or sale of products,
material, supplies, equipment or services under which the undelivered
balance thereof (including the aggregate undelivered balance under any
such Contracts between the same Person and the Company) has a selling
price in excess of $10,000;
(xiv) Contract (A) that is not terminable by either party
thereto without penalty upon not more than 30 days advance notice and
involves aggregate consideration in excess of $10,000 or (B) that
involves aggregate consideration in excess of $5,000 (excluding in the
case of clauses (A) and (B) above any purchase order entered into in
the ordinary course of business which is to be completed within three
months of entering into such purchase order);
(xv) confidentiality, non-disclosure or non-compete agreement
with any officer, director, employee of or consultant to the Company or
other Person with access to or knowledge of confidential or propriety
information designed to safeguard and maintain (A) the secrecy and
confidentiality of confidential or proprietary information and (B) the
proprietary rights of the Company in all of its Owned Requisite Rights;
(xvi) Contract with any Affiliate of the Company with respect
to the Business; or
(xvii) other Contract material to the Business.
(b) All items listed on Schedule 5.11 are in full force and effect,
constitute legal, valid and binding obligations of the respective parties
thereto, and are enforceable in accordance with their respective terms. The
Company has in all material respects performed all of the obligations required
to be performed by it to date, and there exists no default, or any event which
upon the giving of notice or the passage of time, or both, would give rise to a
claim of a default in the performance by the Company or any other party to any
of the foregoing of their respective obligations thereunder. The Purchaser has
been furnished with true, complete and correct copies of all written items
listed on Schedule 5.11 and Schedule 5.11 contains complete descriptions of all
oral items listed on Schedule 5.11. No consent or approval by, or any
notification or filing with, any party to any of the agreements on Schedule 5.11
is required in connection with the execution, delivery and performance by the
Company or any Affiliate thereof of this Agreement or any of the Related
Documents to which the Company or any Affiliate thereof is a party or the
consummation by the Company or any Affiliate thereof of the transactions
contemplated hereby or thereby, except for those consents, approvals,
notifications or filings set forth on Schedule
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5.11, which, except as set forth on Schedule 5.11, have been or shall be made or
obtained prior to the Closing.
5.12 LITIGATION, ETC.
Except as set forth on Schedule 5.12, there are no (i) Proceedings
pending or, to the Best Knowledge of the Company, threatened against the
Company, whether at law or in equity, or before or by any Governmental Entity or
arbitrator or (ii) Orders of any Governmental Entity or arbitrator against the
Company, in each case affecting or potentially affecting the Business. The
Company has delivered to the Purchaser all material documents and correspondence
relating to such matters referred to on Schedule 5.12.
5.13 COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS.
Except as set forth on Schedule 5.13, the Business has not and is not
being conducted in violation in any material respect of any Law, Order or
Permit, including, without limitation, Environmental, Health and Safety Laws.
Except as set forth on Schedule 5.13, no investigation or review by any
Governmental Entity with respect to the Business is pending or, to the Best
Knowledge of the Company, threatened, nor has any Governmental Entity notified
in writing the Company of its intention to conduct the same. The Company has all
Permits necessary for the conduct of the Business, including those required
under any Environmental, Health and Safety Laws, such Permits are in full force
and effect, no violations are or have been recorded in respect thereof and no
Proceeding is pending or, to the Best Knowledge of the Company, threatened, to
revoke or limit any thereof. Schedule 5.13 contains a true and complete list of
all such Permits under which the Business is operating or bound, and the Company
has furnished to the Purchaser true and complete copies thereof.
5.14 FDA AND OTHER COMPLIANCE.
(a) Except as set forth on Schedule 5.14(a), the Company is in
substantial compliance, in all material respects, with all Laws applicable to
the Business including all Laws administered or issued by the United States Food
and Drug Administration (the "FDA"). All Products, where required by Laws
applicable thereto, are being manufactured and marketed under a valid Section
510(k) clearance letter or valid premarket approval application ("PMA") issued
by the FDA and Schedule 5.14(a) hereto lists each letter granting such 510(k)
clearance letter and PMA and includes a copy thereof. Schedule 5.14(a) also
lists those of the Products which are being marketed without a valid Section
510(k) clearance letter or PMA issued by the FDA and sets forth the reason why
each such Product is being marketed without such clearance or approval.
(b) Except as set forth on Schedule 5.14(b):
(i) no false information or significant omission has been made
in any products application or products-related submission to the FDA
by or on behalf of the Company or otherwise relating to any of the
Products;
(ii) any PMA or 510(k) documents and related documents for the
Company's products are in compliance, in all material respects, with
applicable Laws
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administered or promulgated by the FDA and there is no reason to
believe that the FDA is considering limiting, suspending, or revoking
such approvals/clearances or changing the marketing classification or
labeling of any such products;
(iii) all preclinical and clinical studies, if any, have been
conducted by the Company in accordance with recognized good clinical
and good laboratory practices in all material respects, and are in
compliance with applicable Laws administered or promulgated by the FDA
regarding preclinical and clinical studies in all material respects;
(iv) the Company has obtained all necessary regulatory
approvals from any Governmental Entities (whether foreign or domestic)
related to the Products required in any jurisdiction where the Products
are manufactured, marketed or sold;
(v) Schedule 5.14(b) sets forth an accurate list of written
information regarding internal audits concerning whether the Company
complies with current good manufacturing practices including the FDA's
Quality System Regulations (the "QSRs") and ISO 9000 standards and all
written reports or written information regarding QSR audits conducted
for the Company by an outside auditor;
(vi) the Company is in substantial compliance with the QSR and
any other applicable laws regarding manufacturing requirements,
including, but not limited to, the testing of incoming components and
in process product, equipment validation and maintenance, complaint
file requirements, complaint investigation requirements, process
validation, document retention, change controls, and master file and
device history file documentation;
(vii) the Company has signed up-to-date written policies that
reflect its actual QSR procedures;
(viii) the Company has, in a timely manner, filed all required
medical device reports ("MDRs") for deaths, serious injuries, and
reportable malfunctions. A list of such reports and the Company's
written policy regarding MDR reporting is attached as part of Schedule
5.14(b); and
(ix) the Company has no knowledge of any acts that furnish a
reasonable basis for an untitled or Warning Letter, Section 305 Notice,
or other similar communications from the FDA, and there have been no
recalls, field notifications, safety alerts (whether voluntary or
otherwise) or seizures requested or threatened, related to the
Company's Products.
(c) The Company has established a Corporate Compliance Program, a copy
of which is included as part of Schedule 5.14(c) hereto.
5.15 INSURANCE.
(a) Schedule 5.15(a) contains a true and complete list of all policies
of liability, theft, fidelity, life, fire, product liability, workers'
compensation, health and other forms of
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insurance held by the Company for the benefit of the Company (specifying the
insurer, amount of coverage, type of insurance, policy number, Best's rating of
the insurer and any pending claims thereunder). Such insurance coverage has been
maintained at all times during the course of the operation of the Business, and
such insurance coverage has been maintained on an occurrence (as opposed to a
claims made) basis. The Company is insured against all risks usually insured
against by Persons conducting businesses similar to the Business, under policies
of such types as are customarily carried by such Persons. The product liability
policies of the Company are on an "occurrence" basis. The amounts of coverage
under such policies of insurance are specified on Schedule 5.15(a).
(b) Except as set forth on Schedule 5.15(b), with respect to each
policy of insurance listed on Schedule 5.15(a):
(i) such policy is a valid and enforceable policy and is
outstanding and in full force and effect, all premiums with respect
thereto are currently paid and are not subject to adjustment, and the
Company is not in default in any respect with respect to its
obligations under such policy, and no basis exists that would give any
insurer under any such policy the right to cancel or unilaterally
reduce or limit the stated coverages contained in such policy;
(ii) there are no outstanding claims with respect to the
Business or the Purchased Assets currently pending under such policy
that could be expected to cause an increase in the insurance rates of
the Company, and no facts or circumstances exist that might relieve the
insurer under such policy of its obligations to satisfy in full any
claim thereunder; and
(iii) the Company has not received any written notice that
such policy has been or shall be canceled or terminated or will not be
renewed on substantially the same terms as are now in effect.
5.16 LABOR RELATIONS: EMPLOYEES.
Except as set forth on Schedule 5.16, (i) the Business is in compliance
in all material respects with all applicable foreign and domestic Laws and
regulations respecting labor, employment and employment practices, terms and
conditions of employment and wages and hours, (ii) there is no unfair labor
practice complaint against the Company pending before the National Labor
Relations Board or any other Governmental Entity, (iii) there is no labor
strike, material dispute or grievance, slowdown or stoppage actually pending or,
to the Best Knowledge of the Company, threatened against or involving the
Company and (iv) no labor union currently represents the employees of the
Company and, to the Best Knowledge the Company, no labor union has taken any
action with respect to organizing the employees of the Company.
5.17 ERISA COMPLIANCE.
Schedule 5.17(a) contains a true, complete and correct list of all
Employee Benefit Plans of the Company (collectively, the "Company Employee
Plans"). Except as set forth on Schedule 5.17(b), each Company Employee Plan has
been established, maintained, operated and
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administered in accordance with its terms and in compliance in all material
respects with the applicable Laws of each Governmental Entity having
jurisdiction.
5.18 ENVIRONMENTAL MATTERS.
(a) The Company is not nor, to the Best Knowledge of the Company, any
of its past property or operations, subject to or the subject of, any
Proceeding, Order, settlement, or other Contract arising under any
Environmental, Health and Safety Laws, nor, to the Best Knowledge of the
Company, has any investigation been commenced or is any Proceeding threatened
against the Company under any Environmental, Health and Safety Laws, in each
case, with regard to the Business.
(b) Except as set forth on Schedule 5.18(b), the Company has not
received with respect to the Business any written or oral notice, report or
other information that the Company is potentially responsible under any
Environmental, Health and Safety Laws for response costs or natural resource
damages, as those terms are defined under the Environmental, Health and Safety
Laws, at any location and the Company has not transported or disposed of, or
allowed or arranged for any third party to transport to or dispose of, any
Hazardous Materials at any location included on the National Priorities List, as
defined under CERCLA, or any location proposed for inclusion on that List, or
any location included on the CERCLIS database prepared under CERCLA or on any
analogous list prepared by any Governmental Entity.
(c) The Company has provided the Purchaser with correct and complete
copies of all reports and studies within the possession or control of the
Company with respect to the Business and with respect to past or present
environmental conditions or events at any properties or facilities previously
owned or operated by the Company or any predecessor of the Company including the
Facilities and to the Best Knowledge of the Company, there are no other
environmental reports or studies with respect thereto.
5.19 BROKERS.
Except as set forth on Schedule 5.19, neither the Company nor any of
its officers, directors, shareholders or employees nor any other Person acting
on their behalf has employed any broker or finder or incurred any Liability for
any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby. To the extent the Company has agreed to pay
any Liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated hereby, it will be solely responsible for the
payment of such commission or fee.
5.20 ACCOUNTS AND NOTES RECEIVABLE.
Except as set forth on Schedule 5.20, all the accounts receivable and
notes receivable with respect to the Business owing to the Company as of the
date hereof constitute, and as of the Closing shall constitute, valid and
enforceable claims arising from bona fide transactions in the ordinary course of
business, and there are no known or asserted claims, refusals to pay or other
rights of set-off against any thereof. Except as set forth on Schedule 5.20,
there is (i) no account debtor or note debtor delinquent in its payment by more
than 90 days, (ii) no account debtor or note debtor that has refused or, to the
Best Knowledge of the Company, threatened to refuse to
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pay its obligations to the Company for any reason, (iii) to the Best Knowledge
of the Company, no account debtor or note debtor that is insolvent or bankrupt
and (iv) no account receivable or note receivable pledged to any third party by
the Company.
5.21 ACCOUNTS AND NOTES PAYABLE.
Except as set forth on Schedule 5.21, all accounts payable and notes
payable related to the Business by the Company to third parties as of the date
hereof arose, and as of the Closing shall have arisen, in the ordinary course of
business, and, except as set forth on Schedule 5.21, there is no such account
payable or note payable delinquent in its payment, except those contested in
good faith and already disclosed on Schedule 5.21.
5.22 INVENTORIES.
The inventories of the Products as of the date hereof are of good,
useable and merchantable quality. The Company's inventory includes no items
which are below customary quality control standards of the medical device
industry and any applicable governmental quality control and has been
manufactured in compliance with QSR and ISO 9000.
5.23 RELATED TRANSACTIONS.
Except as set forth on Schedule 5.23, and except for compensation to
regular employees of the Company, no current or former Affiliate of the Company
or any associate (as defined in the rules promulgated under the Exchange Act)
thereof, is now, or has been during the last five fiscal years, (i) a party to
any transaction or Contract with the Company related to the Business, or (ii)
the direct or indirect owner of an interest in any Person which is a present or
potential competitor, supplier or customer of the Business (other than
non-affiliated holdings in publicly held companies), nor does any such Person
receive income from any source other than the Company which relates to the
Business, or should properly accrue to, the Company.
5.24 SUPPLIERS AND VENDORS.
Except in the ordinary course of business, no material supplier or
vendor of the Business has canceled or otherwise terminated, or threatened to
cancel or otherwise terminate, its relationship with the Company or, other than
in de minimis amounts, has decreased, limited or otherwise modified, or
threatened to decrease, limit or otherwise modify, the services, supplies or
materials it provides to the Company and, to the Best Knowledge of the Company,
the transactions contemplated by this Agreement shall not affect the
relationship of the Company with any such supplier or vendor.
5.25 CUSTOMERS.
Except to the extent any such business relationship is impaired solely
by virtue of an account or note receivable past 90 days due as disclosed on
Schedule 5.25, the business relationship between the Company and its material
customers of the Business is generally good and no material disagreement or
problem exists between the Company and any such customer. No such customer to
which more than $25,000 of the Company's annual sales are attributable has
notified, or to the Best Knowledge of the Company, has threatened, the Company
in writing that
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it intends, to terminate its relationship and dealings with the Company, whether
as a result of the transactions contemplated by this Agreement or otherwise.
5.26 WARRANTIES OF PRODUCTS; PRODUCTS LIABILITY; REGULATORY COMPLIANCE.
(a) Except to the extent written down on the books of account of the
Company or reserved against thereon, each Product manufactured, sold,
distributed, used or held in inventory by the Company (including, without
limitation, all documentation furnished in connection therewith) is, subject to
customary and reasonable tolerances, free from any significant defects in
workmanship and materials, and conforms in all material respects with all
customary and reasonable standards for products of such type.
(b) The Company has not become aware or otherwise been notified in
writing of or been responsible for, subject to nor does it now have any actual
or potential Liability, whether direct or indirect, arising out of, any injury
to Persons or property as a result of the ownership, possession or use of any
Product.
(c) Neither the FDA nor any other Governmental Entity regulating the
marketing, testing or advertising of any of the Products has requested that any
such product be removed from the market, that substantial new product testing be
undertaken as a condition to the continued manufacturing, selling, distribution
or use of any such product or that such product be modified in a way likely to
have result in a Material Adverse Change to the Business.
5.27 SUFFICIENCY OF ASSETS.
The sale of the Purchased Assets by the Company to the Purchaser
pursuant to this Agreement will effectively convey to, or provide the license
to, the Purchaser the entire Business, and all of the tangible and intangible
property used in the conduct of the Business by the Company (whether owned,
leased or held under license by the Company) and necessary to, the conduct of
the Business as conducted by the Company.
5.28 DISCLOSURE.
Neither this Agreement, including the schedules, attachments or
exhibits, nor any other written material delivered by or on behalf of the
Company to the Purchaser or any of its respective directors, officers,
employees, representatives or agents contains any untrue statement of a material
fact or omits a material fact necessary to make the statements contained herein
or therein, taken as a whole, in light of the circumstances in which they were
made, misleading. There is no fact that has not been disclosed to the parties
referred to above of which the Company or any of the officers or directors of
the Company is aware and which constitutes or could reasonably be anticipated to
result in a Material Adverse Change.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As a material inducement to the Company to enter into and
perform its obligations under this Agreement and the Related Documents, the
Purchaser and the Guarantor each hereby jointly and severally represent and
warrant to the Company as follows:
6.1 ORGANIZATION; CORPORATE AUTHORITY.
It is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and it has all
requisite corporate power and authority to enter into this Agreement and each
Related Document to which it is a party, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby.
6.2 CORPORATE ACTION; AUTHORITY; NO CONFLICT.
Its execution, delivery and performance of this Agreement and each
Related Document to which it is a party, and its consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on its part. This Agreement and
each Related Document to which it is a party has been or will be, at or prior to
the Closing, duly and validly executed and delivered by it and is or will be its
valid and binding obligation, enforceable against it in accordance with its
terms. Each of (i) the execution, delivery and performance of this Agreement and
each Related Document to which it is a party, (ii) its consummation of the
transactions contemplated hereby and thereby, and (iii) its compliance with any
provision hereof or thereof, will not (A) conflict with or result in any
violation of, or cause a default (with or without notice or lapse of time, or
both) under, or give rise to any right of termination, amendment, cancellation
or acceleration of any obligation contained in, or the loss of any benefit
under, or result in the creation of any Encumbrance upon any of its assets or
properties under any term, condition or provision of its Fundamental Documents
or (B) violate any Law applicable to it or any of its respective properties or
assets.
6.3 CONSENT.
(a) No provision of its Fundamental Documents or any Contract to which it
is a party or by which any of its properties is bound, requires the consent or
authorization of any other Person as a condition precedent to the consummation
of the transactions contemplated by this Agreement or any of the Related
Documents to which it is a party, which consent or authorization, if not
obtained, would result in a material adverse change upon the consummation by it
of the transactions contemplated by this Agreement or any of such Related
Documents.
(b) No consent, approval, Order or authorization of, or registration,
qualification, designation, declaration or filing with, any Governmental Entity
is required to be obtained by it in connection with the transactions
contemplated by this Agreement or any of the Related Documents to which it is a
party.
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6.4 BROKERS.
Neither it nor any of its respective officers, directors, shareholders
or employees (nor any Affiliate of any of the foregoing) has employed any broker
or finder or incurred any Liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby. To the
extent it has agreed to pay any Liability for any brokerage fees, commissions or
finder's fees in connection with the transactions contemplated hereby, it will
be solely responsible for the payment of such commission or fee.
6.5 LITIGATION.
There are no Proceedings pending nor, to its Best Knowledge, threatened
against or relating to it before any Governmental Entity or arbitration tribunal
that could, individually or in the aggregate, if adversely determined, result in
a material adverse change on the consolidated business, operations or financial
condition of it and its consolidated Affiliates or that could, individually or
in the aggregate, prevent the consummation by it of the transactions
contemplated by this Agreement or any of the Related Documents to which it is a
party.
ARTICLE VII
CONDUCT AND TRANSACTIONS PRIOR TO AND AT CLOSING
7.1 ACCESS TO INFORMATION.
From and after the date hereof until the earlier of the Closing or the
termination of this Agreement pursuant to Article X (the "Pre-Closing Period"),
the Company shall afford to the Purchaser, its Affiliates and their respective
Representatives free and full access upon reasonable notice and during normal
business hours (but without interruption of the business of the Company) to the
customers, suppliers and vendors of the Company and to all of the books and
records, Tax Returns, work papers and other documents and information related to
the Business and the Purchased Assets and to the Facilities and personnel of the
Company as may be reasonably requested. The investigation contemplated by this
Section 7.1 shall not affect or otherwise diminish or obviate in any respect any
of the representations and warranties or the indemnification obligations of the
Company contained in this Agreement.
7.2 CONDUCT OF THE COMPANY.
During the Pre-Closing Period, the Company shall:
(a) conduct the Business substantially as presently operated and only
in the ordinary course consistent with past practice;
(b) not enter into any transaction with respect to the Business other
than in the ordinary course of business of the Business, or any transaction
which is not at arms-length with unaffiliated third Persons, or any transaction
with any affiliated third Person;
(c) not dispose of any of the Purchased Assets, except sales of
inventories or other assets in the ordinary course of business;
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(d) use commercially reasonable efforts to (i) maintain the business,
assets, relations with employees, customers and suppliers, licenses and
operations of the Business as an ongoing business and preserve its goodwill, in
accordance with past custom and practice and (ii) to satisfy each of the closing
conditions set forth in Section 8.1;
(e) except with the written consent of the Purchaser, enter into any
Contract (or series of related Contracts) with respect to the Business or
amendment of any Contract with respect to the Business involving an aggregate
amount in excess of $10,000 other than in the ordinary course of business of the
Business consistent with past custom and practice;
(f) not pay, discharge or satisfy any material claims, Liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of the
Business, other than the payment, discharge or satisfaction of Liabilities in
the ordinary course of business of the Business consistent with past practice;
(g) delay or postpone the payment of accounts payable and other
obligations and material Liabilities of the Business or accelerate the
collection of accounts receivable of the Business, other than in the ordinary
course of business of the Business consistent with past custom and practice
(h) not change in any material respect the accounting methods or
practices followed by the Company with respect to the Business, including any
material change in any assumption underlying, or method of calculating, any bad
debt, contingency or other reserve, except as may be required by changes in
GAAP;
(i) not amend or modify, in any way that will adversely affect the
Business and the transactions contemplated hereby, the Company's Fundamental
Documents; or
(j) authorize any of the foregoing or enter into any agreement to do
any of the foregoing.
7.3 EFFORTS TO CONSUMMATE.
Subject to the terms and conditions of this Agreement, each party shall
use reasonable efforts to take or cause to be taken all actions and do or cause
to be done all things required under all applicable Laws or this Agreement, in
order to consummate the transactions contemplated hereby.
7.4 EXCLUSIVITY.
(a) The Company acknowledges that substantial time of the Purchaser and
substantial out-of-pocket expenses (including attorneys' and accountants' fees
and expenses) have been and will continue to be expended and incurred in
connection with conducting legal, business and financial due diligence
investigations of the Business, drafting and negotiating this Agreement and the
Related Documents and other related expenses (collectively, "Acquisition
Expenses"). During the Pre-Closing Period, the Company shall not, and shall use
its best efforts to not permit any of the Representatives of the Company to: (i)
solicit or conduct any negotiations, enter into any agreements, understandings
or transactions or provide any
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information to any Person (other than the Purchaser and its Representatives)
regarding Another Transaction, provide any non-public financial or other
confidential or proprietary information regarding the Business or the Purchased
Assets (including this Agreement and any other materials containing the
Purchaser's proposed terms and any other financial information, projections or
proposals regarding the Business or the Purchased Assets) to any Person (other
than to the Purchaser and its Representatives) who the Company knows, or has
reason to believe, would have any interest in participating in Another
Transaction. As used herein, the term "Another Transaction" means the sale of
the Business or any of the Purchased Assets, other than the sale of inventories
in the ordinary course consistent with past practice. The Company represents
that it is not a party to, or bound by, any agreement with respect to Another
Transaction other than this Agreement.
(b) The Company shall disclose to the Purchaser the terms of Another
Transaction that the Company negotiates or discusses, as permitted under this
Section 7.4, with any Person other than the Purchaser (including the identity of
such Person).
(c) Each party recognizes and acknowledges that a breach of this
Section 7.4 will cause irreparable and material loss and damage to the
Purchaser, which cannot be adequately compensated for in damages by an action at
law. Therefore, the Company agrees that the Purchaser shall be entitled, in
addition to any other remedies and damages available, to the equitable remedies
of injunction and specific performance with respect to the Company's obligations
hereunder.
7.5 PROPRIETARY INFORMATION.
All confidential or proprietary information or work product relating to
the Business which is known to the Company as of the Closing Date will be the
sole property of the Company. The Company agrees that it will not use or
disclose such information or work product except as required by Law or for the
benefit of the Company and its successors and assigns and the Company will take
reasonable steps to protect such information and work product from misuse, loss,
theft or accidental disclosure.
7.6 PUBLIC ANNOUNCEMENTS.
The Purchaser and the Company will consult with each other before
issuing and, to the extent reasonably practicable, give each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement or
any Related Document and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or national securities quotation
system. The initial press release to be issued with respect to the execution of
this Agreement shall be in the form heretofore agreed to by the parties.
7.7 CONSENTS.
Each party shall use its best efforts, and the other party shall
cooperate with such efforts, to obtain any consents and approvals of, or effect
the notification of or filing with, each Person,
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whether private or governmental, whose consent or approval is required in order
to permit the consummation of the transactions contemplated hereby.
7.8 NOTICE OF PROSPECTIVE BREACH; SUPPLEMENT TO SCHEDULES.
(a) Each party shall immediately notify the other party in writing upon
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur would be reasonably likely to cause (i) any representation or warranty
of such party contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the Closing as
if such representation and warranty were made at such time or (ii) any material
failure of such party hereto to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by him or it under this Agreement.
(b) From time to time prior to the Closing, the Company will supplement
or amend with reasonable frequency the information contained in the Schedules
hereto with respect to any matter hereafter arising, which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in any Schedule hereto. Any supplement or amendment delivered
pursuant to this Section 7.8(b) shall in no event be the basis for any claim
that any representation or warranty is inaccurate or has been breached for
purposes of Section 8.1 or Section 9.1.
7.9 EXCHANGE OF PROCEEDS.
If during the Pre-Closing Period the Company receives any proceeds in
consideration for the exchange of any of its assets that constitute Purchased
Assets, whether from the sale of any such Purchased Assets (other than sales of
inventory in the ordinary course of business consistent with past practice) or
from insurance proceeds payable on account of any loss or casualty to such
Purchased Assets, any proceeds from the taking of such Purchased Assets pursuant
to the power of eminent domain, or any other proceeds from whatever source
relating to the disposition of such Purchased Assets (the "Exchange Proceeds"),
the Company shall promptly notify the Purchaser of such receipt of Exchange
Proceeds and shall consult with the Purchaser with respect to the application of
any such Exchange Proceeds.
7.10 RELATED DOCUMENTS.
At the Closing, the Company shall execute and deliver the
Non-Competition Agreement and the Company and the Purchaser shall execute and
deliver the Xxxx of Sale, assignment of patents and trademarks, the License
Agreement and the Transition Agreement.
7.11 OFFER OF EMPLOYMENT.
Immediately following the Closing the Purchaser shall offer employment
to those employees of the Business set forth on Schedule 7.11 (the "Designated
Employees", any such employees who accept such offer of employment being
referred to herein as the "Hired Employees"). The Purchaser shall have no
obligation to offer employment to any employees of the Business other than the
Designated Employees. The Purchaser intends to provide the Hired Employees,
effective upon their commencement of employment with the Purchaser, with
benefits substantially similar to those given to similarly situated employees of
the Purchaser.
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The Company shall retain all liabilities and obligations arising from the
termination of employment of the Designated Employees with the Company.
ARTICLE VIII
CLOSING CONDITIONS
8.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER.
The obligations of the Purchaser under this Agreement to purchase the
Purchased Assets and assume the Assumed Liabilities are subject to the
satisfaction, on or prior the Closing, of the following conditions unless waived
(to the extent such conditions can be waived) by the Purchaser:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the Company in this Agreement and the Related Documents
(without giving effect to any qualification contained therein as to materiality,
including without limitation, the phrases "material", "in all material
respects", and "Material Adverse Change") shall be true and correct in all
material respects on and as of the Closing Date with the same effect as if such
representations and warranties had been made at and as of the Closing Date,
except for those representations and warranties which address matters only as of
a particular date (which shall be true and correct as of such date).
(b) PERFORMANCE OF OBLIGATIONS. The Company shall have performed or
complied in all material respects with all agreements, obligations and covenants
required to be performed by it under this Agreement and the Related Documents on
or as of the Closing Date.
(c) AUTHORIZATION. All action necessary to authorize the execution,
delivery and performance of this Agreement and the Related Documents by the
Company and the consummation of the transactions contemplated hereby and
thereby, including any requisite stockholder approval, shall have been duly and
validly taken by the Company and the Company shall have full power and right to
consummate the transactions contemplated hereby and thereby on the terms
provided herein.
(d) CONSENTS AND APPROVALS. The Purchaser shall have received duly
executed copies of all consents and approvals required for or in connection with
the execution and delivery by the Company of this Agreement and each of the
Related Documents to which it may be party, the consummation of the transactions
contemplated hereby and thereby, and the continued conduct of the Business as
previously conducted, in form and substance satisfactory to the Purchaser.
(e) GOVERNMENT CONSENTS, AUTHORIZATIONS, ETC. All consents,
authorizations, Orders and approvals of, filings or registrations with and the
expiration of all waiting periods imposed by, any third Person, including any
Governmental Entity which are required for or in connection with the execution
and delivery by the parties of this Agreement and the Related Documents to which
they may be parties and the consummation by the parties of the transactions
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contemplated hereby and thereby and in order to permit or enable the Purchaser
to conduct the Business after the Closing in substantially the same manner as
previously conducted by the Company shall have been obtained or made, in form
and substance reasonably satisfactory to the Purchaser, and shall be in full
force and effect.
(f) ACTIONS AND PROCEEDINGS. No Proceeding shall be pending before any
court or Governmental Entity, or threatened, which may result in the restraint
or prohibition of the consummation of any of the transactions contemplated by
this Agreement or any of the Related Documents or which could result in damages
payable by the Purchaser in connection therewith or which could adversely affect
the Company or result in a divestiture by the Purchaser of all or a substantial
part of the Purchased Assets, and no court of competent jurisdiction shall have
issued an injunction with respect to the consummation of the transactions
contemplated by this Agreement and the Related Documents that shall not be
stayed or dissolved at the time of Closing.
(g) STATUTES. No action shall have been taken or threatened, and no Law
shall have been enacted, promulgated or issued or deemed applicable to the
transactions contemplated hereby by any Governmental Entity that would (i) make
the consummation of the transactions contemplated hereby illegal or
substantially delay the consummation of any material aspect of the transactions
contemplated hereby, (ii) render any party unable to consummate the transactions
contemplated hereby, or (iii) impair the ability of the Purchaser to own or
conduct the Business as previously conducted, whether directly or indirectly.
(h) OPINION OF THE COMPANY'S COUNSEL. The Purchaser shall have received
an opinion of Xxxxxxx Street and Deinard, counsel to the Company, dated the
Closing Date, substantially in the form of Exhibit G hereto.
(i) RELATED DOCUMENTS. Each of the documents set forth below (each, a
"Related Document", and collectively, the "Related Documents") shall have been
executed and delivered by the parties thereto:
(i) Non-Competition Agreement. The Company shall have executed
and delivered the non-competition agreement substantially in the form
of Exhibit H hereto (the "Non-Competition Agreement");
(ii) Xxxx of Sale. The Company shall have executed and
delivered the Xxxx of Sale; and
(iii) Transition Services. The Company and the Purchaser shall
have executed and delivered an agreement relating to the manufacture of
products and other transitional matters substantially in the form of
Exhibit I hereto (the "Transition Agreement").
(iv) License Agreement. The Company and the Purchaser shall
have executed and delivered a license agreement in which the Purchaser
provides to the Company a royalty-free license (the "License") in
perpetuity for the fiber optic pressure technology patents identified
on Exhibit C hereto for activities other than gynecological
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and urological applications, such license being substantially the form
of Exhibit J hereto (the "License Agreement").
(j) RELEASE OF ENCUMBRANCES. The Purchaser shall have received from the
Company evidence that (i) the Company's lender, Xxxxx Fargo Credit, Inc. f/k/a
Norwest Credit, Inc. (the "Lender"), has consented to the Sale and released its
Encumbrances on the Purchased Assets and (ii) HPSC, Inc. has released its
Encumbrances on the Purchased Assets.
(k) RELATED CERTIFICATES. Each of the following certificates shall have
been executed and/or delivered, as the case may be, by the Person who or which
is the subject thereof:
(i) a certificate of the secretary of the Company dated as of
the Closing Date, certifying (A) that true and complete copies of the
Company's Fundamental Documents as in effect on the Closing Date are
attached thereto, (B) as to the incumbency and genuineness of the
signatures of each officer of the Company executing this Agreement or
any of the Related Documents on behalf of the Company; and (C) the
genuineness of the resolutions (attached thereto) of the board of
directors of the Company authorizing the execution, delivery and
performance of this Agreement and the Related Documents to which the
Company is a party and the consummation of the transactions
contemplated hereby and thereby;
(ii) certificates of the secretaries of state of the states
specified in Schedule 5.1 in which the Company is organized or
qualified to do business, dated as of the Closing Date, certifying as
to the good standing and nondelinquent tax status of the Company; and
(iii) a certificate of the principal executive officer of the
Company dated as of the Closing Date, certifying as to (A) the accuracy
of the representations and warranties of the Company contained herein,
as contemplated by Section 8.1(a), and (B) the performance of the
covenants of the Company contained herein, as contemplated by Section
8.1(b).
8.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company under this Agreement to sell the
Purchased Assets and to take the other actions required to be taken by the
Company at the Closing are subject to the satisfaction, at or prior the Closing,
of the following conditions unless waived (to the extent such conditions can be
waived) by the Company:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the Purchaser in this Agreement and the Related Documents
(without giving effect to any qualification contained therein as to materiality,
including without limitation, the phrases "material" and "in all material
respects") shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if such representations and warranties had
been made at and as of the Closing Date, except for those representations and
warranties which address matters only as of a particular date (which shall be
true and correct as of such date).
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(b) PERFORMANCE OF OBLIGATIONS. The Purchaser shall have performed in
all material respects its respective agreements, obligations and covenants
required to be performed by it under this Agreement on or as of the Closing
Date.
(c) AUTHORIZATION. All action necessary to authorize the execution,
delivery and performance of this Agreement and the Related Documents by the
Purchaser and the consummation of the transactions contemplated hereby and
thereby, shall have been duly and validly taken by the Purchaser and the
Purchaser shall have full power and right to consummate the transactions
contemplated hereby and thereby on the terms provided herein.
(d) CONSENTS AND APPROVALS. The Company shall have received duly
executed copies of all consents and approvals required for or in connection with
the execution and delivery by the Purchaser of this Agreement and each of the
Related Documents to which it may be a party and the consummation of the
transactions contemplated hereby and thereby, in form and substance satisfactory
to the Company.
(e) GOVERNMENT CONSENTS, AUTHORIZATIONS, ETC. All consents,
authorizations, Orders and approvals of, filings or registrations with and the
expiration of all waiting periods imposed by, any third Person, including any
Governmental Entity, which are required for or in connection with the execution
and delivery by the parties of this Agreement and the Related Documents to which
they may be parties and the consummation by the parties of the transactions
contemplated hereby and thereby shall have been obtained or made and shall be in
full force and effect.
(f) ACTIONS AND PROCEEDINGS. No Proceeding shall be pending before any
court or Governmental Entity, or threatened, which may result in the restraint
or prohibition of the consummation of any of the transactions contemplated by
this Agreement or any of the Related Documents or which could result in damages
payable by the Company in connection therewith or which could adversely affect
the Company and no court of competent jurisdiction shall have issued an
injunction with respect to the consummation of the transactions contemplated by
this Agreement and the Related Documents that shall not be stayed or dissolved
at the time of Closing.
(g) STATUTES. No action shall have been taken or threatened, and no Law
shall have been enacted, promulgated or issued or deemed applicable to the
transactions contemplated hereby by any Governmental Entity that would (i) make
the consummation of the transactions contemplated hereby illegal or
substantially delay the consummation of any material aspect of the transactions
contemplated hereby, or (ii) render any party unable to consummate the
transactions contemplated hereby.
(h) OPINION OF THE PURCHASER'S COUNSEL. The Company shall have received
an opinion of X'Xxxxxxxx Graev & Karabell, LLP, counsel for the Purchaser, dated
the Closing Date substantially in the form of Exhibit K hereto.
(i) RELATED DOCUMENTS. Each of the Related Documents shall have been
executed and delivered by the parties thereto and the transactions contemplated
thereby consummated or effected, as the case may be, in accordance with the
terms thereof.
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(j) RELATED CERTIFICATES. Each of the following certificates shall have
been executed and/or delivered, as the case may be, by the Person who or which
is the subject thereof:
(i) a certificate of the secretary of the Purchaser dated as
of the Closing Date, certifying (A) that true and complete copies of
the Fundamental Documents of the Purchaser as in effect on the Closing
Date are attached thereto, (B) as to the incumbency and genuineness of
the signatures of each officer of the Purchaser executing this
Agreement or any of the Related Documents on behalf of the Purchaser;
and (C) the genuineness of the resolutions (attached thereto) of the
board of directors of the Purchaser authorizing the execution, delivery
and performance of this Agreement and the Related Documents to which
the Purchaser are parties and the consummation of the transactions
contemplated hereby and thereby;
(ii) certificates of the secretary of state of the state in
which the Purchaser is organized dated as of the Closing Date,
certifying as to the good standing and nondelinquent tax status of
Purchaser;
(iii) a certificate signed by an officer of the Purchaser,
dated as of the Closing Date, certifying as to (A) the accuracy of the
representations and warranties of the Purchaser contained herein, as
contemplated by Section 8.2(a), and (B) the performance of the
covenants of the Purchaser contained herein, as contemplated in Section
8.2(b).
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION GENERALLY; ETC.
(a) Subject to the further terms of this Article IX, the Company
Indemnifying Persons shall indemnify the Purchaser Indemnified Persons for, and
hold each of them harmless from and against, any and all Purchaser Losses
arising from or in connection with any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of the Company contained in Article V, or in the Schedules,
any Exhibit hereto or any certificate delivered in connection herewith
on or before the Closing Date (or any facts or circumstances
constituting any such untruth, inaccuracy or breach);
(ii) the breach of any agreement or covenant of the Company
contained in this Agreement (including the Schedules and the Exhibits
attached hereto) or any other Related Document to which the Company is
a party;
(iii) the Excluded Assets;
(iv) the Excluded Liabilities;
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(v) notwithstanding the disclosure of any such Liability in
this Agreement, on any Schedule, or otherwise, all Liabilities
(contingent or otherwise and including Liability for response costs,
personal injury, property damage or natural resource damage), other
than the Assumed Liabilities and the Trademark Liability, which arise
out of events involving the Company that may occur prior to or
following the Closing, or products sold or services performed by the
Company prior to the Closing (notwithstanding that the date on which
such Liability arose or became manifest is after the Closing),
including the assertion of any claim, demand or Liability against the
Purchaser arising from or in connection with (x) any action or inaction
of the Company or any of its stockholders in connection with the action
of any such stockholders required to approve the Sale or (y) the
assertion against the Purchaser by any such stockholder of any claim
with respect to any actions or the transactions of or involving the
Company prior to or at Closing (including the actions and transactions
contemplated by this Agreement); and
(vi) non-compliance by the Company with any applicable "bulk
sales laws".
(b) Subject to the further terms of this Article IX, the Purchaser
Indemnifying Persons shall indemnify the Company Indemnified Persons for, and
hold each of them harmless from and against, any and all Company Losses arising
from or in connection with any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of the Purchaser contained in Article VI or any certificate
delivered in connection herewith on or prior to the Closing Date (or
any facts or circumstances constituting any such untruth, inaccuracy or
breach);
(ii) the breach of any agreement or covenant of the Purchaser
contained in this Agreement (including the Schedules and the Exhibits
attached hereto) or any other Related Document to which the Purchaser
is a party;
(iii) any and all Assumed Liabilities; and
(iv) subject to the provisions of the Transition Agreement,
all Liabilities, other than the Excluded Liabilities, that arise on or
after the Closing Date with respect to the operation of the Business or
the use of the Purchased Assets.
9.2 ASSERTION OF CLAIMS; RIGHT OF SETOFF.
(a) No claim shall be brought under Section 9.1 hereof unless the
Indemnified Persons, or any of them, at any time prior to the applicable
Survival Date, give the Indemnifying Persons (a) prompt written notice of the
existence of any such claim, specifying the nature and basis of such claim and
the amount thereof, to the extent known or (b) prompt written notice pursuant to
Section 9.3 of any third party claim, the existence of which might give rise to
such a claim. Upon the giving of such written notice as aforesaid, the
Indemnified Persons, or any of them, shall have the right to commence legal
proceedings subsequent to the Survival Date for the enforcement of their rights
under Section 9.1.
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(b) The Purchaser shall have the right to set-off against amounts owed
under this Agreement to the Company by the Purchaser any amount owed by the
Company to any Purchaser Indemnified Person under this Agreement or otherwise,
including any Losses incurred as a result of the indemnification events set
forth in Sections 9.1(a). In the event of the election by the Purchaser to
exercise any right of set-off under this paragraph, the Purchaser shall deliver
a written notice to the Company specifying the specific right of set-off to be
exercised and the amount thereof. If the Company contests all or part of the
amount set-off by the Purchaser within 15 days after delivery of such written
notice, then any amount not contested may be set-off without dispute by the
Purchaser and the dispute involving any balance shall be resolved in Chicago,
Illinois pursuant to the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") before a single arbitrator agreed upon by the
Company and the Purchaser or, if they cannot agree within 15 days after the
Company's notice of contest, an arbitrator appointed by the AAA in accordance
with its rules. Costs of the arbitration shall be paid one-half by the Company
and one-half by the Purchaser, or as may be otherwise determined by the
arbitrator. Any balance in dispute which the Purchaser owes to the Company may
continue to be held by the Purchaser and shall be paid by the Purchaser to the
Company, set-off or both paid and set-off upon resolution of the dispute.
9.3 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.
The obligations and liabilities of an Indemnifying Person with respect
to Losses resulting from the assertion of liability by third parties (each, a
"Third Party Claim") shall be subject to the following terms and conditions:
(a) The Indemnified Persons shall promptly give written notice to the
Indemnifying Persons of any Third Party Claim which might give rise to any
Losses by the Indemnified Persons, stating the nature and basis of such Third
Party Claim, and the amount thereof to the extent known; provided, however, that
no delay on the part of the Indemnified Persons in notifying any Indemnifying
Persons shall relieve the Indemnifying Persons from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Person thereby
is prejudiced by the delay. Such notice shall be accompanied by copies of all
relevant documentation with respect to such Third Party Claim, including,
without limitation, any summons, complaint or other pleading which may have been
served, any written demand or any other related document or instrument.
(b) If the Indemnifying Persons shall acknowledge in a writing
delivered to the Indemnified Persons that the Indemnifying Persons shall be
obligated under the terms of their indemnification obligations hereunder in
connection with such Third Party Claim, then the Indemnifying Persons shall have
the right to assume the defense of any Third Party Claim at their own expense
and by their own counsel, which counsel shall be reasonably satisfactory to the
Indemnified Persons; provided, however, that the Indemnifying Persons shall not
have the right to assume the defense of any Third Party Claim, notwithstanding
the giving of such written acknowledgment, if (i) the Indemnified Persons shall
have been advised by counsel that there are one or more legal or equitable
defenses available to them which are different from or in addition to those
available to the Indemnifying Persons, and, in the reasonable opinion of the
Indemnified Persons, counsel for the Indemnifying Persons could not adequately
represent the interests of the Indemnified Persons because such interests could
be in conflict with those of the Indemnifying
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Persons, (ii) such action or proceeding involves, or could have a material
effect on, any material matter beyond the scope of the indemnification
obligation of the Indemnifying Persons or (iii) the Indemnifying Persons shall
not have assumed the defense of the Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons shall assume the defense of a Third
Party Claim (under circumstances in which the proviso to Section 9.3(b) is not
applicable), the Indemnifying Persons shall not be responsible for any legal or
other defense costs subsequently incurred by the Indemnified Persons in
connection with the defense thereof. If the Indemnifying Persons do not exercise
their right to assume the defense of a Third Party Claim by giving the written
acknowledgement referred to in Section 9.3(b), or are otherwise restricted from
so assuming by the proviso to Section 9.3(b), the Indemnifying Persons shall
nevertheless be entitled to participate in such defense with their own counsel
and at their own expense; and in any such case, the Indemnified Persons shall
assume the defense of the Third Party Claim, with counsel which shall be
reasonably satisfactory to the Indemnifying Persons, and shall act reasonably
and in accordance with their good faith business judgment and shall not effect
any settlement without the consent of the Indemnifying Persons, which consent
shall not unreasonably be withheld or delayed.
(d) If the Indemnifying Persons exercise their right to assume the
defense of a Third Party Claim, they shall not make any settlement of any claims
without the written consent of the Indemnified Persons, which consent shall not
be unreasonably withheld; provided, however, that in the event the Indemnifying
Persons shall propose the settlement of any claim which is capable of settlement
by the payment of money only and shall demonstrate to the reasonable
satisfaction of the Indemnified Persons the ability to pay such amount, and the
Indemnified Persons shall not consent thereto within 20 days after the receipt
of written notice thereof, any Losses incurred by the Indemnified Persons in
excess of such proposed settlement shall be at the sole expense of the
Indemnified Persons.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Subject to the further provisions of this Section 9.4,
indemnification with respect to the representations and warranties of the
Company contained in this Agreement or in any certificate or other writing
delivered in connection with this Agreement shall survive the Closing Date until
the third anniversary of the Closing Date; provided, however, that the
representations and warranties contained in Sections 5.1 and 5.2 shall survive
indefinitely and the representations and warranties set forth in Sections 5.10,
5.14, 5.17, and 5.18 shall survive until the expiration of the applicable
statute of limitations. The covenants and other agreements of the Company
contained in this Agreement shall survive the Closing Date until they are
otherwise terminated by their terms.
(b) Subject to the further provisions of this Section 9.4,
indemnification with respect to the representations and warranties of the
Purchaser contained in this Agreement or in any certificate or other writing
delivered in connection with this Agreement shall survive the Closing Date until
the third anniversary of the Closing Date; provided, however, that the
representations and warranties contained in Sections 6.1 through 6.3 shall
survive indefinitely.
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The covenants and other agreements of the Purchaser contained in this Agreement
shall survive the Closing Date until they are otherwise terminated by their
terms.
(c) For convenience of reference, the date upon which any
representation or warranty contained herein shall terminate, if any, is referred
to herein as the "Survival Date".
9.5 LIMITATIONS ON INDEMNIFICATION.
(a) Indemnity Basket for the Company Indemnifying Persons. From and
after the Closing, the Purchaser Indemnified Persons shall not have the right to
be indemnified for breaches of representations and warranties of the Company
pursuant to Section 9.1(a)(i) unless and until the Purchaser Indemnified Persons
(or any member thereof) shall have incurred on a cumulative basis aggregate
Losses in an amount exceeding $75,000, in which event the right to be
indemnified shall apply only to the extent such Losses exceed $75,000; provided,
however, that in no event shall the limitations set forth in this Section 9.5(a)
apply to the rights of the Purchaser Indemnified Persons to be indemnified
pursuant to (i) Section 9.1(a)(i) with respect to the representations and
warranties set forth in Sections 5.1, 5.2, 5.10, 5.14, 5.17, and 5.18, and (ii)
Sections 9.1(a)(ii)-(vi).
(b) Indemnity Limitations for the Company Indemnifying Persons. The sum
of all Losses pursuant to which indemnification is payable by the Company
Indemnifying Persons pursuant to Section 9.1(a)(i) shall not exceed $1,000,000
in the aggregate; provided, however, that in no event shall the limitations set
forth in this Section 9.5(b) apply to the rights of the Purchaser Indemnified
Persons to be indemnified pursuant to (i) Section 9.1(a)(i) with respect to the
representations and warranties set forth in Sections 5.1, 5.2, 5.10, 5.14, 5.17,
and 5.18, and (ii) Sections 9.1(a)(ii)-(vi).
(c) Indemnity Basket for the Purchaser Indemnifying Persons. From and
after the Closing, the Company Indemnified Persons (or any member thereof) shall
not have the right to be indemnified for breaches of representations and
warranties of the Purchaser pursuant to Section 9.1(b)(i) unless and until the
Company Indemnified Persons (or any member thereof) shall have incurred on a
cumulative basis aggregate Losses in an amount exceeding $75,000, in which event
the right to be indemnified shall apply shall apply only to the extent such
Losses exceed $75,000; provided, however, that in no event shall the limitations
set forth in this Section 9.5(c) apply to the rights of the Company Indemnified
Persons to be indemnified pursuant to (i) Section 9.1(b)(i) with respect to the
representations and warranties set forth in Sections 6.1 through 6.3, and (ii)
Sections 9.1(b)(ii)-(iv).
(d) Indemnity Limitations for the Purchaser Indemnifying Persons. The
sum of all Losses pursuant to which indemnification is payable by the Purchaser
Indemnifying Persons pursuant to Section 9.1(b)(i) shall not exceed $1,000,000
in the aggregate; provided, however, that in no event shall the limitations set
forth in this Section 9.5(d) apply to the rights of the Company Indemnified
Persons to be indemnified pursuant to (i) Section 9.1(b)(i) with respect to the
representations and warranties set forth in Sections 6.1 through 6.3, and (ii)
Sections 9.1(b)(ii)-(iv).
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ARTICLE X
TERMINATION; EFFECT OF TERMINATION
10.1 TERMINATION.
This Agreement may be terminated at any time prior to the Closing by:
(a) the mutual consent of the Purchaser and the Company; or
(b) the Purchaser, if:
(i) there has been a willful breach by the Company of any
representation, warranty, covenant or agreement set forth in this
Agreement which is material and which the Company fails to cure within
10 Business Days after notice thereof is given by the Purchaser (except
no cure period shall be provided for a breach by the Company which by
its nature cannot be cured);
(ii) the conditions set forth in Section 8.1 shall not have
been satisfied or waived (to the extent they may be waived) by May 1,
2001; or
(iii) the matters contained in a supplement or amendment of
any Schedule of this Agreement by the Company constitute, or may
constitute, a Material Adverse Change.
(c) the Company, if:
(i) there has been a willful breach by the Purchaser of any
representation, warranty, covenant or agreement set forth in this
Agreement which is material and which the Purchaser fails to cure
within 10 Business Days after notice thereof is given by the Company
(except no cure period shall be provided for a breach by the Purchaser
which by its nature cannot be cured); or
(ii) if the conditions set forth in Section 8.2 shall not have
been satisfied or waived (to the extent they may be waived) by May 1,
2001.
(d) the Purchaser or the Company, if any permanent injunction or other
Order of a Governmental Entity preventing the Closing shall have become final
and nonappealable.
provided, however, that neither the Company nor the Purchaser shall be entitled
to terminate this Agreement pursuant to Section 10.1(b)(ii) or Section
10.1(c)(ii) if such party's intentional breach of this Agreement has prevented
the satisfaction of a condition.
10.2 TERMINATION PROCEDURES.
Any termination pursuant to Section 10.1(a) shall be effected by a
written instrument signed by the Purchaser and the Company, and any other
termination pursuant to Section 10.1 shall be effected by written notice from
the party or parties so terminating to the other parties
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hereto, which notice shall specify the Section of this Agreement pursuant to
which this Agreement is being terminated.
10.3 EFFECT OF TERMINATION.
In the event of the termination of this Agreement as provided in
Section 10.1, this Agreement shall be of no further force or effect, except for
this Section 10.3 and Article XI, each of which shall survive the termination of
this Agreement; provided, however, that the Liability of any party for any
breach by such party of the representations, warranties, covenants or agreements
of such party set forth in this Agreement occurring prior to the termination of
this Agreement shall survive the termination of this Agreement. In the event of
any action for breach of contract in the event of a termination of this
Agreement, the prevailing party shall be reimbursed by the other party to the
action for reasonable attorneys' fees and expenses relating to such action.
ARTICLE XI
MISCELLANEOUS PROVISION
11.1 NO THIRD PARTY BENEFICIARIES.
Except as expressly set forth herein, this Agreement shall not confer
any rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns, personal representatives, heirs and
estates, as the case may be.
11.2 ENTIRE AGREEMENT.
This Agreement and the Related Documents (including, but not limited
to, the schedules and the exhibits attached hereto) contain all of the
agreements among the parties hereto with respect to the transactions
contemplated hereby and supersede all prior agreements or understandings,
whether written or oral, among the parties with respect thereto including, but
not limited to, the Letter Agreement dated February 16, 2001 between
CooperSurgical, Inc. and the Company, as amended.
11.3 SUCCESSORS AND ASSIGNS.
All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Anything contained herein to the contrary notwithstanding,
this Agreement shall not be assigned by any party without the prior written
consent of each other party, except that the Purchaser may, without the consent
of any other party, assign its rights under this Agreement to any of its
Affiliates provided that such assignment shall not relieve the Purchaser of its
obligations and liabilities hereunder.
11.4 AMENDMENT.
This Agreement shall not be altered or otherwise amended except
pursuant to an instrument in writing signed by each party, except that any party
may waive any obligation owed to it by another party under this Agreement. No
waiver by any party of any default,
-42-
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.5 EXTENSION; WAIVER.
At any time prior to the Closing, the Purchaser and the Company may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement and (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any such waiver shall not operate or be construed
as a waiver of any subsequent breach by the other party.
11.6 FEES AND EXPENSES.
Except as otherwise expressly provided in this Agreement, each party
hereto shall bear its own fees and expenses incurred in connection with this
Agreement and the Related Documents (including the legal, accounting and due
diligence fees, costs and expenses incurred by such party).
11.7 NOTICES.
All notices, amendments, waivers, or other communications pursuant to
this Agreement shall be in writing and shall be deemed to be sufficient if
delivered personally, telecopied, sent by e-mail, sent by nationally-recognized,
overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to the Company, to:
MedAmicus, Inc.
00000 Xxxxxxx 00 Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
email: xxxxxxxx@xxxxxxxxx.xxx
with a copy to:
Xxxxxxx Street and Deinard
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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email: xxxx.xxxxx@xxxxxxx.xxx
(b) if to the Purchaser, to:
CooperSurgical Acquisition Corp.
c/o The Xxxxxx Companies, Inc.
0000 Xxxxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, V.P., Legal Affairs
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
email: xxxxxxxx@xxxxxxxx.xxx;
with copies to:
CooperSurgical, Inc.
00 Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telephone: (000) 000-0000
email: xxxxxxxx.xxxxxxxx@xxxxxxxxxxxxxx.xxx
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
email: xxx@xxx.xxx.
All such notices and other communications shall be deemed to have been
given and received (i) in the case of personal delivery or delivery by telecopy
or e-mail, on the date of such delivery if delivered during business hours on a
Business Day or, if not delivered during business hours on a Business Day, the
first Business Day thereafter, (ii) in the case of delivery by
nationally-recognized, overnight courier, on the Business Day following
dispatch, and (iii) in the case of mailing, on the third Business Day following
such mailing.
11.8 GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) All questions concerning the construction, interpretation and validity of
this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the State of New York, without giving effect to any
choice or conflict of law provision or rule (whether in the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. In furtherance of the foregoing,
the internal law of the State of New York will control the interpretation and
construction of this
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Agreement, even if under such jurisdiction's choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would ordinarily or
necessarily apply.
(b) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES (OTHER THAN DISPUTES
ARISING PURSUANT TO SECTION 3.2 AND DISPUTES CONCERNING OFFSETS ARISING PURSUANT
TO SECTION 9.2) BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
11.9 INTERPRETATION; CONSTRUCTION.
(a) "Agreement" means this agreement together with all schedules and
exhibits hereto, as the same may from time to time be amended, modified,
supplemented or restated in accordance with the terms hereof. "Best Knowledge"
of any Person means (i) the actual knowledge of such Person and (ii) that
knowledge which should have been acquired by such Person after making such due
inquiry and exercising such due diligence as a prudent businessperson would have
made or exercised in the management of his or her business affairs, including
due inquiry of those key employees and professional advisers (including
attorneys, accountants and consultants) of the Person who could reasonably be
expected to have actual knowledge of the matters in question. When used in the
case of the Company, the term "Best Knowledge" shall include the Best Knowledge
of the Company and Xxxxx X. Xxxxxxx, Xxxxxxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxxx and
Xxxx Xxxxxxxxx. When used in the case of the Purchaser, the term "Best
Knowledge" shall include the Best Knowledge of the Purchaser and Xxxxxxxx
Xxxxxxxx, Xxxx Xxxxxxx and Xxxx Xxxxxx. The use in this Agreement of the term
"including" means "including, without limitation." The words "herein", "hereof",
"hereunder", "hereby", "hereto", "hereinafter", and other words of similar
import refer to this Agreement as a whole, including the schedules and exhibits,
as the same may from time to time be amended, modified, supplemented or
restated, and not to any particular article, section, subsection, paragraph,
subparagraph or clause contained in this Agreement. All references to articles,
sections, subsections, clauses, paragraphs, schedules and exhibits mean such
provisions of this Agreement and the schedules and exhibits attached to this
Agreement, except where otherwise stated. The title of and the article, section
and paragraph headings in this Agreement are for convenience of reference only
and shall not govern or affect the interpretation of any of the terms or
provisions of this Agreement. The use herein of the masculine, feminine or
neuter forms shall also denote the other forms, as in each case the context may
require.
(b) Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
-45-
construction shall be applied against any party. Accounting terms used but not
otherwise defined herein shall have the meanings given to them under GAAP.
Unless expressly provided otherwise, the measure of a period of one month or
year for purposes of this Agreement shall be that date of the following month or
year corresponding to the starting date, provided that if no corresponding date
exists, the measure shall be that date of the following month or year
corresponding to the next day following the starting date. For example, one
month following February 18 is March 18, and one month following March 31 is May
1.
11.10 INCORPORATION OF EXHIBITS AND SCHEDULES.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
11.11 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
11.12 REMEDIES.
THE PARTIES HERETO SHALL EACH HAVE AND RETAIN ALL RIGHTS AND REMEDIES
EXISTING IN THEIR FAVOR UNDER THIS AGREEMENT, AT LAW OR EQUITY, INCLUDING RIGHTS
TO BRING ACTIONS FOR SPECIFIC PERFORMANCE AND INJUNCTIVE AND OTHER EQUITABLE
RELIEF (INCLUDING, WITHOUT LIMITATION, THE REMEDY OF RESCISSION) TO ENFORCE OR
PREVENT A BREACH OR ANY VIOLATION OF THIS AGREEMENT. ALL SUCH RIGHTS AND
REMEDIES SHALL BE CUMULATIVE AND THE EXISTENCE, ASSERTION, PURSUIT OR EXERCISE
OF ANY THEREOF BY A PARTY SHALL NOT PRECLUDE THE ASSERTION, PURSUIT OR EXERCISE
BY SUCH PARTY OF ANY OTHER RIGHTS OR REMEDIES AVAILABLE TO IT.
11.13 SEVERABILITY.
The parties hereto desire that the provisions of this Agreement be
enforced to the fullest extent permissible under the Law and public policies
applied in each jurisdiction in which enforcement is sought. Accordingly, in the
event that any provision of this Agreement would be held in any jurisdiction to
be invalid, prohibited or unenforceable for any reason, such provision, as to
such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
-46-
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
11.14 COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. Facsimile counterpart signatures to this Agreement
shall be acceptable and binding.
11.15 GUARANTY.
The Guarantor hereby guarantees, absolutely, unconditionally and
irrevocably, the performance and payment of all of the obligations and
liabilities of the Purchaser contained in this Agreement.
11.16 SURVIVAL.
The representations and warranties set forth in Article V and Article
VI shall survive the Closing for the period of time set forth in Article IX; the
other obligations of the parties including those pursuant to Sections 3.2, 3.3
and 11.15 shall survive the Closing until all payments due and owing are made.
* * *
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A-1
IN WITNESS WHEREOF, the parties hereto have executed this
Asset Purchase Agreement as of the date first written above.
THE PURCHASER:
COOPERSURGICAL ACQUISITION CORP.
By: /s/ Xxxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: President & CEO
THE GUARANTOR:
COOPERSURGICAL, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: President & CEO
THE COMPANY:
MEDAMICUS, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Pres & CEO
ANNEX I
CERTAIN DEFINITIONS
"AFFILIATE" means, with respect to any Person (i) a director, officer
or shareholder of such Person, (ii) a spouse, parent, sibling or descendant of
such Person (or spouse, parent, sibling or descendant of any director or
executive officer of such Person), and (iii) any other Person that, directly or
indirectly through one or more intermediaries, controls, or is Controlled by, or
is under common Control with, such Person..
"BUSINESS DAY" means any day that is not a Saturday, Sunday or a day on
which banking institutions in New York, New York are not required to be open.
"CERCLA" is defined under the definition of "Environmental Health and
Safety Laws."
"CERCLIS" means the Comprehensive Environmental Response, Compensation,
and Liability Information System.
"CLAIM" means any claim, demand, assessment, judgment, order, decree,
action, cause of action, litigation, suit, investigation or other Proceeding.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY INDEMNIFIED PERSONS" means the Company and its respective
Affiliates, successors and assigns, heirs and estates and the respective
officers and directors of the foregoing.
"COMPANY INDEMNIFYING PERSONS" means the Company and its respective
successors and assigns.
"COMPANY LOSSES" means any and all Losses sustained, suffered or
incurred by any Company Indemnified Person arising from or in connection with
any matter which is the subject of indemnification under Section 9.1(b).
"CONTRACT" means any loan or credit agreement, note, bond, mortgage,
indenture, lease, sublease, purchase order or other agreement, commitment,
instrument, permit, concession, franchise or license.
"CONTROL" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"EMPLOYEE BENEFIT PLAN" means (i) any qualified or
non-qualified Employee Pension Benefit Plan (as defined in Section 3(2) of
ERISA), including any Multiemployer Plan or Multiple Employer Plan, (ii) any
Employee Welfare Benefit Plan (as defined in Section 3(1) of ERISA), or (iii)
any employee benefit, fringe benefit, compensation, incentive, bonus or other
A-1
plan, program or arrangement, whether or not subject to ERISA and whether or not
funded. "ERISA Affiliate" means, with respect to any Person, any other Person
that is a member of a "controlled group of corporations" with, or is under
"common control" with, or is a member of the same "affiliated service group"
with such Person as defined in Section 414(b), 414(c), or 414(m) or 414(o) of
the Code.
"ENCUMBRANCES" means any security interests, mortgages, deeds of trust,
liens, pledges, charges, claims, easements, reservations, restrictions, clouds,
equities, rights of way, options, rights of first refusal, grants of power to
confess judgment, conditional sales and title retention agreements (including
any lease in the nature thereof) and all other encumbrances, whether or not
relating to the extension of credit or the borrowing of money.
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means all Laws, Permits and
Contracts with Governmental Entities relating to or addressing pollution or
protection of the environment, public health and safety, or employee health and
safety, including, but not limited to, the Solid Waste Disposal Act, as amended,
42 U.S.C. ss.6901, et seq., the Clean Air Act, as amended, 42 U.S.C.ss.7401 et
seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C.ss.1251 et
seq., the Emergency Planning and Community Right-to-Know Act, as amended, 42
U.S.C.ss.11001 et seq., the Comprehensive Environmental Response, Compensation,
and Liability Act ("CERCLA"), as amended, 42 U.S.C.ss.9601 et seq., the
Hazardous Materials Transportation Uniform Safety Act, as amended, 49
U.S.C.ss.1804 et seq., the Occupational Safety and Health Act of 1970, as
amended, the regulations promulgated thereunder, and any similar Laws and other
requirements having the force or effect of Law, and all Orders issued or
promulgated thereunder, and all related common law theories.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended or
any successor Federal statute, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, all as the same shall be in
effect from time to time.
"FUNDAMENTAL DOCUMENTS" means the documents by which any Person (other
than an individual) establishes its legal existence or which govern its internal
affairs. For example, the "Fundamental Documents" of a corporation would be its
certificate of incorporation and by-laws.
"GOVERNMENTAL ENTITY" means any Federal, state, local or foreign court,
administrative agency or commission or other governmental authority or
instrumentality.
"HAZARDOUS MATERIALS" means any hazardous or toxic chemicals, materials
or substances, pollutants, contaminants, or crude oil or any fraction thereof
(as such terms are defined under any Environmental, Health and Safety Law).
"INDEMNIFIED PERSONS" means and includes the Company Indemnified
Persons and/or the Purchaser Indemnified Persons, as the case may be.
"INDEMNIFYING PERSONS" means and includes the Company Indemnifying
Persons or the Purchaser Indemnifying Persons, as the case may be.
A-2
"INTELLECTUAL PROPERTY RIGHTS" means all intellectual property rights,
including patents, patent applications, trademarks, trademark applications,
tradenames, servicemarks, servicemark applications, domain names and
applications therefor, trade dress, logos and designs and goodwill connected
with the foregoing, copyrights and copyright rights, know-how, trade secrets,
proprietary processes and formulae, confidential information, franchises,
licenses, inventions, instructions, marketing materials and all documentation
and media constituting, describing or relating to the foregoing, including
software, manuals, memoranda and records. Intellectual Property Rights is
limited to those related to the Business and does not include those Intellectual
Property Rights associated solely with the Excluded Assets.
"LAW" means any law, statute, treaty, rule, directive or regulation or
Order of any Governmental Entity.
"LIABILITY" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"LITIGATION EXPENSE" means any out-of-pocket expenses incurred in
connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder including, without limitation, court filing fees, court costs,
arbitration fees or costs, witness fees and fees and disbursements of outside
legal counsel, investigators, expert witnesses, accountants and other
professionals.
"LOSSES" means any and all losses, claims, shortages, damages,
Liabilities, expenses (including reasonable attorneys' and accountants' and
other professionals' fees and Litigation Expenses), assessments, Tax
deficiencies, Taxes (including interest or penalties thereon) and insurance
premium increases arising from or in connection with any such matter that is the
subject of indemnification under Article IX.
"MATERIAL ADVERSE CHANGE" means a material adverse change of the
business, operations, assets, condition (financial or otherwise), operating
results, liabilities, employee relations or business prospects of the Company or
any material casualty loss or damage to the assets of the Company, whether or
not covered by insurance, but shall not include changes in the general economy
or industry conditions.
"ORDERS" means judgments, writs, decrees, compliance agreements,
injunctions or orders of any Governmental Entity or arbitrator.
"PERMITS" means all permits, licenses, authorizations, registrations,
franchises, approvals, certificates, variances and similar rights obtained, or
required to be obtained, from Governmental Entities.
"PERMITTED ENCUMBRANCES" means (i) Encumbrances for Taxes not yet due
and payable or being contested in good faith by appropriate proceedings and for
which there are adequate reserves on the books, (ii) workers or unemployment
compensation liens arising in the ordinary course of business; and (iii)
mechanic's, materialman's, supplier's, vendor's or similar liens arising in the
ordinary course of business securing amounts that are not delinquent.
A-3
"PERSON" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"PROCEEDINGS" means actions, suits, claims, investigations or legal or
administrative or arbitration proceedings.
"PURCHASER INDEMNIFIED PERSONS" means the Purchaser, its Affiliates,
successors and assigns, and the respective officers and directors of each of the
foregoing.
"PURCHASER INDEMNIFYING PERSONS" means the Purchaser and its
Affiliates, successors and assigns.
"PURCHASER LOSSES" means any and all Losses sustained, suffered or
incurred by any of the Purchaser Indemnified Persons arising from or in
connection with any matter which is the subject of indemnification under Section
9.1(a).
"REPRESENTATIVE" means officers, directors, employees, agents,
attorneys, accountants and financial advisors of the Purchaser and the Company,
as the case may be.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect from time to
time.
"TAX" or "TAXES" means, with respect to any Person, (i) all income
taxes (including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, alternative or add-on minimum
taxes, customs duties and other taxes, fees, assessments or charges of any kind
whatsoever, together with all interest and penalties, additions to tax and other
additional amounts imposed by any taxing authority (domestic or foreign) on such
Person (if any) and (ii) any liability for the payment of any amount of the type
described in clause (i) above as a result of (A) being a "transferee" (within
the meaning of Section 6901 of the Code or any other applicable Law) of another
Person, (B) being a member of an affiliated, combined or consolidated group or
(C) a contractual arrangement or otherwise.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TRADEMARK LIABILITY" means any Liability of the Company to Xxxx
Incorporated arising from the use by the Company, prior to the Closing, of the
LuMax(TM) trademark.
A-4
SCHEDULE 3.2
METHODOLOGY FOR MODIFICATION OF VALUATION
OF THE COMPANY'S INVENTORY
A. FINISHED GOODS INVENTORY. Inventory of Products on hand at Closing
at the Facilities of the Company or held by vendors shall be valued for purposes
of the Asset Statement as provided in this Schedule:
1. The number of finished units of each Product will be counted (the
"Closing Unit Number").
2. The average monthly sales of each Product during the twelve
months from January 1, 2000 to December 31, 2000 shall be deemed to be the "12
months' sales of such Products". The "24 months' sales of such Product" shall be
deemed to be the 12 months' sales of such Products multiplied by 2.
3. The amount of the Closing Unit Number for each Product not in
excess of the 12 months' sales of such Product shall be valued at 100% of the
Company's book value therefor.
4. The excess of the amount of the Closing Unit Number for each
Product which is more than the 12 months' sales of such Product, but not in
excess of 24 months' sales of such Product, shall be valued at 50% of the
Company's book value therefor.
5. The excess, if any, of the Closing Unit Number for each Product
in excess of 24 months' sales of such Product shall have zero value for purposes
of calculating the value of Inventory on hand at Closing.
Schedule 3.2(a)-1
SCHEDULE 3.2 (CONT.)
B. RAW MATERIALS AND WORK IN PROCESS INVENTORY. The Closing Unit Number
shall include the number of additional units of finished goods inventory of each
Product which are capable of being created with raw material and work in process
inventory of the Business on hand at the Facilities at Closing. Such raw
material and work in process inventory shall be valued under "A" above as if it
had been incorporated into the number of finished units of each Product which
are then capable of being created from it. No value shall be given to raw
material and work in process inventory which is not capable of so being
incorporated in a finished unit of a Product.
C. DEMONSTRATION PRODUCTS. The Company does not treat demonstration
Products as inventory, but rather treats such items as fixed assets. Each
Product which constitutes demonstration Products shall be valued at the
Company's book value therefor determined in accordance with GAAP; provided, that
for purposes of the Asset Statement demonstration Products shall not be valued
in excess of $10,000.
D. CURRENCY EXCHANGE. In calculating the value of items on the Closing
Statements, any values of items provided in other than U.S. Dollars shall be
converted to a value denominated in U.S. currency at the conversion rate
published by The Wall Street Journal in New York City on the Closing Date.
E. GENERAL. As specified in the Agreement to which this Schedule is
attached, Inventory shall be valued in accordance with GAAP, applied
consistently with the Company's applications thereof, as GAAP is modified by
this Schedule.
Schedule 3.2(a)-2
